Strategic Review Outcome
Q: Any update on the strategic review process?
A: Management couldn't comment on specific structures or alternatives but emphasized their goal to maximize value for all stakeholders. They have a strong cash position and are committed to providing an update soon.

MRD Business Growth Outlook
Q: What's the outlook for MRD revenue growth and guidance?
A: At the midpoint of guidance, the overall business is expected to grow over 30%. The clinical MRD business anticipates 50% revenue growth, driven by both volume and increased ASPs. Volume growth consensus is around 35%, which management agrees is fair. The pharma MRD business expects about 10% growth, acknowledging continued industry-wide headwinds but supported by a strong backlog of over $185 million.

Profitability and Cost Reductions
Q: How are you progressing toward MRD profitability and reducing costs?
A: They are on track to achieve MRD profitability in the second half of 2025. Cost reduction initiatives include switching to NovaSeq sequencing by year-end, which will significantly reduce COGS. A LIMS overhaul in the first half will also improve efficiency. At scale, the MRD business should reach gross margins north of 70%.

Pricing Improvements and ASP Increases
Q: How are ASP improvements progressing, and what's the expected impact?
A: They are reducing non-contracted and out-of-policy claims, improving appeals, and prior authorization processes. Medicaid mix as a percentage of tests is decreasing. They expect to increase ASPs by $200 over the next two years, with progress already underway and modeling a linear increase.

Epic and Flatiron EMR Integrations
Q: Can you elaborate on the EMR integrations and their impact?
A: Epic integrations are in early stages, with initial accounts seeing positive results and increased ordering. They aim to have 15 to 20 additional Epic integrations by year-end. The Flatiron partnership provides access to about 40% of community oncologists in the U.S., with implementation expected in Q4. This integration should streamline ordering and drive volume growth.

Blood-Based Testing Expansion
Q: Will blood-based clonoSEQ tests become the majority of volumes?
A: Yes, they believe blood-based tests can become the majority. Currently, nearly 40% of MRD tests are conducted via blood, and this percentage is growing steadily, especially as they expand into community accounts.

FDA Acceptance of MRD as Surrogate Endpoint
Q: Any updates on FDA accepting MRD as a surrogate endpoint in multiple myeloma?
A: They are awaiting the FDA's decision on accepting MRD as a primary endpoint in multiple myeloma. If approved, it could significantly benefit the business, but timing is uncertain.

MRD Pharma Business Trends
Q: What are the trends in the MRD pharma business, any trial cancellations or delays?
A: In multiple myeloma, the number of trials peaked in 2021 and has been declining, impacting growth opportunities. Non-Hodgkin's lymphoma trials remain consistent. The focus is on increasing penetration in NHL to offset myeloma trends.

Expansion into New Indications
Q: What's the plan for mantle cell lymphoma and other new indications?
A: Mantle cell lymphoma represents an area of unmet need. They have significant existing volume and expect Medicare coverage to trigger proactive commercialization. They're interacting with MolDX and anticipate more information this year. They are filing with Medicare on mantle cell lymphoma and CTCL this year.

State Biomarker Legislation Impact
Q: How might state biomarker bills affect your business?
A: They are increasingly optimistic that enforcement of state biomarker laws is starting to take hold, which could positively impact the business over time. However, this benefit is not currently included in the 2024 guidance.

Genentech Amortization
Q: Should we model the $14 million Genentech amortization ratably over the year?
A: Yes, modeling it ratably throughout the year is acceptable, although it may shift month to month.

Immune Medicine R&D Investments
Q: How are you gating R&D investments in the Immune Medicine side?
A: Following the discovery of a novel target in multiple sclerosis, they are focused on validating the target with in vitro and in vivo models, expecting data in the first half of the year. They're also advancing their antibody discovery platform to designate therapeutic candidates over the next two years.

Seasonality and MRD Revenue Cadence
Q: How should we think about MRD revenue cadence and seasonality?
A: Q4 typically has fewer business days, leading to lighter growth. In Q4, the U.S. clinical business grew 7%, while ex-U.S. grew more slowly, resulting in overall growth of 4%. They started 2024 with record volumes in January and expect MRD revenue to be 45% in the first half and 55% in the back half, indicating back-half weighting.

Mantle Cell Lymphoma Market Size
Q: What's the potential market size for mantle cell lymphoma?
A: Mantle cell lymphoma is a smaller indication, similar to ALL and myeloma, but there is significant interest for monitoring. The assay is technically applicable in any lymphoma, and expansion depends on data development. They plan to advance data generation and seek Medicare coverage.

Impact of NovaSeq and LIMS on Margins
Q: Can you quantify the margin uplift from NovaSeq and LIMS initiatives?
A: They are not providing specific details but expect the NovaSeq transition to impact in 2025. At scale, the MRD business should achieve gross margins north of 70%. ASP improvements will also contribute to margin expansion.