Ladies and gentlemen, thank you for standing by. And welcome to Adaptive Biotechnologies Fourth Quarter Financial Results Conference Call. [Operator Instructions] I would now like to turn the call over to your speaker today, Ms. Karina Calzadilla. Thank you, please go ahead..

Thank you, Jeff. And good afternoon, everyone. I would like to welcome you to Adaptive Biotechnologies’ fourth quarter and full year 2020 earnings conference call. Earlier today, we issued a press release reporting Adaptive's financial results for the fourth quarter and full year 2020. The press release at adaptivebiotech.com.

We are conducting a live webcast of this call, and will be referencing to a slide presentation that has been posted to the Investor 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 issued earlier. Joining the call today are Chad Robins, our CEO and Co-Founder; Julie Rubinstein, our President; and Chad Cohen, our Chief Financial Officer. In addition, Harlan Robins, Adaptive's Chief Scientific Officer and Co-Founder will be available for Q&A.

With that, I will turn the call over to Chad Robins.

Chad?.

Thanks, Karina. Good afternoon, everybody. And thank you for joining us on our fourth quarter and full year 2020 earnings call. What a year, once again, I want to thank all our Adaptive employees for their unwavering dedication, flexibility and execution in a very challenging 2020. Yesterday, marked a pivotal moment for diagnostic testing.

Adaptive launched T-Detect COVID, proving that it is possible to read how T cells detect disease in the blood. This test is now validated for COVID, but it's just the beginning. T cells see all diseases in the exact same way.

And T-Detect will translate this natural capability of T cells into a broadly applicable test that will change the diagnostic paradigm. We recognize it may take time for T-Detect to become mainstream, but the stage is set. The FDA has reviewed and provided encouraging feedback on our EUA submission.

FDA is working through how we can implement a new T cell testing category. FDA clearance under the EUA pathway when received will be the next milestone for T-Detect and one of many to come as we realize its value over time.

In addition to the launch of T-Detect COVID all the efforts we've put in place to combat the pandemic are being leveraged to accelerate a variety of development and commercial initiatives that will drive the future execution of our platform to power the age of immune medicine.

Let me walk you through the significant progress we made throughout the year. As shown on Slide 3, despite the impact from COVID-19, we grew our business and ended the year with over $98 million in revenue up 16% versus 2019. And revenue in the fourth quarter also grew 25% versus prior year to $30.2 million.

As you can see, the amount of progress was significant and demonstrates our ability to execute across our business areas, which are all driven by the same platform Starting with clinical diagnostics, in addition to the launch of T-Detect COVID, we also advanced T-Detect for other future indications.

The ImmuneSENSE study for T-Detect Lyme was launched and is expected to be completed in 2021. We identified another signal in Crohn's disease, which may represent a significant opportunity to reduce the expensive and time-consuming diagnostic odyssey that Crohn's patients currently undergo.

We are also advancing at an increasingly rapid pace in many other disease states. clonoSEQ also achieved important milestones during the year. We obtained our first label expansion with the FDA for CLL in both blood and in bone marrow. And I'm pleased to announce that we recently filed with the FDA for the second label expansion of ALL into the blood.

We are hopeful that more patients will be able to know their MRD status from a simple blood draw, as data continues to support this approach In our life science research business, although the most impacted by COVID, we developed in three important ways.

First, as a result of findings from the immune CODE database, we launched immunoSEQ T-MAP COVID to elucidate the T cell response to vaccines in development for COVID-19.

Second, we further extended immunoSEQ T-MAP to cancer with a recent partnership with Astra Zeneca to map T cell receptors to cancer antigens, and AstraZeneca portfolio of cancer medicines. And third, we entered into several contracts to expand distribution of our research use only kit with partners including prominent CROs and core labs.

In fact, yesterday, we announced an expanded partnership with Labcorp to enable broader access to our growing portfolio of immune-driven clinical diagnostic and research products. In drug discovery, we made significant progress on the with Genentech, with both the shared and private products.

The path is set for important milestones in 2021, including IND filing by Genentech of the first shared product, generation of a data package by Adaptive for a possible second shared product, and proof-of-concept on the private product.

In addition, we leveraged our new medicine platform to build world-class antibody discovery capabilities that can benefit society for years to come. Our powerful technology allows us to search deeper and find more potent neutralizing antibodies against a wider variation of targets at very low concentrations.

We have already found potent neutralizing antibodies against parts of the SARS-CoV-2 virus that could potentially treat patients impacted by a wide variety of variants. We are in advanced discussions with several potential partners.

As you can see, 2020 was a busy year for Adaptive and laid a strong foundation for our 2021 plan, which we will discuss in detail throughout the call.

But before I pass it on to Julie to provide details of our inline products at our pipeline, I want to take a minute on Slide 4, to reorient to the fact that everything we do at Adaptive derived from using the genetics of the Adaptive immune system as the source code of our platform.

Our platform then transforms this code into data to enable the development of diagnostics and therapeutics for almost any disease. The massive and growing amount of immune receptor data that we generate with over 58 billion immune receptors, it's really at the epicenter of all of our business areas.

