Good day, and thank you for standing by. Welcome to the Adaptive Biotechnologies Third Quarter Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Karina Calzadilla, Head of Investor Relations. Please go ahead.

Thank you, Jacinda, and good afternoon, everyone. I would like to welcome you to Adaptive Biotechnologies Third Quarter 2025 Earnings Conference Call. Earlier today, we issued a press release reporting Adaptive financial results for the third quarter of 2025. The press release is available at www.adaptivebiotech.com. We are conducting a live webcast of this call and will be referencing a slide presentation that has been posted to the Investors section of 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 also 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. Joining the call today are Chad Robins, our CEO and Co-Founder; and Kyle Piskel, our Chief Financial Officer. Additional members from management will be available for Q&A. With that, I'll turn the call over to Chad.

Thanks, Karina. Good afternoon, and thank you for joining us on our third quarter earnings call. I'm pleased to share another quarter of strong execution and accelerating momentum across the business. We delivered meaningful wins, sustained growth, and further strengthened our financial position. Let's now turn to Slide 3 for a summary of this quarter's highlights. The MRD business delivered major profitability milestones. This quarter, adjusted EBITDA was $7 million, reflecting strong sequential growth. Also this quarter and ahead of plan, the MRD business became cash flow positive, a significant achievement that underscores the strength and scalability of our model. MRD revenue grew 52% year-over-year, driven by robust increases in clinical volume and average selling price (ASP). This growth reflects expanding clinical utility and broader integration of MRD testing into patient care. Clinical validation continues to deepen. The NCCN guidelines were updated again this quarter, this time in CLL, incorporating MRD-guided treatment options, providing more specific direction on testing frequency and supporting clonoSEQ ID testing at diagnosis. Operationally, we're scaling efficiently. With clonoSEQ now running on the NovaSeq X Plus, we're realizing meaningful cost efficiencies and expanding gross margins. Total company sequencing gross margin improved 10 percentage points year-over-year to 66%, and our focus on operating discipline is paying off. Operating expenses remained stable sequentially, while cash burn continued to decline. Through the first 9 months of the year, we reduced cash burn by 51% versus last year, ending the quarter with a strong cash position of $217 million. Given this performance, we are again updating our full-year guidance to reflect a higher MRD revenue range, lower operating expenses, and a reduced annual cash burn. Kyle is going to cover the details shortly in his prepared remarks. Let's now turn to Slide 5 for a deeper look at the MRD business. clonoSEQ clinical revenue had impressive growth of 83% year-over-year and 18% quarter-over-quarter. We saw broad-based volume expansion across all reimbursed indications, delivering over 27,100 tests, up 38% versus prior year and up 7% sequentially. By indication, multiple myeloma remained our largest contributor, accounting for 42% of U.S. clonoSEQ volume, followed by ALL at 32%, CLL at 10%, DLBCL at 9%, and MCL at 5%. This volume growth continues to align with our strategic priorities. First, blood-based testing now represents 45% of volume, achieving our full year goal ahead of plan. And in multiple myeloma, blood-based contribution reached 24%, up from 21% last year. Second, community-based testing represents 31% of total clonoSEQ volume with increasing contribution from Flatiron integrated accounts. Third, NHL testing expanded to 15% of total clonoSEQ volume, led by DLBCL and MCL sequential growth. Fourth, ordering healthcare providers (HCPs) grew 38% year-over-year to more than 4,100 with sequential growth of 9% in academic centers and 12% in community practices. And finally, we tested over 19,400 unique patients in the quarter, a 41% increase year-over-year and 8% sequentially. In addition to volume growth, we saw continued improvement in ASP with U.S. clonoSEQ ASP increasing to over $1,340 per test, reinforcing our confidence to achieve full year average ASP of $1,300 or higher. During the quarter, we achieved several policy wins, including our first large commercial payer coverage in DLBCL and two major payers in CLL, bringing our total CLL covered lives to over 260 million. We continue to improve cash collections and expand our reimbursement footprint with new payer contracts. Overall, all ASP metrics and contracting initiatives are trending in the right direction, positioning us well to reach our long-term ASP target of $1,700 to $1,800 per