Adaptive Biotechnologies Q2 2026 Earnings Report

Adaptive Biotechnologies EPS Results

• Actual EPS: -$0.25
• Consensus EPS: -$0.13
• Beat/Miss: Missed by -$0.12
• One Year Ago EPS: -$0.17

Adaptive Biotechnologies Revenue Results

• Actual Revenue: $71.55 million
• Expected Revenue: $65.44 million
• Beat/Miss: Beat by +$6.12 million
• YoY Revenue Growth: +21.50%

Adaptive Biotechnologies Announcement Details

• Quarter: Q2 2026
• Date: 7/29/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, July 29, 2026
• Conference Call Time: 4:30PM ET

Adaptive Biotechnologies (NASDAQ:ADPT) is a clinical-stage biotechnology company that focuses on harnessing the adaptive immune system to transform the diagnosis and treatment of disease. Through proprietary immune receptor sequencing and analysis, the company decodes the genetic information of T-cell and B-cell receptors to identify signatures of immune response. Its core technology platform provides insights into immune-driven conditions, enabling more precise monitoring and targeted therapeutic development.

The company’s flagship product, immunoSEQ, offers high-throughput immune repertoire profiling for researchers and pharmaceutical partners. Adaptive also develops T-cell receptor (TCR) discovery services to support the discovery and development of novel TCR-based therapeutics. Its offerings span research services, clinical diagnostics, and collaborative programs with leading drug developers to advance immune-driven medicine.

Founded in 2009 and headquartered in Seattle, Washington, Adaptive Biotechnologies maintains research and operations facilities in North America and Europe. The company collaborates with global technology and life sciences organizations, including a strategic partnership with Microsoft to apply machine learning to immune data. Adaptive’s platform has been utilized in oncology, autoimmune and infectious disease research across multiple continents.

Adaptive Biotechnologies is led by co-founder and CEO Chad Robins, under whose guidance the firm continues to expand its molecular profiling capabilities and build a world-class immune medicine business.

Adaptive Biotechnologies Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: MRD delivered strong growth and improved profitability: Core MRD revenue rose 49% year over year excluding prior-year milestones, while sequencing gross margin expanded to 72% and MRD adjusted EBITDA increased to $9.1 million.
• Positive Sentiment: Clinical testing momentum remained broad-based. clonoSEQ volume grew 43% year over year, with blood-based testing up 68%, community testing up 65%, and nearly 5,200 ordering clinicians; multiple myeloma volume rose 15% sequentially.
• Positive Sentiment: Adaptive raised full-year MRD revenue guidance to $268 million-$278 million from $260 million-$270 million and remains on track for positive company-wide adjusted EBITDA and free cash flow by year-end 2026.
• Neutral Sentiment: The company is pursuing a separation of its Immune Medicine business, with Morgan Stanley advising on strategic alternatives and a preferred path expected by year-end; Adaptive is winding down its research-use-only pharma services business to focus on proprietary immune data, AI models, and autoimmune target discovery.
• Positive Sentiment: Adaptive strengthened its balance sheet with a $340 million zero-coupon convertible note offering, using proceeds to retire the OrbiMed agreement, reduce potential dilution through a capped-call and share repurchase, and support MRD investment and the separation strategy.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Adaptive Biotechnologies second quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Karina Calzadilla, Head of Investor Relations. Please go ahead.

[Karina Calzadilla, Head of Investor Relations at Adaptive Biotechnologies]

Thank you, Sonia, and good afternoon, everyone. I would like to welcome you to Adaptive Biotechnologies' second quarter 2026 earnings conference call. Earlier today, we issued a press release reporting Adaptive's financial results for the second quarter. The press release is available at www.adaptivebiotech.com. We are conducting a live webcast of this call and will be referencing to the slide presentation that has been posted in the Investor section in our corporate website. During the call, management will make projections and other forward-looking statements within the meanings 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.