And the scalability of our platform and our data enables us to become a clinical product development engine. I am more confident than ever in our open-ended growth story as we have made substantial progress and had development activity underway at various stages in life science research, clinical diagnostics, and in drug discovery.

And with that, I'll hand it over to Julie.

Julie?.

first, we are opening a European business entity to support international expansion. We believe there is a lot of interest in immunosequencing at Core Lab's outside of the United States, and we want to improve our ability to capture that business.

Secondly, we are expanding our organization to include an inside sales team and more marketing colleagues to grow our Kit business and data monetization opportunities. Moving on to drug discovery on Slide 9. Progress continues full speed ahead in both shared and private T cell mediated products with Genentech.

For the first shared product, we had anticipated the IND submission by Genentech in the first quarter of this year. Based on productive interactions with the FDA, Genentech decided to file in the second quarter to include additional information requested by the FDA that was initially planned for post filing.

For the second shared product, we have characterized several promising CCRs currently being considered by Genentech for the development of its second shared product. We expect to complete a second TCR data package this year.

And if this TCR candidate is selected by Genentech, this could result in the potential development of our second shared product using our TruTCR approach. In addition, we continue to build our pipeline of TruTCR candidates against additional targets that we've prioritized with Genentech.

For the private product, we have started screening and identifying patient specific TCRs against specific tumor mutations using blood from each cancer patient. We are on track to deliver a proof-of-concept from an initial 15 cancer patients to Genentech by Q1 2021.

These data and results from additional cancer patient samples will be used to establish a prototype during the second half of this year. To scale our private product development, we are building a dedicated lab that will be opened by the end of this quarter. This additional space will accommodate our end-to-end personalized product workflow.

Importantly, this space has the capacity to accommodate early phase clinical studies. We are also in the process of growing our product and process development teams and hiring dedicated FTEs for this purpose. As you can see, lots of progress and exciting milestones ahead in our partnership with Genentech.

Switching now to our neutralizing antibodies on Slide 10. Using our TruAB antibody discovery approach, we identified several lead antibody candidates that strongly bind to different parts of the virus. Our growing portfolio of novel antibodies include candidates that not only bind to the RBD region, but also bind to S1, Trimer, and S2.

This could have important advantages in the pactual strategy that targets different mechanisms of action to inhibit the virus and potentially virus varin. We are advancing discussions with potential partners who similarly believe that our antibody candidates may provide a differentiated solution in the wake of these variants.

Building on our success in identifying differentiated antibodies to SARS-CoV-2 as our first clinically relevant target, we are exploring additional future applications of our TruAB discovery approach.

As part of our drug discovery growth strategy, we aim to identify additional naturally occurring, fully human antibodies against several targets in infectious diseases and autoimmune disorders, particularly where we can fill a strong unmet need. I'll now pass it over to Chad C, who will provide you with a financial update..

Thanks, Julie. I'll first review our fourth quarter financial results, briefly describe our full year financial performance, and then we'll provide an outlook on 2021. Turning to Slide 11. Total revenue in the fourth quarter was $30.2 million, representing a 25% increase from $24.2 million in the same period last year.

Our revenue mix for the fourth quarter consisted of 42% of our revenues coming from our sequencing category and 58% coming from our development category. Sequencing revenue in the fourth quarter was $12.7 million and decreased 8% from the same period in 2019.

This decrease was primarily driven by our research business and partially offset by growth in our clinical business. Research sequencing volume decreased by 46% to 5,907 sequences from 10,898 sequences in the fourth quarter 2019.

Trial enrollment delays and project deferrals resulting from the COVID-19 pandemic were both contributing factors to the decrease on a year-over-year basis. However, we did see growth in our pharma business related to MRD registrational studies.

On a sequential basis from the third quarter, we did see modest growth in our pharma business in respect to volumes, but our academic business continue to feel macro pressure from the current environment.

With respect to our clinical diagnostic products, clinical sequencing volume, which now includes our T-Detect COVID volume, increased 41% in the fourth-quarter 2020 to 4,539 clinical tests from 3,218 clinical tests from the fourth quarter 2019.

We have seen a recovery of our clinical sequencing volumes with our fourth quarter 2020 volumes, up 13% from the previous quarter. Development revenue grew to $17.5 million in the fourth quarter, up 69% from the same period last year.

The increase was largely due to growth in revenue generated from our Genentech collaboration based on ongoing aggressive investments into our drug discovery efforts. Shifting now from our revenue to our operating costs.

Total operating expenses for the fourth quarter 2020 was $74.4 million, representing a 54% increase from $48.4 million in the same quarter last year. Continuing to work down our operating expenses, cost of revenue was $6.2 million during the fourth quarter 2020 compared to $6 million for the fourth quarter last year, representing a 3% increase.

Though the increase was relatively flat, there were some material puts and takes year-over-year. We invested in additional lab personnel, lab management and CapEx to ensure that we came into 2021 with the appropriate capacity to operationalize our growth projections.

