Adaptive Biotechnologies Corporation (NASDAQ:ADPT) Q3 2024 Earnings Conference Call November 7, 2024 4:30 PM ET

Company Participants

Karina Calzadilla - Head of IR
Chad Robins - CEO and Co-Founder
Kyle Piskel - CFO
Susan Bobulsky - Chief Commercial Officer

Conference Call Participants

Dan Brennan - TD Cowen
Mark Massaro - BTIG
Matt Sykes - Goldman Sachs
Maggie Boeye - William Blair
Corey Rosenbaum - Scotiabank

Operator

Good day, and welcome to Adaptive Biotechnologies Third Quarter Financial Results [Operator Instructions]. As a reminder, this call may be recorded. I would now like to turn the call over to Karina Calzadilla, Head of Investor Relations. Please go ahead.

Karina Calzadilla

Thank you, Michelle. Good afternoon, everyone. I would like to welcome you to Adaptive Biotechnologies third quarter 2024 earnings conference call. Earlier today, we issued a press release reporting Adaptive's financial results for the third quarter of '24. The press release is available at www.adaptivebiotech.com. We are conducting a live webcast of this call and we'll be referencing to a slide presentation that has been posted to the Investors section of our corporate Web site. During the call, management will make projections and other forward-looking statements within the meaning of federal securities laws regarding future events and the future financial performance of the company. These statements reflect management's current perspective of the business as of today. Actual results may differ materially from today's forward-looking statements depending on a number of factors, which are set forth in our public filings with the SEC and listed in this presentation. In addition, non-GAAP financial measures will be discussed during this call and a reconciliation from non-GAAP to GAAP metrics can be found in our earnings release. Joining the call today are Chad Robins, our CEO and Co-Founder; and Kyle Piskel, our Chief Financial Officer. Additional members from management will be available for Q&A. With that, I'll turn the call over to Chad. Chad?

Chad Robins

Thanks, Karina. Good afternoon. And thank you for joining us on our third quarter earnings call. As shown on Slide 3, results for the quarter are a clear testament of our continued strong execution on the top and bottom line. MRD revenue increased 52% year-over-year, driven by both clinical and pharma. This quarter, we reached two catalysts that will drive MRD revenue growth. One, Medicare set a new gapfill rate of $2,007 for our clonoSEQ test, which is a 17% increase from our previous rate under the episode structure. And two, we secured Medicare coverage for mantle cell lymphoma. Operating spend had another significant decline of 11% versus prior year and 5% sequentially excluding q time costs. Sequencing gross margin further increased 6 percentage points compared to last quarter as we successfully executed efficiencies in workflow leading to lower per sample cost. And cash ended at approximately $267 million, which represents a burn reduction of 38% in the first nine months this year compared to the same period a year ago. Due to our strong year-to-date performance, we are raising the lower end of our previous MRD revenue guidance. We are reducing our full year operating expenses and lowering our annual cash burn target. Kyle will share more in his detailed remarks.