test. Let's now turn to Slide 6 to review progress on EMR integrations. Our EMR integration efforts continue to gain momentum across both academic and community settings. These integrations are a key driver of volume growth and support two other important strategic initiatives. The first is to build a scalable moat around clonoSEQ, protecting against new entrants and minimizing disruption from account turnover. The second is to maximize clonoSEQ's usage across the care continuum by directly embedding into EMR-driven workflow, which translates into more tests per patient. Since last quarter, we've completed 11 integrations, 7 academic and 4 community with 6 of our top 10 accounts now integrated. Among accounts integrated with Flatiron last quarter, volume in these accounts grew 17% sequentially and now represent 24% of our community volume, up from 20% prelaunch. We're also leveraging integration to enable serial testing plans with many ordering providers at Flatiron integrated accounts selecting recurring testing at 3, 6 or 12-month intervals. Importantly, nearly 40% of our commercial tests this quarter came from integrated accounts, which contributes to continued outpacing growth from non-integrated accounts. Looking ahead, we plan to further expand our EMR footprint and expect continued acceleration from integrated accounts with fewer ordering discrepancies and deeper account retention. Now let's turn to MRD Pharma on Slide 7. Our MRD Pharma business delivered a solid quarter with revenue up 11% year-over-year, including $6.5 million in milestone revenue. Multiple myeloma remains the largest contributor to our biopharma portfolio at over 60% of our active trials, followed by CLL at 17% and ALL at 9%. We ended the quarter with a backlog of more than $200 million, reflecting strong partner demand and sustained program activity. clonoSEQ is most well established as an endpoint in multiple myeloma, where the ODAC and CHMP votes reinforce its role in assessing treatment response and supporting accelerated approvals, particularly in the frontline setting. The momentum is now extending to other lymphoid cancers and driving diversification across our portfolio. Endpoint qualification efforts are underway in CLL and DLBCL, which are already translating into results. 2025 CLL bookings are more than twice what they were last year. Currently, the FDA is accepting MRD as an endpoint on a case-by-case basis in other lymphoid cancers. Of our 19 ongoing primary endpoint studies, 12 are in multiple myeloma, 6 are in leukemia, and 1 is in MCL. While recent agency news views on surrogate endpoints have introduced some uncertainty, we remain confident MRD will gain broader acceptance as an endpoint for accelerated approval in other lymphoid cancers. As the first and only FDA-cleared MRD assay, clonoSEQ holds a distinct and durable position to capture this market. In summary, MRD is a strong growth engine with multiple levers to increase penetration. Now let's turn to Immune Medicine on Slide 9. Our Immune Medicine business is executing across our three strategic priorities. First, we continue to generate large-scale, high-quality proprietary data to develop a digital TCR antigen prediction model. We're making good progress by using our data to train and improve the accuracy of our models. As we deploy these models, we see promising results in multiple immunology applications. One of these applications included the ability to select the best TCRs to use in cancer cell therapy products in partnership with Genentech. Earlier this quarter, we announced the conclusion of our partnership with Genentech following its internal portfolio prioritization. As a result, Adaptive is released from exclusivity and any further obligations related to this partnership. Importantly, the scientific and technical progress we've made along the way allowed us to significantly accelerate both our data generation and our AI/ML modeling capabilities across multiple use cases. We are deploying our knowledge and infrastructure that we built towards multiple high-value partnership opportunities. Second, for our T-cell depletion antibody program, we are on track to establish a preclinical data package in our lead autoimmune indication. This quarter, we selected our lead antibody candidate. This key milestone is based on robust potency and other functional characterization data that we generated this year. We've also started planning for CMC tox work, which represents a key step towards IND-enabling studies for this lead T-cell depleting antibody in autoimmunity. As we continue to execute on these two focused R&D priorities, we remain financially disciplined and are on track to achieve our 2025 cash burn target between $25 million and $30 million. Now I'm going to pass it over to Kyle to walk through the financial results and updated full year guidance.

