Press Release

Adaptive Biotechnologies Reports Second Quarter 2020 Financial Results

08-10-2020

SEATTLE, Aug. 10, 2020 (GLOBE NEWSWIRE) -- Adaptive Biotechnologies Corporation (“Adaptive Biotechnologies”) (Nasdaq: ADPT), a commercial stage biotechnology company that aims to translate the genetics of the adaptive immune system into clinical products to diagnose and treat disease, today reported financial results for the quarter ended June 30, 2020.

“The current coronavirus pandemic is highlighting the critical importance of a deeper understanding of the immune response to disease broadly, making Adaptive’s technology more relevant than ever,” said Chad Robins, chief executive officer and co-founder of Adaptive Biotechnologies. “In the past several months, we have demonstrated that we can read and translate the genetics of immune receptors in blood, including T-cell response at scale, which is enabling us to rapidly deliver novel, immune-driven products.”

Recent Highlights

  • Revenue was $21.0 million for the quarter ended June 30, 2020, representing a 5% decrease from the second quarter in the prior year. 
  • Clinical sequencing volume increased 31% to 3,136 clinical tests delivered in the second quarter of 2020 compared to the second quarter 2019.
  • Advanced our first immunoSEQ Dx clinical product in development for SARS-CoV-2 based on favorable results from a head-to-head study comparing Adaptive’s clinical T-cell based diagnostic test to two leading serology tests with additional publication forthcoming.
  • Launched a new research product, immunoSEQ T-MAP™ COVID, to offer vaccine developers a tool to accurately and reproducibly measure the T-cell immune response to vaccines in development and track the persistence of that response over time.
  • Received clearance from the U.S. Food and Drug Administration (FDA) for clonoSEQ® Assay to detect and monitor minimal residual disease (MRD) in blood or bone marrow from patients with chronic lymphocytic leukemia (CLL).  
  • Initiated two clinical validation studies for immunoSEQ Dx®: ImmuneSENSE Lyme for Lyme disease, and ImmuneRACE to collect blood samples from people who have been exposed, are actively fighting or have recently recovered from COVID-19.
  • Strengthened balance sheet with the successful completion of underwritten public offering, raising approximately $271.7 million in net proceeds.

Second Quarter 2020 Financial Results

Revenue was $21.0 million for the quarter ended June 30, 2020, representing a 5% decrease from the second quarter in the prior year. Sequencing revenue was $8.0 million for the quarter, representing a 33% decrease from the second quarter in the prior year. Development revenue increased to $13.0 million for the quarter, representing a 27% increase from the second quarter in the prior year.

Operating expenses were $57.9 million for the second quarter of 2020, compared to $38.2 million in the second quarter of the prior year, representing an increase of 52%.

Net loss was $33.5 million for the second quarter of 2020, compared to $15.7 million for the same period in 2019.

Adjusted EBITDA (non-GAAP) was a loss of $28.5 million for the second quarter of 2020, compared to a loss of $10.9 million for the second quarter of the prior year.

Cash, cash equivalents and marketable securities was $627.8 million as of June 30, 2020. Subsequent to the quarter, Adaptive Biotechnologies raised approximately $271.7 million in net proceeds, after deducting underwriting discounts and net offering expenses payable by us, from a follow-on offering, which closed in mid-July.

2020 Financial Guidance

Adaptive Biotechnologies is not providing 2020 financial guidance due to the continued uncertainties from the impact of COVID-19.

Webcast and Conference Call Information

Adaptive Biotechnologies will host a conference call to discuss its second quarter financial results after market close on Monday, August 10, 2020 at 4:30 PM Eastern Time. The conference call can be accessed at http://investors.adaptivebiotech.com. The webcast will be archived and available for replay at least 90 days after the event.

