Adaptive Biotechnologies Corporation (ADPT) Q4 2025 Earnings Call Transcript
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Overview
The company reported strong financial performance with significant revenue growth, improved margins, and a substantial reduction in cash burn. Raised revenue guidance and a positive EBITDA outlook further bolster confidence. Despite some conservative growth assumptions and lack of specific contract details, the overall sentiment is positive, supported by strong MRD performance and strategic partnerships like Pfizer.
Key Financial Performance
Full-year revenue growth 46% year-over-year growth in the MRD business, attributed to strong execution, accelerated EMR integrations, and Medicare coverage for recurrence monitoring in MCL.
Total company revenue growth 55% year-over-year growth, driven by strong MRD execution, progress in Immune Medicine, and disciplined spending.
ClonoSEQ clinical testing revenue 64% growth for the full year 2025 and 59% in the fourth quarter compared to the prior year, driven by increased test volumes and broader adoption.
ClonoSEQ test volumes 30,038 tests in Q4, up 43% year-over-year and 11% sequentially, driven by blood-based testing, community presence, and EMR integrations.
Average selling price (ASP) for ClonoSEQ tests $1,307 per test for the year, up 17% year-over-year, with Q4 exiting at $1,350 per test. Growth driven by renegotiated payer contracts and operational enhancements.
MRD pharma business revenue 20% year-over-year growth, including $19.5 million in regulatory milestone revenue. Excluding milestones, pharma grew 11%.
Immune Medicine revenue $9.8 million in Q4, up from $3.8 million a year ago, driven by data licensing agreements with Pfizer.
Sequencing gross margin 71% in Q4, up 12 points year-over-year and 5 points sequentially, driven by production efficiencies and transition to NovaSeq X Plus.
Total company adjusted EBITDA $4.1 million in Q4 compared to a loss of $16.4 million a year ago. Full-year adjusted EBITDA was $12.2 million compared to a loss of $80.4 million in 2024.
Cash balance $227 million at year-end, reflecting a 68% reduction in cash burn year-over-year.
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Operating Highlights
clonoSEQ test: Volume increased 43% year-over-year to 30,038 tests in Q4 2025. Blood-based testing accounted for 47% of tests, up from 41% a year ago. Average selling price (ASP) increased to $1,307 per test, up 17% year-over-year.
NovaSeq X Plus: Launched to scale operations and improve margins.
Medicare coverage: First Medicare coverage for recurrence monitoring in MCL, expanding the lifetime value of each MCL Medicare patient.
Commercial payer contracts: Renegotiated 8 major payer contracts and signed new agreements with Anthem, Centene, Florida, and LA Care.
Revenue growth: Total company revenue grew 55% year-over-year in 2025. MRD revenue grew 46%, and Immune Medicine revenue increased 17%.
Cash burn reduction: Cash burn reduced by 68%, ending with a cash balance of $227 million.
Immune Medicine partnerships: Two licensing deals with Pfizer for data and target discovery in rheumatoid arthritis.
Shift in investment: Stopped investment in ankylosing spondylitis program to prioritize data generation and AI modeling.
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Risk or Challenges
Regulatory and Clinical Endorsement Challenges: The company faces challenges in securing broader regulatory and clinical endorsement for MRD as a primary endpoint in trials, which is critical for driving pharma revenue growth.
Supply Chain and Operational Risks: The transition to NovaSeq X Plus and scaling operations to meet increased demand may pose risks related to production efficiencies and cost management.
Market Penetration and Adoption: Expanding community testing and increasing physician adoption require significant investment in sales and marketing, which may not yield proportional returns.
Revenue Dependency on Specific Areas: A significant portion of MRD pharma revenue is dependent on multi myeloma, which accounts for 70% of sequencing revenue and 60% of backlog, posing a concentration risk.
Financial Sustainability: Despite achieving profitability in MRD, the company still faces challenges in maintaining positive adjusted EBITDA and free cash flow for the entire company by the end of 2026.
Immune Medicine Business Risks: The decision to stop further investment in the ankylosing spondylitis program and focus on data generation and AI modeling may limit diversification and expose the company to risks if these areas do not yield expected returns.
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Guidance & Outlook
MRD Business Revenue Growth: Expected to grow by more than 30% year-over-year in 2026, supported by increased blood-based testing, deeper penetration in the community setting, further scaling of EMR integration, and continued data generation.
Average Selling Price (ASP): Targeted to increase to approximately $1,400 per test in 2026, driven by payer contract renegotiations and operational enhancements.
Pharma Business Growth: Plans to increase the number of registrational and primary endpoint studies across multiple indications, leveraging regulatory and clinical endorsement of MRD.
Margin Expansion: Expected continued margin expansion driven by higher volumes, NovaSeq X Plus efficiencies, and operating leverage.
Immune Medicine Business: Focus on advancing TCR-antigen data sets and AI/ML modeling work, with a lower target net cash burn of $15 million to $20 million in 2026. Plans to secure additional data partnerships.
Company-Wide Profitability: Targeting positive adjusted EBITDA and positive free cash flow for the whole company by the end of 2026.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you discuss the sequential step-up in clonoSEQ volume in Q4 and any seasonality or weather-related issues in Q1?