Thanks, Chad. First, I will go over the financial results, including $33.7 million of noncash revenue recognized this quarter from the remaining amortization of payments previously received from Genentech. Total company revenue for the third quarter was $94 million, representing a 102% increase year-over-year. Total company adjusted EBITDA was $28 million compared to a loss of $14.3 million a year ago. Interest expense from our royalty financing agreement with OrbiMed was $3 million, which was $700,000 higher than interest income. Net income from the quarter was $9.5 million. Now and as shown on Slide 10, the revenue and adjusted EBITDA figures which I will be discussing forward are presented excluding all noncash revenue from Genentech in all periods presented. Looking at this quarter's performance on Slide 10. MRD revenue grew 52% year-over-year to $56.8 million, with clinical and pharma contributing 67% and 33%, respectively. clonoSEQ test volume, including international, increased 38% versus last year to 27,111 tests delivered. U.S. ASP grew 28% to over $1,340, reflecting continued strength in cash collections and improved pricing through our various contracting initiatives. MRD Pharma revenue grew 11% year-over-year, inclusive of $6.5 million in milestones. Immune Medicine revenue from pharma and academic services was $3.4 million versus $5.5 million a year ago. Turning to gross margins and expenses. Total company gross margin, again, excluding Genentech revenue, was 70%. Sequencing gross margin, which excludes MRD milestones, was 66%, up from 56% a year ago. This improvement was driven by operating leverage in the lab from higher volumes, stronger pricing across both clinical and pharma and efficiency gains from the NovaSeq X implementation. Total operating expenses, including cost of revenue, was $83.7 million, up 6% year-over-year and flat sequentially. The year-over-year increase was primarily driven by higher SG&A expenses related to our expected EMR and reimbursement efforts and higher cost of revenue from volume growth, partially offset by lower R&D expenses. Turning to profitability. As shown on the segment reporting table at the bottom of the slide, the MRD business delivered positive adjusted EBITDA of $7 million compared to a deficit of $6.1 million a year ago. Immune Medicine adjusted EBITDA deficit, again, excluding the Genentech revenue, was $10 million versus $8.7 million in Q3 of last year. At the total company level, adjusted EBITDA, excluding Genentech, was a loss of $5.8 million compared to a $17.8 million loss a year ago. Total company net loss for the quarter was $24.2 million, again excluding Genentech. Turning to our full year 2025 updated guidance on Slide 11. We are raising our full year MRD revenue guidance to a range of $202 million to $207 million, up from the prior range of $190 million to $200 million. This increase reflects stronger-than-expected clinical revenue performance in Q3 and higher MRD milestone revenue for the year. With sustained clinical volume momentum, we now expect to deliver approximately 104,000 tests for the year, exceeding our prior growth target of 35% over 2024. We also expect MRD milestone revenue between $18 million and $19 million, up from our previous $14 million to $15 million range. Overall, this outlook implies 39% to 42% total MRD revenue growth year-over-year and 38% to 42% growth for the MRD base business, which excludes milestones at the midpoint. We are also tightening and lowering the top end of our total company operating expense guidance, including cost of revenue to $335 million to $340 million from our previous range of $335 million to $345 million. We continue to expect roughly 69% of expenses from MRD, 23% from Immune Medicine and the remainder from unallocated corporate costs. Further, we are also narrowing and lowering our full year company cash burn guidance to $45 million to $50 million from the prior $45 million to $55 million range, driven primarily by higher MRD revenue. We expect approximately 15% cash burn from MRD, still anticipate $25 million to $30 million from Immune Medicine and the balance from unallocated corporate costs. It's encouraging to see the MRD business generate positive cash flows, achieve positive adjusted EBITDA on the base business, all while continuing meaningful top-line growth. With that, I'll hand it back over to Chad.

Thanks, Kyle. Our results this year highlight the strength of our strategy and the discipline of our execution. MRD is now a profitable scaling business that is delivering consistent growth and margin expansion, and Immune Medicine continues to advance key R&D programs and unlock new partnership opportunities for future growth. We're confident in our trajectory and are well positioned to finish the year strong with a solid foundation for long-term value creation. With that, I'd like to now turn the call back over to the operator and open it up for questions.

Our first question comes from Mark Massaro at BTIG.

On the strong beat and raise. Just a question maybe to start. It looks like your MRD Pharma business is becoming a little more recurring in nature than it was maybe a year ago, and it's actually starting to look linear, increasing about $1 million a quarter. I'm not expecting this to continue in a linear way. But can you just give us a sense of the $200 million you have in the backlog, how should we think about that backlog being released, say, over the next several quarters?

