SEC Filing | Adaptive Biotechnologies

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to _____

Commission File Number: 001-38957

ADAPTIVE BIOTECHNOLOGIES CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Washington	27-0907024
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1165 Eastlake Avenue East Seattle, Washington	98109
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (206) 659-0067

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001 per share

ADPT

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 28, 2022, the registrant had 143,012,157 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of Shareholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II.	OTHER INFORMATION	40
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	41
Signatures		42

Adaptive Biotechnologies Corporation

FORWARD-LOOKING STATEMENTS

This report 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 report other than statements of historical fact are forward-looking statements, which include but are not limited to, statements about:

•

our ability to leverage and extend our immune medicine platform to discover, develop and commercialize our products and services, including further commercialization and development of products and services related to our Immune Medicine and Minimal Residual Disease (“MRD”) market opportunities, particularly in light of the novelty of immune medicine and our methods;

•

our ability to achieve and maintain commercial market acceptance of our current products and services, such as clonoSEQ and immunoSEQ, as well as our ability to achieve market acceptance for any additional products and services beyond our current portfolio, if developed;

•

our collaboration with Genentech, Inc. (“Genentech”) and our ability to develop and commercialize cellular therapeutics, including our ability to achieve milestones and realize the intended benefits of the collaboration;

•

our ability to develop a map of the interaction between the immune system and disease (“TCR-Antigen Map”) and yield insights from it that are commercially viable; and

•

our expected reliance on collaborators and other third parties for development, clinical testing and regulatory approval of current products in new indications and potential product candidates, which may fail at any time due to a number of possible unforeseen events.

The forward-looking statements in this report also include 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 this report and in other documents we file with the Securities and Exchange Commission (“SEC”) 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 report represent our views as of the date of this report.

We undertake no obligation to update any forward-looking statements for any reason, except as required by law.

Unless otherwise stated or the context otherwise indicates, references to “we,” “us,” “our” and similar references refer to Adaptive Biotechnologies Corporation.

Adaptive Biotechnologies Corporation

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)


	September 30, 2022			December 31, 2021
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	217,552		$	139,065
Short-term marketable securities (amortized cost of $295,689 and $214,115, respectively)		290,527			213,996
Accounts receivable, net		26,549			17,409
Inventory		17,345			19,263
Prepaid expenses and other current assets		12,407			13,015
Total current assets		564,380			402,748
Long-term assets
Property and equipment, net		86,662			85,262
Operating lease right-of-use assets		82,605			87,678
Long-term marketable securities (amortized cost of $20,507 and $218,163, respectively)		19,698			217,145
Restricted cash		2,433			2,138
Intangible assets, net		7,256			8,526
Goodwill		118,972			118,972
Other assets		2,202			875
Total assets	$	884,208		$	923,344
Liabilities and shareholders’ equity
Current liabilities
Accounts payable	$	4,163		$	3,307
Accrued liabilities		10,702			9,343
Accrued compensation and benefits		12,733			15,642
Current portion of operating lease liabilities		8,528			5,055
Current portion of deferred revenue		67,892			80,460
Total current liabilities		104,018			113,807
Long-term liabilities
Operating lease liabilities, less current portion		100,521			106,685
Deferred revenue, less current portion		67,300			98,750
Revenue interest liability, net		124,555			—
Total liabilities		396,394			319,242
Commitments and contingencies (Note 10)
Shareholders’ equity
Preferred stock: $0.0001 par value, 10,000,000 shares authorized at September 30, 2022 and December 31, 2021; no shares issued and outstanding at September 30, 2022 and December 31, 2021		—			—
Common stock: $0.0001 par value, 340,000,000 shares authorized at September 30, 2022 and December 31, 2021; 142,987,127 and 141,393,865 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		14			14
Additional paid-in capital		1,372,751			1,324,006
Accumulated other comprehensive loss		(5,971	)		(1,137	)
Accumulated deficit		(878,954	)		(718,891	)
Total Adaptive Biotechnologies Corporation shareholders’ equity		487,840			603,992
Noncontrolling interest		(26	)		110
Total shareholders’ equity		487,814			604,102
Total liabilities and shareholders’ equity	$	884,208		$	923,344

The accompanying notes are an integral part of these condensed consolidated financial statements.