This increase in overhead drove up our overall costs of running our production lab but was offset by a lower mix of revenue sample volume. Research and development expenses for the fourth quarter of 2020 were $35.8 million compared to $21.2 million in the fourth quarter of 2019, representing a 69% increase.

The increase was to support our drug discovery activities relating to our Genentech collaboration and antibody discovery for COVID, as well as validation efforts for T-Detect COVID and T-Detect pipeline development, along with investments tied to expanding our clonoSEQ indications.

Sales and marketing expenses for the fourth quarter of 2020 were $18.5 million compared to $12.6 million in the fourth quarter of 2019, representing an increase of 47%. The two primary drivers of the increase were personnel and marketing costs.

Year-over-year, we continued our hiring process to support the clonoSEQ brand and also made our first fully dedicated team hires to support our T-Detect COVID launch. We also undertook a large corporate rebranding effort and continue to deploy marketing investments to soft launch our T-Detect COVID product and to support our clonoSEQ brand.

Overall, these increases were partially offset by savings in travel and customer event related expenses. General and administrative expenses for the fourth quarter of 2020 were $13.4 million compared to $8.2 million in the fourth quarter 2019, representing an increase of 63%.

The increase was primarily driven by growth in finance, legal, and HR headcount, and personnel costs. Net loss for the fourth quarter 2020 was $44.6 million compared to fourth quarter 2019 net loss of $20.6 million.

Adjusted EBITDA for the fourth quarter of 2020 was a loss of $34.6 million compared to a loss of $18.7 million in the same period of the prior year. Quickly turning now to our annual financial results for 2020. Total revenue was $98.4 million, representing a 16% increase from $85.1 million in 2019.

Our revenue mix for the current year consisted of 42% of our revenues coming from our sequencing category and 58% coming from our development category. Sequencing revenue in 2020 was $41.4 million and decreased 5% from 2019. Research sequencing volumes decreased by 36% to 22,663 sequences from 35,491 sequences in 2019.

As previously discussed, trial enrollment delays and project deferrals resulting from the COVID-19 pandemic have been contributing factors to this decrease. Clinical sequencing volume, however, increased 50% in the current year to 15,216 clinical tests from 10,168 clinical tests in 2019.

Development revenue grew to $56.9 million in 2020 and up 37% from last year. The increase was largely due to growth in revenue generated from our Genentech collaboration. Operating expenses for the year totaled $251.2 million, representing a 54% increase from $163.5 million in 2019.

The largest driver of OpEx growth on a dollar's basis was research and development, which grew $45.4 million, up 64% from prior year, followed by sales and marketing, which grew $22.9 million and up 60% from prior year. Earlier, Chad and Julie articulated the business rationale and opportunities available to Adaptive, which drove these investments.

Full year 2020 net loss was $146.2 million compared to $68.6 million in the prior year. And adjusted EBITDA for 2020 was a loss of $119.6 million compared to a loss of $57.5 million in 2019. We ended the year with approximately $807 million in cash, cash equivalents, and marketable securities. We had no debt.

With respect to our outlook for 2021, in light of an ongoing COVID recovery, we are planning an initial revenue range of $145 million to $155 million. This outlook represents 52% growth at the midpoint of the range and a strong reacceleration of revenues from prior year.

We are contemplating our sequencing revenues to represent between 50% to 55% of our total revenues for the year, which includes our expectations for effectively doubling our clonoSEQ volumes.

In our development revenues category, we currently contemplate increasing revenue from the amortization from the $300 million upfront from Genentech based on increasing investments into the partnership. Additionally, we anticipate a $10 million Genentech IND acceptance milestone payment in the second half of the year.

But it should be noted that this outlook reflects only a partial recognition of the payment in 2021 of between $4 million to $5 million based on a proportional method of revenue recognition from our accounting literature.

In addition, we are also contemplating mid-single-digit millions in potential MRD regulatory milestones in the back half of the year. With respect to some of the trends for the year, we anticipate our research business to be back-half weighted, and we expect Q1 2021 to be our lowest watermark for the year.

This is due to normal seasonality, along with the overhang of the fourth quarter COVID impact. We anticipate that a strong backlog of signed pharma contracts coming into 2021, coupled with ongoing execution of new pharma bookings will contribute significantly to the growth so long as we continue to get access to samples.

Regarding our operating expenses and capital investments, we expect closer to $8 million to $12 million in sequential OpEx growth quarter-over-quarter, resulting in a slight reacceleration of OpEx growth as a percentage of revenue versus the prior year.

These expenses will primarily support commercialization activities and investments in our immuno medicine platform.

In addition, we are deploying more capital off our balance sheet to support large scaling projects, which includes the opening of our new office and molecular lab facility in Seattle, as well as the opening of our personalized cell therapy prototype facility to support our Genentech partnership.

We are excited for the next phase of growth at Adaptive. And with that, I'd like to turn the call back to Chad for his closing remarks..

Thanks, Chad C. As you heard during the call, we have many exciting upcoming milestones in 2021 on the commercial and development fronts across all business areas, which are listed on Slide 12. We're more confident than ever in our value proposition as we continue to deliver on our promises and demonstrate the capabilities of our platform.

