On Tuesday, Adaptive Biotechnologies (NASDAQ:ADPT) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
Adaptive Biotechnologies reported a strong start to the year with MRD revenue growing 53% year over year, driven by both clinical and pharma segments.
The company raised its full-year MRD revenue guidance to $260-$270 million, citing strong clinical volume performance and continued momentum.
Sequencing gross margin increased by 8 percentage points to 70% due to scale and operational efficiency, with expectations to reach 75% as a future goal.
The company ended the quarter with $222 million in cash, reflecting disciplined financial management and reduced cash burn.
Adaptive Biotechnologies achieved a milestone with MRD being used as a primary endpoint in drug development, increasing its pharma backlog to $254 million.
The Clonaseq test volumes reached a record of 32,600 in Q1, with strong adoption in the community setting, supported by EMR integrations.
Management highlighted the expansion of its immune medicine programs, including AI modeling and a partnership with Pfizer, while maintaining a disciplined approach to capital allocation.
Full Transcript
Karina Calcadilla (Head of Investor Relations)
Thank you Anton and good afternoon everyone. I would like to welcome you to Adaptive Biotechnologies first quarter 2026 earnings conference call. Earlier today we issued a press release reporting adaptive financial results for Q1 2026. The press release is available at www.adaptivebiotech.com. We are conducting a live webcast of these calls and will be referencing to a slide presentation that has been posted to the Investors section in our corporate website. 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 the call and a reconciliation from non GAAP to GAAP metrics can be found in our earnings release. Joining the call today are Chad Robbins, our CEO and co Founder and Kyle Pisco, our Chief Financial Officer. Additional members from management will be available for Q and A. With that, I’ll turn the call over to Chad.
Chad Robbins (CEO and Co-Founder)
Thanks, Karina. Good afternoon and thank you for joining us on our first quarter earnings call. As shown on Slide 3, we are off to a strong start to the year with accelerating momentum in MRD and disciplined execution across the company. MRD revenue grew 53% year over year reflecting broad based strength across both clinical and pharmaceutical. We also recognized our first primary endpoint milestone this quarter, a meaningful proof point for MRD’s expanding role in drug development. Clonacy clinical volumes increased 41% year over year demonstrating strong continued adoption. We also delivered meaningful margin expansion with sequencing gross margin increasing 8 percentage points year over year to 70% driven by scale and operational efficiency. At the same time, we maintained strong financial discipline, reducing cash burn and ending the quarter with approximately $222 million in cash. Given the strength we’re seeing in the MRD business, we are raising our full year MRD revenue guidance to a range of 260 to 270 million. Carol is going to provide more detail shortly. Let’s now turn to slide 4 for a deeper look at the MRD business. Our clinical business continues to deliver strong growth with revenue up 54% year over year. Clonaseq test reached another quarterly record of almost 32,600 in Q1 up 9% sequentially. Growth was observed in all reimbursed indications led by DLBCL at over 19% growth versus prior quarter. Importantly, we’re seeing mounting traction across the key drivers that support durable long term adoption. Blood based testing reached 49% of MRD volume in multiple myeloma, a traditionally bone marrow driven indication. The contribution of blood based MMRD increased to 29% up 8 percentage points year over year. This shift is closely linked to expansion in the community setting where promotion in favorable guideline updates and implementation of standardized testing protocols contributed to growth rates that outpaced the rest of the business community. Volumes grew 67% year over year and now represent 35% of total testing. Growth in the community business was further supported by our EMR enabled workflows which are driving repeat utilization. Serial monitoring orders available to Flatiron integrated accounts are widely being utilized and strong initial pull through rates have further improved with 72% of repeat orders due are being fulfilled. Physician engagement also continues to expand with the number of practicing clinicians growing 43% year over year to nearly 5,000 in Q1, underscoring increasingly broad acceptance of MRD as part of routine clinical management. Finally, we continue to see increases in pricing with US ASP growth of 11% year over year to 1360 per test. Importantly, I’m excited to share that Clonaseq is now listed in the Texas Medicaid Policy Manual. Clonaseq is one of only two specific tests included in newly developed genetic testing section and patients may receive up to six tests per year. It’s great to be pioneers in bringing advanced molecular testing some of our most vulnerable cancer patients. Our scale adoption and embedded workflows support Clonaseq’s sustained growth and continue to strengthen our leadership position as the market evolves. Let’s now turn to Slide 5 to discuss our biopharma business. We delivered one of the strongest quarters to date in MRD pharma with revenue growing 53% year over year or 33% excluding milestones. As mentioned, we also recognized our first milestone in the US Tied to MRD as a primary endpoint in the Cepheus trial. In multimyeloma, new bookings were strong, driving backlog to approximately $254 million, up 24% year over year. Bookings came primarily from regulated studies including several registrational trials where MRD will be used as a primary or co primary endpoint in both multiple myeloma and CLL. We continue to see increasing use of MRD to guide treatment. Today we have approximately 20 ongoing interventional studies where MRD is used for enrollment, stratification or to guide therapy