Bill Bonello

Bill Bonello asked about the Immune Medicine (IM) business, noting its shift towards a data and informatics model rather than therapy development, and sought insights into monetizing its leading database and scaling the business over time. He also inquired about investments needed to make data more accessible to pharma clients and the timing of the business's inflection.

Answer

Sharon Benzeno, Chief Commercial Officer of Immune Medicine, expressed excitement about the two Pfizer data licensing deals and the potential to replicate similar or differentiated deals, leveraging the massive, differentiated dataset for various immunology applications. Chad Robins, CEO and Co-Founder, added that the Pfizer deals represent both data licensing for AI modeling and target discovery work, highlighting multiple monetization opportunities. Regarding investments, Mr. Robins stated that current investments are captured within the projected $15-$20 million net burn for the year, with future investments to be evaluated based on risk-adjusted returns.

Bill Bonello commented on the Immune Medicine business's strategic shift towards a data and informatics model rather than therapy development, asking about the monetization strategies for its leading database and how the business might scale over time. He also inquired about necessary investments to enhance data accessibility for pharma clients and the potential timing for this business to inflect.

Answer

Sharon Benzeno, Chief Commercial Officer of Immune Medicine, Adaptive Biotechnologies, expressed excitement about the two distinct Pfizer data licensing deals and the potential to replicate similar partnerships, leveraging the massive differentiated dataset for various immunology applications. Chad Robins, CEO and Co-Founder, Adaptive Biotechnologies, further clarified that the Pfizer deals represent both data licensing for AI modeling and target discovery work. He stated that all necessary investments for generating a robust dataset are captured within the projected $15-$20 million net burn for the year, indicating that future investment plans would be shared if a business case for higher risk-adjusted returns emerges.

Bill Bonello inquired about GeneDx's EBITDA margin outlook, asking if the company aims to maintain current levels or if margins might temporarily decrease due to incremental investments before improving significantly in the future. He also sought more detail on the steps required for a meaningful ramp in the general pediatrician market, beyond sales force recruitment and training, specifically regarding the ordering and results delivery platforms and other foundational work. Lastly, Bonello asked if GeneDx would consider partnering with larger lab companies to expand into the primary care physician market.

Answer

Kevin Feeley, CFO, stated that GeneDx is in an investment cycle, and while the commitment is to remain profitable on an adjusted basis, EBITDA margins may temporarily decrease in some quarters as investments ramp up before maturing into top-line contributions. Katherine Stueland, CEO and President, outlined key steps for pediatrician market ramp: extensive education to dispel myths and highlight benefits, workflow improvements for one-minute ordering, market access efforts aligned with guidelines, and direct sales rep engagement. Bryan Dechairo, COO, added that GeneDx's strong brand recognition among pediatricians supports their current direct-to-market strategy. Stueland acknowledged that while open to partnerships that drive the business forward, past experiences suggest partners may not prioritize GeneDx's offerings.

Bill Bonello of Craig-Hallum Capital Group asked about the expected trajectory of EBITDA margins given increased investments, the detailed steps required for a meaningful ramp in the general pediatrician market, and GeneDx's openness to partnering with larger lab companies for market expansion.

Answer

Kevin Feeley, CFO, indicated that while GeneDx aims for profitability, EBITDA margins might temporarily decrease during the investment cycle before contributing to future growth. Katherine Stueland, CEO and President, outlined key steps for pediatrician market penetration, including extensive education, workflow improvements, market access alignment, and direct sales engagement. She also noted that while open to new channels, past experience with partnerships hasn't been ideal, and Bryan Dechairo, COO, emphasized GeneDx's strong brand recognition among pediatric providers.

Bill Bonello of Craig-Hallum Capital Group LLC asked for a breakdown of the path to adjusted EBITDA positivity in Q4, questioning the mix of revenue leverage and cost-cutting. He also sought clarity on whether second-half revenue growth would be driven by volume or ASP, and inquired about the outlook for Development Services revenue.

Answer

Robin Harper Cowie, CFO, clarified that the path to Q4 adjusted EBITDA positivity is primarily driven by revenue growth, fueled by the planned sales team expansion to 93-97 reps. She stated there are no major cost-cutting measures planned. Cowie confirmed that the expected revenue acceleration is rep and volume-driven, with stable ASPs, and noted that Development Services revenue typically sees a seasonal uptick in the fourth quarter.

Bill Bonello of Craig-Hallum Capital Group LLC sought details on the AstraZeneca contract structure, asking if it was milestone-based, if milestones were within Sophia's control, and if it could generate ongoing revenue. He also attempted to clarify the deal's potential size and asked about the terms of the Perceptive financing.

Answer

President Ross Muken confirmed the AstraZeneca deal has a mix of base payments and milestone 'bullets' tied to deliverables, not clinical risk, and that it's too early to discuss potential ongoing products. He declined to size the deal but affirmed its materiality. EVP & CFO George Cardoza detailed the Perceptive financing terms as SOFR plus 6%, along with the issuance of warrants.

Bill Bonello of Craig-Hallum Capital Group LLC asked for a big-picture perspective on whether the paradigm shift from tissue-first to liquid-first seen with Guardant360 could be extrapolated to the MRD space, shifting perceptions of Reveal's tumor-naive approach versus tumor-informed tests.

Answer

Chairman & Co-CEO Helmy Eltoukhy agreed with the analogy, suggesting it's an underappreciated aspect of the Infinity platform. He explained that features from Guardant360 will migrate to Reveal, creating a differentiated product that analyzes active tumor biology, not just passenger mutations. He believes this will lead to two distinct MRD markets—tumor-informed and a 'massive' tissue-free market—similar to the dynamic in therapy selection, where liquid biopsy is becoming dominant.

Bill Bonello questioned the timing of the CEO transition and asked for a characterization of the Q1 outlook, noting that the commentary suggested a potentially slower start to the year than investors might have hoped for.

Answer

CEO Paul Diaz clarified that the transition timing was driven by a personal career opportunity and expressed his full confidence in the remaining team and strategy. Regarding Q1, CFO Scott Leffler highlighted a difficult year-over-year comparison due to a significant favorable prior-period adjustment in Q1 2024. COO Samraat Raha added that their view of the full year and typical Q1 seasonality (impacted by deductibles) remains unchanged.