With that, I'd like to turn it back over to the operator and open it up for questions..

[Operator Instructions] Your first question comes from the line of Doug Schenkel from Cowen. Your line is open..

Hey. Good afternoon. And thanks for the call and for taking my questions. Thanks for all the detail today. There was a lot there, and it was really helpful. Just starting with guidance. I'm sure it's not lost on you that your guidance for the year is a bit below where most recent consensus was. It's not far off, but it's a little bit lower.

I would imagine your skewing guidance to the lower end of the error bars, given the environment, keeping in mind that we're still just coming out of the pandemic, we hope, and that it is early in the year.

If you were to come in above the range, what do you think the top three things are that are likely as you sit here to drive – ultimately be the key drivers to upside relative to where you're setting expectations for the year?.

Sure. Doug, I'll take that. I think there's opportunities in immunoSEQ T-MAP on some of the kind of additional data deals as we expand there. In terms of our kind of Life Science Research business, I think there's also potentially upside in our kit sales. And there may be potential to hit some additional milestones on the development side.

So there's potential across the business, for upside potential in kind of all the potential business segments. Obviously, we've got kind of high hopes for the clonoSEQ business as well. So there's certainly opportunities there. But as you said, it's – you're coming out of the pandemic.

We want to make sure that we're guiding the street and are being cautious..

Okay. Super helpful. And then just a few other things, just to follow-up on – based on the presentation. It does seem like the timelines changed on a couple of things. First, I believe the timing of the Genentech IND moved from Q1 to Q2.

In the grand scheme of things, if I have that right, it's clearly not a big deal, but I just want to see if there's anything to detail further in terms of maybe something that Genentech is further evaluating prior to the submission? And then the second thing is on the launch of the CLIA based Lyme LDT, which I think also slipped.

Again, I may have those wrong. But if I have them right, I'd love you to talk a little bit about what I just asked about on Genentech and then for Lyme. I just want to see how concerned we should be about timing given just how North American tick season tends to fall..

Yes. I'll let Harlan answer the Genentech question. Just as far as Lyme, we've been talking about a 2021 CLIA launch. So I'm not – I don't think the timeline has slipped there. It looks like we're on track to be able to launch during this year in a CLIA environment.

Harlan, do you want to cover Genentech?.

Sure. So thanks, Doug. So basically the – through informal interaction with the FDA and the set of consultants, Genentech decided to upfront let's say, a set of studies and provide more information that they thought they were going to do between IND filing and first-in-humans. So this – the timeline for first-in-humans didn't change at all.

So it's just a matter of where the IND filing is going to go relative to some of the other things that needed to be done. So I think we're – it was a – and it's Genentech's call anyways, but I don't believe that we think there's a material change in sort of longer term view of this product. Hopefully, that's sufficient..

Okay. Yes, that's helpful. And one sorry, Chad..

Doug, I just wanted to make one more comment on guidance. I think your models had the $10 million kind of revenue recognition from the IND acceptance on the Genentech deal. It is Street had it in the model. And we're – just from a rev rec issue, our – and accounting principles are recognizing four to five.

So that's going to probably $5 million to $6 million of it right there as well. Just to clarify..

Yes. That's a super helpful bridge going back to that. And then last one, kind of as a follow up for, I think, Harlan, and then I'll get back in the queue.

What are the next steps after successful data is generated for the personalized T therapy? I guess I'm just trying to see if you've learned anything in terms of how ultimately, the regulatory process is going to unfold here after that data is generated?.

Yes. So in some ways, we're learning as we go. We've been – both Genentech and Adaptive have as many sets of consultants as well as internal capabilities to assess regulatory, and we're interacting with the FDA.

So we're – it has – since it is new, it hasn't been completely worked out yet, but – I'm not sure I can answer that as directly as I would like yet, but we'll get back to you when we get more resolution on the details.

But so far, the FDA certainly seems there – I think they're excited about the possibility as are we, but we have to see if – what the exact requirements are going to be. And we're trying to dot every I and cross every T..

Okay. Thank you very much..

Your next question comes from the line of Brian Weinstein from William Blair. Your line is open..

Hey, guys. Thanks for taking the questions. Good afternoon. On T-Detect COVID, obviously, a great milestone here for the company to launch a T cell-based diagnostic. Can you talk – just you talked enthusiastically at the beginning about it.

Can you just talk more about the importance of this? And what it sells – what it says about T cell diagnostics as a class of products going forward? And really how it can be impactful across various conditions? You've outlined several of those in the past.

But I'm just curious about kind of what this milestone signals you think to you guys, the broader community? And also curious about thoughts FDA has had about reviewing the T cell-based product?.

Sure. Thanks, Brian.

Harlan, do you want to try framing this and putting it into context?.

Sure. Thanks, Brian. So basically, every major diagnostic company in the world has put out a serology test for COVID. And yesterday, we launched a test using a completely different technology that answers some overlapping questions. And as part of our data, we've done head-to-head comparisons.