Adaptive Biotechnologies Corporation

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Revenue	$	47,830		$	39,467		$	130,110		$	116,414
Operating expenses
Cost of revenue		14,907			14,189			41,320			34,945
Research and development		35,658			36,072			110,534			107,644
Sales and marketing		21,513			24,949			71,887			68,769
General and administrative		20,755			20,154			66,099			51,156
Amortization of intangible assets		428			428			1,270			1,270
Total operating expenses		93,261			95,792			291,110			263,784
Loss from operations		(45,431	)		(56,325	)		(161,000	)		(147,370	)
Interest and other income, net		765			327			1,454			1,429
Interest expense		(653	)		—			(653	)		—
Net loss		(45,319	)		(55,998	)		(160,199	)		(145,941	)
Add: Net loss attributable to noncontrolling interest		38			95			136			95
Net loss attributable to Adaptive Biotechnologies Corporation	$	(45,281	)	$	(55,903	)	$	(160,063	)	$	(145,846	)
Net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted	$	(0.32	)	$	(0.40	)	$	(1.12	)	$	(1.04	)
Weighted-average shares used in computing net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted		142,928,654			140,833,564			142,334,342			140,060,379

The accompanying notes are an integral part of these condensed consolidated financial statements.

Adaptive Biotechnologies Corporation

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net loss	$	(45,319	)	$	(55,998	)	$	(160,199	)	$	(145,941	)
Other comprehensive loss
Change in unrealized gains and losses on investments		(171	)		(209	)		(4,834	)		(886	)
Comprehensive loss		(45,490	)		(56,207	)		(165,033	)		(146,827	)
Add: Comprehensive loss attributable to noncontrolling interest		38			95			136			95
Comprehensive loss attributable to Adaptive Biotechnologies Corporation	$	(45,452	)	$	(56,112	)	$	(164,897	)	$	(146,732	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Adaptive Biotechnologies Corporation

Condensed Consolidated Statements of Shareholders’ Equity

(in thousands, except share amounts)

(unaudited)


	Common Stock				Additional		Accumulated Other			Accumulated			Noncontrolling			Total
	Shares		Amount		Paid-In Capital		Comprehensive Gain (Loss)			Deficit			Interest			Shareholders’ Equity
Balance at June 30, 2021		140,663,755	$	14	$	1,294,506	$	216		$	(601,555	)	$	129		$	693,310
Issuance of common stock for cash upon exercise of stock options		360,607		—		2,797		—			—			—			2,797
Vesting of restricted stock units		3,125		—		—		—			—			—			—
Common stock option and restricted stock unit share-based compensation		—		—		11,643		—			—			—			11,643
Other comprehensive loss		—		—		—		(209	)		—			—			(209	)
Net loss		—		—		—		—			(55,903	)		(95	)		(55,998	)
Balance at September 30, 2021		141,027,487	$	14	$	1,308,946	$	7		$	(657,458	)	$	34		$	651,543

Balance at June 30, 2022		142,784,868	$	14	$	1,357,763	$	(5,800	)	$	(833,673	)	$	12		$	518,316
Issuance of common stock for cash upon exercise of stock options		131,802		—		846		—			—			—			846
Vesting of restricted stock units		70,457		—		—		—			—			—			—
Common stock option, restricted stock unit and market-based restricted stock unit share-based compensation		—		—		14,142		—			—			—			14,142
Other comprehensive loss		—		—		—		(171	)		—			—			(171	)
Net loss		—		—		—		—			(45,281	)		(38	)		(45,319	)
Balance at September 30, 2022		142,987,127	$	14	$	1,372,751	$	(5,971	)	$	(878,954	)	$	(26	)	$	487,814

The accompanying notes are an integral part of these condensed consolidated financial statements.

Adaptive Biotechnologies Corporation

Condensed Consolidated Statements of Shareholders’ Equity (Continued)

(in thousands, except share amounts)

(unaudited)


	Common Stock				Additional		Accumulated Other			Accumulated			Noncontrolling			Total
	Shares		Amount		Paid-In Capital		Comprehensive Gain (Loss)			Deficit			Interest			Shareholders’ Equity
Balance at December 31, 2020		137,646,896	$	14	$	1,253,971	$	893		$	(511,612	)	$	—		$	743,266
Issuance of common stock upon exercise of common stock warrant		54,162		—		—		—			—			—			—
Issuance of common stock for cash upon exercise of stock options		3,310,804		—		23,299		—			—			—			23,299
Vesting of restricted stock units		15,625		—		—		—			—			—			—
Common stock option and restricted stock unit share-based compensation		—		—		31,376		—			—			—			31,376
Capital contributions for Digital Biotechnologies, Inc.		—		—		300		—			—			129			429
Other comprehensive loss		—		—		—		(886	)		—			—			(886	)
Net loss		—		—		—		—			(145,846	)		(95	)		(145,941	)