[Karina Calzadilla, Head of Investor Relations at Adaptive Biotechnologies]

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 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, CEO and Co-founder at Adaptive Biotechnologies]

Thanks, Karina. Good afternoon, and thank you for joining us on our second quarter earnings call. Q2 was an exceptional quarter for Adaptive and a clear validation of our strategy and execution. We delivered excellent operating performance, took decisive strategic actions to unlock shareholder value, and strengthened our balance sheet. Together, these accomplishments reinforce our confidence in the long-term opportunity ahead. Three achievements define the quarter. First, our MRD business delivered one of the strongest quarters in our history. Revenue, excluding milestones, increased 49% year-over-year, driven by growth across both clinical testing and pharma. Clinical testing volume grew 43%, adding more than 3,500 tests sequentially, while pharma sequencing continued its strong momentum. We expanded MRD sequencing gross margin to 71%, up nine percentage points from a year ago, and we increased adjusted EBITDA margin to 14%.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

These results demonstrate the scalability of our MRD business and its ability to generate profitable growth. Second, we announced our plan to separate our MRD and Immune Medicine business. We are evaluating strategic and structural alternatives for Immune Medicine that we believe will best position the business to pursue its growth strategy, access the capital it needs, and unlock its full potential outside of Adaptive. We have retained Morgan Stanley as our advisor and continue to expect to identify our preferred path of separation by year-end. Third, we further strengthened our balance sheet through a successful $340 million zero coupon convertible note offering. The transaction enabled us to retire the OrbiMed agreement, simplify our capital structure, increase our financial flexibility to execute our separation strategy, and invest in the compelling opportunities we see in MRD.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Importantly, we paired the financing with a cap call transaction and share repurchase, significantly reducing potential shareholder dilution while optimizing the economics of the financing. We ended the quarter with approximately $357 million in cash. The performance we've delivered year-to-date, combined with the momentum we're seeing across clinical and pharma, reinforces our confidence in the trajectory of the MRD business. Accordingly, we're raising our full year MRD revenue guidance to a range of $268 million-$278 million. Kyle will provide additional details in his remarks. Now, let's take a closer look at the clinical business on slide five, which continues to be the primary driver of MRD growth. Clinical revenue increased 53% year-over-year, driven by a 43% increase in testing volumes and a 7% increase in ASP. During the quarter, we delivered more than 36,100 clonoSEQ tests, representing 11% sequential growth.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

This reflects continued expansion of our ordering physician and account base, combined with deeper penetration of existing accounts and increasing adoption across the patient care continuum. Growth was broad-based across every reimbursed indication. CLL grew 16% sequentially, continuing to benefit from the 2025 NCCN guideline update. Multiple myeloma, our largest indication representing 44% of testing volume, grew 15% sequentially, driven by broader adoption of blood-based testing across both academic and community. In lymphoma, DLBCL and MCL now account for approximately 16% of total testing volume, and both delivered healthy double-digit sequential growth. We also continued to make progress on pricing. U.S. ASP increased to $1,382 per test this quarter, reflecting ongoing reimbursement gains, including a recent expansion of MCL coverage with Concert, as well as operational improvements from bringing key revenue cycle management functions in-house. The takeaway is clear. We're growing volumes, expanding adoption across indications, and improving pricing.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Those are the fundamentals that drive durable top-line clinical growth. Let's turn to slide six, which highlights some of the key drivers behind our clinical volume growth. What is encouraging is that each of these metrics continues to move in the right direction, supporting both broader adoption of clonoSEQ and increased testing over time. Starting with blood-based testing, because blood is less invasive and more convenient for patients, it supports more frequent MRD testing through the course of treatment. Blood-based testing grew 68% year-over-year and 14% sequentially, and represented 51% of total clonoSEQ volume in Q2, exceeding half of all tests for the first time. Importantly, we're seeing increasing adoption of blood testing in both multiple myeloma and ALL, two indications for which physicians traditionally have relied on bone marrow testing. Blood now contributes 30% of MRD testing in multiple myeloma and 42% in ALL.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

The shift towards blood also expands our opportunity in the community setting, where blood-based testing is significantly easier to integrate into routine practice. Community testing represented 36% of total clonoSEQ volume this quarter, exceeding our full-year target, and grew 65% year-over-year. That growth has been supported by broader adoption of updated clinical guidelines, standardized testing protocols, and our EMR-enabled workflows, which are making repeat testing easier for physicians. We're also seeing encouraging progress in serial monitoring. One year after our Flatiron integration, 75% of repeat orders have been fulfilled, demonstrating that community physicians are increasingly incorporating MRD into ongoing patient management rather than using it as a one-time test. Importantly, physician adoption continues to expand. Nearly 5,200 clinicians ordered clonoSEQ during the quarter, an increase of 40% from a year ago.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