About Adaptive Biotechnologies

Adaptive Biotechnologies is a commercial-stage biotechnology company focused on harnessing the inherent biology of the adaptive immune system to transform the diagnosis and treatment of disease. We believe the adaptive immune system is nature’s most finely tuned diagnostic and therapeutic for most diseases, but the inability to decode it has prevented the medical community from fully leveraging its capabilities. Our proprietary immune medicine platform reveals and translates the massive genetics of the adaptive immune system with scale, precision and speed to develop products in life sciences research, clinical diagnostics and drug discovery. We have two commercial products and a robust clinical pipeline to diagnose, monitor and enable the treatment of diseases such as cancer, autoimmune conditions and infectious diseases. Our goal is to develop and commercialize immune-driven clinical products tailored to each individual patient.

Forward-Looking Statements

This press release contains forward-looking statements that are based on management’s beliefs and assumptions and on information currently available to management. All statements contained in this release other than statements of historical fact are forward-looking statements, including statements regarding our ability to develop, commercialize and achieve market acceptance of our current and planned products and services, our research and development efforts and other matters regarding our business strategies, use of capital, results of operations and financial position and plans and objectives for future operations. 

In some cases, you can identify forward-looking statements by the words “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. These risks, uncertainties and other factors are described under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in the documents we file with the Securities and Exchange Commission from time to time. We caution you that forward-looking statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. As a result, the forward-looking statements may not prove to be accurate. The forward-looking statements in this press release represent our views as of the date hereof. We undertake no obligation to update any forward-looking statements for any reason, except as required by law.

Use of Non-GAAP Financial Measure

This press release includes references to Adjusted EBITDA, which is a non-GAAP financial measure that we define as net loss adjusted for interest and other income, net, income tax benefit (expense), depreciation and amortization and share-based compensation expenses. We have provided a reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA at the end of this press release.

Management uses Adjusted EBITDA to evaluate the financial performance of our business and the effectiveness of our business strategies. We present Adjusted EBITDA because we believe it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry and it facilitates comparisons on a consistent basis across reporting periods. Further, we believe it is helpful in highlighting trends in our operating results because it excludes items that are not indicative of our core operating performance.

Adjusted EBITDA has limitations as an analytical tool and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. We may in the future incur expenses similar to the adjustments in the presentation of Adjusted EBITDA. In particular, we expect to incur meaningful share-based compensation expense in the future. Other limitations include that Adjusted EBITDA does not reflect:

  • all expenditures or future requirements for capital expenditures or contractual commitments;
  • changes in our working capital needs;
  • income tax benefit (expense), which may be a necessary element of our costs and ability to operate;
  • the costs of replacing the assets being depreciated and amortized, which will often have to be replaced in the future;
  • the non-cash component of employee compensation expense; and
  • the impact of earnings or charges resulting from matters we consider not to be reflective, on a recurring basis, of our ongoing operations.

In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

ADAPTIVE MEDIA
Beth Keshishian
917-912-7195
media@adaptivebiotech.com

ADAPTIVE INVESTORS
Karina Calzadilla, Vice President, Investor Relations
201-396-1687
Carrie Mendivil, Gilmartin Group
investors@adaptivebiotech.com


Adaptive Biotechnologies
Condensed Statements of Operations
(in thousands, except share and per share amounts)

  Three Months Ended June 30,   Six Months Ended June 30,
    2020       2019       2020       2019  
  (unaudited)
Revenue              
Sequencing revenue $   7,985     $   11,865     $    17,454     $    17,948  
Development revenue     13,003         10,273         24,444          16,856  
  Total revenue     20,988         22,138         41,898         34,804  
Operating expenses              
Cost of revenue     4,912         5,734         10,255         10,722  
Research and development     25,992         16,527         49,927         29,010  
Sales and marketing     14,332         8,897          28,339          16,714  
General and administrative     12,238         6,662          24,059          13,666  
Amortization of intangible assets     423         423         847         842  
  Total operating expenses     57,897         38,243          113,427         70,954  
Loss from operations      (36,909 )       (16,105 )       (71,529 )       (36,150 )
Interest and other income, net     1,893         446         4,787         2,105  
Income tax benefit      1,481         —         1,804         —  
Net loss     (33,535 )       (15,659 )       (64,938 )       (34,045 )
Fair value adjustment to Series E-1 convertible preferred
  stock options
    —         (710 )       —           (964 )
Net loss attributable to common shareholders $   (33,535 )   $   (16,369 )   $    (64,938 )   $   (35,009 )
Net loss per share attributable to common shareholders,  
  basic and diluted
$   (0.26 )   $   (1.23 )   $   (0.51 )   $   (2.68 )
Weighted-average shares used in computing net loss per
  share attributable to common shareholders, basic and
  diluted
    127,383,582         13,279,324         126,720,986         13,074,692  


