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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 June 30, 2021

OR

 

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.)

1551 Eastlake Avenue East, Suite 200

Seattle, Washington

98102

(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.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

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 July 30, 2021, the registrant had 140,765,849 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

24

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

34

Item 4.

Controls and Procedures

34

PART II.

OTHER INFORMATION

35

Item 1.

Legal Proceedings

35

Item 1A.

Risk Factors

35

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

35

Item 3.

Defaults Upon Senior Securities

35

Item 4.

Mine Safety Disclosures

35

Item 5.

Other Information

35

Item 6.

Exhibits

36

Signatures

37

 

 

 


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 clonoSEQ and T-Detect products, including T-Detect Lyme, particularly in light of the novelty of immune medicine and our methods;

 

our ability to obtain regulatory clearance, authorization and approval for such products and services;

 

our collaboration with Genentech, Inc. (“Genentech”) and 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 as we expand the T-Detect product line;

 

our expected reliance on collaborators for development and clinical testing of potential diagnostic and therapeutic product candidates, which may fail at any time due to a number of possible unforeseen events;

 

our ability to develop and commercialize products related to COVID-19, such as our ability to develop a map of the T cell response to the SARS-CoV-2 virus (“immunoSEQ T-MAP COVID”), the commercialization of a T cell-based clinical diagnostic product for COVID-19 (“T-Detect COVID”) and the development of neutralizing antibody products or processes; and

 

the potential adverse effect on our business, operations and plans or timelines (including those plans and timelines related to expansion initiatives and clinical development) resulting from the ongoing COVID-19 pandemic, including potential impacts of our “return to office” initiatives on hiring, training, retention and corporate culture, as well as impacts to supply chain.  

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.

 

 

 

 

 

 

 

 

3


Adaptive Biotechnologies Corporation

 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

 

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

 

 

June 30, 2021

 

 

December 31, 2020

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

184,186

 

 

$

123,436

 

Short-term marketable securities (amortized cost of $413,965 and $564,036, respectively)

 

 

414,227

 

 

 

564,833

 

Accounts receivable, net

 

 

14,174

 

 

 

10,047

 

Inventory

 

 

18,612

 

 

 

14,063

 

Prepaid expenses and other current assets

 

 

12,530

 

 

 

14,535

 

Total current assets

 

 

643,729

 

 

 

726,914

 

Long-term assets

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

75,235

 

 

 

39,692

 

Operating lease right-of-use assets

 

 

92,067

 

 

 

99,350

 

Long-term marketable securities (amortized cost of $91,177 and $118,429, respectively)

 

 

91,131

 

 

 

118,525

 

Restricted cash

 

 

2,138

 

 

 

2,138

 

Intangible assets, net

 

 

9,383

 

 

 

10,225

 

Goodwill

 

 

118,972

 

 

 

118,972

 

Other assets

 

 

719

 

 

 

598

 

Total assets

 

$

1,033,374

 

 

$

1,116,414

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

6,093

 

 

$

3,237

 

Accrued liabilities

 

 

13,539

 

 

 

13,162

 

Accrued compensation and benefits

 

 

8,630

 

 

 

11,950

 

Current portion of operating lease liabilities

 

 

4,833

 

 

 

3,529

 

Current portion of deferred revenue

 

 

83,553

 

 

 

73,319

 

Total current liabilities

 

 

116,648

 

 

 

105,197

 

Long-term liabilities

 

 

 

 

 

 

 

 

Operating lease liabilities, less current portion

 

 

103,774

 

 

 

104,333

 

Deferred revenue, less current portion

 

 

119,642

 

 

 

163,618

 

Total liabilities

 

 

340,064

 

 

 

373,148

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

Preferred stock: $0.0001 par value, 10,000,000 shares authorized at June 30, 2021 and December 31, 2020; no shares issued and outstanding at June 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock: $0.0001 par value, 340,000,000 shares authorized at June 30, 2021 and December 31, 2020; 140,663,755 and 137,646,896 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

 

 

14

 

 

 

14

 

Additional paid-in capital

 

 

1,294,506

 

 

 

1,253,971

 

Accumulated other comprehensive gain

 

 

216

 

 

 

893

 

Accumulated deficit

 

 

(601,555

)

 

 

(511,612

)

Total Adaptive Biotechnologies Corporation shareholders’ equity

 

 

693,181

 

 

 

743,266

 

Noncontrolling interest

 

 

129

 

 

 

 

Total shareholders’ equity

 

 

693,310

 

 

 

743,266

 

Total liabilities and shareholders’ equity

 

$

1,033,374

 

 

$

1,116,414

 

 

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

 

4


Adaptive Biotechnologies Corporation

 

 

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sequencing revenue

 

$

18,555

 

 

$

7,985

 

 

$

33,729

 

 

$

17,454

 

Development revenue

 

 

19,950

 

 

 

13,003

 

 

 

43,218

 

 

 

24,444

 

Total revenue

 

 

38,505

 

 

 

20,988

 

 

 

76,947

 

 

 

41,898

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

10,765

 

 

 

4,912

 

 

 

20,756

 

 

 

10,255

 

Research and development

 

 

37,800

 

 

 

25,992

 

 

 

71,572

 

 

 

49,927

 

Sales and marketing

 

 

23,216

 

 

 

14,332

 

 

 

43,820

 

 

 

28,339

 

General and administrative

 

 

16,066

 

 

 

12,238

 

 

 

31,002

 

 

 

24,059

 

Amortization of intangible assets

 

 

423

 

 

 

423

 

 

 

842

 

 

 

847

 

Total operating expenses

 

 

88,270

 

 

 

57,897

 

 