Thank you for the question, Mark. First, I want to express that we are happy with the business's performance and will reaffirm our expected revenues for the year. We believe that the recent decisions from ODAC and CHMP regarding multiple myeloma, along with our robust pipeline in NHL and CLL and accelerated progress in leukemia, indicate strong potential for 2026 and beyond. While we haven't provided guidance for next year, we anticipate continued growth similar to this year. Additionally, our backlog, which we expect to recognize over a 5 to 7-year period, is quite solid heading into the year. Our new bookings have also been strong, and we expect this trend to continue, especially with the potential role of MRD as an endpoint in various indications beyond multiple myeloma in the coming years.

It's great to see the 38% growth in MRD volume. I'm not asking for specific guidance on 2026, but considering your Epic integrations and other EMR integrations, along with the increase in blood and community penetration and the testing of new patients, there are multiple factors working in your favor. Is there any reason to believe that a 30% growth target for MRD volume in 2026 is achievable?

Mark, thanks for your question. As you mentioned, we're not going to specifically yet come out with 2026 guidance. I can just say all of the underlying factors that you mentioned give us great confidence in the trajectory of the business in 2026 and beyond, and we will provide more specific guidance shortly.

Our next question comes from Subbu Nambi at Guggenheim.

So again, in the spirit of just trying to model on clonoSEQ ASPs, can you help us think about next year? I know your long-term target is $1,800. But as we think about next year, it appears clonoSEQ is well on track to hit your target this year. How much should ASPs continue to lift from here?

Yes, Subbu, I appreciate the question. Look, I won't give a firm number yet on 2026. But what I can say is with the profile of the business and $1,340 in Q3, I feel confident about the exit rate that we're going to exit the year at. With the momentum around coverage and not only CLL and what we're seeing in DLBCL as well, I think we're setting our foundation up fairly strong to go into 2026 to have meaningful growth in ASP. And that's where we think we are. And again, I reiterate that $1,700 to $1,800 long-range target, and we'll continue to grow for next year.

Perfect. And another one for me. Our mature EMR integrations remaining strong, what do those run rates look like? And if still accelerating for the more mature accounts, how long before some of them actually steady off?

Sure, I can address that question, Subbu. As you may have noticed, our EMR integrations have been progressing well and driving growth across accounts of all sizes, both academic and community. It's important to highlight that we are not only experiencing growth acceleration, but we are also safeguarding our existing business against competition. We are increasingly finding ways to leverage tools developed within the EMR to enhance the consistency and frequency of testing, which will provide long-term value for our growth in those accounts. We observe that more mature integrated accounts continue to grow at a faster rate compared to non-integrated accounts. This can vary somewhat based on the size of the account. As you can imagine, well-penetrated accounts may not maintain the significant acceleration we see post-integration over the long term, but we still experience various benefits in those larger accounts even if their growth stabilizes after a while. The integration facilitates easier ordering for more healthcare professionals, which mitigates the impact of staff turnover. Additionally, we see a reduction in healthcare professional workload, making it easier for us to maintain that business, and we are strengthening our competitive advantages. Therefore, even in our largest accounts, there are long-term benefits. To provide some statistics, in Q3 compared to Q2, our integrated account commercial volumes experienced 9% quarter-over-quarter growth across the entire group, whether mature or newer, while non-integrated accounts grew by 6%. This reflects a 50% increase in the growth rate when looking at the entire group. The group is expanding, and the number of mature accounts is increasing over time, although it remains relatively small. Most of our integrations are less than a year old. We will have more insights as this progresses, but we are confident that this trend is real and something we can continue to develop using the tools offered by the EMR to optimize testing.

Fantastic. And given we recently initiated in most of our checks, we felt the competition was nonexistent almost or there was no close competitor, maybe a distant second. So when you refer to competitive moat, could you shed light on what kind of tests truly compete with clonoSEQ?