Adaptive Biotechnologies

Condensed Balance Sheets
(in thousands, except share and per share amounts)

    June 30,   December 31,
      2020       2019  
    (unaudited)    
Assets        
Current assets        
Cash and cash equivalents   $   365,440     $   96,576  
Short-term marketable securities (amortized cost of $203,765 and $479,791,  
  respectively)
      204,940         480,290  
Accounts receivable, net       7,914         12,676  
Inventory       10,536         9,069  
Prepaid expenses and other current assets       10,691         14,079  
       Total current assets       599,521         612,690  
Long-term assets        
Property and equipment, net       26,833         60,355  
Operating lease right-of-use assets       37,619         —  
Long-term marketable securities (amortized cost of $56,405 and $105,263,
  respectively)
      57,383         105,435  
Restricted cash       2,138         2,138  
Intangible assets, net       11,081         11,928  
Goodwill       118,972         118,972  
Other assets       1,275         784  
       Total assets   $   854,822     $   912,302  
Liabilities and shareholders’ equity        
Current liabilities        
Accounts payable   $   3,686     $   4,453  
Accrued liabilities       4,832         4,371  
Accrued compensation and benefits       5,976         8,124  
Current portion of deferred rent       —         371  
Current operating lease liabilities       3,229         —  
Current deferred revenue       75,699         60,994  
       Total current liabilities       93,422         78,313  
Long-term liabilities        
Deferred rent liability, less current portion       —         6,918  
Operating lease liabilities, less current portion       42,503         —  
Financing obligation       —         36,607  
Deferred revenue, less current portion       187,462         219,332  
Other long-term liabilities       1,496         93  
       Total liabilities       324,883         341,263  
Commitments and contingencies        
Shareholders’ equity        
Preferred stock: $0.0001 par value, 10,000,000 shares authorized at
  June 30, 2020 and December 31, 2019; no shares issued and
  outstanding at June 30, 2020 and December 31, 2019
      —         —  
Common stock: $0.0001 par value, 340,000,000 shares authorized at June 30,
  2020 and December 31, 2019; 128,233,842 and 125,238,142 shares issued and
  outstanding at June 30, 2020 and December 31, 2019, respectively
      12         12  
Additional paid-in capital       958,097         935,834  
Accumulated other comprehensive gain       2,153         671  
Accumulated deficit       (430,323 )       (365,478 )
       Total shareholders’ equity       529,939         571,039  
       Total liabilities and shareholders’ equity   $   854,822     $   912,302  


A
djusted EBITDA

The following table sets forth a reconciliation between our Adjusted EBITDA and our net loss, the most directly comparable GAAP financial measure, for each of the periods presented (in thousands):

  Three Months Ended June 30,   Six Months Ended June 30,
    2020       2019       2020       2019  
  (unaudited)
Net loss $   (33,535 )   $   (15,659 )   $   (64,938 )   $   (34,045 )
Interest and other income, net     (1,893 )       (446 )       (4,787 )       (2,105 )
Income tax benefit     (1,481 )       —         (1,804 )       —  
Depreciation and amortization expense     1,998         1,870         3,976         3,653  
Share-based compensation expense     6,373         3,332         11,048         6,378  
Adjusted EBITDA $   (28,538 )   $   (10,903 )   $   (56,505 )   $   (26,119 )



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Source: Adaptive Biotechnologies