Adaptive Biotechnologies (NASDAQ:ADPT) Q1 2026 Earnings Call

0:00 Good day, and thank you for standing by. Welcome to the Adaptive Biotechnologies first quarter financial results. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press 11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Carina Calcadilla, Head of Investor Relations. Please go ahead. Thank you, Anton, and good afternoon, everyone. I would like to welcome you to Adaptive Biotechnologies First Quarter twenty twenty six Earnings Conference Call.

0:48 Earlier today, we issued a press release reporting Adaptive financial results for the first quarter of twenty twenty six. The press release is available at www.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 Investors section in our corporate website. During the call, management will make projections and other forward looking statements within the meaning of federal security 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.

1:35 In addition, non GAAP financial measures will be discussed during the call and a reconciliation from non GAAP to GAAP metrics can be found in our earnings release. Joining the call today are Chad Robbins, our CEO and Co Founder and Kyle Fischl, our Chief Financial Officer. Additional members from management will be available for Q and A. With that, I'll turn the call over to Chad. Chad? Thanks, Karina. Good afternoon, and thank you for joining us on our first quarter earnings call. As shown on Slide three, we're off to a strong start to the year with accelerating momentum in MRD and disciplined execution across the company. MRD revenue grew 53% year over year, reflecting broad based strength across both clinical and pharma.

2:23 We also recognized our first primary endpoint milestone this quarter, a meaningful proof point for MRD's expanding role in drug development. Clomacy clinical volumes increased 41% year over year, demonstrating strong continued adoption. We also delivered meaningful margin expansion, with sequencing gross margin increasing eight percentage points year over year to 70%, driven by scale and operational efficiency. At the same time, we maintained strong financial discipline, reducing cash burn and ending the quarter with approximately $222,000,000 in cash. Given the strength we're seeing in the MRD business, we are raising our full year MRD revenue guidance to a range of $260,000,000 to $270,000,000 Kyle is going to provide more detail shortly.

3:17 Let's now turn to slide four for a deeper look at the MRD business. Our clinical business continues to deliver strong growth with revenue up 54% year over year. ClonoSEQ tests reached another quarterly record of almost 32,600 in Q1, up 9% sequentially. Growth was observed in all reimbursed indications, led by DLBCL at over 19% growth versus prior quarter. Importantly, we're seeing mounting traction across the key drivers that support durable long term adoption. Blood based testing reached forty nine percent of MRD volume. In multiple myeloma, a traditionally bone marrow driven indication, the contribution of blood based MRD increased to twenty nine percent, up eight percentage points year over year.

4:10 This shift is closely linked to expansion of the community setting, where promotion of favorable guideline updates and implementation of standardized testing protocols contributed to growth rates that outpaced the rest of the business. Community volumes grew 67% year over year and now represent 35% of total testing. Growth in the community business was further supported by our EMR enabled workflows, which are driving repeat utilization. Serial monitoring orders available to Flatiron integrated accounts are widely being utilized, and strong initial pull through rates have further improved with 72% of repeat orders due are being fulfilled. Physician engagement also continues to expand, with the number of ordering clinicians growing 43% year over year to nearly 5,000 in Q1, underscoring increasingly broad acceptance of MRD as part of routine clinical management.

5:09 Finally, we continue to see increases in pricing with U. S. ASP growth of 11% year over year to $13.60 dollars per test. Importantly, I'm excited to share that clonoSEQ is now listed in the Texas Medicaid Policy Manual. ClonoSEQ is one of only two specific tests included in a newly developed genetic testing section, and patients may receive up to six tests per year. It's great to be pioneers in bringing advanced molecular testing to some of our most vulnerable patients. Our scale, adoption and embedded workflows support ChronoSEQ's sustained growth and continue to strengthen our leadership position as the market evolves. Let's now turn to Slide five to discuss our biopharma business. We delivered one of the strongest quarters to date in MRD Pharma, with revenue growing 53% year over year or 33% excluding milestones.