A:Management was pleased with Q4 results, which they see as a testament to long-term growth potential. They acknowledged seasonality, with Q1 typically being lighter due to holidays and weather. Recent weather-related impacts affected sample arrival timing and volume, but samples are now flowing back in large volumes, and they remain confident in their Q1 and annual forecasts.
Q:How should we think about penetration rates in DLBCL and leveraging the lead in multiple myeloma?
A:Management noted that 45% of their business comes from multiple myeloma, where they have a strong position. In DLBCL, they are focusing on convincing stakeholders of MRD's value. Q4 saw 14% sequential growth in DLBCL and 115% growth year-over-year, but penetration is only at 3%. They aim to expand the market through data generation, guideline advancement, payer coverage, and pharma partnerships.
Q:What are your thoughts on a competitor's flow cytometry assay for myeloma, particularly regarding sensitivity and pricing?
A:Management stated that flow-based methods are inherently less sensitive than clonoSEQ. The competitor's assay claims sensitivity of 1 in 200,000 with 10 mL of blood, while clonoSEQ achieves 1 in 1 million with 2 mL of blood. They emphasized that sensitivity is crucial, especially for blood-based testing in myeloma, and noted that clonoSEQ is broadly reimbursed and integrated into EMR systems.
Q:How should we think about ASP pacing this year given private payer negotiations?
A:Management suggested thinking of ASP growth as linear, with some timing variability due to key payer contract negotiations. They are focused on converting key contracts and believe linear growth is a prudent assumption.
Q:Can you clarify the EBITDA guidance for 2026 and any changes to the sales force?
A:Management expects to exit Q4 2026 with positive EBITDA for the entire company. MRD is already EBITDA positive. They currently have 65 sales reps and do not anticipate significant expansion this year, though they may add territories opportunistically.
Q:Why are you being conservative with blood-based testing and community penetration growth assumptions for 2026?
A:Management believes there is no cap on growth but is being prudent based on historical progress. They aim to grow blood-based testing above 50% and community contributions above 35% by 2026. They are focusing on guideline updates, data sets, and EMR integrations to drive growth.
Q:What is the long-term gross margin outlook, and how does it relate to ASP growth?
A:Management raised their gross margin target to 75%, driven by the transition to NovaSeq X Plus and ASP growth. They expect further margin improvements as they layer more samples on sequencing runs and renegotiate payer contracts.
Q:Why is the ASP growth rate for 2026 lower than in 2025?
A:In 2025, ASP growth was driven by a Medicare fee-for-service rate increase. For 2026, growth is expected to be 7%, with key payer contract renegotiations being a major factor. Management is being prudent and expects more growth in the second half of the year.
Q:Where do you see upside to the clonoSEQ volume guide for the year?
A:Management sees potential upside in serial testing pull-through, optimizing EMR-integrated sites, and growth in blood-based testing and community contributions. They are confident in their guide and believe they can meet or exceed goals through these drivers.
Q:What is the strategy for monetizing the immune medicine (IM) business and its data?
A:Management highlighted two Pfizer data licensing deals as examples of monetizing their data. They are focusing on licensing data for AI modeling and using their capabilities for target discovery. Investments in the IM business are captured within a $15-20 million net burn for the year.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the timing and outcomes of key payer contract negotiations, as well as the exact timing of when the immune medicine business could inflect or scale significantly.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
Adaptive result
Biotechnologies Full
CLL DLBCL
Chad
Full Conference
Genentech collaboration
MRD sale
NCCN guideline
NovaSeq Plus
RA
TCR antigen
access
achievement
adoption testing
agreement Pfizer
blood testing
capability
cell receptor
community setting
discovery
driver
generation
licensing agreement
licensing deal
margin expansion
modeling
multi myeloma
need sensitivity
parallel
partnership
platform
program spondylitis
receptor antigen
scale
sensitivity MRD
shift
spending
ADPT Transcript
Adaptive Biotechnologies Corporation (ADPT) Q4 2025 Earnings Call Transcript
Positive2-6
The company reported strong financial performance with significant revenue growth, improved margins, and a substantial reduction in cash burn. Raised revenue guidance and a positive EBITDA outlook further bolster confidence. Despite some conservative growth assumptions and lack of specific contract details, the overall sentiment is positive, supported by strong MRD performance and strategic partnerships like Pfizer.
Adaptive Biotechnologies Corporation (ADPT) Presents at 44th Annual J.P. Morgan Healthcare Conference Transcript
Neutral1-12
Adaptive Biotechnologies Corporation (ADPT) Q3 2025 Earnings Call Transcript
Positive11-6
The earnings call summary and Q&A section reveal several positive aspects: raised revenue guidance, improved margins, and strong growth in MRD volumes. The company's strategic partnerships and regulatory advancements, along with a clear path to profitability, are positive indicators. Despite some vague management responses, the overall sentiment is optimistic. The stock is likely to see a positive movement, with increased MRD revenue and improved cash burn guidance contributing to investor confidence.
Adaptive Biotechnologies Corporation (ADPT) Presents At Morgan Stanley 23rd Annual Global Healthcare Conference Transcript
Neutral9-10
ADPT Slides
ADPT Report
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