Adaptive Biotechnologies Reports Third Quarter 2021 Financial Results

SEATTLE, Nov. 03, 2021 (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 September 30, 2021. “We are pleased to deliver another quarter of strong growth with continued momentum across research, diagnostic and drug discovery,” said Chad Robins, chief executive officer and co-founder of Adaptive Biotechnologies. “Achievements during the quarter mark important advancements in the evolution of our immune medicine platform as a clinical product development engine.” Recent Highlights Revenue of $39.5 million for the third quarter 2021, representing a 50% increase from the third quarter 2020clonoSEQ clinical sequencing volume in the third quarter 2021 grew 47% versus prior year and 8% over the second quarter of 2021Launched an enhanced version of the clonoSEQ Assay for CLL patients, which provides IGHV mutation status in the same test where we measure the trackable MRD sequenceReceived positive Tech Assessment from MolDX for coverage of T-Detect COVID in certain cases including immunocompromised patientsIncreased interest by research collaborators and vaccine manufacturers to use immunoSEQ T-MAP COVID to assess whether T cells may provide a correlate of protectionVaccibody initiated its phase 1/2 study to address emerging SARS-CoV-2 variants of concern and use as a potential universal booster with their two candidates, one of which includes T cell-based components identified by Adaptive Biotechnologies’ immune medicine platform Third Quarter 2021 Financial Results Revenue was $39.5 million for the quarter ended September 30, 2021, representing a 50% increase from the third quarter in the prior year. Sequencing revenue was $22.1 million for the quarter, representing a 96% increase from the third quarter in the prior year. Development revenue was $17.4 million for the quarter, representing a 16% increase from the third quarter in the prior year. Operating expenses were $95.8 million for the third quarter of 2021, compared to $63.3 million in the third quarter of the prior year, representing an increase of 51%. Net loss was $56.0 million for the third quarter of 2021, compared to $36.7 million for the same period in 2020. Adjusted EBITDA (non-GAAP) was a loss of $41.1 million for the third quarter of 2021, compared to a loss of $28.4 million for the third quarter of the prior year. Cash, cash equivalents and marketable securities was $632.4 million as of September 30, 2021. 2021 Financial Guidance Adaptive Biotechnologies reiterates full year 2021 revenue to be in the range of $148 million to $155 million, representing 54% growth at the mid-point of the range over full year 2020 revenue. Webcast and Conference Call Information Adaptive Biotechnologies will host a conference call to discuss its third quarter 2021 financial results after market close on Wednesday, November 3, 2021 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 (“we” or “our”) 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 three 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 To supplement our unaudited condensed consolidated statements of operations and unaudited condensed consolidated balance sheets, which are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), this press release also includes references to Adjusted EBITDA, which is a non-GAAP financial measure that we define as net loss attributable to Adaptive Biotechnologies Corporation adjusted for interest and other income, net, income tax (expense) benefit, depreciation and amortization and share-based compensation expenses. We have provided a reconciliation of net loss attributable to Adaptive Biotechnologies Corporation, 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 (expense) benefit, 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; andthe 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 MEDIABeth [email protected] ADAPTIVE INVESTORSKarina Calzadilla, Vice President, Investor Relations201-396-1687Carrie Mendivil, Gilmartin [email protected] Adaptive BiotechnologiesCondensed 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  Adaptive BiotechnologiesCondensed 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        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  Adjusted EBITDA The following table sets forth a reconciliation between our Adjusted EBITDA and net loss attributable to Adaptive Biotechnologies Corporation, the most directly comparable GAAP financial measure, for each of the periods presented (in thousands, unaudited):   Three Months Ended September 30,  Nine Months Ended September 30,   2021  2020  2021  2020 Net loss attributable to Adaptive Biotechnologies Corporation $(55,903) $(36,719) $(145,846) $(101,657)Interest and other income, net  (327)  (1,018)  (1,429)  (5,805)Income tax expense (benefit)  —   688   —   (1,116)Depreciation and amortization expense  3,528   2,144   9,104   6,120 Share-based compensation expense  11,643   6,470   31,376   17,518 Adjusted EBITDA $(41,059) $(28,435) $(106,795) $(84,940)