And our test performs as well or better than almost any of the serology tests. And even beyond that, we're kind of getting better every week at both detecting COVID as well as many other diseases in the pipeline. We've learned a lot from COVID to apply there, too.

So – and I don't yet even know what the limit of how good we can be in terms of sensitivity and specificity and how broad this can be in terms of how many diseases we can eventually include in the single test.

But it already stands up to the premier tests for viruses in terms of serology from the best companies in the world for – in the space of COVID. And to be honest, that was the thing we really learned. I didn't know – I knew we could detect COVID.

I didn't know that we'd be able to do it with the sensitivity and specificity that really could compare to the kind of best-in-class, and already. And so that was what was kind of – if I think about it, so it's a good – so if I think of a good analogy, so I would think of Tesla from – when they released the Roadster a decade ago.

So there they released a product that probably wasn't designed to be a big commercial product, but they show that an electric car could outperform a Ferrari. And if we would really been – if I have been paying attention, if everybody else had really been paying attention.

I think we would have realized that it was, at that point, it was sort of fait accompli that we would all end up with electric cars.

Because just it was a totally different way of propelling the automobile [ph] and even with one engineering team by itself was able to kind of blow away what everybody else in the world was able to do over – with many, many years or decades of engineering.

So that's kind of – we're kind of sitting on this precipice, and I'm pretty excited about it, as you can probably tell..

That's great. Sorry. Go ahead..

Did you also asked about the FDA?.

Yes.

I just talked about how FDA is thinking about reviewing a T cell-based product here, if you have anything specific that they've kind of commented to you about?.

Yes. So we've been in – we're in the interactive review stage, and so far, everything is going quite well. We're – the FDA has been super supportive and also quite reasonable.

So there's some – because it's totally new, there's some extra steps that we hadn't even thought of, like, for example, they don't even – that there's no space on the FDA website for a test like us. So they have to literally create a new space on their website in order to put us on there.

So there's some extra like minor time delays here and there, but in terms of our interaction and the data that we provided them and their feedback on it and the studies we've done, we feel very good about it, and they've been great partners on us to date..

Great. Thanks. And then if I could sneak two more and just on T-Detect, in general. First, I heard you talked about in Lyme. I mean, is there anything on the oncology-based diagnostics that you guys are coming up with? I think ovarian was originally the one you were targeting first.

And then Chad C, can you just talk about if there's T-Detect COVID and T-MAP COVID in the guidance? And if so, are you willing to quantify that? Thanks..

So we are working in a couple of different areas of cancer.

I do think that that's going to be a longer time horizon than – I think, we have a group of autoimmune diseases and other group of infectious diseases that are all moving faster, mostly because the space of antigens is so broad in cancer, that it's sort of a bigger, harder problem, but we are advancing.

And our partnership with AstraZeneca is going to accelerate that as well. And I think we might have some other partners that can help us in that regard in the future. So we're bullish about it, but it's going to take some time on the cancer side..

Brian, on your questions on T detect and [indiscernible] COVID. So we do have some small studies that are contemplated with respect to T-MAP COVID sort of in the guide. So to the extent that there are larger studies available to us throughout the year, I think as Chad Robins would probably represent upside to our outlook.

And then yes, T-Detect is in our guide as well, it represents, I think, a very sort of low percentage, we're looking to see what the trajectory is from our full launch just the other day before we perhaps think about where that might go from an upside perspective. But right now it's sort of close low single digits for the year..

Thank you..

Your next question comes from line of Salveen Richter from Goldman Sachs. Your line is open..

Great. Good afternoon and thank you for taking our question. This is Elizabeth [ph] on for Salveen. I guess big picture with regards to the drug discovery vertical and then more so for other oncology efforts, in general. I guess, could you speak to Adaptive strategy for partnering assets here versus keeping programs in-house? And then a second question.

So in 2021, I guess, could you walk us through the exact data that's going to be disclosed from the private products and shared product candidates? I think if I heard this correctly, there's TOT data coming from 15 cancer patients for the private products early in 2021. And we're just trying to get a sense of what that could look like? Thank you..

Sure. I'll start with the first question, and then I'll pass it off to Harlan for the second question. With respect to our partnering strategy versus how much we're going to take in-house, I look at it this way is that, to start with in terms of both our human capital resources expertise, right now, we're learning from kind of the best.

We had the opportunity to partner with kind of multiple companies. We chose Genentech and Cell Therapy and really have an opportunity to kind of learn as we go. And over time, we will look to kind of potentially kind of move up the value chain and vertically integrate as we learn more.

But for right now, we're in the stage where we think our expertise at kind of using immune receptors and finding them as targeting molecules for therapeutic uses are – as our place in the ecosystem right now, but we – that could change over time.

And we could make investments over time to expand that capabilities as we learn more and get that expertise. And then as far as kind of what data is going to be presented or available over the year with respect to kind of the shared and private product, I'll pass it on to Harlan to disclose if we can, what's going to be available..

Yes. So since this is a partnership with Genentech, in most cases, they'll have the final say over what gets released and how it gets released. I presume that in terms of the private product, the actual data itself, there'll probably be little released publicly.

