Adaptive Biotechnologies Reports Third Quarter 2022 Financial Results

SEATTLE, Nov. 03, 2022 (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, 2022.

“We continue to deliver solid growth in both of our business areas quarter over quarter, and are confident in our long-term outlook,” said Chad Robins, chief executive officer and co-founder of Adaptive Biotechnologies. “With a bolstered cash position from our recent financing, we are focused on driving growth and innovation across our businesses with a clear path to profitability.”

Recent Highlights

  • Revenue of $47.8 million for the third quarter 2022, representing a 21% increase from the third quarter 2021.
  • clonoSEQ test volume in the third quarter 2022 grew 52% versus the third quarter of prior year.
  • Signed partnership with Epic to integrate the clonoSEQ® Assay into Epic’s comprehensive electronic medical record (EMR) system.
  • Immune Medicine business grew 18% in the third quarter 2022 versus the third quarter 2021, driven by drug discovery and pharma services.
  • Signed non-dilutive royalty financing agreement with OrbiMed for up to $250 million.
  • Provided long-term guidance including revenue CAGR from 2022-2027 at 20%-30%, positive adjusted EBITDA in 2025 and cash flow breakeven in 2026.

Third Quarter 2022 Financial Results

Revenue was $47.8 million for the quarter ended September 30, 2022, representing a 21% increase from the third quarter in the prior year. Immune Medicine revenue was $27.9 million for the quarter, representing an 18% increase from the third quarter in the prior year. MRD revenue was $20.0 million for the quarter, representing a 26% increase from the third quarter in the prior year.

Operating expenses were $93.3 million for the third quarter of 2022, compared to $95.8 million in the third quarter of the prior year, representing a decrease of 3%. Interest expense from our revenue interest purchase agreement entered into during the third quarter of 2022 was $0.7 million.

Net loss was $45.3 million for the third quarter of 2022, compared to $56.0 million for the same period in 2021.

Adjusted EBITDA (non-GAAP) was a loss of $25.9 million for the third quarter of 2022, compared to a loss of $41.1 million for the third quarter of the prior year.

Cash, cash equivalents and marketable securities was $527.8 million as of September 30, 2022.

2022 Financial Guidance

Adaptive Biotechnologies narrows full year 2022 revenue to be in the range of $185 million to $190 million compared to the previous expectation of $185 million to $195 million.

We now expect full year 2022 operating expenses to be below $400 million compared to the previous expectation of between $410 million and $415 million.

Webcast and Conference Call Information

Adaptive Biotechnologies will host a conference call to discuss its third quarter 2022 financial results after market close on Thursday, November 3, 2022 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 commercial products and a robust clinical pipeline to diagnose, monitor and enable the treatment of diseases such as cancer, autoimmune disorders, 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, interest expense, income tax (expense) benefit, depreciation and amortization expense, restructuring expense and share-based compensation expense. 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;
  • interest expense, which may be a necessary and ongoing element of our costs and ability to operate;
  • 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 noncash component of employee compensation expense; and
  • the impact of earnings or charges resulting from matters we consider not to be reflective, on a recurring basis, of our ongoing operations, such as our March 2022 restructuring and reduction in workforce.

In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

ADAPTIVE MEDIA
Mary Pat Lancelotta, Senior Vice President, Corporate Affairs & Communications
646-382-4912
media@adaptivebiotech.com

ADAPTIVE INVESTORS
Karina Calzadilla, Vice President, Investor Relations
201-396-1687
investors@adaptivebiotech.com



Adaptive Biotechnologies
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 



Adaptive Biotechnologies
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      
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 


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, 
  2022  2021  2022  2021 
Net loss attributable to Adaptive Biotechnologies Corporation $(45,281) $(55,903) $(160,063) $(145,846)
Interest and other income, net  (765)  (327)  (1,454)  (1,429)
Interest expense  653      653    
Depreciation and amortization expense  5,383   3,528   15,634   9,104 
Restructuring expense        2,023    
Share-based compensation expense  14,142   11,643   41,183   31,376 
Adjusted EBITDA $(25,868) $(41,059) $(102,024) $(106,795)


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