We view this as another indicator that MRD testing is becoming a standard part of clinical care across a growing number of providers. These drivers are interconnected. Greater adoption of blood-based testing, continuing expansion in the community, increasing physician adoption, and higher rates of serial monitoring all support deeper penetration across indications and more testing per patient through the continuum of care. Let's turn to slide seven to take a look at our MRD pharma business. This was another good quarter for MRD pharma. Sequencing revenue grew 38% year-over-year, excluding milestones. Importantly, unlike the prior year, we did not recognize any milestone revenue this quarter, highlighting the continued strength of the underlying sequencing business. We ended the quarter with 189 active global clinical trials and a backlog of approximately $245 million, up 12% from a year ago.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

We view this backlog as an important leading indicator of future revenue and continued demand from our biopharma partners. The quality of our portfolio continues to improve. Studies in which MRD is used as a regulated endpoint, either primary or secondary, now comprise about 60% of our active studies, compared to about 40% a couple of years ago. These studies not only carry higher economic value, but they also create opportunities for future milestone payments tied to regulatory approvals. Multiple myeloma continues to represent the largest portion of our registrational portfolio, reflecting the industry's growing use of MRD following the FDA's support for MRD as an endpoint. At the same time, we're seeing encouraging expansion in both CLL and ALL, with a number of registrational studies continue to grow as sponsors increasingly are incorporating MRD into their development programs.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Beyond the numbers, we're also seeing a shift in how MRD is being used. More studies are using MRD to guide enrollment, stratification, and treatment decisions rather than simply measuring response. That generates the clinical evidence needed to support broader adoption in routine care and strengthens the connection between our biopharma and our clinical businesses. To wrap on MRD, slide eight summarizes our progress against the key objectives we set for 2026. At the midpoint of the year, we've either achieved or remain on track to achieve each of them. Clinical testing volumes have exceeded our original expectations. Based on the first half performance and continued momentum, we now expect volume growth between 38%-40% this year, which is well above our initial target of more than 30%. The key drivers of growth are also ahead of plan.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Blood-based testing and community adoption have already exceeded our full-year targets, while EMR integrations continue to progress with 31 additional accounts integrated year to date. On pricing, we're on track to achieve our target of approximately $1,400 per test, supported by continued reimbursement progress and improved collections. Finally, strong revenue growth combined with ongoing operational efficiencies, keeps us on track to exceed 70% in sequencing gross margin while continuing to expand adjusted EBITDA. Overall, the business continues to perform ahead of expectations. We're expanding adoption, improving profitability, and executing against the strategy we laid out at the beginning of the year. Before I turn the call over to Kyle to go over financial results and updated guidance, I'd like to provide an update on our plan to separate the Immune Medicine business and the progress we've made. The timing for a separation is right.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

MRD has scaled into a profitable, market-leading diagnostics business with a clear runway for durable growth. At the same time, Immune Medicine has evolved into a differentiated discovery platform built on proprietary immune data, AI, and target discovery. As each business enters its next phase, each requires a different operating model, capital structure, and set of investors. For Immune Medicine, we see the greatest opportunity to realize the value of its assets outside of a commercial diagnostics company. As such, Adaptive will remain focused on expanding its leadership in MRD diagnostics, while identifying the best path forward for Immune Medicine to advance as an independent business. Since announcing our plans, we've taken several important steps to move the process forward. First, as mentioned, we've retained Morgan Stanley to advise us as we evaluate the strategic and structural alternatives for the Immune Medicine business.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Second, Harlan Robins, my brother, is transitioning from Chief Scientific Officer role at Adaptive to a consultant role, supporting key R&D initiatives for MRD while dedicating significant time to advancing the separation of IM. Given his scientific leadership and deep knowledge of the platform, his active participation is important during this transition. Third, we've sharpened the focus of the Immune Medicine portfolio. Following a comprehensive review, we've decided to wind down our research use only pharma services business. While it operated around break even, it was not central to the assets that differentiate Immune Medicine. Going forward, we'll focus on the platform's highest value assets and capability, which are our proprietary TCR antigen data set, our AI and machine learning digital models, and our target discovery platform for autoimmune disease. We're also exploring new ways to monetize these unique assets and maximize their path forward.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

As an initial step, we plan to enter into a trial agreement with Harrell Data Corp, an independent cloud-based marketplace founded by Harlan that enables proprietary data sets and AI models to be crowdsourced among researchers and developers. This creates a new commercialization model where data creators can participate in the value generated as their data sets and models are used to solve scientific problems and develop new products. Finally, we continue to make good progress on the Pfizer deal in RA, where we are sequencing patients to identify disease-specific T cell receptors to inform potential therapeutic development. This program remains an important focus of the Immune Medicine team. In summary, in the past month and a half, we've established a clear separation process, sharpened the strategic focus of the business, and are advancing new opportunities to realize the value of these assets.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

We remain on track to identify our preferred path by year-end, and we'll update you on further progress accordingly. I'll now turn the call over to Kyle. Kyle?

