SEC Filing | Adaptive Biotechnologies

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

View:

Download DOC

Download PDF

Download XLS

Download XBRL

adpt-10q_20210930.htm

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, 2021

☐	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 29, 2021, the registrant had 141,131,844 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, 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, therapeutic and drug development 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, the commercialization of a T cell-based clinical diagnostic product for COVID-19 (“T-Detect COVID”), the development of neutralizing antibody products or processes and the development of COVID-19 vaccines together with Vaccibody; 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 to our supply chain, human capital and corporate culture.

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, 2021			December 31, 2020
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	122,401		$	123,436
Short-term marketable securities (amortized cost of $292,556 and $564,036, respectively)		292,639			564,833
Accounts receivable, net		17,122			10,047
Inventory		18,231			14,063
Prepaid expenses and other current assets		16,634			14,535
Total current assets		467,027			726,914
Long-term assets
Property and equipment, net		87,820			39,692
Operating lease right-of-use assets		89,446			99,350
Long-term marketable securities (amortized cost of $217,455 and $118,429, respectively)		217,379			118,525
Restricted cash		2,138			2,138
Intangible assets, net		8,955			10,225
Goodwill		118,972			118,972
Other assets		870			598
Total assets	$	992,607		$	1,116,414
Liabilities and shareholders’ equity
Current liabilities
Accounts payable	$	8,252		$	3,237
Accrued liabilities		17,034			13,162
Accrued compensation and benefits		12,034			11,950
Current portion of operating lease liabilities		5,108			3,529
Current portion of deferred revenue		79,954			73,319
Total current liabilities		122,382			105,197
Long-term liabilities
Operating lease liabilities, less current portion		108,044			104,333
Deferred revenue, less current portion		110,638			163,618
Total liabilities		341,064			373,148
Commitments and contingencies (Note 9)
Shareholders’ equity
Preferred stock: $0.0001 par value, 10,000,000 shares authorized at September 30, 2021 and December 31, 2020; no shares issued and outstanding at September 30, 2021 and December 31, 2020		—			—
Common stock: $0.0001 par value, 340,000,000 shares authorized at September 30, 2021 and December 31, 2020; 141,027,487 and 137,646,896 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		14			14
Additional paid-in capital		1,308,946			1,253,971
Accumulated other comprehensive gain		7			893
Accumulated deficit		(657,458	)		(511,612	)
Total Adaptive Biotechnologies Corporation shareholders’ equity		651,509			743,266
Noncontrolling interest		34			—
Total shareholders’ equity		651,543			743,266
Total liabilities and shareholders’ equity	$	992,607		$	1,116,414

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,
	2021			2020			2021			2020
Revenue
Sequencing revenue	$	22,106		$	11,276		$	55,835		$	28,730
Development revenue		17,361			15,023			60,579			39,467
Total revenue		39,467			26,299			116,414			68,197
Operating expenses
Cost of revenue		14,189			6,053			34,945			16,308
Research and development		36,072			30,314			107,644			80,241
Sales and marketing		24,949			14,474			68,769			42,813
General and administrative		20,154			12,079			51,156			36,138
Amortization of intangible assets		428			428			1,270			1,275
Total operating expenses		95,792			63,348			263,784			176,775
Loss from operations		(56,325	)		(37,049	)		(147,370	)		(108,578	)
Interest and other income, net		327			1,018			1,429			5,805
Income tax (expense) benefit		—			(688	)		—			1,116
Net loss		(55,998	)		(36,719	)		(145,941	)		(101,657	)
Add: Net loss attributable to noncontrolling interest		95			—			95			—
Net loss attributable to Adaptive Biotechnologies Corporation	$	(55,903	)	$	(36,719	)	$	(145,846	)	$	(101,657	)
Net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted	$	(0.40	)	$	(0.27	)	$	(1.04	)	$	(0.79	)
Weighted-average shares used in computing net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted		140,833,564			134,372,026			140,060,379			129,289,948

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,
	2021			2020			2021			2020
Net loss	$	(55,998	)	$	(36,719	)	$	(145,941	)	$	(101,657	)
Other comprehensive (loss) income:
Change in unrealized gains and losses on investments		(209	)		(726	)		(886	)		756
Comprehensive loss		(56,207	)		(37,445	)		(146,827	)		(100,901	)
Add: Comprehensive loss attributable to noncontrolling interest		95			—			95			—
Comprehensive loss attributable to Adaptive Biotechnologies Corporation	$	(56,112	)	$	(37,445	)	$	(146,732	)	$	(100,901	)

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			Deficit			Interest			Shareholders’ Equity
Balance at June 30, 2020		128,233,842	$	12	$	958,097	$	2,153		$	(430,323	)	$	—		$	529,939
Issuance of common stock upon public offering, after deducting underwriters' discounts and net offering costs payable by us		7,200,000		1		271,838		—			—			—			271,839
Issuance of common stock for cash upon exercise of stock options		958,414		—		4,244		—			—			—			4,244
Common stock option and restricted stock unit share-based compensation		—		—		6,470		—			—			—			6,470
Other comprehensive loss		—		—		—		(726	)		—			—			(726	)
Net loss		—		—		—		—			(36,719	)		—			(36,719	)
Balance at September 30, 2020		136,392,256	$	13	$	1,240,649	$	1,427		$	(467,042	)	$	—		$	775,047

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

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			Deficit			Interest			Shareholders’ Equity
Balance at December 31, 2019		125,238,142	$	12	$	935,834	$	671		$	(365,478	)	$	—		$	571,039
Issuance of common stock upon public offering, after deducting underwriters' discounts and net offering costs payable by us		7,200,000		1		271,838		—			—			—			271,839
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		3,949,614		—		15,459		—			—			—			15,459
Vesting of restricted stock units		4,500		—		—		—			—			—			—
Common stock option and restricted stock unit share-based compensation		—		—		17,518		—			—			—			17,518
Other comprehensive income		—		—		—		756			—			—			756
Net loss		—		—		—		—			(101,657	)		—			(101,657	)
Balance at September 30, 2020		136,392,256	$	13	$	1,240,649	$	1,427		$	(467,042	)	$	—		$	775,047

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 Spin Technologies, Inc.		—		—		300		—			—			129			429
Other comprehensive loss		—		—		—		(886	)		—			—			(886	)
Net loss		—		—		—		—			(145,846	)		(95	)		(