6:03 As mentioned, we also recognized our first milestone in The U. S. Tied to MRD as a primary endpoint in the CEPIUS trial in multiple myeloma. New bookings were strong, driving backlog to approximately $254,000,000 up 24% year over year. Bookings came primarily from regulated studies, including several registrational trials where MRD will be used as a primary or co primary endpoint in both multiple myeloma and CLL. We continue to see increasing use of MRD to guide treatment. Today, we have approximately 20 ongoing interventional studies where MRD is used for enrollment, stratification or to guide therapy decisions.

6:49 As these trials read out, they directly support our commercial business. For example, data from the PERSIUS trial helped establish sustained MRD negativity as a meaningful measure of deeper response in multiple myeloma, which supports broader adoption of clonoSEQ in clinical practice. The momentum we are seeing in the pharma business is likely to be further supported by evolving regulatory trends. The FDA recently introduced a new clinical trial model that incorporates real time data submission, with early proof of concept studies underway, including the TRAVERSTE trial in mantle cell lymphoma, where MRD negative complete response is measured by clonoSEQ is a key endpoint. While early, this emerging model for accelerating data review will reinforce the value of MRD endpoints that are objective, quantitative, and longitudinal.

7:41 These dynamics are particularly relevant in regulated and registrational settings, where data quality, reproducibility, and regulatory credibility are critical and where clonoSEQ is well positioned as a clinically validated MRD assay. Taken together, the trends we are observing support a reinforcing flywheel between biopharma and clinical testing as adoption of clonoSEQ in drug development generates evidence, strengthens clinical utility, and drives demand in the clinic. To wrap up on MRD, as shown on slide six, we are well on track to deliver against our key priorities for the year. Starting with clinical volumes, we initially guided to over 30% growth for the year. Based on our first quarter performance and continued momentum, we now expect volumes to grow to at least 35% in 2026 with potential for upside.

8:37 Importantly, the underlying drivers of growth are already nearing our full year targets. Blood based testing is rapidly approaching our goal of over 50% contribution and community contribution is already at 35%, in line with our full year expectations. EMR integrations continue to advance with six new Epic accounts added year to date and five more expected to go live in the next month. In April, we went live with Epic, another of our top 10 accounts, bringing us to seven of our top 10 now being fully integrated. On pricing, we remain on track to achieve our target of approximately $1,400 per test in 2026, supported by recent policy expansions in CLL and DLBCL, Medicaid payment traction, and commercial payer negotiations.

9:28 In biopharma, we have already exceeded our goal for new registrational studies with 10 signed in the first quarter alone. Finally, strong top line growth combined with continued operational efficiencies positions us to achieve over 70% sequencing gross margins and expand adjusted EBITDA. Overall, our progress across these MRD priorities is a testament to our continued momentum and strengthens our confidence in our ability to meet or exceed our full year commitments. Turning now to slide seven. Our immune medicine programs are progressing well against our twenty twenty six key priorities. We continue to scale our TCR antigen datasets and advance our AIML modeling work. We now have more than 6,000,000 functional TCR antigen pairs with data that currently spans about 50,000 antigens and 50 plus HLA types.

10:27 This proprietary data set enables us to understand TCR antigen interactions and their role in cancer, virology, and autoimmunity. We recently confirmed that our digital AI model outperformed the accuracy of existing public benchmarks in predicting TCR antigen binding. We published this work in Proceedings of Machine Learning and Research and presented the Machine Learning for Health Symposium. Our focus this year is to further improve these models in targeted applications that could be attractive to partners seeking to leverage our data and our digital capabilities. In parallel, we are applying our AI enabled immune medicine platform to identify the likely disease causing T cell receptors and their antigens in select autoimmune conditions.

11:17 This quarter, we kicked off our RA target discovery partnership with Pfizer. We received over 1,000 patient samples and are on track to deliver the RA data package in the second half of twenty twenty six. As we continue to make progress on these 2026 priorities, we're advancing discussions on additional data partnerships, maintaining a disciplined approach to capital allocation and operating within our expected I'm cash burn range of 15,000,000 to $20,000,000 for the year. I'll now turn the call over to Kyle, who's going to walk through our financial results and updated full year guidance. Kyle? Thanks, Chad. Starting on Slide eight with our first quarter results. Total revenue was $70,900,000 representing 45% growth year over year, driven primarily by continued strength in MRD, which accounted for approximately 95% of total revenue.

