10-Q 1 adpt-20220930.htm 10-Q 10-Q
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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, 2022

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 28, 2022, the registrant had 143,012,157 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

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

39

Item 4.

Controls and Procedures

39

PART II.

OTHER INFORMATION

40

Item 1.

Legal Proceedings

40

Item 1A.

Risk Factors

40

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

40

Item 3.

Defaults Upon Senior Securities

40

Item 4.

Mine Safety Disclosures

41

Item 5.

Other Information

41

Item 6.

Exhibits

41

Signatures

42

 

 

 

 


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 products and services related to our Immune Medicine and Minimal Residual Disease (“MRD”) market opportunities, particularly in light of the novelty of immune medicine and our methods;
our ability to achieve and maintain commercial market acceptance of our current products and services, such as clonoSEQ and immunoSEQ, as well as our ability to achieve market acceptance for any additional products and services beyond our current portfolio, if developed;
our collaboration with Genentech, Inc. (“Genentech”) and our 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; and
our expected reliance on collaborators and other third parties for development, clinical testing and regulatory approval of current products in new indications and potential product candidates, which may fail at any time due to a number of possible unforeseen events.

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, 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 (Note 10)

 

 

 

 

 

 

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

 

 

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,

 

 

 

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

 

 

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,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(45,319

)

 

$

(55,998

)

 

$

(160,199

)

 

$

(145,941

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized gains and losses on investments

 

 

(171

)

 

 

(209

)

 

 

(4,834

)

 

 

(886

)

Comprehensive loss

 

 

(45,490

)

 

 

(56,207

)

 

 

(165,033

)

 

 

(146,827

)

Add: Comprehensive loss attributable to noncontrolling interest

 

 

38

 

 

 

95

 

 

 

136

 

 

 

95

 

Comprehensive loss attributable to Adaptive Biotechnologies Corporation

 

$

(45,452

)

 

$

(56,112

)

 

$

(164,897

)

 

$

(146,732

)

 

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 (Loss)

 

 

Deficit

 

 

Interest

 

 

Shareholders’ Equity

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2022

 

 

142,784,868

 

 

$

14

 

 

$

1,357,763

 

 

$

(5,800

)

 

$

(833,673

)

 

$

12

 

 

$

518,316

 

Issuance of common stock for cash upon exercise of stock options

 

 

131,802

 

 

 

 

 

 

846

 

 

 

 

 

 

 

 

 

 

 

 

846

 

Vesting of restricted stock units

 

 

70,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock option, restricted stock unit and market-based restricted stock unit share-based compensation

 

 

 

 

 

 

 

 

14,142

 

 

 

 

 

 

 

 

 

 

 

 

14,142

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(171

)

 

 

 

 

 

 

 

 

(171

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(45,281

)

 

 

(38

)

 

 

(45,319

)

Balance at September 30, 2022

 

 

142,987,127

 

 

$

14

 

 

$

1,372,751

 

 

$

(5,971

)

 

$

(878,954

)

 

$

(26

)

 

$

487,814

 

 

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 (Loss)

 

 

Deficit

 

 

Interest

 

 

Shareholders’ Equity

 

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 Digital Biotechnologies, Inc.

 

 

 

 

 

 

 

 

300

 

 

 

 

 

 

 

 

 

129

 

 

 

429

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(886

)

 

 

 

 

 

 

 

 

(886

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(145,846

)

 

 

(95

)

 

 

(145,941

)

Balance at September 30, 2021

 

 

141,027,487

 

 

$

14

 

 

$

1,308,946

 

 

$

7

 

 

$

(657,458

)

 

$

34

 

 

$

651,543