 

167,992

 

 

 

113,427

 

Loss from operations

 

 

(49,765

)

 

 

(36,909

)

 

 

(91,045

)

 

 

(71,529

)

Interest and other income, net

 

 

464

 

 

 

1,893

 

 

 

1,102

 

 

 

4,787

 

Income tax benefit

 

 

 

 

 

1,481

 

 

 

 

 

 

1,804

 

Net loss

 

$

(49,301

)

 

$

(33,535

)

 

$

(89,943

)

 

$

(64,938

)

Net loss per share attributable to common shareholders, basic and diluted

 

$

(0.35

)

 

$

(0.26

)

 

$

(0.64

)

 

$

(0.51

)

Weighted-average shares used in computing net loss per share attributable to common shareholders, basic and diluted

 

 

140,359,317

 

 

 

127,383,582

 

 

 

139,667,380

 

 

 

126,720,986

 

 

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

 

5


Adaptive Biotechnologies Corporation

 

 

 

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

(49,301

)

 

$

(33,535

)

 

$

(89,943

)

 

$

(64,938

)

Change in unrealized gains and losses on investments

 

 

(415

)

 

 

(1,160

)

 

 

(677

)

 

 

1,482

 

Comprehensive loss

 

$

(49,716

)

 

$

(34,695

)

 

$

(90,620

)

 

$

(63,456

)

 

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

 

6


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

 

 

Deficit

 

 

Interest

 

 

Shareholders’ Equity

 

Balance at March 31, 2020

 

 

126,621,829

 

 

$

12

 

 

$

945,026

 

 

$

3,313

 

 

$

(396,788

)

 

$

 

 

$

551,563

 

Issuance of common stock for cash upon exercise of stock options

 

 

1,609,763

 

 

 

 

 

 

6,698

 

 

 

 

 

 

 

 

 

 

 

 

6,698

 

Vesting of restricted stock units

 

 

2,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock option and restricted stock unit share-based compensation

 

 

 

 

 

 

 

 

6,373

 

 

 

 

 

 

 

 

 

 

 

 

6,373

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(1,160

)

 

 

 

 

 

 

 

 

(1,160

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33,535

)

 

 

 

 

 

(33,535

)

Balance at June 30, 2020

 

 

128,233,842

 

 

$

12

 

 

$

958,097

 

 

$

2,153

 

 

$

(430,323

)

 

$

 

 

$

529,939

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2021

 

 

139,884,698

 

 

$

14

 

 

$

1,277,197

 

 

$

631

 

 

$

(552,254

)

 

$

129

 

 

$

725,717

 

Issuance of common stock for cash upon exercise of stock options

 

 

766,557

 

 

 

 

 

 

6,060

 

 

 

 

 

 

 

 

 

 

 

 

6,060

 

Vesting of restricted stock units

 

 

12,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock option and restricted stock unit share-based compensation

 

 

 

 

 

 

 

 

11,249

 

 

 

 

 

 

 

 

 

 

 

 

11,249

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(415

)

 

 

 

 

 

 

 

 

(415

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(49,301

)

 

 

 

 

 

(49,301

)

Balance at June 30, 2021

 

 

140,663,755

 

 

$

14

 

 

$

1,294,506

 

 

$

216

 

 

$

(601,555

)

 

$

129

 

 

$

693,310

 

 

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

7


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

 

 

Deficit

 

 

Interest

 

 

Shareholders’ Equity

 

Balance at December 31, 2019

 

 

125,238,142

 

 

$

12

 

 

$

935,834

 

 

$

671

 

 

$

(365,478

)

 

$

 

 

$

571,039

 

Adjustments to accumulated deficit for adoption of guidance on accounting for leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

93

 

 

 

 

 

 

93

 

Issuance of common stock for cash upon exercise of stock options

 

 

2,991,200

 

 

 

 

 

 

11,215

 

 

 

 

 

 

 

 

 

 

 

 

11,215

 

Vesting of restricted stock units

 

 

4,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock option and restricted stock unit share-based compensation

 

 

 

 

 

 

 

 

11,048

 

 

 

 

 

 

 

 

 

 

 

 

11,048

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

1,482

 

 

 

 

 

 

 

 

 

1,482

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(64,938

)

 

 

 

 

 

(64,938

)

Balance at June 30, 2020

 

 

128,233,842

 

 

$

12

 

 

$

958,097

 

 

$

2,153

 

 

$

(430,323

)

 

$

 

 

$

529,939

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

2,950,197

 

 

 

 

 

 

20,502

 

 

 

 

 

 

 

 

 

 

 

 

20,502

 

Vesting of restricted stock units

 

 

12,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock option and restricted stock unit share-based compensation

 

 

 

 

 

 

 

 

19,733

 

 

 

 

 

 

 

 

 

 

 

 

19,733

 

Capital contributions for Spin Technologies, Inc.

 

 

 

 

 

 

 

 

300

 

 

 

 

 

 

 

 

 

129

 

 

 

429

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(677

)

 

 

 

 

 

 

 

 

(677

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(89,943

)

 

 

 

 

 

(89,943

)

Balance at June 30, 2021

 

 

140,663,755

 

 

$

14

 

 

$

1,294,506

 

 

$

216

 

 

$

(601,555

)

 

$

129

 

 

$

693,310

 

 

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

 

8


Adaptive Biotechnologies Corporation

 

 

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(89,943

)

 

$

(64,938

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

4,734

 

 

 

3,129

 

Noncash lease expense

 

 

3,489

 

 

 

1,344

 

Share-based compensation expense

 

 

19,733

 

 

 

11,048

 

Intangible assets amortization

 

 

842