12:10 Of note, amortization from the Genentech payments is excluded from all prior period comparisons. MRD revenue grew 53% versus prior year to $67,100,000 with clinical and pharma contributions of 6535% respectively. Immune medicine revenue was $3,800,000 down 26% from a year ago, primarily due to timing of sample receipts and processing. Turning to margins, sequencing gross margin, which excludes MRD milestones, was 70% for the quarter, up from 62% a year ago. This improvement reflects reduced assay costs due to efficiencies from our NovaSeq launch in the second half of twenty twenty five and leverage in overhead as we support higher volumes as well as favorable pricing trends across both clinical and pharma.

12:59 Total operating expenses inclusive of cost of revenue was $90,100,000 up 10% year over year. This increase was mainly driven by continued investment in commercial infrastructure, including EMR integrations and reimbursement, as well as higher personnel related costs. At the segment level, MRD continues to demonstrate strong profitability, with adjusted EBITDA of $12,100,000 compared to a loss of $4,100,000 in the prior year, reflecting the impact of revenue growth, including milestone revenue and continued operating leverage. Immunomedicine adjusted EBITDA was a loss of 10,400,000 At the total company level, adjusted EBITDA was a loss of $2,500,000 Net loss for the quarter was $20,000,000 including approximately $2,900,000 of interest expense related to our royalty financing agreement with Orpa.

13:47 I'll now turn to our updated full year guidance on slide nine. We are raising our full year MRD revenue guidance to a range of $260,000,000 to $270,000,000 up from our prior range of $255,000,000 to $265,000,000 This increase reflects stronger than expected clinical volume performance in the first quarter and continued momentum across key growth drivers. This range includes $9,000,000 of MRD milestone revenue, which was recognized in the first quarter, and we do not anticipate additional milestone revenue for the remainder of the year. At the midpoint of the guide, this implies approximately 25% year over year growth or 33% growth excluding milestones. In terms of seasonality, we continue to expect MRD revenue to be weighted approximately 45% in the first half and 55% in the second half.

14:41 We are reiterating our full year total operating expense guidance, including cost of revenue of $350,000,000 to $360,000,000 This reflects continued investment in MRD growth with approximately 75% of spend allocated to MRD, approximately 20% to immune medicine and the remainder to corporate unallocated. Importantly, we remain on track to achieve positive adjusted EBITDA and positive free cash flow for the full company by the end of twenty twenty six. Overall, the quarter reflects strong financial execution supported by continued revenue growth, expanding margins and operating leverage. With that, I'll turn the call back over to Chad. Thanks, Kyle. We're executing well across the business and the strength we're seeing particularly in MRD gives us confidence in both our plan and the opportunity ahead.

15:32 As we move through the year, we expect to build on this performance and drive additional upside over time. With that, I'll turn it over to the operator for questions. Thank you. At this time, we will conduct a question and answer session. Our Our first question comes from Andrew Brackman from William Blair. Please go ahead. Hey, guys. Good afternoon. Thanks for taking the questions here. I wanted to ask on community testing. You know, Chad, as you sort of outlined here, I think you're already at the full year target for the mix that you want coming from the community.

16:19 Can you maybe sort of compare and contrast for us just the nature of the conversations that you're having with those accounts in particular, maybe today versus a year or so ago? You just got so much sort of tailwinds from the blood mix sort of increasing and then also the MR integration. So how have those conversations sort of evolved over the last year or so? Thanks. Thanks for the question, Andrew. I can help answer that. I think a year ago, if you had asked me this question, I would have said, well, the conversations have shifted from what is MRD? Why should I care? Why should I do this? To okay, how should I do this? What patients, which indications, which use cases help me understand more of the practical applications. And now a year later, the conversations are increasingly shifting toward practical implementation.

