Chad Robins : Yes, so, absolutely, as we kind of previously mentioned and I’ll reiterate, we are looking and we have been testing the NovaSeq and we’re looking at a switch for the NovaSeq by the end of this year. And that will have a significant reduction in the cost of goods sold. But in addition to that, as Tycho’s said no stone is being left unturned. We’re looking at, you know, our operating cost as well and we continue to refine the business to sort of figure out how we can increase the profitability profile over time. So, yes, the answer is yes. We are absolutely looking at the cost side of the equation.
Tycho Peterson: And there’s another couple of things we’ve highlighted we’re doing a lens overhaul, in the first half of the year that will have implications for overhead. We are reducing the number of extractions that we process. So there is a lot in terms of the workflow.
Mark Massaro : Okay, and then my last question is just on mantle cell lymphoma. Can you just talk about maybe remind us the size of the market and timing of commercial launch and what you think that might do to expand sort of that portfolio?
Susan Bobulsky : Yeah, sure. Mantle cells are relatively smaller indication more similar to perhaps AOLs in myeloma in the in the context of our existing covered indications. That said it is an area of unmet need for monitoring and certainly an area of high interest for MRD based on our interactions with clinicians to-date. We already have significant existing volume with several KOLs in the space and anticipate that Medicare coverage, which we are actively seeking today will be the trigger for us to begin proactively commercializing that indication. We’re looking forward to continuing to interact with – and are actively engaged with them now. So we expect to have more information this year.
Mark Massaro : Excellent. I’ll keep my questions there. Thanks guys.
Chad Robins : Thanks, Mark.
Operator: Thank you. One moment for our next question. And our next question comes from line of Tejas Savant from Morgan Stanley. Your question, please.
Unidentified Analyst: Hello. Hi. This is [Indiscernible] on the call for Tejas. Earlier this year, you talked about potential for FDA to accept MRD as a primary surrogate endpoint in multiple myeloma. Could you elaborate on what you’re hearing and how quickly we could see that associated upside for MRD business?
Chad Robins : Yeah, what we’ve heard is through the International myeloma working group that several members of that committee had heard that the FDA was considering multi myeloma as a primary endpoint. So we are waiting for that decision. I don’t have any more resolution into the timing of that. But we’re certainly hoping that that comes in the first couple of quarters of this year. But again, it’s hard to predict a government body. In terms of acceleration, obviously we have deals that have written into the contract that upon approval of the drug of our data is used as a primary endpoint that we – there are payments due. So, it would certainly be beneficial to the business.
Unidentified Analyst: Great. Thank you. And then, a separate follow-up, you talked about the limbs overhaul and NovSeq switch as some of the cost actions that are underway? Could you quantify the uplift in margins from those initiatives?
Tycho Peterson: Yeah. I don’t think I’m going to get that granular. I can talk a little bit about pacing and limited to first half of this year. We’ve been pretty clear that NovaSeq really won’t have an impact until 2025. One thing we have said is, at scale, the MRD business should easily be north of 70% gross margin. That includes both clinical and Pharma, but, kind of consistent with other CLIA Labs, but we’re not going to break out contributions from limbs versus, the Nova transition specifically.
Unidentified Analyst: Got it. And then,
Tycho Peterson: ASPs will also help here by the way.
Unidentified Analyst: Okay. And maybe just one slip in one more question here. In terms of the Flatiron – the Flatiron OncoEMR agreement, how much additional accounts, how much incremental would it be to the two Epic agreement that you already have?
Susan Bobulsky : You mean in terms of access to accounts?
Unidentified Analyst: Yes.
Susan Bobulsky : And so, Flatiron is engaged with – they have access to about 40% of the community oncology – community oncologists in the US 40. And they are also they’re currently implemented in 250 accounts, which is a bit of a number that’s hard to interpret because, it’s large – these are very large accounts, but the business potential for us is tremendous. I mean just the top 15 accounts that have utilized OncoEMR has 33,000 relevant patients for our disease indications. So, I think I’ll leave it at that.
Tycho Peterson: At a high level think about and why we do this. Think about Epic as way being integrated into the academic and medical centers and institutions and Flatiron, being integrated into the community oncology and network practices. And so that we’re trying to cover all bases and they’re one of the largest EHR providers within the community and gives us access. One of the benefits to Flatiron that we don’t have with Epic, it’s a faster, I mean it takes it takes a while to do the upfront setup cost and they’re backlog on timing. But we’re looking kind of at a fourth quarter of this year implementation, but once they hit once they hit kind of the button they can push it out to many of the sites all at the same time as opposed to having to go kind of one-by-one on the Epic integration.
