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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 June 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 July 29, 2022, the registrant had 142,872,988 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

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

34

Item 4.

Controls and Procedures

34

PART II.

OTHER INFORMATION

35

Item 1.

Legal Proceedings

35

Item 1A.

Risk Factors

35

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

35

Item 3.

Defaults Upon Senior Securities

35

Item 4.

Mine Safety Disclosures

35

Item 5.

Other Information

35

Item 6.

Exhibits

36

Signatures

37

 

 

 


Adaptive Biotechnologies Corporation

 

 

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are based on management’s beliefs and assumptions and on information currently available to management. All statements contained in this report other than statements of historical fact are forward-looking statements, which include but are not limited to, statements about:

 

our ability to leverage and extend our immune medicine platform to discover, develop and commercialize our products and services, including further commercialization and development of 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, T-Detect 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, including with respect to the T-Detect product line; 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)

 

 

 

June 30, 2022

 

 

December 31, 2021

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

76,412

 

 

$

139,065

 

Short-term marketable securities (amortized cost of $310,999 and $214,115, respectively)

 

 

307,326

 

 

 

213,996

 

Accounts receivable, net

 

 

23,712

 

 

 

17,409

 

Inventory

 

 

18,778

 

 

 

19,263

 

Prepaid expenses and other current assets

 

 

12,347

 

 

 

13,015

 

Total current assets

 

 

438,575

 

 

 

402,748

 

Long-term assets

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

86,852

 

 

 

85,262

 

Operating lease right-of-use assets

 

 

84,398

 

 

 

87,678

 

Long-term marketable securities (amortized cost of $69,055 and $218,163, respectively)

 

 

66,928

 

 

 

217,145

 

Restricted cash

 

 

2,446

 

 

 

2,138

 

Intangible assets, net

 

 

7,684

 

 

 

8,526

 

Goodwill

 

 

118,972

 

 

 

118,972

 

Other assets

 

 

778

 

 

 

875

 

Total assets

 

$

806,633

 

 

$

923,344

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,720

 

 

$

3,307

 

Accrued liabilities

 

 

9,447

 

 

 

9,343

 

Accrued compensation and benefits

 

 

9,772

 

 

 

15,642

 

Current portion of operating lease liabilities

 

 

8,615

 

 

 

5,055

 

Current portion of deferred revenue

 

 

80,914

 

 

 

80,460

 

Total current liabilities

 

 

111,468

 

 

 

113,807

 

Long-term liabilities

 

 

 

 

 

 

 

 

Operating lease liabilities, less current portion

 

 

102,727

 

 

 

106,685

 

Deferred revenue, less current portion

 

 

74,122

 

 

 

98,750

 

Total liabilities

 

 

288,317

 

 

 

319,242

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

Preferred stock: $0.0001 par value, 10,000,000 shares authorized at June 30, 2022 and December 31, 2021; no shares issued and outstanding at June 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock: $0.0001 par value, 340,000,000 shares authorized at June 30, 2022 and December 31, 2021; 142,784,868 and 141,393,865 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

 

14

 

 

 

14

 

Additional paid-in capital

 

 

1,357,763

 

 

 

1,324,006

 

Accumulated other comprehensive loss

 

 

(5,800

)

 

 

(1,137

)

Accumulated deficit

 

 

(833,673

)

 

 

(718,891

)

Total Adaptive Biotechnologies Corporation shareholders’ equity

 

 

518,304

 

 

 

603,992

 

Noncontrolling interest

 

 

12

 

 

 

110

 

Total shareholders’ equity

 

 

518,316

 

 

 

604,102

 

Total liabilities and shareholders’ equity

 

$

806,633

 

 

$

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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

43,660

 

 

$

38,505

 

 

$

82,280

 

 

$

76,947

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

13,221

 

 

 

10,765

 

 

 

26,413

 

 

 

20,756

 

Research and development

 

 

37,037

 

 

 

37,800

 

 

 

74,876

 

 

 

71,572

 

Sales and marketing

 

 

24,281

 

 

 

23,216

 

 

 

50,374

 

 

 

43,820

 

General and administrative

 

 

21,200

 

 

 

16,066

 

 

 

45,344

 

 

 

31,002

 

Amortization of intangible assets

 

 

423

 

 

 

423

 

 

 

842

 

 

 

842

 

Total operating expenses

 

 

96,162

 

 

 

88,270

 

 

 

197,849

 

 

 

167,992

 

Loss from operations

 

 

(52,502

)

 

 

(49,765

)

 

 

(115,569

)

 

 

(91,045

)

Interest and other income, net

 

 

418

 

 

 

464

 

 

 

689

 

 

 

1,102

 

Net loss

 

 

(52,084

)

 

 

(49,301

)

 

 

(114,880

)

 

 

(89,943

)

Add: Net loss attributable to noncontrolling interest

 

 

38

 

 

 

 

 

 

98

 