17:10 We are increasingly getting traction with conversations around protocols and in fact have established testing protocols in a number of large community centers and networks. The goal is let's standardize testing so that all our patients have access to the best care. Let's ensure our clinicians aren't forgetting about this for their heme patients who in the community may not make up the lion's share of the patients they see every day. And so that sort of practical implementation oriented conversation is more and more the norm. And I think a really positive sign for the degree to which MRD is now becoming really entrenched as part of the standard of care in a community at large. That's perfect. I appreciate all that color. And then I just wanted to sort of ask on the reimbursement front. Obviously, there's a lot of noise out there with respect to CMS and the CRUSH initiative.

18:04 Can you maybe just sort of remind investors how clonoSEQ is positioned from a reimbursement profile and how you see your sort of rate as durable, even if there are changes to things like bold act nationalization or implementation of prior authorizations? Thanks for taking the questions. Yes, it's Dave. Thanks for the question, Andrew. We look extensively at this question. And after internal and external evaluation with outside counsel, we've determined that we're currently not subject to PAMA reporting requirements for the cycle. There's actually very specific and defined requirements for PAMA reporting. That's actually by statute. And your tests must not only fall under the CLFS or clinical lab fee schedule, it also has to account for over 50% of your Medicare revenue.

18:52 And you know that CMS publishes a list of CPT codes that fall under the CLFS. And frankly, the clonoSEQ episode billing structure, it's not on it. And if we double click and go one level deeper, a CMS does not identify the MolDX code that we use for billing the clonoSEQ episodic rate structure as being on the CLFS list. It's worth noting, as you all know, that the vast majority of our Medicare revenues are generated through the episode rate structure billing under the MolDX program. CMS does consider the PLA code that we use to bill Medicare for MCL recurrence monitoring as being on the CLFS.

19:39 But we have Medicare revenues under the PLA code that are under that recurrence monitoring that are well below the 50% revenue threshold set for PAMA for these purposes for this initial data reporting period. Separately, I think we're in process of really a multipronged strategy that not only includes recurrence monitoring. This goes to your durability question. But we're also in productive discussion with MolDex to increase the number of tests per bundle under our episode structure. And there's other things that we're looking at. So this is of super high importance and we're all over it. Great. Appreciate all the color. Thanks, guys.

20:25 Sure. Thank you. Our next question comes from David Westenberg from Piper Sandler. Please go ahead. Hi. Thank you for taking the question. Congrats on the great job here. So I want to talk about with MRD as a primary endpoint, congratulations on that. How should we think about different things like CDx or on the label? And how should we think about pharma basically helping to push your product because of it beyond the label? And lastly, I imagine there's a lot of power in being able to find patients that are recurring. Is there any potential reimbursement or strategic monetization of maybe getting these clinical patients into clinical trials that were not able to prior to maybe clonoSEQ and it's incredibly high sensitivity?

21:16 Thanks, David. I appreciate those questions. And I think interesting set of topics. First of all, with regards to primary endpoint, as you've heard in Chad's prepared remarks, we're seeing increasing use of the assay in the pharma setting in terms of regulated studies. And even more beyond that, seeing use in interventional studies where MRD is being used to stop or start therapy, being used to actually qualify patients that should be enrolled in the study to begin with. And that particular trend is extremely favorable for our business because of course we're the only FDA cleared assay in the space. We're extremely well positioned to capture these opportunities. We're also an assay that has extremely sensitivity and high specificity, which is really important in the context of interventions where you don't want to be giving patients therapies they don't need. So the question does then come up, well is this a companion diagnostic, should it be incorporated into studies? And there are now the beginnings of studies that are exploring that use case for MRD. Although up till this point, the FDA has not taken the position that MRD needed to be positioned as a companion diagnostic within the regulatory context.

22:30 I imagine that that will come up as time goes on. There will be some studies for which that may be appropriate, others not. But regardless of whether MRD becomes a companion or remains a complementary diagnostic for these studies and for these therapies, it's quite clear that the pharma companies are very interested in partnering to ensure that MRD uptake is maximized to support the adoption of their therapies. We're already having numerous conversations actively with our biopharma partners who want to better understand MRD adoption dynamics from our point of view and want to think about how we can work together to expand MRD adoption, especially in the community setting. And to your question about, I think essentially the concept of clinical trial matching, that is potentially an application of the data that we generate.

23:23 And we have done some initial exploration and there is, I think, some level of interest potentially in that. But more work to be done to be determined whether and how we may determine to pursue that. Got it. And if I may, I'm going ask just one more on sticking with the clomacy business. DLBCL grew 19% quarter on quarter. That's great, particularly because there's a lot of noise with competition and our competitor having a lot of different presentations. Do you think that you maybe saw benefits from all of the different presentations in ASH and that would be kind of a one, two quarter, three quarter benefit as all these physicians saw that at ASH? Or do you think like there's a sustainability for something beyond that? Thank you.

24:11 I think that the strength we saw in the DLBCL business in Q1, first of I was very pleased to see, but also we've seen very strong growth quarter over quarter prior to and since the entry of competition in the space. So I'm quite confident that the growth we're seeing quarter over quarter is driven by the sustainable moats that we've built and also the durable advantages that we have. The brand awareness specifically as a heme MRD test, the technology and its advantages relative to other approaches to assessing MRD, and the broad real world clinical experience that we've built along with the coverage and the customer satisfaction that we've been able to deliver. All those things I think have contributed to clinician confidence in utilizing clonoSEQ. And as the noise around MRD and DLBCL continues to mount, we are disproportionately benefiting from that as the market leader.

25:10 I was just going say, David, just remember, it's really early days for MRD and DLBCL in general. Susan mentioned all the reasons that we're well positioned, but we see durable growth over many quarters ahead. The general sentiment is getting doctors to incorporate MRD into clinical practice as a routine measure. And yes, we're benefiting not from really the noise across the industry, but also, as Susan mentioned, from the fact that we have what we believe is kind of the most sensitive and specific test out there. Yes. And David, we do intend to continue to release additional data in this space. And I think particularly at ASH, we expect that you'll have the opportunity to see another round of significant data advance.

26:02 All right. Thank you. Our next question comes from Mark Mazzaro from BTIG. Please go ahead. Hey, guys. Thanks for taking the questions and congrats on another beat and raise. I wanted to start on the Pharma backlog, which increased 24% year over year. And like David said, it's great to see the first primary milestone come in. So I think in prior quarters, you've sort of broken out the secondary versus primary funnel. So I'm just curious if you could just speak to with just, of course, one primary milestone in the bank. What does that look like for you guys, say, over the next couple of years?

26:49 Is this something that you think can continue? And then can you just remind investors the economics of the primary endpoint compared to like a secondary endpoint? Sure, Mark. So to start out, I think I can kind of give you an overview of how the backlog is broken out. We have about 190 active studies. And of those, 111 are either primary or secondary endpoint studies. 23 are primary and the remaining 88 are secondary. And Kyle, maybe you want to speak to the economics. Yeah, on economics front, I mean, I think deal by deal can have its own unique differences. And I won't go into specifics. Generally primary endpoint milestones are higher than what you've seen historically in the past, which has been the vast majority of secondary endpoint milestones.

27:40 They won't all be the same dollar amounts, etc, but they're typically a little bit higher. Fantastic. And then maybe at a high level, can you just maybe give us a sense, this might be for you Chad, like what inning do you think you are in the EHR integration? I'm just basically trying to determine what type of upside you have as we think about getting to full maturity across the EMR systems. Yeah, I mean, think one the important things is prioritizing going after our largest accounts. Now we're seven out of 10 of our top largest academic accounts. But in the community setting in particular is where we're targeting the large network practices on EMR integrations. Obviously, Flatiron gives you kind of certain advantages that Epic doesn't and that you could turn on a lot of accounts at one time. So we have now kind of 150 ish on the community EMR integrations.

28:47 But now the real point is once you have your accounts integrated, we have a very defined strategy about targeting those accounts and the pull through and how you optimize the EMR. And I would say we're early on those, but in the accounts that we've gone in really put that muscle into it, we're seeing really, really strong results. So that's really the focal point right now is to say, Okay, once we're integrated, how do we go in and optimize those accounts? So I would say early, but we've got a very strong playbook in place. Fantastic. Thanks, guys. Sure. Thank you. Our next question comes from Subbu Nambi from Guggenheim.