[Kyle Piskel, CFO at Adaptive Biotechnologies]

Thanks, Chad. I'll start on slide 10 with our second quarter results. Total revenue was $71.6 million, an increase of 30% from the prior year, driven by continued strength in MRD, which represented 92% of total company revenue. As a reminder, amortization of the Genentech payments are excluded from all prior period comparisons. MRD revenue was $66.2 million, up 33% year-over-year. Importantly, excluding $5.5 million of milestones recognized in the second quarter of last year, the core MRD revenue grew 49%, driven by continued strength in both clinical and pharma businesses. Clinical and pharma represented 75% and 25% of MRD revenue, respectively. Immune Medicine revenue was $5.4 million, up 8% from a year ago, primarily reflecting revenue recognized as part of our target discovery agreement with Pfizer. Turning to margins, sequencing gross margin, which excludes MRD milestones, was 72% for the quarter, up from 64% a year ago.

[Kyle Piskel, CFO at Adaptive Biotechnologies]

This reflects lower assay costs following our NovaSeq X transition, along with continued operating leverage as volumes grow. We also maintained disciplined expense management. Total operating expenses, including cost of revenue, were $87.3 million, up 4% year-over-year. The increase primarily reflects continued investment in our commercial infrastructure, including reimbursement and EMR integration initiatives, partially offset by lower R&D spending in Immune Medicine. At the segment level, MRD adjusted EBITDA increased to $9.1 million compared to $1.9 million a year ago, reflecting the combination of strong revenue growth and continued operating leverage. Immune Medicine reported an adjusted EBITDA loss of $6.3 million, resulting in an adjusted EBITDA loss of $0.7 million for the total company. GAAP net loss for the quarter was $39.9 million, which included $26.4 million of debt extinguishment expense and interest expense related to our now settled OrbiMed financing agreement.

[Kyle Piskel, CFO at Adaptive Biotechnologies]

With the repayment of OrbiMed and the completion of our zero coupon convertible note offering, going forward, we will generate net interest income from our cash and investments on hand. Turning to slide 11. We are raising our full year MRD revenue guidance to a range of $268 million-$278 million, up from our prior range of $260 million-$270 million. This increase reflects stronger than expected clinical volume and pharma sequencing performance in the second quarter, as well as higher year-over-year clinical volume growth of 38%-40% versus our prior guidance of 35%. Our guidance continues to include $9 million of MRD milestone revenue, which was all recognized in the first quarter and assumes no additional milestone revenue during the second half of the year. At the midpoint of the guide, this implies 29% year-over-year growth or 37% growth excluding milestones.

[Kyle Piskel, CFO at Adaptive Biotechnologies]

We're narrowing our full-year operating expense guidance to $350 million-$355 million versus our prior range between $350 million and $360 million, reflecting lower spend in the Immune Medicine business. As a result, we remain on track to achieve positive adjusted EBITDA and positive free cash flow for the entire company by the end of 2026. With that, I'll turn back the call to Chad.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Thanks, Kyle. This quarter demonstrates that our strategy is delivering results. We're growing revenue and expanding profitability of the MRD business, taking decisive steps to unlock the value of Immune Medicine and strengthening our financial position to support the opportunities ahead. We're confident in the direction of the business and look forward to updating you on our continued progress next quarter. With that, I'll turn it over to the operator for questions.

[Operator]

Certainly. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A roster. Our first question will come from the line of David Westenberg of Piper Sandler. Your line's open, David.

[David Westenberg, Senior Research Analyst at Piper Sandler]

All right. Thank you for taking the question and congrats again. I actually want to focus on the multiple myeloma of 15% growth sequentially. This is your biggest indication, and I don't think there's a single multiple myeloma doc out there that hasn't heard of you. Can you talk about some of the things driving that? I would guess maybe this is frequency and maybe a number of tests per patients going up. Can you just maybe talk about some of that unlock there? Because just given, again, that this is such an older indication, it was an impressive number, and I'd love to see how this keep going quarter-on-quarter. Thank you.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Yeah. Susan?