This is sort of internal as of now and that we're going to forge ahead as fast as possible toward getting this filed with the FDA and getting in the clinic. And then on the shared products, also, I think as we file our IND, I think, the first shared product, what the target is, will become known as part of that.

And then for the next one, I think, we'll let – we'll definitely inform you when we trigger that next product, but the actual target itself will be known upon filing on, I'm sure. So probably not as forthcoming in this case. And it's because it's not really under our control..

Got it. Thank you so much..

Your next question comes from the line of Tejas Savant from Morgan Stanley. Your line is open..

Thanks for the time this evening. One quick one, Chad, for you on the LabCorp agreement.

Just what additional steps does LabCorp need to take here before performing key detect on site? Or is it essentially ready to go? And then how quickly do you expect the collaboration to result in accelerated growth for clonoSEQ and immunoSEQ? And at a very high level, at least, can you walk us through how the economics would work versus the direct sales for you?.

Sure. Actually, I'm going to have Julie answer the question on LabCorp..

Sure. Hi Tejas, thanks so much. So the LabCorp agreement is actually, as you noted, a combination of a variety of agreements that we've signed with them. One is the extension of a blood collection for T-Detect. The other is the RUO kit. The second site lab, as you mentioned, and then clonoSEQ.

So for the on-site next steps, we are in the process right now of operationalizing that. There's a little bit of work that we need to do to make that happen, but the teams are already working together to identify those next steps, and it should be ready in a couple of months, I would say.

And in terms of the growth timeline and the economics, specifically for the clonoSEQ agreement, that is really a marketing program, whereby we cannot, for compliance reasons share economics in terms of commission to reps and so forth.

So it's essentially an agreement whereby we are paying LabCorp a very nominal amount actually to have the opportunity to include clonoSEQ in their oncology reps' bag, and so that they can end market clonoSEQ to their community oncology users – customers..

Got it. Got it. That's helpful. And then how do you think – yes, go on....

Just one, you asked also about the seller timeline. And so we've been working for a little bit of time actually to operationalize with LabCorp's so that we'd be ready to hit the ground running with training and get their reps ready to sell in the fields right away.

So we do anticipate seeing some amount of penetration through that relationship in 2021, but it is baked into our guidance..

Got it. Perfect.

And then, Julie, do you expect this to sort of accelerate that transition from bone marrow to blood pretty meaningfully here, say, by the third or fourth quarter of this year? And by when should we expect a response from the FDA on ALL?.

Sure. So we do anticipate and hope, actually, that there is going to be a larger proportion of usage of clonoSEQ in blood. What I can tell you to date since the launch of CLL a 70% of those orders are actually in blood.

So while I think it will be indication dependent, we're definitely seeing a tendency toward blood, at least, for that particular indication. And that's really nice to see.

We just – we filed ALL, and we don't – we haven't actually provided, I don't think announcement of when we expect it, but it would – we expect it to follow the normal sort of six months or so time line from the FDA..

Got it..

Tejas the CDRA right now is slammed right now with COVID, and backed up in general across diagnostic applications. So, I just want to make sure that we set the stage. It's really an industry-wide problem that we're working through AdvaMedDx to solve it..

Got it. That's understandable. And one final housekeeping one for Chad.

What are you assuming Chad, in terms of the Lyme contribution at the midpoint of the guide here?.

I mean, really nominal..

Nominal, okay..

Yes. .

Perfect. Thank you so much..

Thanks, Tejas..

Your next question comes from the line of Tycho Peterson from JPMorgan. Your line is open..

Hey, thanks, guys. Question on the TruAB discovery efforts, a two-parter.

First, the code neutralizing antibodies, you said you are in advanced discussion, so should we assume that you've kind of baked something in the guidance there? Or could that be another source of upside? And then, I think, the bigger question here is, where are you going with the discovery approaches on TruAB? I mean, could you go after MRSA sepsis, I mean there seems to be unlimited opportunities for monoclonal antibody therapies.

So, where kind of the priorities for the research efforts there?.

So, there's nothing in the guidance, it's not contemplating any contribution from that..

And Harlan do you want to answer?.

Yes, I think as that goes, we're evaluating a variety of different directions to go with our antibody platform.

That includes some of the things that you're mentioning, but we actually have a variety of other directions that we're exploring as well, that I think, are sort of opened up by a combination of our immunology platforms, as well as our TruAB platform.

So, we'll give more information as we go, because right now, we're sort of in the – we're just in planning phase and evaluating different options. But we're pretty excited about this. And we're bringing on some new technologies as well, evaluating some potential partners as we go forward..

Okay.

And then on the immunoSEQ T Map I'm just curious, if you could talk a little bit about the level of interest, the funnel beyond the initial partnerships with Astra Zeneca and Oxford? Can you just talk to what the funnel looks like there for incremental partners?.

Sure, Julie you want to take that one?.

Sure, yes. As we discussed, I think, in the fall, obviously, the trials were very far advanced when we brought this product, to the vaccine developers, and we're all thrilled about that.