29:37 Please go ahead. Thank you, guys. Thank you for taking the questions. You've mentioned before having preliminary discussions on increasing the Medicare bundle of test two over four. Can you give us the latest on the progress in those conversations? Is this a late twenty twenty six or the 2027 opportunity? And what are the steps left in that process? Yeah, Subbu, it's really hard to predict timing of government contractors and agencies. So I'm not going to go out on a limb and try to do that on this call. The only thing I can tell you is that we have a very strong relationship. We continue to develop very strong evidence and we have had very productive discussions. That's fair, Chad.

30:24 Then can you talk about your progress so far this year related to the structure of milestone payments versus transitioning pharma to a more direct pay for service structure? How has that been received by partners? And is there a percentage of total customer numbers you're looking to have transitioned as we progress throughout the year? Subbu, it's a long process. Many of our contracts are multiyear contracts and the renegotiations come up sort of as those contracts expire. So it's going to take some amount of time, some number of years for us to even get the opportunity to revisit the existing contract structures. What I will say is that in the situations that it's come up, it's been a topic of conversation every time. And we haven't many of those conversations are still ongoing.

31:11 That's fair. And last one for me, for Kyle, maybe sequencing margin, what is the feeling this year, and what will be the gross margin progression look like this whole year? Should we expect sequential increases each quarter? And will the full benefit of NovaSeq transition be realized this year? And what other levels do you have for gross margins? Yes. I appreciate the question, Suvu. I'd say, it relates to feeling, we've talked about 75 kind of being the North Star. And I think it's a fair step up into that 75% gross margin throughout the year at the end of the day. The utility of NovaSeq X, as we continue to drive volume, that's just compounds value for us. And as we can continue to improve our price point, you'll see more margin improvement throughout the year. But I think it's probably fair to just state that as a linear step up through to about that 75% range.

32:12 Perfect. Thank you so much, guys. And sorry to have nitpicky questions, because honestly, the volume numbers are pretty impressive. So, thank you, guys. No worries. Our next question comes from Sebastian Sandler from JPMorgan. Please go ahead. Great. Thank you for taking the question. My first question is on pharma MRD bookings and conversion expectations. So it looks like most of the guide change is on better volumes. So I'm just wondering if you expect any of the incremental bookings you saw in 1Q to convert to revenues in 2025. I think normally there is a 20% release rate for in year bookings. So I'm just wondering what's baked in there and if there could be any upside to the guides from that? And then I have a quick follow-up.

33:00 Yes. It was great to see the bookings in Q1 and increased backlog exiting Q1. I'd say, as it relates to the guide, we want to kind of pharma is lumpy quarter to quarter. It's a great start to the year. I think we just want to be prudent here in kind of managing expectations. So keep it at that 11% to 12% year over year growth. But that being said, as the trajectory continues and the book the pace of bookings and pull through of the backlog increases, it could provide some opportunity to lift the guide in the back half of the year or even potentially next quarter. Okay. Thank you. And then just a follow-up. It looks like EBITDA for MRD stepped up around $2,000,000 quarter over quarter despite a $9,000,000 pharma milestone.

33:46 So just were there any one offs we should be aware of? It seems like it might have just been personnel and EMR costs. And then I know you have the total co adjusted EBITDA guide positive by the end of the year. But just wondering if you can give us any more color incremental MRD EBITDA margins for the balance of the year and just kind of pacing there. Thank you. Sure. As it relates to the sequential movement Q4 to Q1, there is a bit of seasonality in our business in Q1 where we have some increased costs that won't recur. And then Q4 also a little bit higher on the Pharma revenue versus Q1. So that's the majority of the balance of the mix. As it relates to the EBITDA improvement on the MRD business, again, if you focus on the base business, I think it's going to have a continued growth trajectory throughout the rest of the year.

34:35 I don't want to put anything firm in terms of an EBITDA margin at this point, but sufficient to say it's going to continue to grow sequentially each quarter. Great. Thank you. Thank you. Our next question comes from Dan Brennan from TD Cowen. Please go ahead. Great. Thank you. Thanks for the questions, guys. Congrats. Maybe just starting off with the 35% up volume guide, like, what do you think the puts and takes would be if you guys come in above that over the back half of the year given, I think, we've been accustomed to these really strong volume numbers and now you just raised the bar again. Thanks for the question, Dan. We are very pleased with the performance in Q1.