[Company Representative at Adaptive Biotechnologies]

Thanks, David. I apologize, I was stuck on mute here. I think the question was focused on multiple myeloma and the growth and how we can continue that. Is that fair?

[David Westenberg, Senior Research Analyst at Piper Sandler]

We'll just say yeah.

[Kyle Piskel, CFO at Adaptive Biotechnologies]

Let me know if I don't address it. Yeah, we're very pleased to see the growth in multiple myeloma this quarter. I think it reflects the continued focus. That is our top priority indication. It's the largest contribution to our business. It's been particularly driven in recent quarters by the continued increase in blood-based testing, which we think is a critical opportunity both to access untapped users in the community setting where bone marrows are more difficult to complete and also to increase interim surveillance testing and increase the frequency of testing in multiple myeloma across the patient care continuum. We do believe that we will need to continue to invest in that blood testing strategy, both by developing data with our current assay and by investing in product development to continue to enhance the sensitivity we can offer in that space.

[Kyle Piskel, CFO at Adaptive Biotechnologies]

We also will need to continue to bring forward clinical actionability use cases like the ones you've seen in recent years, like MIDAS, to show how patients can avoid transplantation, show how patients can discontinue therapy based in the maintenance setting. All of those things will continue to support, we believe, ongoing updates to the guidelines, openness to establishing testing pathways and protocols and standardized testing at the clinic and account level, and will leverage the EMR to ensure that as our customers and the departments they're in are starting to accept and buy into these clinical actionability use cases, that we can standardize those and ensure that the patients get the pull-through of the testing that their providers intend.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

I'll just add one comment on top of that, Susan, which is, David, even with a 15% quarter-on-quarter sequential growth in our largest indication, which obviously we were very pleased to see, we're now only 17% penetrated in multiple myeloma. There's a long growth runway ahead of us, especially as we continue to move to or incorporate more blood-based testing and penetrate the community.

[David Westenberg, Senior Research Analyst at Piper Sandler]

Appreciate it. Just maybe one for Kyle, again, the volume is really, really strong, I don't mean to pick on the ASP, it's still good, 7% a year up over there. We're not quite to the $1,400, just in the second half, can you talk about some of the stuff that you expect to be improving, the payer mix, indication mix things like that, price actions, anything you can do to make us feel like that $1,400 is a de-risk number. Thank you again, and congrats, guys.

[Kyle Piskel, CFO at Adaptive Biotechnologies]

Yeah, appreciate the question, David. I think I'd start with, we had a couple of contracts that we renegotiated in prior years that have price increases that go into effect effectively in the second half of the year. We'll start with that. I think the second piece is as we continue to focus on expanding coverage in DLBCL, MCL, and getting some momentum from there and capturing some additional dollars from those coverage expansions, that will help lift it. Finally, we've got some initiatives going on with two large payers, which we've been working to recontract with, that we're focused on and executing in the second half of the year.

[Operator]

Our next question will be coming from the line of Subbu Nambi of Guggenheim. Your line is open.

[Subbu Nambi, Managing Director at Guggenheim]

Hey, guys. Thank you for taking my question. As blood becomes a bigger share of clonoSEQ volumes and drives more serial testing per patient that you spoke about, especially in surveillance settings with coverage gaps, should reported ASP still be the KPI we anchor on, or is per-patient economics the better lens? Any sense on how per-patient ASP is trending as the blood mix shifts? Even directionally, are you seeing lifetime value per patient expand, even if per-test ASP compresses?

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Yes. Hi, Subbu. I'll take that. First, I'll say that kind of ASP and per-patient economics are very intertwined or related. We have an active set of dialogue going on to close the coverage gaps, particularly, as you mentioned, in our largest indication of multiple myeloma. We are in a, I'll characterize it as a productive dialogue with Medicare, with the MolDX program, to expand the number of tests per episode. I think that's, in our opinion and our assessments, going to be the quickest way to get there, and again, those conversations are going well. Keep in mind also, though, that this only applies to the Medicare population, which is the high 30s% of our business. The commercial payer coverage doesn't have a limitation on the number of tests. It's just based on medical necessity.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

In addition to expanding the number of tests per episode, we also have our second indication for recurrence monitoring, which we're working on. As you recall, last year, we got MCL, and now we're working on CLL. We can go on an indication-by-indication basis. Long story short, we're going to close those coverage gaps. It is smart to point out that ASP, you have to deal with a little bit of a chicken or the egg problem in diagnostics, where you have to prove that the necessity of doing, I'll put in this case, more than four tests is warranted and that clinicians are on the path to do that. You're trying to do that before you cross over that four-test threshold.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

You can't get coverage until you really have the data to do that, we do feel now that we've got a sufficient amount of data that warrants an expansion of the number of tests beyond it. Our main strategy is to increase the number of tests per patient over the life cycle of a patient. That is ultimately what's going to drive the growth in the future, we absolutely have many different paths to make sure that we will get paid for that and it'll be captured in the revenue line.