I think there have been obviously, the introduction of the new variants, as well as new FDA guidance that you might have seen recently on immunogenicity and just better understanding of the importance of the T-cell response to the whole virus is definitely helping and advancing many of our discussions.

We have about more than the companies were allowed to discuss, that are working with us already on T-MAP COVID and were running a variety of different types of trials for them right now, with the pharma companies, as well as, as I mentioned in my remarks, a nice set of trials on the academic side as well.

So, we will have data on almost all of the most advanced vaccines. And I think from that data, we're going to learn a lot as well, they that will really set the stage for the way this continues to progress throughout the year..

Okay. And then modelling question just on life science research.

Are you assuming kind of sequential improvement here in sequencing in the first quarter? Are we through the worst of it, or do you think you could continue to be down?.

Julie, do you want to take that, do you want me to?.

Maybe I can start and then you can….

Sure..

Well, I guess what, I just want to make a couple of quick remarks on that with life sciences research. Just to clarify, as you know, life sciences research on the pharma side is made up of both the MRD pharma, as well as the PCR pharma work that we do.

And the MRD pharma work is quite advanced registrational trials, which actually did quite well in 2020. It's really the exploratory work that was most impacted by COVID, because it's non-COVID-related. We do expect to see recovery in that front and continued growth with the MRD pharma work that we do.

And I'll let Chad kind of take you through more specifically the net new numbers..

Yes, absolutely.

So, the way we're thinking about it, just as I mentioned on the script, is that the first quarter really, from a life science research perspective, should be our low watermark for the year with progressing revenues, as well as bookings throughout the year, for both the pharma contracts that are tied to those registrational studies, as Julie said, on the MRD side, and those that are more exploratory in nature.

So, we are assuming sort of sequential growth across revenue and volume, but as you know it's also – there's a ton of variability when it comes to some of these trials. And so sometimes they can – depending on the size of the trial, they can impact whether one quarter is, maybe benefiting a little more than the next sequentially.

But short, some large volume samples coming in from a particularly large trials, we should see continued growth quarter-over-quarter..

Okay, last one, I think you mentioned opening a European Lab, can you just talk to the strategy there?.

Sure. So, we already have a small number of people in Europe, but in order to essentially access kind of core labs in Europe, we had to establish a European entity. And that will allow us to kind of expand kind of the boots on the ground of the field force there..

It's not allowed over opening. Yes, effectively starting off with a legal entity in [indiscernible]..

Okay, got it. Thank you..

Yes..

Your next question comes from the line of Derik de Bruin from Bank of America, your line is open. .

Hi, this is Ivey on for Derik today. Thank you for taking my question. Congrats on the T-Detect COVID progress there and Labcorp partnership.

Just curious how do you see the test rolling out as estimates or discussion regarding herd immunity, timing, both? Just curious how that all plays out? And then what have you seen in terms of the uptake since your soft launch back in December?.

Sure.

Julie, do you want to take that?.

Sure, hi Ivey. So yes, so in terms of the early assets launches, as you mentioned, I'll start there, as I think you know, we didn't have any virtual prescriber capability. So, it was a little bit of a challenging ordering process and therefore, we didn't do any marketing.

But yet, we had over 660 tests, ordered, and delivered and 13 concierge medicine groups signed up. And as I mentioned 60% participation in the opt-in for ongoing research.

So, given the fact that it was available, people had to sort of find it on their own, and it was over the holidays, we feel like it does give a good appreciation for interest in T cell testing, with the full launch and the virtual prescriber capability, of Labcorp, blood collection and some of the excitement we’re already seeing in the media, and hopefully eminent EUA and targeted marketing.

For some period of time, we expect to see growth of the test. But we are, as you mentioned, very aware of the change in dynamics of the diagnostic market. We recognize that, things may change with more vaccination, widespread vaccination. But what we do know is that the T cells matter.

And we are thrilled to be able to participate in understanding exactly what they mean. And we'll continue to share that information. And that's really why we did this. As we've always said from the start. It's really about validating both our platform, and the utility of reading T cells in blood across diseases.

And we really think we're going to learn a lot from this experience to contribute to the future growth. It's really just the beginning for T-Detect..

Great, thank you for the details Julie. A couple questions on the Lyme disease. I know we talked about the pricing around $500 if I remember correctly last time.

Could you update us on any charts there? And number two, could you share more details on the current thinking on commercialization, like, are you burning salesforce, also partnering with Labcorp. Thank you..

Sure. So right now, that's still our target price. We are continuing to do payer research as the data matures. And that maturity of the data is also influencing our commercialization plans. We've talked previously about focusing exclusively on the acute line setting.

And we are, in fact, seeing some interesting data that shows potential utility of this in we call the PTLDS setting. So those patients who had been treated with antibiotics but have lingering symptoms. So, a lot of those are sort of tied together as that data continues to readout. And that will help us set the commercialization plan going forward.

From an organizational perspective, we have hired a VP of Sales, who is putting together his plans around exactly how we anticipate the final pricing and marketing plan for the test.