Sure, in many of our indications, we are primarily competing against the lack of testing or traditional methods for disease burden assessments that do not really utilize minimal residual disease (MRD). Our main focus is on educating clinicians about the clinical data, its utility, use cases, and increasingly the supportive guidelines for MRD adoption. There are technologies, such as traditional and next-generation flow, that are commonly used in academic institutions, which we compete with in those environments. Our data convincingly demonstrates the advantages of clonoSEQ over both traditional and next-gen flow, and we will present additional data at ASH that reinforces this point, alongside many existing datasets favorable to clonoSEQ. We are aware of emerging competition in diffuse large B-cell lymphoma, with competitors entering the market, and we expect more to do so in the coming year. However, we are very confident in our position. We have built strong credibility and possess extensive clinical experience, having conducted over 7,000 DLBCL tests in the last year with more than 900 healthcare providers ordering them. Our established clinical base is robust, along with several other advantages including our commercial footprint, relationships, Medicare coverage, and expanding commercial payer coverage, which is starting to gain traction. Furthermore, we provide universal testing for all lymphoid cancers. Therefore, even in a space with increasing competition, we believe we are well positioned to maintain our leading market position.

Our next question comes from Andrew Brackmann at William Blair.

Chad, I think you called out recent guideline wins this year and even in Q3. Obviously, we saw those throughout the year. But have you seen those sorts of changes to the guidelines start to impact utilization already? Or is that still something on the come? And then I guess bigger picture here, just on the commercial front, how are those updates perhaps changing the conversation that your team is having with these docs?

Yes. I'll begin by highlighting our impressive list of guideline wins this year and then I'll pass it to Susan for insights on the clinical impact. First, there have been significant guideline updates in multiple myeloma, with a stronger recommendation for clonality ID assessment this year. This is crucial for clonoSEQ as it helps lessen the obstacles to initial ID testing. It's also pertinent to our educational efforts and community engagement, which are essential for our growth. Additionally, in DLBCL, MRD assessment was incorporated into the NCCN and lymphoma guidelines for the first time. In CLL, the guidelines now recommend serial MRD assessment with specified intervals of 3 to 6 months. They also reinforce that NGS can serve as an alternative to flow, as Susan mentioned. This is an excellent opportunity for us to provide information that highlights clonoSEQ's ability to identify disease overlooked by flow below a threshold of 10 to the 4. I want to emphasize that these guidelines were released this year. They serve as a powerful talking point for us when presenting strong data. Now, I'll turn it over to Susan to discuss how this is influencing clinical uptake.

Sure. I can give you a couple of examples. First, in multiple myeloma, we've discussed the MIDS data, which allows MRD-negative patients to potentially avoid a transplant. With the support of the guidelines, we can emphasize the importance of the ID test at diagnosis to ensure that no patient misses this opportunity. This is particularly significant in community settings where patients must leave their local doctor for a transplant, which is not ideal for either party. Thus, there is a strong motivation supported by the guidelines to recommend the ID test, ensuring that more patients can access the MIDS message we're promoting. In CLL, with the recent updates to the guidelines, we're just beginning our efforts, but we are introducing community doctors to the benefits of limited duration therapy, an area where they have limited experience so far. We anticipate that upcoming approvals of certain combination regimens mentioned in the guidelines will allow us to discuss testing frequency related to limited duration therapy in a more detailed way, which is what community doctors are seeking. They want us to clarify when and whom to test, and the guidelines significantly enhance our ability to convey this information.

Susan, maybe a follow-up there. I think in an earlier question, you referenced tools in the EMR to increase the frequency of testing and getting that scheduled maybe. Just sort of practically, what are you referencing there? And I guess, how does that drive the increased utilization here?

Sure. Yes. A couple of things that I'm referencing are things like treatment plans and order sets. So there are ways within Epic, let's say, that a clinician or a department can set up specific sets of actions that they want to take for a given type of patient at a given point in time. And we are now talking to clinicians in our integrated accounts increasingly about how clonoSEQ might be incorporated into order sets, how do guidelines, existing data, well-vetted clinical trial designs support specific time points, where are there places where you might want to make decisions? Would you want to have the clonality ID incorporated into the diagnostic workup? All of those things can be facilitated by tools that are built into Epic. Additionally, there are tools that allow you to do essentially analytics and reporting on your patient population. For example, very easily in Epic, you can pull up a list of all the patients who are within, let's say, 1 month of the end of a frontline induction regimen in DLBCL. You can make sure that your staff has those patients on their radar to place a clonoSEQ order when they come in. So that kind of thing is incredibly powerful. And it's really where you're going to hear us talking a lot more in 2026 about those types of things because we're shifting from just getting as many accounts integrated as possible. We'll continue to do that, but now we can also look at our integrated accounts and what are all the opportunities to use those tools.