 

 

 

Net loss attributable to Adaptive Biotechnologies Corporation

 

$

(52,046

)

 

$

(49,301

)

 

$

(114,782

)

 

$

(89,943

)

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

 

$

(0.37

)

 

$

(0.35

)

 

$

(0.81

)

 

$

(0.64

)

Weighted-average shares used in computing net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted

 

 

142,363,589

 

 

 

140,359,317

 

 

 

142,032,261

 

 

 

139,667,380

 

 

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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(52,084

)

 

$

(49,301

)

 

$

(114,880

)

 

$

(89,943

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized gains and losses on investments

 

 

(1,017

)

 

 

(415

)

 

 

(4,663

)

 

 

(677

)

Comprehensive loss

 

 

(53,101

)

 

 

(49,716

)

 

 

(119,543

)

 

 

(90,620

)

Add: Comprehensive loss attributable to noncontrolling interest

 

 

38

 

 

 

 

 

 

98

 

 

 

 

Comprehensive loss attributable to Adaptive Biotechnologies Corporation

 

$

(53,063

)

 

$

(49,716

)

 

$

(119,445

)

 

$

(90,620

)

 

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 March 31, 2021

 

 

139,884,698

 

 

$

14

 

 

$

1,277,197

 

 

$

631

 

 

$

(552,254

)

 

$

129

 

 

$

725,717

 

Issuance of common stock for cash upon exercise of stock options

 

 

766,557

 

 

 

 

 

 

6,060

 

 

 

 

 

 

 

 

 

 

 

 

6,060

 

Vesting of restricted stock units

 

 

12,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock option and restricted stock unit share-based compensation

 

 

 

 

 

 

 

 

11,249

 

 

 

 

 

 

 

 

 

 

 

 

11,249

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(415

)

 

 

 

 

 

 

 

 

(415

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(49,301

)

 

 

 

 

 

(49,301

)

Balance at June 30, 2021

 

 

140,663,755

 

 

$

14

 

 

$

1,294,506

 

 

$

216

 

 

$

(601,555

)

 

$

129

 

 

$

693,310

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2022

 

 

142,183,258

 

 

$

14

 

 

$

1,339,601

 

 

$

(4,783

)

 

$

(781,627

)

 

$

50

 

 

$

553,255

 

Issuance of common stock for cash upon exercise of stock options

 

 

581,881

 

 

 

 

 

 

3,982

 

 

 

 

 

 

 

 

 

 

 

 

3,982

 

Vesting of restricted stock units

 

 

19,729

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

14,180

 

 

 

 

 

 

 

 

 

 

 

 

14,180

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(1,017

)

 

 

 

 

 

 

 

 

(1,017

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(52,046

)

 

 

(38

)

 

 

(52,084

)

Balance at June 30, 2022

 

 

142,784,868

 

 

$

14

 

 

$

1,357,763

 

 

$

(5,800

)

 

$

(833,673

)

 

$

12

 

 

$

518,316

 

 

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

 

 

2,950,197

 

 

 

 

 

 

20,502

 

 

 

 

 

 

 

 

 

 

 

 

20,502

 

Vesting of restricted stock units

 

 

12,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock option and restricted stock unit share-based compensation

 

 

 

 

 

 

 

 

19,733

 

 

 

 

 

 

 

 

 

 

 

 

19,733

 

Capital contributions for Digital Biotechnologies, Inc.

 

 

 

 

 

 

 

 

300

 

 

 

 

 

 

 

 

 

129

 

 

 

429

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(677

)

 

 

 

 

 

 

 

 

(677

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(89,943

)

 

 

 

 

 

(89,943

)

Balance at June 30, 2021

 

 

140,663,755

 

 

$

14

 

 

$

1,294,506

 

 

$

216

 

 

$

(601,555

)

 

$

129

 

 

$

693,310

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

141,393,865

 

 

$

14

 

 

$

1,324,006

 

 

$

(1,137

)

 

$

(718,891

)

 

$

110

 

 

$

604,102

 

Issuance of common stock for cash upon exercise of stock options

 

 

1,230,089

 

 

 

 

 

 

6,716

 

 

 

 

 

 

 

 

 

 

 

 

6,716

 

Vesting of restricted stock units

 

 

160,914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

27,041

 

 

 

 

 

 

 

 

 

 

 

 

27,041

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(4,663

)

 

 

 

 

 

 

 

 

(4,663

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(114,782

)

 

 

(98

)

 

 

(114,880

)

Balance at June 30, 2022

 

 

142,784,868

 

 

$

14

 

 

$

1,357,763

 

 

$

(5,800

)

 

$

(833,673

)

 

$

12

 

 

$

518,316

 

 

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

 

8


Adaptive Biotechnologies Corporation

 

 

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(114,880

)

 

$

(89,943

)

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

 

 

 

 

 

 

 

 

Depreciation expense

 

 

9,409