So, certainly excited about it and excited about what we’re seeing early on from the Epic integrations that we’ve already done. So continuing to invest in making it easier for a doctor to order a test is something that we believe is going to lead to more testing ordered. And it’s just very simply. It’s a very simple equation.
Unidentified Analyst: Got it. Thank you so much for that color.
Tycho Peterson: You bet.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Andrew Brackmann from William Blair. Your question please.
Andrew Brackmann : Hi guys. Good afternoon. Thanks for taking my question. I just want to circle back on pricing here for a minute. I think in the past you sort of talked about some improvements coming from reducing Medicaid mix and then also revenue cycle management. We just sort of get an update on where those initiatives stand and how you are thinking about those impacts in 2024? Thanks.
Tycho Peterson: Yeah, I’d just kind of reiterate some of the things I mentioned in my prepared remarks. We’re really excited about the work that we put in and how it’s going to already starting to play out on a ASP increases. So we’re kind of reducing non-contracted claims auto policy claims and just working on a lot of a blocking and tackling on the appeals process prior off process et cetera. So, all those things are working. In terms of Medicaid, you’ll naturally as we continue to expand into going to more indications Medicaid is an overall percentage of our test mix, excuse me kind of wands up going down in a large percentage of Medicaid also relates to AOL. So, overall our initiatives on are working. What we’ve talked about just in terms of quantifying that is a $200 increase over the next two years and we’ve already we’ve already starting to see that work.
Andrew Brackmann : Okay, that’s perfect. And then, I just want to go back to your comments around for a gating R&D investments for specific proof points within the Immune Medicine side of things. Any color that you can give us with respect to some of the things you might be looking for as you’re thinking about what level of spend you might be comfortable there? Thanks for taking the questions
Tycho Peterson: And I am going to turn that over to showed Sharon Benzeno, who runs the IM business.
Sharon Benzeno: Yeah, thanks for the question. So, of course on the heels of our discovery of the first novel target using our platform it’s a Target that we’ve identified in multiple sclerosis. Obviously a devastating disease. And this year we’re very focused on further validation of the target as being causative of multiple sclerosis. We’re using both in vitro and in vivo MS disease models to ensure that data on that front we expect in the first half of the year. And then in parallel we are of course starting to think about what drug modality to use to be able to go after the target. In parallel, this year we’re also deploying and have already deployed our antibody discovery platform. We completed at the end of last year a successful proof-of-concept in MS for antibody discovery approach.
And so, we’re pretty encouraged by parallel processing those two work streams with the goal to ultimately have antibody candidates that we can designate as therapeutic candidates to advance over the next year – during the next two years into the clinic.
Andrew Brackmann : Great. Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Sung Ji Nam from Scotiabank. Your question please.
Sung Ji Nam: Hi, thanks for taking the questions. Maybe if I can pull it a little further on the MRD Pharma side, obviously, solid backlog there, but could you maybe talk about the trends you guys are seeing that’s specific to Adaptive? Are you seeing any child cancellations or it is mostly child delays or kind of lengthening of the studies?
Tycho Peterson: Go ahead.
Susan Bobulsky : I think probably one thing that’s relevant to notice that the indications that we are in the trends that we’re seeing in the broader market with regard to investment in clinical trials over the last several years in multiple myeloma, which is the largest contributor to our pharma business. The number of trials are steadily increasing. The number peaked in 2021 and since then it has been declining. And so, I think one thing to be aware of is that, for our specific business, we have a very strong position in that indication potentially maybe even stronger if and when the FDA accepts the MRD as a surrogate for accelerated approval. But we are competing for a smaller subset of trials or drawing kind of I should say smaller subset of trials over time.
In other indications like in Non-Hodgkins Lymphoma, the trends are different. The number of trials hasn’t started to decline. It seems relatively consistent over the last several years. And so, that’s a big area of focus for us in terms of growth is driving an increased penetration in the non-Hodgkins lymphomas whereas we have likely less growth opportunity just in the in the context of a smaller shrinking market in multiple myeloma over the longer term.
Sung Ji Nam: Gotcha. Great. And then just going back to the question on the MCL PTCL market opportunity there. My understanding is that, not DLBCL is roughly 25%, 30 % of NHL and then, that there’s about 60% of the aggressive subtypes of NHLs. So is the 60% of NHL kind of be potential adjustable market, do you think in the future? Or is it too early to tell just kind of curious how as we think about the potential market size?
Susan Bobulsky : Yeah, I think we’re – it’s early to say we’re still developing a lot of data in the non-Hodgkins Lymphoma and indications beyond the first few. And so, what percentage of that total addressable market we can ultimately tap into remains to be seen. But I will say that the assay is technically is applicable in any of these lymphoma and it will just be a question of which evidence we determine to invest in developing.