[Subbu Nambi, Managing Director at Guggenheim]

Super helpful. Thank you for that, Chad. My second question is, any chance you could give us detail on what % of volume comes from the top group of ordering HCPs? How is that informing your strategy to go deeper versus broader to expand volumes? Thank you so much.

[Company Representative at Adaptive Biotechnologies]

Thanks for that question, Subbu. In Q2, over 5,100 HCPs ordered clonoSEQ for clinical purposes. If I look at the concentration of volumes in that quarter, our top 100 or so users make up around 10% of that volume. There is, as with many businesses, a concentration of those highest, deepest adopters. Takes about 2,000 providers to get to 80% of that volume, our use has become considerably more distributed over time, which I think is a reflection of our strategy to broaden use, particularly in the community setting, where fewer patients per provider are seen, but overall, many, more than half of the patients in the heme cancer community are treated. I think we still have a significant opportunity to go broader.

[Company Representative at Adaptive Biotechnologies]

We believe that approaching half of clinicians who treat heme patients in the U.S. are currently ordering clonoSEQ. We also have an opportunity to go much deeper, even on some of those top users. There are a growing number of clinical use cases that are supported by the evidence and the guidelines. We have increasingly the access to EMR-based tools that can help us further standardize testing and optimize frequency. We've seen success on all of those fronts. I think it demonstrates that we can continue to focus on both, that there is a high ceiling, both in terms of breadth and depth.

[Subbu Nambi, Managing Director at Guggenheim]

Perfect. Thank you so much, guys. Congratulations once again.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Thanks, Subbu.

[Operator]

Our next question is coming from the line of Mark Massaro of BTIG. Mark, your line's open.

[Mark Massaro, Managing Director, Senior Equity Research Analyst at BTIG]

Hey, guys. Thank you for taking the questions and congrats on a strong quarter. My first question is on commercial payer contracting. You've done a nice job of getting more commercial payers up to your newer, higher Medicare rate. I know your $1,400 ASP guide contemplated getting there this year, even without negotiating higher with two other commercial health plans. Pardon me if I missed it, where do you stand now with those large two health plans? Have you met with them? Any updates there would be helpful.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Yeah, we have a productive dialogue going on with both of those. I think it's just a matter of time, hopefully it'll be in the second half of this year. As you mentioned, it's not necessary. We've got many paths to get to the $1,400. At this point, I would just consider it maybe as upside, we're confident in the number.

[Mark Massaro, Managing Director, Senior Equity Research Analyst at BTIG]

Fantastic. My second one is pretty basic. Obviously, you guys are firing on all cylinders and volumes. With 43% growth, you raised the clonoSEQ volume guide to 38%-40%. This one is on competitive environment. It doesn't look like there's anything of concern relative to the Natera Foresight offering. Can you just give us a sense for what you're seeing in the market, and maybe just talk about your competitive positioning?

[Company Representative at Adaptive Biotechnologies]

Sure. Yeah. Thank you for that question, Mark. I think overall, we are certainly seeing the presence of competition out in the field, particularly in DLBCL. That said, when we look at the impact on our growth on our customer base, we haven't yet seen any attributable impact. We do believe that we have a winning position here. We have an unparalleled technology platform. It's purpose-built for hematology patients. We have a strong evidence base, substantial real-world experience based on our Headstart established reimbursements. Our customers tell us they love working with us, we've EMR integrated with increasing proportion of them. I think even with all of those, I would still highlight that the DLBCL market, where we're seeing most of the competition is a very early underdeveloped market. We really don't view it as us versus them to be able to succeed here.

[Company Representative at Adaptive Biotechnologies]

We benefit in the short term as awareness of MRD and the potential utility of MRD and DLBCL is increasing, and we can leverage all the modes I talked about effectively in the short term in the midst of that increased awareness. I also think we'll benefit in the longer term as we further demonstrate the clinical performance of the enhanced version of our ctDNA assay that we launched last year, and that's one of the big areas of focus for us later this year and going forward.