decisions. As these trials read out, they directly support our commercial business. For example, data from the Perseus trial helped establish sustained MRD negativity as a meaningful measure of deeper response in multi myeloma, which supports broader adoption of clonaseq in clinical practice. The momentum we are seeing in the pharma business is likely to be further supported by evolving regulatory trends. The FDA recently introduced a new clinical trial model that incorporates real time data submission with early proof of concept studies underway, including the TRAVERSE trial and mantle cell lymphoma where MRD negative complete response as measured by clonaseq as a key endpoint. While early this emerging model for accelerating data review will reinforce the value of MRD endpoints that are objective, quantitative and longitudinal. These dynamics are particularly relevant in regulated and registrational settings where data quality, reproducibility and regulatory credibility are critical and where Clonaseq is well positioned as a clinically validated MRD assay. Taken together, the trends we are observing support a reinforcing flywheel between biopharma and clinical testing as adoption of Clonaseq and drug development generates evidence, strengthens clinical utility, in drives demin in the clinic to wrap up on MRD. As shown on Slide 6, we are well on track to deliver against our key priorities for the year, starting with clinical volumes, we initially guided to over 30% growth for the year based on our first quarter performance and continued momentum. We now expect volumes to grow to at least 35% in 2026 with potential for upside. Importantly, the underlying drivers of growth are already nearing our full year targets. Blood based testing is rapidly approaching our goal of over 50% contribution and community contributions already at 35% in line with our full year expectations. EMR integrations continue to advance, with six new EPIC accounts added year to date and five more expected to go live in the next month. In April, we went live with EPIC on another of our top 10 accounts, bringing us to seven of our top 10. Now being fully integrated on pricing, we remain on track to achieve our target of approximately $1,400 per test in 2026. Supported by recent policy expansions in CLL and DLBCL, Medicaid, payment traction and commercial payer negotiations in biopharma. We have already exceeded our goal for new registrational studies with 10 signed in the first quarter alone. Finally, strong top line growth combined with continued operational efficiencies positions us to achieve over 70% sequencing gross margins and expand adjusted EBITDA. Overall, our progress across these MRD priorities is a testament to our continued momentum and strengthens our confidence in our ability to meet or exceed our full year commitments. Turning now to slide 7 our immune medicine programs are progressing well against our 2026 key priorities. We continue to scale our TCR antigen datasets and advance our AI ML modeling work. We now have more than 6 million functional TCR antigen pairs with data that currently spans about 50,000 antigens and 50 plus HLA types. This proprietary data set enables us to understand TCR antigen interactions and their role in cancer virology and autoimmunity. We recently confirmed that our digital AI
Kyle Pisco (Chief Financial Officer)
model outperformed the accuracy of existing public benchmarks in predicting TCR antigen binding. We published this work in Proceedings of Machine Learning and Research and presented the Machine Learning for Health Symposium. Our focus this year is to further improve these models in targeted applications that could be attractive to partners seeking to leverage our data and our digital capabilities. In parallel, we are applying our AI enabled immune medicine platform to identify the likely disease causing T cell receptors and their antigens in select autoimmune conditions. This quarter we kicked off our RA Target Discovery partnership with Pfizer. We received over 1000 patient samples and are on track to deliver the RA data package in the second half of 2026. As we continue to make progress on these 2026 priorities, we’re advancing discussions on additional data partnerships, maintaining a disciplined approach to capital allocation and operating within our expected IM cash burn range of $15 million to $20 million for the year. I’ll now turn the call over to Kyle who’s going to walk through our financial results and updated full year guidance. Kyle thank you Chad. Starting on slide 8 with our first quarter results, total revenue was 70.9 million, representing 45% growth year over year, driven primarily by continued strength in MRD, which accounted for approximately 95% of total revenue. Of note, amortization from the Genentech payments is excluded from all prior period comparisons, MRD revenue grew 53% versus prior year to 67.1 million with clinical and pharma contributions of 65 and 35% respectively. Immune medicine revenue was 3.8 million, down 26% from a year ago, primarily due to timing of sample receipts and processing. Turning to margins sequencing gross margin, which excludes MRD milestones was 70% for the quarter up from 62% a year ago. This improvement reflects reduced assay costs due to efficiencies from our NovaSeq launch in the second half of 2025 and leverage in overhead as we support higher volumes as well as favorable pricing trends across Both clinical and Phar. Total operating expenses inclusive of cost of revenue was 90.1 million, up 10% year over year. This increase was mainly driven by continued investment in commercial infrastructure including EMR integrations and reimbursement as well as higher personnel related costs. At the segment level, MRD continues to demonstrate strong profitability with adjusted EBITDA of 12.1 million compared to a loss of 4.1 million in the prior year. Reflecting the impact of revenue growth including milestone revenue and continued operating leverage, Immune Medicine adjusted EBITDA was the …
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