Our next question comes from Sebastian Sandler at JPMorgan.

Congrats on the quarter. My first question is on community. I think that had another solid quarter. It seems to be continuing to accelerate. Can you just help us level set where we stand in penetration into the community, which is where most of the heme cancer patients are treated? And then do you have any color on whether the sequential increase in HCPs from these practices are coming from new accounts versus existing accounts? And I think you've kept your sales force headcount relatively stable. So I'm wondering if you have any plans to expand as you penetrate further into the community setting? And I have a follow-up.

Sure. Thanks for the questions. First, we've made significant progress in community penetration, with approximately 30% of our volume coming from community settings. However, we still have considerable room for growth compared to academic settings. We're actively taking steps to enhance our presence in this area, including the recent integration with OncoEMR through Flatiron Health, which has yielded positive results. In fact, we saw 17% quarter-over-quarter growth in our Flatiron accounts in Q3. Although we are just starting to explore our serial testing option in that interface, there is significant interest, and we are eager to see how we can facilitate testing in the upcoming months. Regarding healthcare providers, there is still a lot of untapped potential in the community. While it takes time to establish relationships with new accounts, we're seeing success with new providers in both new and existing accounts. For existing accounts, integration is key to onboarding new providers, as it simplifies the ordering process. We're also focused on Flatiron accounts that have not yet adopted clonoSEQ and are exploring additional opportunities outside that segment. As for our sales force, we've assessed our current team of 65 representatives, about half of whom concentrate on community settings. We believe this is the optimal number based on potential in various regions and the volume of accounts and providers each rep can effectively manage. We continuously monitor our sales alignment and may modify territories as new opportunities arise. In the long run, we may consider new strategies that could necessitate additional hires, but we do not expect any major expansion soon.

Got it. Very helpful. And then my second question is on sequencing gross margins. So those had a nice step up. Can you give us a little more granularity on the individual drivers of that improvement? I think more of the uplift from the X transition was expected to fall more in 4Q, but I'm wondering if that benefit was accelerated and had an outsized impact in Q3? And then any color on how we should think about sequencing gross margins exiting the year would be helpful.

Thanks, Sebastian. Yes, I appreciate the comment. Sequencing gross margin was 66%, and that was up from 64% in Q2. I'd say if you drill in a little deeper on the MRD business alone, it was up 3 percentage points, and NovaSeq X contributed 2 percentage points of that. So certainly taking out the lion's share of the improvement. We were only integrated starting at the end of July, so really 2 months of benefit. So expect it to continue. And in terms of guidance as it relates to exiting the year, we said 5 to 8 percentage points post-launch, still reaffirming that. And I think we'll see a continued step-up, especially as the volume continues to grow exiting the year.

Our next question comes from William Bonello at Craig-Hallum.

I want to revisit the question Andrew asked about the EMR tools. Did I understand correctly that you mentioned a physician can now place an order that covers multiple testing time periods upfront, whether it was with Epic or OncoEMR? If I heard that correctly, could you explain how that works? Is it available for all indications? Can practices customize it? You mentioned some time points, but I'm unsure if those are fixed or if doctors have flexibility. Additionally, what kind of increase in tests per patient do you expect from this capability?

Sure. I'd be happy to talk more about that, William. So the serial testing option is available to our Flatiron integrated accounts. So OncoEMR offers this as an option in their interface that we've taken advantage of. What essentially happens is when you're placing an order, you have to select from a drop-down whether you'd like a single order or a serial cadence, which can vary from 1, 3, 6 or 12 months. It's as simple as selecting from the dropdown. And that is universal for all OncoEMR accounts that utilize their molecular precision NPI tool, which is what we use to provide integrated test ordering. It's across all indications. It isn't customizable in the sense that it looks the same for every practice, but it is up to the HCP what cadence they select. We do see variability depending on whether an HCP is going to do blood or bone marrow, depending on whether they are testing in DLBCL or CLL, etc. We haven't quantified the specific lift associated with this yet because, as I mentioned, we're only 3 months in, and most clinicians are selecting a 3 or 6-month cadence. We are just now getting to the point where we'll be able to start measuring, do we pull those orders through, or do the physicians elect to delay or not send the sample. But we are confident based on the early results that we will get incremental test growth from that offering, and we are looking at whether there are ways to extend it to other parts of our business beyond Flatiron.

