ASP Increase to $1,300 in 2025
Q: What assumptions underlie the $1,300 ASP target for 2025?
A: The company is targeting an average selling price (ASP) of $1,300 in 2025, up from $1,050 in 2023, reflecting a $300 increase due to the new gapfill price. " This increase is expected to enhance the long-term margin profile but will take time to fully realize. The impact will be immediate for new Medicare patients, comprising about 20% of fee-for-service Medicare. " For commercial payers, the company plans to renegotiate contracts at higher rates, though timing is uncertain. Initiatives driving the $200 per test increase include expansion of payer coverage, closing contracts with large payers, operational enhancements, and shifting the test mix away from Medicaid. " An additional $50+ per test is anticipated from the new gapfill rate in 2025. " While there's potential for upside, management remains cautious about the pace of impacting remaining payers.

Guidance and Revenue Beat
Q: Why didn't you raise guidance despite beating revenue estimates?
A: Despite exceeding Q3 revenue expectations by about $6 million " , the company chose not to raise the upper end of the MRD guidance due to several factors. An unexpected ASP charge in Q3, which wasn't previously forecasted, impacted results. " Additionally, pharma revenues are volatile; delays in one or two studies can significantly affect quarterly outcomes. " There is also potential softness due to hurricane impacts, which the company is still assessing. " Management remains confident in their guidance but prefers to be prudent to ensure targets are met.

MRD Pharma Pipeline Growth
Q: What's the outlook for MRD pharma and milestone expectations?
A: The company has approximately $200 million in backlog for MRD pharma. " Confidence in the pharma profile is strong, with expectations of decent growth into 2025 similar to this year's performance. " Currently, there are 10 multiple myeloma studies using clonoSEQ as a primary endpoint, including 2 new studies and 3 converted from secondary to primary endpoints. " The ODAC decision is catalyzing this backlog and accelerating milestones as companies pursue approvals via the new accelerated approval pathway " " . Management anticipates more studies will convert to primary endpoints, enhancing access to outstanding and new milestones. "

Cost Savings Progress
Q: Where do you see further opportunities for cost savings?
A: Significant progress has been made in cost savings within G&A and R&D through restructurings and organizational flattening. " In sales and marketing, the company is leveraging existing investments and focusing on targeted areas like reimbursement operations. " Continued efforts to reduce overhead and drive additional leverage are ongoing, but there are no current plans for further targeted reductions. " Future efficiency initiatives, such as the NovaSeq project, are expected to contribute to cost savings. "

NovaSeq Rollout and Margin Impact
Q: What is the status of NovaSeq rollout and expected margin benefits?
A: The NovaSeq rollout is progressing well, with plans to launch in the third quarter of 2025, assuming all goes smoothly. " The company anticipates an annualized 5% to 8% improvement in the margin profile within the first 12 months post-launch, depending on volumes. " As volumes grow, margins are expected to expand further, supporting the long-term goal of achieving a 70% gross margin for the MRD business. "

EMR Integration and Volume Growth
Q: How will EMR integrations impact volume growth in 2025?
A: With 11 Epic EMR integrations completed, the company has become more efficient and observed strong growth. " Six accounts live since Q2 experienced 13% quarter-over-quarter growth in Q3. " For five accounts that went live recently, strong month-over-month growth was seen in October. " The company expects to have 20 integrations by year-end and aims for approximately 50% of total order volume to flow through integrated platforms like Epic and Flatiron by the end of 2025. " These integrations are expected to drive volume growth through improved standardization and efficiency.

Mantle Cell Lymphoma Coverage
Q: What's the potential for testing volume in mantle cell lymphoma?
A: Mantle cell lymphoma has an annual incidence of about 4,200 patients and approximately 20,000 prevalent patients in the U.S., similar to ALL, which accounts for 35% of testing volume today. " The aggressive and recurrent nature of the disease means patients may undergo multiple treatments and relapses, leading to numerous testing opportunities over their lifetime. " While clinical guidelines are not yet established for this indication, there is significant potential for MRD testing both in response assessment and ongoing monitoring for disease recurrence over time. "

Genentech Partnership amid Roche Pipeline Reduction
Q: How is the Genentech partnership affected by Roche's pipeline cut?
A: Despite Roche announcing a 25% reduction in their pipeline and reorganizing their oncology research division, they have assured the company that this does not impact their partnership with Genentech. " No further details were provided on this matter.

Payer Landscape Challenges
Q: How might payer cost concerns affect genetic testing coverage?
A: The company acknowledges challenges in the payer landscape due to rising costs. " For clonoSEQ, they emphasize the value it brings to patients and the healthcare system. " By demonstrating significant cost savings—such as reducing expensive maintenance therapies in multiple myeloma, which cost over $100,000 per year, through a test costing $2,000 per year—they highlight economic benefits to payers. " A strong focus on reimbursement contracting and operations is maintained to ensure appropriate payment and cash collection. "