[Mark Massaro, Managing Director, Senior Equity Research Analyst at BTIG]

That's great. Thank you, guys.

[Operator]

As a reminder, to ask a question, please press star 11 on your touchtone telephone and wait for your name to be announced. Our next question will be coming from the line of Dan Brennan of TD Cowen. Your line is open.

[Dan Brennan, Senior Equity Research Analyst Managing Director at TD Cowen]

Great. Thank you. Thanks for the questions. Congrats on the quarter. Maybe just to start with the guide, the MRD guide. Can you just walk through a little bit the pacing in the back half of the year? The new volume guide, 38-40, does imply still a slowdown from the low 40s growth rate this year. Is that just conservatism or comps? Obviously, a great start to the year and still a great guide. Just wondering if there's some cushion baked in there, and then kind of implies, I think pharma steps down from Q2, any color just on MRD pharma, which was really strong in Q2 as well.

[Company Representative at Adaptive Biotechnologies]

Sure, of course. Thanks, Dan. I think we're really pleased with the growth we've delivered in the first half of this year, and we feel very comfortable with delivering on the growth that we've guided for the remainder of the year and for the full year, about 38%-40%. Keep in mind, the midpoint of that range is the same growth we delivered last year on a percentage basis, and this, of course, would be off a much bigger base. We think it's a prudent place to be for now, given there's still half of the year to go, but we do not have any specific expectations that we will see deceleration. In fact, quite the opposite. We are monitoring all the main growth drivers, which have trended strongly year-to-date, and I think they are very reasonably a source of further upside.

[Company Representative at Adaptive Biotechnologies]

We just want to remain focused in the second half of the year on all the strategic drivers that we believe can unlock that upside. In the clinical business, I remain quite confident in our ability to continue to deliver similar results. On the pharma side of the business, we've had really strong first half as well, and I think the thing to keep in mind with that business is it's lumpy, so it's dependent on the timing of trial enrollments and sample arrivals. We, again, will continue to be prudent in the way that we anticipate the future, but we have seen great trends coming out of that space, continued opportunity in multiple myeloma in particular, but also in leukemias to expand the degree to which we're doing interventional studies, regulated studies that deliver significantly higher economics.

[Company Representative at Adaptive Biotechnologies]

The use of MRD as an endpoint is stronger than ever in multiple myeloma. We have many reasons to be optimistic about that business as well.

[Dan Brennan, Senior Equity Research Analyst Managing Director at TD Cowen]

Terrific. Thanks. Thanks for all the color. Maybe just a second just on the separation. Obviously, you talked about it a little bit on this call. I'm just wondering maybe any updates, just what transpired since you announced it. You're obviously looking to separate the businesses you've discussed in the past, maybe the strategic value of the standalone MRD business, post a successful separation. Just looking for any other color, incremental information you could provide. Thank you.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

I mean, Dan, I think that's it, right? In the sense that, if you look at the goalposts of an outcome, I would say I'm going to put this in kind of funnier quotes, the worst outcome, in terms of that we have the MRD business is going to Free and clear and separated to be able to pursue its growth strategy. Like we've been talking about for the last couple of years is, IM is really a call option and I would like to point you to continue to think of it as such. We're looking for an outcome there. We're evaluating the different paths with our advisors at Morgan Stanley to see what the potential value maximizing path is for shareholders. We'll update you. That could take several different forms. We're looking at them and we'll provide further information at the appropriate time.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Thanks, Dan.

[Operator]

Our next question will be coming from the line of Casey Woodring of JPMorgan. Your line is open, Casey.

[Casey Woodring, VP Equity Research at JPMorgan]

Thanks for taking my questions and for taking me on the call today. I wanted to follow up on the serial testing piece you flagged during the prepared remarks. I think it's 75% of repeat orders have been fulfilled this quarter. That number last quarter, I think was 72. Just curious on if the updated volume guide assumes some sort of benefit from serial testing that wasn't in there before, or if you're still leaving that as upside to the year, maybe just how do we think about those numbers trending in the back half of the year?