And so if a physician, for instance, selects a 3-month cadence, does that mean that for a period of time, every 3 months, another test is being ordered? I just want to make sure I understand that.

Correct. It essentially works that way, but it's like a placeholder order. The order is scheduled in the patient's calendar within the EMR system. When the due date arrives, it notifies the clinic staff that the patient is due for another blood draw for a clonoSEQ test. The staff still need to take the necessary action to complete the blood draw before it officially counts as an order for us. None of these orders are included in our order numbers. However, we are actively working to address this by implementing reminders and field tactics to ensure that our clinicians are aware of these upcoming orders. We expect to successfully process some of these and provide more consistent testing to patients over time.

Okay. That's really helpful. And then just a completely different question for you guys. Where are we at in terms of blood today and uptick with blood as sort of a percent of what you're seeing? And what are your thoughts on that looking forward?

Sure. So overall, we have now reached 45% of all MRD tests being performed in blood. That was actually our goal for the year. So we're pleased to have achieved that a quarter early; our expectation was to exit the year at 45%. We are seeing increases in blood-based testing in both myeloma and ALL, which are traditionally marrow-based tests. We now are at 37% of ALL tests in blood and 24% of multiple myeloma tests in blood. That's each up about 3 to 4 absolute percentage points from a year ago. We're also seeing increased contribution from our primarily blood-based indications, which include DLBCL, MCL, and CLL. DLBCL, in particular, is driving some of the growth in blood-based testing because it's simply becoming a larger portion of our total test base.

Sure. Okay. And then if I can, just one last question. You mentioned the national contract wins and just the way the bullet points were on the slide, I wasn't totally sure if you were saying those were related, if there were two distinct points. Are the rate increases related to just DLBCL and CLL? Or are those across all modalities? And then secondly, did we see any benefit from that this quarter? Or is that all ahead of us?

Yes, I'll begin and then Kyle can follow up. First, it's important to distinguish between coverage and potential rate increases, as they can sometimes occur together. In my prepared remarks, I mentioned that we secured our first commercial payer coverage for DLBCL and also received additional coverage for two CLL policies. These changes are effective now, but their impact will be felt over time and won't be included in this quarter's results.

Yes, that's right. And the contracting initiatives or wins we flagged were in effect in Q3. Some of that pull-through in Q3. We still think there's some room to go just from an implementation perspective with some of those payers that we're still working some of the kinks through, but we'll get there on that front.

Just to give you a good example. Remember, we discussed a major payer win in terms of contracting for Anthem last quarter, and the implementation happened this quarter. So you do start seeing a lift in terms of your ASP from that. So there's a lag often between contracting and implementation and kind of the rate increase and/or the rate increase.

Okay, that makes sense. When I look back at it, I see there are two distinct points. You receive coverage policy from the two, and I understand that there were three national payer price increases, as you mentioned.

Correct.

That was in effect in Q3.

Our last question comes from David Westenberg at Piper Sandler.

I want to begin by discussing the contribution margin of MRD at this time. I understand you might not provide the exact number, but I am considering how, as we experience growth in that area, we approach cash flow breakeven and manage our pacing. Additionally, given your strong competitive lead in MRD in blood right now, how are you planning to balance investments in sales and marketing and other areas to enhance that competitive advantage, possibly through clinical studies or similar initiatives?

Yes. Thanks, David. On the contribution margin comment, certainly, we have control to be able to manage and pace the growth as long as we continue to see and expect to see the growth. Again, this quarter was a great accomplishment to see the cash flow positivity, which gives us some confidence going forward that the business will remain cash flow positive. That being said, we may choose to make some additional investments to press the gas and grow faster, either in volumes and/or in the reimbursement environment. All of those things get combined give us a little bit of control. As the volume continues to increase, we can decide whether or not we want to reinvest in the business and what areas we want to go after.

