NEW YORK – Encouraged by fourth quarter and full-year 2024 financial results, Adaptive Biotechnologies' executives expressed optimism for the company's minimal residual disease (MRD) business and aim to turn it into a profitable franchise in 2025.
"2024 was a year of key wins and strong execution on all fronts," Adaptive Cofounder and CEO Chad Robins told investors and analysts on a conference call recapping the company's Q4 financial results late Tuesday afternoon. "In MRD, we are executing our strategy, and we are confident in reaching our profitability goal later this year."
During the fourth quarter, Adaptive's MRD revenues were $40.1 million, representing 31 percent growth year over year from $30.8 million a year ago. Full-year MRD revenues in 2024 were $145.5 million, rising 42 percent from $102.7 million in the prior year.
According to Robins, two "major catalysts" occurred in 2024, which the company believes will drive the long-term growth profile of the MRD business. For one, he said the company obtained a new gap-fill rate for its ClonoSeq test of $2,007 from Medicare, which is about $300 higher per test than the company's previous implied rate.
Additionally, the US Food and Drug Administration's Oncologic Drugs Advisory Committee (ODAC) voted in favor of using MRD as a primary endpoint to support accelerated approval of multiple myeloma drugs, which Robins considers "a paradigm shift" in the development of immune cancer drugs.
These favorable developments boosted both the MRD clinical and MRD pharma businesses, which contributed 65 percent and 35 percent to overall MRD revenues during Q4, respectively, according to CFO Kyle Piskel.
More specifically, for MRD clinical, Adaptive delivered a record number of 20,945 ClonoSeq tests during Q4, representing a 34 percent increase versus the prior-year period, Robins noted. Of the tests delivered, "meaningful growth" was observed in all reimbursed indications, he added, including multiple myeloma, acute lymphocytic leukemia, chronic lymphocytic leukemia, and B-cell leukemias and lymphomas, as well as mantle cell lymphoma.
During Q4, Robins said the company also completed Epic integration in nine accounts, adding the total integrated sites to 19, which represents about 20 percent of the total ClonoSeq ordering volume in 2024.
Moreover, Robins said revenue growth in MRD clinical was further fueled by an increase in the average selling price (ASP) of ClonoSeq, ending the year with an ASP of $1,117 in the US, which represents 7 percent growth from 2023.
During 2024, Adaptive reduced the proportion of the ClonoSeq tests delivered for indications not covered by Medicare from 17 percent to 7 percent. The company also initiated coverage agreements with several previously uncontracted Blue Cross Blue Shield payors, including Blue Cross and Blue Shield of Texas and Independence Blue Cross. The company also established its first Medicaid coverage for ClonoSeq in New York and California.
The firm's MRD pharma business saw Q4 revenues rise 44 percent compared to the year-ago period. Excluding regulatory milestone revenues, which were $12.5 million, core MRD pharma revenues grew 14 percent, and the company ended the year with "a healthy backlog" of over $200 million, Robins told investors.
In 2024, Adaptive closed agreements for 20 new myeloma studies, 15 of which were closed post ODAC's vote last April. As of now, the company has 10 multiple myeloma studies using ClonoSeq as a primary endpoint, including three that were upgraded from secondary to primary, Robins said.
Robins also outlined Adaptive's key strategic priorities for the MRD business to help achieve profitability in 2025, capturing the current momentum. These include expanding blood-based testing, growing its presence in the community clinical setting, integrating additional Epic accounts, increasing ClonoSeq's ASP to an average of $1,300 per test, and increasing the number of new MRD pharma studies across indications.
Looking at the rest of the financials, for the three months ended Dec. 31, the Seattle-based immune sequencing firm tallied revenues of $47.5 million, a 4 percent increase compared to $45.8 million a year ago and above analysts' average estimate of $46.1 million. About 85 percent of Q4 revenues were from the company’s MRD business while the rest was from the immune medicine business.
Adaptive's Q4 immune medicine revenues fell 51 percent to $7.3 million from $15.0 million, largely due to an expected reduction in amortization of an upfront payment from Genentech, as well as lower pharma and academic services, according to Piskel.
The company's Q4 R&D expenses dropped 19 percent to $23.2 million from $28.7 million a year ago. Its SG&A spending dipped 7 percent year over year to $39.7 million from $42.6 million.
The firm's Q4 net loss was $33.7 million, or $.23 per share, compared to a net loss of $69.4 million, or $.48 per share, a year ago. On average, analysts had expected a Q4 net loss of $.24 per share.
For full-year 2024, Adaptive reported revenues of $179.0 million, up 5 percent from $170.3 million in 2024 and exceeding analysts' average estimate of $177.6 million.
Full-year immune medicine revenues were $33.4 million in 2024, down 51 percent from $67.5 million in 2023.
Adaptive's 2024 R&D expenses were $103.0 million, down 16 percent from $122.1 million in 2023, while its SG&A expenses decreased 9 percent to $157.6 million from $172.5 million.
The company's full-year net loss was $159.5 million, or $1.08 per share, compared to a net loss of $225.3 million, or $1.56 per share, in 2023, and was below the consensus Wall Street estimate of a $1.11 loss per share.
For 2025, the company expects MRD revenues to be between $175.0 million and $185.0 million, including $6.0 million to $7.0 million in milestone revenues. This guidance factors in "conservative" MRD pharma services growth, Piskel said, as the company executives "navigate through a new administration and monitor broader impacts from the biopharma industry."
At the midpoint, the guidance represents 24 percent growth versus 2024, or 30 percent excluding milestones. Concerning revenue trends throughout the year, Piskel said the company expects MRD revenues to be 40-60 weighted between the first and second half of the year, respectively.
Adaptive did not provide overall revenue guidance or guidance for the immune medicine business, though Piskel noted that the company anticipates around $15 million in amortization from the Genentech collaboration.
Adaptive finished 2024 with $47.9 million in cash and cash equivalents and $174.4 million in short-term marketable securities. The company estimates its total cash burn for 2025 will be between $60.0 million and $70.0 million, representing an annual reduction at the midpoint of the range of about 28 percent versus 2024.