35:22 I think it's a great strong start to the year, and we do feel very confident in the 35% year over year growth. Could it be higher? I think the answer is yes, and there is high potential for upside. We're just early in the year, so we want to see how our key growth drivers continue to play out. But that said, it's the same things that we've been talking about EMR integrations and whether or not we can drive increased adoption of serial testing and increased pull through, particularly on the Flatiron system, which allows us to really standardize that ordering approach. We've seen really good results to date from that. The blood based testing, we saw twenty nine percent of myeloma MRDs coming in this quarter in blood and that is a nice step up and we'll continue to look for that as a potential area for upside because we do see increased testing frequency where we see increased use of blood.

36:15 Community use, we achieved our goal as Chad's prepared remarks indicated for the full year in Q1. Need to maintain that, we need to continue to see disproportionate growth in that segment. And the guidelines that we've been promoting, favorable updates that came last year have been an important component of that. So if we can continue to build and continue to implement some of the pathways that I talked about earlier, these protocols that really dictate how testing will be done in a standardized fashion in large community practices, that's another source of upside. I think that the takes are simply that we believe we're in a very strong position, we have the right strategy, we have the right team, we're a market leader, but we're going to remain attentive to new existing and new emerging competition.

37:03 But I think that's just why it makes it important for us to maintain a rapid pace of growth and invest appropriately and solidify all the moats that we've been talking about. Great. Maybe just talking about the commercial organization, just could you just remind us kind of the plan this year, kind of where you stand now, what the targets are by year end in terms of commercial ads? And what's the balance you're trying to strike there with driving profitability while ensuring you have enough feet on the street to kind of stay ahead of any competition that's coming or to maximize on the opportunity ahead? Sure. The short answer is that we think that the team we have is the right team to continue to prosecute the opportunity. We have 65 sales reps in the field. They're split half and half between account managers who focus on academic institutions and diagnostic hematology specialists who focus on community practices.

37:58 Our reps have manageable index values. They're calling on a reasonable number of accounts and doctors. They have acceptable amounts of travel time. So we always look at the individual territory performance and potential, and potentially we shift or add territories here and there to make sure that we're capitalizing on opportunities in specific geographies. And we will over time continue to look at the option of new deployment strategies that could justify additional hiring and we're watching the market dynamics carefully in that regard, but not expecting to invest in any significant expansions this calendar year. I'll just take some of the areas that we are continuing to deploy capital and invest behind is EMR integrations as discussed, reimbursement and revenue cycle management and continued data generation to demonstrate clinical utility across all of our indications.

38:56 Great. Thank you. Thank you. As a reminder, to ask a question, you need to press 11 on your telephone and wait for your name to be announced. Our next question comes from John Wilkin from Craig Hallum. Please go ahead. Hi, guys. Thanks for taking the questions. Just one quick one for me. Want to dig in a little bit deeper on the sequencing side of the pharma business. I know you guys have historically talked about that business being more of like a high single digit grower, and now we're in the second straight quarter where it's grown. I think Q4 was 24%, this quarter over 30%. So, if you could give a little detail on what's driving that acceleration, if you think that acceleration could be sustainable through the balance of the year. Thanks.

39:47 Yes, John, appreciate the question. I think we're seeing a lot of traction in the pharma MRD space. The bookings and backlog are really the drivers of that. The pull through is also starting to happen. It's just additional pharma partners want to generate data and get readouts on their trials. I think it's an opportunity, as I mentioned in one of the Q and As earlier, think it's an opportunity for us to continue to go after and we're going to be beneficiaries of it. It's just again, we're just going to hold the guide here right now. I do anticipate it will grow throughout the year, but it can be lumpy quarter to quarter. Okay, that's helpful. Thank you. Thank you.

40:32 This concludes the question and answer session. Thank you for participating in today's conference. This does conclude the program. You may now disconnect.