Maybe I'll add on to that, and then Susan can as well. First, I think it's worth pointing out, even though we've had great growth, there's still a long way to go in penetration in order to fully capture this large and expanding total addressable market opportunity. But particularly in terms of investments, we are continuing to invest in blood-based testing, both in terms of assay improvements and in terms of clinical studies. In addition to blood-based testing, I think that's a key initiative for us overall is investing in clinical studies to continue to demonstrate the clinical utility of the assay where a doctor can use our test to improve patient care across the continuum, and we'll continue to make those investments.

Got it. Just real one quick one on the guide, and apologies, I've been jumping between 3 calls here. But is there any seasonality in the Q4 MRD number? I mean I think you've had sequential growth of, I think it was 10%, 10%, 7%. I realize you can't maintain that forever. But I think the guide would imply that maybe the volumes or the ASPs might be a little bit lower than what you've gotten in the quarter-over-quarter. Just wanted to see if you can remind us on the seasonality there. And yes, I'll just stop there.

Yes. Yes. As it relates to guide, certainly something we are contemplating with respect to our guidance. Obviously, the volume growth has been phenomenal, and we expect it to continue to be phenomenal. But Q4 is one of the tougher periods with the amount of holidays and ordering. So I think that factored into some of our guide. But again, longer term and into '26, we think there's strong growth ahead of us. So there's a little bit of seasonality in that growth. It doesn't mean we can't beat it, but that is factored into our guide.

Got it. I might just squeeze in one quick question since I may be at the end of the queue anyway. What are your thoughts on the potential for clonoSEQ to be considered a primary endpoint, especially regarding its use as a primary measure? How far are we from that happening? I assume clinical trials are speeding up and more promising drugs are emerging because of this. When can we expect advancements in other areas such as CLL, ALL, and non-Hodgkin lymphoma?

Sure. As Chad mentioned earlier, there are active efforts underway for both CLL and DLBCL to establish a similar designation as the one provided by ODAC for myeloma regarding MRD as an accelerated endpoint for approval. The initiative for CLL is being led by several key opinion leaders and in collaboration with a wide range of pharmaceutical partners. We are also getting directly involved in this effort. The leaders of that initiative have indicated that it took 10 years for multiple myeloma, but it will not take 10 years for CLL. This is because we now have a clear understanding of what the FDA requires. However, the FDA has evolved since the ODAC vote, creating some uncertainties. Nonetheless, data collection is progressing quickly, and all participants are optimistic that despite the current administration, we will see advancements happen much sooner than they did for multiple myeloma. Other conditions beyond CLL and DLBCL may also explore this in the future.

And just one point in terms of quantifying this in terms of bookings. Our 2025 CLL bookings are more than twice what they were last year in the MRD Pharma space.

Our last question comes from Dan Brennan at TD.

Maybe just on DLBCL, I mean, the mix ticked up pretty nicely in the quarter. I know you may have addressed it a little bit, but just speak to a little bit what you're seeing there and how we might think about the opportunity there as we go into '26 in terms of the pace of progress.

Sure. Thanks for the question, Dan. We are currently observing a solid increase in the contribution of DLBCL, rising from 6% a year ago to 9% this quarter. It seems likely that DLBCL will surpass CLL as the third largest indication in the next quarter or two, although we expect the CLL business to benefit from the recent guidelines update. There are a couple of factors contributing to DLBCL’s growth. One is the significant attention surrounding MRD in the field, not just from us but also due to extensive data generation happening. Many pharmaceutical companies are interested in how they can leverage MRD-guided treatment to improve outcomes in this disease, which is curable for some patients and hopefully for an increasing proportion over time. Several companies are either advancing or contemplating trials that will incorporate MRD-guided elements in the upcoming years. This interest, combined with the existing clinical demand, will likely lead to more use cases for MRD in clinical settings.

Great. And maybe just a follow-up. I know there's a few questions on margins. But just wondering as an early read, if we think about into '26 and the investments you're making, but yet the OpEx leverage path you're on, just can you remind us how we might think about the early look on OpEx leverage as we go into '26 and what are the key puts and takes?

Yes. I mean, I think we will continue to see growth in investment areas like EMR. But at this point, we're not planning any major investments. That being said, we might change our mind. But at this point, I think we're going to continue to see meaningful leverage across the business and look at opportunities to take advantage of the position we're in, in the MRD business.

The other area that I mentioned earlier, Dan, is continuing to invest in data generation for clinical utility studies. But overall, we're looking to continue to get leverage out of the business.

This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.