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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 September 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.)

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.

 

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 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.

 

 

 

 

 

 

 

 

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)

 

 

 

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.

 

4


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.

 

5


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.

 

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 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.

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

 

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