[Company Representative at Adaptive Biotechnologies]

Sure. I think the short answer is that the guide doesn't necessarily contemplate specific increases in serial testing, although that is a key area of focus for us, both in the approach we've taken to driving blood-based testing adoption and also utilization of EMR tools to increase testing consistency. The Flatiron experience, I do feel really pleased with the results we've been able to accomplish. When we first measured serial testing back in Q4, the first full quarter we had to compare, we had 60% pull-through, and now as you've noted, we've increased it to 75%. I think we would like to be able to apply the lessons we've learned in that setting with OncoEMR customers to other settings like our Epic customers.

[Company Representative at Adaptive Biotechnologies]

In fact, in Q2, we did our first ever Epic integration with a custom serial testing interface built into that, and we've been really pleased with the early results and we'll have a lot more data on how that's going over the next two quarters or so. Our general approach is to continue to look for avenues to standardize the way that serial testing is delivered. We have a number of projects ongoing in that space, and it is a source of potential upside in the guide.

[Operator]

Again, to ask a question, please press star one one from your telephone and wait for your name to. Operator, are you still there? Thank you. As a reminder to ask a question, please press star one one again. One moment for our next question, please. Our next question will come from Kallum Titchmarsh from Morgan Stanley. Your line is open.

[Kallum Titchmarsh, VP, Equity Analyst at Morgan Stanley]

Hey, guys. Thanks for taking the question. Maybe following up on Dan's question on the separation, I guess folks are trying to work out what the next step looks like and how the MRD business could look on its own. There's obviously still good room to run in heme, do you think a heme-only MRD platform can be sufficient longer term, or would you perhaps look to bolster capabilities on the solid tumor side, too? I know there's been some debate there in the past, curious whether the separation changes that outlook.

[Operator]

Hi, speakers?

[Kallum Titchmarsh, VP, Equity Analyst at Morgan Stanley]

On your phone, Karina?

[Operator]

I-

[Operator]

We got to go on a phone.

[Operator]

Hi, speaker.

[Karina Calzadilla, Head of Investor Relations at Adaptive Biotechnologies]

Hello?

[Karina Calzadilla, Head of Investor Relations at Adaptive Biotechnologies]

Hi, this is.

[Karina Calzadilla, Head of Investor Relations at Adaptive Biotechnologies]

Hello, can you hear me?

[Operator]

Yes, we can hear you now. Thank you.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Oh my gosh, I apologize. I'm not sure why this is cutting out. I'll say I appreciate the question, and I think that two things, one, the separation, and two, we brought additional capital onto the balance sheet through the convertible debt offering that we did, allows us to look at how we can leverage the platform that we've built, both in terms of our capabilities, if you look at them in terms of generating the clinical evidence, our market access and the ability to get reimbursed, our revenue cycle management functions. We figure out really how to efficiently operate a lab with scalable gross margin opportunities. We look at if we can deploy those core competencies and capabilities that we've built to other opportunities, it's something that we are looking at. That means both potentially in solid tumors, but also in other disease areas as well.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

I do want to just mention that we have a very disciplined approach to not only capital allocation for organically, but for inorganic growth as well. We put a set of criteria and filters on to look at things that we want to play in areas that we can win, that have tests that have high gross margin opportunities, that really have high sensitivity and specificity, and areas that we think we can have a differentiated competitive advantage, and those are areas which we look to leverage the platform we've built to continue growing the business. I also want to mention, though, that I want to go back again to say there is a long growth ahead of us in the MRD heme business.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

We're going to make sure that if we do something, that it is a high growth profile and fits well into the platform.

[Kallum Titchmarsh, VP, Equity Analyst at Morgan Stanley]

Great. I'll just stick to one. Thanks.

[Operator]

Thank you. I am showing no further questions from our phone lines. I would now like to pass it back to management.

[Chad Robins, CEO and Co-founder at Adaptive Biotechnologies]

Thank you very much.

[Operator]

Thank you, and this does conclude the program. Thank you for your participation, and you may now disconnect.

Participants

Executives

• Karina Calzadilla, Head of Investor Relations
• Chad Robins, CEO and Co-founder
• Kyle Piskel, CFO
• Company Representative

Analysts

• David Westenberg, Senior Research Analyst at Piper Sandler
• Subbu Nambi, Managing Director at Guggenheim
• Mark Massaro, Managing Director, Senior Equity Research Analyst at BTIG
• Dan Brennan, Senior Equity Research Analyst Managing Director at TD Cowen
• Casey Woodring, VP Equity Research at JPMorgan
• Kallum Titchmarsh, VP, Equity Analyst at Morgan Stanley