And we'll provide more details is that most likely on the next call?.

Great, thank you. One final quick one, just wanted to get an update on the presented labs open [ph] is that's still impacting the research business? Thank you..

I didn’t get the last question..

Yes, maybe you cut out a little bit Ivey [ph] can you say that again?.

Yes, just wanted to get an update on the percentage of labs open as of 4Q, – or exiting January, is that still impacting the research business and all that? Thanks..

So, our view of it is that the labs are opening, they are in the process of opening. And hopefully that will continue. They are not fully staffed, like they maybe were in the past. But we're definitely starting to see more activity, more usage of the kits.

And in fact, even with T-MAP COVID, as I mentioned, a lot of the researches is shifting towards COVID. And we're starting to see uptake of those opportunities with our academic business as well. But it still remains to be seen, we don't have a very large field force on the academic research side.

So, we don't have the same sort of coverage we have with our clonoSEQ field force to really hit all the ups and downs in all the various locations throughout the country.

And so, that also leads to a little bit more of the volatility that we're seeing, but we're definitely seeing much more of an opening that we hope will continue as the year progresses..

Great. Thank you for the detail..

Your next question comes from the line of David Westenberg from Guggenheim Securities. Your line is open..

Hi, thanks. Sorry, lots already been covered. So, I just want to confirm, I think, you said 600 tests in T-Detect have already been ordered. I want to make sure that's correct.

Is there any anticipation number that you have for T-Detect for this year, just given the fact that we're rolling out that vaccine? But more importantly, I want to ask in terms of how meaningful the additional samples can be from a platform standpoint, from terms of R&D cannot help you get other tasks out faster.

And then in terms of regulatory conversations that you have real world samples? I mean, do you think that speeds up some of your timelines for Ameda CTX, maybe Lyme or some of the things that you're going to do in GI? And I'll stop with that question, may be my last question. Thank you..

Yes, sure, David. So, first, let me just start with the HLR confirm it kind of 600 tests, without marketing, or the virtual prescriber. In terms of projecting number of tests, just keep in mind, this is a brand-new category of testing. So, it's very, very hard to predict what our testing volumes are going to be with a marketing initiative.

So, we're not going to provide guidance on that. As far as kind of how T-MAP or excuse me how T-Detect COVID has accelerated signal generation, I'll have Harlan comment, because it's been quite significant..

Sure, yes. So, I think one of the biggest boons to our learning was from COVID was a couple things. One is that, obviously, everybody was sharing samples. So, we were able to get a very large amount of samples and they were super clean, because PCR based diagnostics of who got the disease and who didn't is quite accurate.

So, we got many, many thousands of positives and negatives that were able to really use to improve our algorithms and understanding in conjunction with Microsoft.

And for example, we have been sitting on a sample set frame multiple sclerosis that we, to be honest, hadn't been making that much headway on and then we started applying some of our algorithmic learning that we had had from COVID. And all of a sudden, a really nice clean signal started appearing.

This is still in research, but we're pretty excited about this. And it's improving our signal in all of our studies, including Celiac and Lyme, and Chron’s, and a variety of others that we're working on behind the scenes as well. So, this has been a huge boon to our understanding..

I think there was a third-party presence [indiscernible].

Is there a third-party presence?.

The only other third-party presence would have been the regulatory standpoint..

Yes, so, we've worked – the nice thing about COVID from our point of view, there is an EUA out there, which allows us to interact with the – in an accelerated timeframe with the FDA and really get them to see our data understand our assay. And they've been really great about the whole process.

So, I think, that interaction, obviously having that personal interaction and really understanding what their comments and concerns are and coming to an agreement on how to address them has been a big boon for us and hopefully will carry over into other areas for – as this product expands into multiple diagnostics..

Thanks, guys. Get a great year. Thank you..

Thank you..

Thank you..

Thanks..

Your next question comes from the line of Mark Massaro from BTIG. Your line is open..

Hey, guys, thanks for the question. I'll just ask one. And it's for Chad Robins that companies like Grail and Thrive certainly are pursuing multi cancer tests that can screen for roughly 10 or up to 50 different cancers. I know you guys are contemplating a panel approach on T-Detect.

But I think I also heard you talk about maybe a general health panel in the future.

And so, if I heard that correctly, can you just elaborate on that and just talk about the decision to pursue panels or maybe a really large panel?.

Yes, it's a great question. Thanks, Mark. We're really looking at as a three-phase approach where right now we're going disease by disease. The second phase is a panel like approach based on kind of patients who come in the door that have a similar set of symptoms.

But at the same time, we're parallel tracking, we're actually exploring options for kind of large-scale trials to be able to look at many different diseases at the same time to get to a really a – I don't know if I'll call it a pan-disease diagnostic, but a many disease at the same time, a diagnostic.

And there's different ways to do that, and different methodologies and partners that we're looking at as potentials to accelerate that that kind of multi-disease panel..

Terrific. Thanks so much..

You bet. Thanks, Mark..

There are no more questions at this time presenters, you may continue..

Thank you, everyone. We look forward to a great 2021..

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect..