Company Quick10K Filing
Adeptus Health
Price40.53 EPS-0
Shares124 P/E-170
MCap5,039 P/FCF-167
Net Debt-77 EBIT-30
TEV4,961 TEV/EBIT-168
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-05-05
10-K 2020-12-31 Filed 2021-02-24
10-Q 2020-09-30 Filed 2020-11-10
10-Q 2020-06-30 Filed 2020-08-10
10-Q 2020-03-31 Filed 2020-05-12
S-1 2020-01-21 Public Filing
10-K 2019-12-31 Filed 2020-02-26
10-Q 2019-09-30 Filed 2019-11-12
10-Q 2019-06-30 Filed 2019-08-13
S-1 2019-05-30 Public Filing
8-K 2021-01-21
8-K 2020-11-11
8-K 2020-11-10
8-K 2020-10-09
8-K 2020-08-21
8-K 2020-08-10
8-K 2020-07-14
8-K 2020-06-25
8-K 2020-06-12
8-K 2020-05-12
8-K 2020-05-05
8-K 2020-03-20
8-K 2020-02-26
8-K 2020-02-13
8-K 2020-01-21
8-K 2020-01-08
8-K 2019-11-12
8-K 2019-09-24
8-K 2019-08-13
8-K 2019-08-02
8-K 2019-07-31
8-K 2019-06-26

ADPT 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 adpt-ex311_70.htm
EX-31.2 adpt-ex312_71.htm
EX-32.1 adpt-ex321_68.htm
EX-32.2 adpt-ex322_69.htm

Adeptus Health Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
1.00.70.50.2-0.0-0.32018201820192020
Assets, Equity
0.10.10.0-0.0-0.1-0.12018201820192020
Rev, G Profit, Net Income
0.40.30.1-0.0-0.2-0.32018201820192020
Ops, Inv, Fin

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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 March 31, 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 April 30, 2021, the registrant had 140,311,141 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

8

 

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

PART II.

OTHER INFORMATION

32

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

32

Item 3.

Defaults Upon Senior Securities

32

Item 4.

Mine Safety Disclosures

32

Item 5.

Other Information

32

Item 6.

Exhibits

33

Signatures

34

 

 

 


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 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, such as TruAB;

 

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; 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 recent COVID-19 pandemic, including potential impacts to our supply chain, such as longer lead times in inventory production and diminished availability of reagents or other materials.

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)

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

173,624

 

 

$

123,436

 

Short-term marketable securities (amortized cost of $540,016 and $564,036, respectively)

 

 

540,640

 

 

 

564,833

 

Accounts receivable, net

 

 

19,754

 

 

 

10,047

 

Inventory

 

 

17,422

 

 

 

14,063

 

Prepaid expenses and other current assets

 

 

13,520

 

 

 

14,535

 

Total current assets

 

 

764,960

 

 

 

726,914

 

Long-term assets

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

56,308

 

 

 

39,692

 

Operating lease right-of-use assets

 

 

88,504

 

 

 

99,350

 

Long-term marketable securities (amortized cost of $30,681 and $118,429, respectively)

 

 

30,688

 

 

 

118,525

 

Restricted cash

 

 

2,138

 

 

 

2,138

 

Intangible assets, net

 

 

9,806

 

 

 

10,225

 

Goodwill

 

 

118,972

 

 

 

118,972

 

Other assets

 

 

717

 

 

 

598

 

Total assets

 

$

1,072,093

 

 

$

1,116,414

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,197

 

 

$

3,237

 

Accrued liabilities

 

 

13,484

 

 

 

13,162

 

Accrued compensation and benefits

 

 

5,431

 

 

 

11,950

 

Current portion of operating lease liabilities

 

 

4,308

 

 

 

3,529

 

Current portion of deferred revenue

 

 

78,348

 

 

 

73,319

 

Total current liabilities

 

 

106,768

 

 

 

105,197

 

Long-term liabilities

 

 

 

 

 

 

 

 

Operating lease liabilities, less current portion

 

 

95,252

 

 

 

104,333

 

Deferred revenue, less current portion

 

 

144,356

 

 

 

163,618

 

Total liabilities

 

 

346,376

 

 

 

373,148

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

Preferred stock: $0.0001 par value, 10,000,000 shares authorized at March 31, 2021

   and December 31, 2020; no shares issued and outstanding at March 31, 2021 and

   December 31, 2020

 

 

 

 

 

 

Common stock: $0.0001 par value, 340,000,000 shares authorized at March 31, 2021

   and December 31, 2020; 139,884,698 and 137,646,896 shares issued and outstanding

   at March 31, 2021 and December 31, 2020, respectively

 

 

14

 

 

 

14

 

Additional paid-in capital

 

 

1,277,197

 

 

 

1,253,971

 

Accumulated other comprehensive gain

 

 

631

 

 

 

893

 

Accumulated deficit

 

 

(552,254

)

 

 

(511,612

)

Total Adaptive Biotechnologies Corporation shareholders’ equity

 

 

725,588

 

 

 

743,266

 

Noncontrolling interest

 

 

129

 

 

 

 

Total shareholders’ equity

 

 

725,717

 

 

 

743,266

 

Total liabilities and shareholders’ equity

 

$

1,072,093

 

 

$

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 March 31,

 

 

 

 

2021

 

 

2020

 

 

Revenue

 

 

 

 

 

 

 

 

 

Sequencing revenue

 

$

15,174

 

 

$

9,469

 

 

Development revenue

 

 

23,268

 

 

 

11,441

 

 

Total revenue

 

 

38,442

 

 

 

20,910

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

9,991

 

 

 

5,343

 

 

Research and development

 

 

33,772

 

 

 

23,935

 

 

Sales and marketing

 

 

20,604

 

 

 

14,007

 

 

General and administrative

 

 

14,936

 

 

 

11,821

 

 

Amortization of intangible assets

 

 

419

 

 

 

424

 

 

Total operating expenses

 

 

79,722

 

 

 

55,530

 

 

Loss from operations

 

 

(41,280

)

 

 

(34,620

)

 

Interest and other income, net

 

 

638

 

 

 

2,894

 

 

Income tax benefit

 

 

 

 

 

323

 

 

Net loss

 

$

(40,642

)

 

$

(31,403

)

 

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

 

$

(0.29

)

 

$

(0.25

)

 

Weighted-average shares used in computing net loss per share attributable

   to common shareholders, basic and diluted

 

 

138,967,754

 

 

 

126,058,389

 

 

 

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 March 31,

 

 

 

2021

 

 

2020

 

Net loss

 

$

(40,642

)

 

$

(31,403

)

Change in unrealized gains and losses on investments

 

 

(262

)

 

 

2,642

 

Comprehensive loss

 

$

(40,904

)

 

$

(28,761

)

 

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

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Noncontrolling

 

 

Total

Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Gain

 

 

Deficit

 

 

Interest

 

 

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

 

 

1,381,437

 

 

 

 

 

 

4,517

 

 

 

 

 

 

 

 

 

 

 

 

4,517

 

Vesting of restricted stock units

 

 

2,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock option and restricted stock unit share-based

   compensation

 

 

 

 

 

 

 

 

4,675

 

 

 

 

 

 

 

 

 

 

 

 

4,675

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

2,642

 

 

 

 

 

 

 

 

 

2,642

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,403

)

 

 

 

 

 

(31,403

)

Balance at March 31, 2020

 

 

126,621,829

 

 

$

12

 

 

$

945,026

 

 

$

3,313

 

 

$

(396,788

)

 

$

 

 

$

551,563

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

2,183,640

 

 

 

 

 

 

14,442

 

 

 

 

 

 

 

 

 

 

 

 

14,442

 

Common stock option and restricted stock unit share-based

   compensation

 

 

 

 

 

 

 

 

8,484

 

 

 

 

 

 

 

 

 

 

 

 

8,484

 

Capital contributions for Spin Technologies, Inc.

 

 

 

 

 

 

 

 

300

 

 

 

 

 

 

 

 

 

129

 

 

 

429

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(262

)

 

 

 

 

 

 

 

 

(262

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(40,642

)

 

 

 

 

 

(40,642

)

Balance at March 31, 2021

 

 

139,884,698

 

 

$

14

 

 

$

1,277,197

 

 

$

631

 

 

$

(552,254

)

 

$

129

 

 

$

725,717

 

 

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

 

7


Adaptive Biotechnologies Corporation

 

 

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(40,642

)

 

$

(31,403

)

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

 

 

 

 

 

 

 

 

Depreciation expense

 

 

2,252

 

 

 

1,554

 

Noncash lease expense

 

 

1,732

 

 

 

631

 

Share-based compensation expense

 

 

8,484

 

 

 

4,675

 

Intangible assets amortization

 

 

419

 

 

 

424

 

Investment amortization

 

 

2,108

 

 

 

(556

)

Benefit from income tax

 

 

 

 

 

(323

)

Other

 

 

(9

)

 

 

114

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(9,707

)

 

 

3,278

 

Inventory

 

 

(3,359

)

 

 

(1,449

)

Prepaid expenses and other current assets

 

 

1,273

 

 

 

3,526

 

Accounts payable and accrued liabilities

 

 

(7,257

)

 

 

(4,603

)

Operating lease liabilities

 

 

813

 

 

 

(333

)

Deferred revenue

 

 

(14,233

)

 

 

(6,926

)

Other

 

 

(119

)

 

 

(215

)

Net cash used in operating activities

 

 

(58,245

)

 

 

(31,606

)

Investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(15,841

)

 

 

(2,963

)

Purchases of marketable securities

 

 

(15,340

)

 

 

(107,747

)

Proceeds from sales and maturities of marketable securities

 

 

125,000

 

 

 

253,469

 

Net cash provided by investing activities

 

 

93,819

 

 

 

142,759

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

14,185

 

 

 

4,959

 

Proceeds from initial capital contributions for Spin Technologies, Inc.

 

 

429

 

 

 

 

Net cash provided by financing activities

 

 

14,614

 

 

 

4,959

 

Net increase in cash, cash equivalents and restricted cash

 

 

50,188

 

 

 

116,112

 

Cash, cash equivalents and restricted cash at beginning of year

 

 

125,574

 

 

 

98,714

 

Cash, cash equivalents and restricted cash at end of period

 

$

175,762

 

 

$

214,826

 

Noncash investing and financing activities

 

 

 

 

 

 

 

 

Purchases of equipment included in accounts payable and accrued liabilities

 

$

7,698

 

 

$

627

 

Derecognition of lease financing arrangements upon adoption of guidance on

   accounting for leases

 

$

 

 

$

36,607

 

 

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

 

8


Adaptive Biotechnologies Corporation

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

1.

Organization and Description of Business

Adaptive Biotechnologies Corporation (“we,” “us” or “our”) is a commercial-stage company advancing the field of immune medicine by 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 immune medicine platform applies our proprietary technologies to read the diverse genetic code of a patient’s immune system and aims to understand precisely how the immune system detects and treats disease in that patient. We capture these insights in our dynamic clinical immunomics database, which is underpinned by computational biology and machine learning, and use them to develop and commercialize clinical products and services that we are tailoring to each individual patient. We have commercial products and services and a robust pipeline of clinical products and services that we are designing to diagnose, monitor and enable the treatment of diseases, such as cancer, autoimmune conditions and infectious diseases.

We were incorporated in the State of Washington on September 8, 2009 under the name Adaptive TCR Corporation. On December 21, 2011, we changed our name to Adaptive Biotechnologies Corporation. We are headquartered in Seattle, Washington.

New Sequencing Technology

In 2021, we formed a corporate subsidiary, Spin Technologies, Inc. (“SpinTech”), in order to facilitate the development of a potential new early-stage sequencing technology that is ancillary to our core business. We have a 70% ownership interest in SpinTech. All intercompany transactions and balances between us and this majority-owned subsidiary have been eliminated in consolidation. The remaining interest, held by certain of our related parties and related family trusts, was reported as noncontrolling interest in our unaudited condensed consolidated financial statements.

2.

Significant Accounting Policies

Basis of Presentation and Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience and other relevant assumptions that we believe to be reasonable under the circumstances. Estimates are used in several areas including, but not limited to, estimates of progress to date for certain performance obligations and the transaction price for certain contracts with customers, share-based compensation, the provision for income taxes, including related reserves, and goodwill, among others. These estimates generally involve complex issues and require judgments, involve the analysis of historical results and prediction of future trends, can require extended periods of time to resolve and are subject to change from period to period. Actual results may differ materially from management’s estimates.

Unaudited Interim Condensed Consolidated Financial Statements

In our opinion, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information. These unaudited condensed consolidated financial statements include all adjustments necessary to fairly state the financial position and the results of our operations and cash flows for interim periods in accordance with GAAP. All such adjustments are of a normal, recurring nature. Interim-period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 24, 2021.

Restricted Cash

We are required to maintain certain balances under lease arrangements for some of our property and facility leases. We had restricted cash of $2.1 million as of March 31, 2021 and December 31, 2020.

 

9


Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

 

 

Leases

We determine if an arrangement contains a lease at inception. We have operating lease agreements for the laboratory and office facilities that we occupy, as well as server space. Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized at the date the underlying asset becomes available for our use and are based on the present value of the future minimum lease payments over the lease term. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. As our leases generally do not provide an implicit interest rate, the present value of our future minimum lease payments is determined using our incremental borrowing rate. This rate is an estimate of the collateralized borrowing rate we would incur on our future lease payments over a similar term and is based on the information available to us at the lease commencement date, or as of January 1, 2020 for commenced leases that existed as of our adoption of the new lease standard.

Certain of our leases contain options to extend or terminate the lease; lease terms are adjusted for these options only when it is reasonably certain we will exercise these options. Our lease agreements do not contain residual value guarantees or covenants.

We have made a policy election regarding our real estate leases not to separate nonlease components from lease components, to the extent they are fixed. Nonlease components that are not fixed are expensed as incurred as variable lease expense. Our leases for laboratory and office facilities typically include variable nonlease components, such as common-area maintenance costs. We have also elected not to record on the balance sheet a lease that has a lease term of twelve months or less and does not contain a purchase option that we are reasonably certain to exercise.

Lease expense is recognized on a straight-line basis over the terms of the leases. Incentives granted under our facilities leases, including rent holidays, are recognized as adjustments to lease expense on a straight-line basis over the terms of the leases.

Concentrations of Risk

We are subject to a concentration of risk from a limited number of suppliers, or in some cases single suppliers, for some of our laboratory instruments and materials. This risk is managed by targeting a quantity of surplus stock.

Cash, cash equivalents and marketable securities are financial instruments that potentially subject us to concentrations of credit risk. We invest in money market funds, United States (“U.S.”) government debt securities, U.S. government agency securities, commercial paper and corporate bonds with high-quality accredited financial institutions.

Significant customers are those that represent more than 10% of our total revenue or accounts receivable, net balances for the periods and as of each balance sheet date presented, respectively. Revenue from these customers reflects their purchase of our products and services and our collaboration efforts with Genentech.

For each significant customer, revenue as a percentage of total revenue for the periods presented and accounts receivable, net as a percentage of total accounts receivable, net as of the dates presented were as follows:

 

 

 

Revenue

 

Accounts Receivable, Net

 

 

 

Three Months Ended March 31,

 

March 31,

 

December 31,

 

 

 

2021

 

2020

 

2021

 

2020

 

Customer A

 

*%

 

*%

 

*%

 

 

19.1

%

Customer B

 

10.4

 

*

 

17.8

 

12.2

 

Customer D

 

10.0

 

*

 

19.4

 

*

 

Customer E

 

*

 

*

 

17.8

 

*

 

Genentech, Inc. and Roche Group

 

42.1

 

54.4

 

*

 

*

 

* less than 10%

 

 

 

 

 

 

 

 

 

 

10


Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

 

 

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”), Revenue from Contracts with Customers. Under ASC 606, for all revenue-generating contracts, we perform the following steps to determine the amount of revenue to be recognized: (1) identify the contract or contracts; (2) determine whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (3) measure the transaction price, including the constraint on variable consideration; (4) allocate the transaction price to the performance obligations based on estimated selling prices; and (5) recognize revenue when (or as) we satisfy each performance obligation. The following is a summary of the application of the respective model to each of our revenue classifications.

Overview

Our revenue is generated from immunosequencing (“sequencing”) products and services (“sequencing revenue”) and from regulatory or development support services leveraging our immune medicine platform (“development revenue”). When revenue generating contracts have elements of both sequencing revenue and development revenue, we classify revenue based on the nature of the performance obligation and the allocated transaction price.

Sequencing Revenue

Sequencing revenue reflects the amounts generated from providing sequencing services and testing through our clonoSEQ and immunoSEQ products and services to our clinical and research customers, respectively.

For clinical customers, we derive revenues from providing our clonoSEQ report to ordering physicians, and we bill and receive payments from medical institutions and commercial and government third-party payors. In these transactions, we have identified one performance obligation: the delivery of a clonoSEQ report. As payment from the respective payors may vary based on the various reimbursement rates and patient responsibilities, we consider the transaction price to be variable and record an estimate of the transaction price, subject to the constraint for variable consideration, as revenue at the time of delivery. The estimate of transaction price is based on historical and expected reimbursement rates with the various payors, which are monitored in subsequent periods and adjusted as necessary based on actual collection experience.

For our clonoSEQ coverage under Medicare, we bill an episode of treatment when we deliver the first eligible test results. This billing contemplates all necessary tests required during a patient’s treatment cycle, which is currently estimated at approximately four tests per patient, including the initial sequence identification test. Revenue recognition commences at the time the initial billable test result is delivered and is based upon cumulative tests delivered to date. We estimate the number of tests we expect to deliver over a patient’s treatment cycle based on historical testing frequencies for patients by indication. These estimates are subject to change as we develop more information about utilization over time. Any unrecognized revenue from the initial billable test is recorded as deferred revenue and is recognized as we deliver the remaining tests in a patient’s treatment cycle or when it becomes remote that a patient will receive additional testing and we have not delivered our estimate of total tests.

For research customers, contracts typically include an amount billed in advance of services (“upfront”) and subsequent billings as sample results are delivered to the customer. Upfront amounts received are recorded as deferred revenue, which we recognize as revenue upon satisfaction of performance obligations. We have identified two typical performance obligations under the terms of our research service contracts: sequencing services and related data analysis. We recognize revenue for both identified performance obligations as sample results are delivered to the customer.

Development Revenue

We derive revenue by providing services through development agreements to biopharmaceutical customers who seek access to our immune medicine platform technologies. We generate revenues from the delivery of professional support activities pertaining to the use of immunoSEQ and our minimal residual disease (“MRD”) product in the development of the respective customers’ initiatives. The transaction price for these contracts may consist of a combination of non-refundable upfront fees, separately priced sequencing fees, progress-based milestones and regulatory milestones. The development agreements may include single or multiple performance obligations, depending on the contract. For certain contracts, we may perform services to support the biopharmaceutical customers’ regulatory submissions as part of their registrational trials. These services include regulatory support pertaining to our technology intended to be utilized as part of the submission, development of analytical plans for our sequencing data, participation on joint research committees and assistance in completing a regulatory submission. Generally, these services are not distinct within the context of the contract and they are accounted for as a single performance obligation.

11


Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

 

When sequencing services are separately priced customer options, we assess if a material right exists and, if not, the customer option to purchase additional sequencing services is not considered part of the contract. Except for any non-refundable upfront fees, the other forms of compensation represent variable consideration. Variable consideration related to progress-based and regulatory milestones is estimated using the most likely amount method, where variable consideration is constrained until it is probable that a significant reversal of cumulative revenue recognized will not occur. Progress milestones, such as the first sample result delivered or final patient enrollment in a customer trial, are customer dependent and are included in the transaction price when the respective milestone is probable of occurring. Milestone payments that are not within our customers’ control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. Determining whether regulatory milestone payments are probable is an area that requires significant judgment. In making this assessment, we evaluate scientific, clinical, regulatory and other risks, as well as the level of effort and investment required to achieve the respective milestone.

The primary method used to estimate standalone selling price for performance obligations is the adjusted market assessment approach. Using this approach, we evaluate the market in which we sell our services and estimate the price that a customer in that market would be willing to pay for our services. We recognize revenue using either an input or output measure of progress that faithfully depicts performance on a contract, depending on the contract. The measure used is dependent on the nature of the service to be provided in each contract. Selecting the measure of progress and estimating progress to date requires significant judgment.

Net Loss Per Share Attributable to Common Shareholders

We calculate basic net loss per share attributable to common shareholders by dividing the net loss attributable to common shareholders by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share attributable to common shareholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, common stock warrants, stock options and nonvested restricted stock units are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common shareholders, as their effect is anti-dilutive.

3.

Revenue

MRD Development Agreements

We have entered into agreements with biopharmaceutical customers to further develop and commercialize our MRD product and the biopharmaceutical customers’ therapeutics. Under each of the agreements, we received or will receive non-refundable upfront payments and could receive substantial additional payments upon reaching certain progress milestones or achieving certain regulatory milestones pertaining to the customers’ therapeutics and our MRD product.

 

Under the contracts, we identify performance obligations, which may include: (1) obligations to provide services supporting the customer’s regulatory submission activities as they relate to our MRD product; and (2) sequencing services related to customer-provided samples for their regulatory submissions. The transaction price allocated to the respective performance obligations is estimated using an adjusted market assessment approach for the regulatory support services and a standalone selling price for the estimated immunosequencing services. At contract inception, we fully constrain any consideration related to the regulatory milestones, as the achievement of such milestones is subject to third-party regulatory approval and the customers’ own submission decision-making. We recognize revenue relating to the sequencing services as sequencing revenue over time using an output method based on the proportion of sample results delivered relative to the total amount of sample results expected to be delivered and when expected to be a faithful depiction of progress. We use the same method to recognize the regulatory support services. When an output method based on the proportion of sample results delivered is not expected to be a faithful depiction of progress, we utilize an input method based on estimates of effort completed using a cost-based model.

We earned $7.0 million during the three months ended March 31, 2021 upon the achievement of certain regulatory milestones by our respective customers’ therapeutics, all of which was recognized as revenue within the respective period, as we determined the amounts were consistent with our estimated standalone selling prices and the respective performance obligations were complete.

We recognized $7.2 million and $0.4 million in development revenue related to these contracts, inclusive of the aforementioned milestones, during the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, in future periods we could receive up to an additional $306.5 million in milestone payments if certain regulatory approvals are obtained by our customers’ therapeutics in connection with MRD data generated from our MRD product.

12


Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

 

Genentech Collaboration Agreement

In December 2018, we entered into a worldwide collaboration and license agreement with Genentech (“Genentech Agreement”) to leverage our capability to develop cellular therapies in oncology. Subsequent to receipt of regulatory approval in January 2019, we received a non-refundable, upfront payment of $300.0 million in February 2019 and may be eligible to receive more than $1.8 billion over time, including payments of up to $75.0 million upon the achievement of specified regulatory milestones, up to $300.0 million upon the achievement of specified development milestones and up to $1,430.0 million upon the achievement of specified commercial milestones. In addition, we are separately able to receive tiered royalties at a rate ranging from the mid-single digits to the mid-teens on aggregate worldwide net sales of products arising from the strategic collaboration, subject to certain reductions, with aggregate minimum floors. Under the agreement, we are pursuing two product development pathways for novel T cell immunotherapies in which Genentech intends to use T cell receptors (“TCRs”) screened by our immune medicine platform to engineer and manufacture cellular medicines:

 

Shared Products. The shared products will use “off-the-shelf” TCRs identified against cancer antigens shared among patients (“Shared Products”).

 

Personalized Product. The personalized product will use patient-specific TCRs identified by real-time screening of TCRs against cancer antigens in each patient (“Personalized Product”).

Under the terms of the agreement, we granted Genentech exclusive worldwide licenses to develop and commercialize TCR-based cellular therapies in the field of oncology, including licenses to existing shared antigen data packages. Additionally, Genentech has the right to determine which product candidates to further develop for commercialization purposes. We determined that this arrangement meets the criteria set forth in ASC Topic 808, Collaborative Arrangements (“ASC 808”), because both parties are active participants in the activity and are exposed to significant risks and rewards depending on the activity’s commercial failure or success. Because ASC 808 does not provide guidance on how to account for the activities under a collaborative arrangement, we applied the guidance in ASC 606 to account for the activities related to the Genentech Agreement.

In applying ASC 606, we identified the following performance obligations at the inception of the agreement:

 

1.

License to utilize on an exclusive basis all TCR-specific platform intellectual property to develop and commercialize any licensed products in the field of oncology.

 

2.

License to utilize all data and information within each shared antigen data package and any other know-how disclosed by us to Genentech in oncology.

 

3.

License to utilize all private antigen TCR product data in connection with research and development activities in the field of use.

 

4.

License to existing shared antigen data packages.

 

5.

Research and development services for shared product development, including expansion of shared antigen data packages.

 

6.

Research and development services for private product development.

 

7.

Obligations to participate on various joint research, development and project committees.

 

We determined that none of the licenses, research and development services or obligations to participate on various committees were distinct within the context of the contract, given such rights and activities were highly interrelated and there was substantial additional research and development to further develop the licenses. We considered factors such as the stage of development of the respective existing antigen data packages, the subsequent development that would be required to both identify and submit a potential target for investigational new drug acceptance under both product pathways and the variability in research and development pathways given Genentech’s control of product commercialization. Specifically, under the agreement, Genentech is not required to pursue development or commercialization activities pertaining to both product pathways and may choose to proceed with one or the other, as opposed to both. Accordingly, we determined that all of the identified performance obligations were attributable to one general performance obligation, which is to further the development of our TCR-specific platform, including data packages, and continue to make our TCR identification process available to Genentech to pursue either product pathway.

Separately, we have a responsibility to Genentech to enter into a supply and manufacturing agreement for patient-specific TCRs as it pertains to any Personalized Product therapeutic. We determined this was an option right of Genentech should they pursue commercialization of a Personalized Product therapy. Because of the uncertainty resulting from the early stage of development, the novel approach of our collaboration with Genentech and our rights to future commercial milestones and royalty payments, we determined that this option right was not a material right that should be accounted for at inception. As such, we will account for the supply and manufacturing agreement when entered into between the parties.

13


Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

 

We determined the initial transaction price shall be made up of only the $300.0 million upfront, non-refundable payment, as all potential regulatory and development milestone payments were probable of significant revenue reversal given their achievement was highly dependent on factors outside our control. As a result, these payments were fully constrained and were not included in the transaction price as of March 31, 2021. We excluded the commercial milestones and potential royalties from the transaction price, as those items relate predominantly to the license rights granted to Genentech and will be assessed when and if such events occur.

As there are potential substantive developments necessary, which Genentech may be able to direct, we determined that we would apply a proportional performance model to recognize revenue for our performance obligation. We measure proportional performance using an input method based on costs incurred relative to the total estimated costs of research and development efforts to pursue both the Shared Product and Personalized Product pathways. When any of the potential regulatory and development milestones are no longer fully constrained and included in the transaction price, such amounts will be recognized using the cumulative catch-up method based on proportional performance at such time. We currently expect to recognize the revenue over a period of approximately seven to eight years from the effective date. This estimate of the research and development period considers pursuit options of development activities supporting both the Shared Product and the Personalized Product, but may be reduced or increased based on the various activities as directed by the joint committees, decisions made by Genentech, regulatory feedback or other factors not currently known.

We recognized revenue of $15.6 million and $10.9 million during the three months ended March 31, 2021 and 2020, respectively, related to the Genentech Agreement. Costs related to the Genentech Agreement are included in research and development expenses.

4.

Fair Value Measurements

The following tables set forth the fair value of financial assets as of March 31, 2021 and December 31, 2020 that were measured at fair value on a recurring basis (in thousands):

 

 

 

March 31, 2021

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

151,330

 

 

$

 

 

$

 

 

$

151,330

 

U.S. government debt securities