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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
10-Q
(Mark One)
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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period ended
September 30,
2022
OR
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the transition period from _____to _____
Commission File Number:
001-38957
ADAPTIVE BIOTECHNOLOGIES CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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Washington
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27-0907024
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1165 Eastlake Avenue East
Seattle,
Washington
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98109
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
(206)
659-0067
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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Common stock, par value $0.0001 per share
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ADPT
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The NASDAQ Stock Market LLC
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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.
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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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
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
1,361,891
|
|
|
|
—
|
|
|
|
7,562
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,562
|
|
|
Vesting of restricted stock units
|
|
|
231,371
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Common stock option, restricted stock unit and market-based
restricted stock unit share-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
41,183
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
41,183
|
|
|
Other comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,834
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,834
|
)
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(160,063
|
)
|
|
|
(136
|
)
|
|
|
(160,199
|
)
|
|
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.
8
Adaptive Biotechnologies Corporation
Condensed Consolidated Statements of
Cash Flows
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Operating activities
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(160,199
|
)
|
|
$
|
(145,941
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating
activities
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
14,364
|
|
|
|
7,834
|
|
|
Noncash lease expense
|
|
|
5,423
|
|
|
|
5,259
|
|
|
Share-based compensation expense
|
|
|
41,183
|
|
|
|
31,376
|
|
|
Intangible assets amortization
|
|
|
1,270
|
|
|
|
1,270
|
|
|
Investment amortization
|
|
|
1,825
|
|
|
|
5,956
|
|
|
Research and development inventory reserve
|
|
|
2,638
|
|
|
|
—
|
|
|
Interest expense
|
|
|
653
|
|
|
|
—
|
|
|
Other
|
|
|
(20
|
)
|
|
|
(9
|
)
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(9,139
|
)
|
|
|
(7,075
|
)
|
|
Inventory
|
|
|
(2,212
|
)
|
|
|
(4,168
|
)
|
|
Prepaid expenses and other current assets
|
|
|
601
|
|
|
|
(2,239
|
)
|
|
Accounts payable and accrued liabilities
|
|
|
(3,419
|
)
|
|
|
5,518
|
|
|
Operating lease right-of-use assets and liabilities
|
|
|
(3,041
|
)
|
|
|
9,935
|
|
|
Deferred revenue
|
|
|
(44,018
|
)
|
|
|
(46,345
|
)
|
|
Other
|
|
|
165
|
|
|
|
(272
|
)
|
|
Net cash used in operating activities
|
|
|
(153,926
|
)
|
|
|
(138,901
|
)
|
|
Investing activities
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(13,807
|
)
|
|
|
(52,501
|
)
|
|
Purchases of marketable securities
|
|
|
(113,744
|
)
|
|
|
(238,001
|
)
|
|
Proceeds from maturities of marketable securities
|
|
|
228,000
|
|
|
|
404,500
|
|
|
Net cash provided by investing activities
|
|
|
100,449
|
|
|
|
113,998
|
|
|
Financing activities
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options
|
|
|
7,568
|
|
|
|
23,439
|
|
|
Proceeds from revenue interest purchase agreement, net of issuance
costs
|
|
|
124,691
|
|
|
|
—
|
|
|
Proceeds from initial capital contributions for Digital
Biotechnologies, Inc.
|
|
|
—
|
|
|
|
429
|
|
|
Net cash provided by financing activities
|
|
|
132,259
|
|
|
|
23,868
|
|
|
Net increase (decrease) in cash, cash equivalents and restricted
cash
|
|
|
78,782
|
|
|
|
(1,035
|
)
|
|
Cash, cash equivalents and restricted cash at beginning of
year
|
|
|
141,203
|
|
|
|
125,574
|
|
|
Cash, cash equivalents and restricted cash at end of
period
|
|
$
|
219,985
|
|
|
$
|
124,539
|
|
|
Noncash investing and financing activities
|
|
|
|
|
|
|
|
Purchases of equipment included in accounts payable and accrued
liabilities
|
|
$
|
2,619
|
|
|
$
|
8,133
|
|
|
Revenue interest purchase agreement issuance costs included in
accounts payable and accrued liabilities
|
|
$
|
316
|
|
|
$
|
—
|
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
9
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
disorders 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.
2. Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The unaudited condensed consolidated financial statements include
the accounts of Adaptive Biotechnologies Corporation, our
wholly-owned subsidiary and Digital Biotechnologies, Inc., a
corporate subsidiary we have
70%
ownership interest in. The remaining interest in Digital
Biotechnologies, Inc., held by certain of our related parties and
their related family trusts, are shown in the unaudited condensed
consolidated financial statements as noncontrolling interest. All
intercompany transactions and balances between Adaptive
Biotechnologies Corporation, our wholly-owned subsidiary and
Digital Biotechnologies, Inc. have been eliminated upon
consolidation.
Use of Estimates
The preparation of condensed consolidated 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 condensed consolidated 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, including the fair value of stock, imputing interest
for our revenue interest purchase agreement (the "Purchase
Agreement") that we entered into in September 2022, 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 our financial position and the results of our
operations and cash flows for interim periods in accordance with
GAAP. All such adjustments were 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 the audited financial
statements and notes included in our Annual Report on Form 10-K for
the year ended December 31, 2021 filed with the Securities and
Exchange Commission ("SEC") on February 15, 2022.
Reclassification
We previously disclosed revenue bifurcated into sequencing and
development financial statement captions. Beginning with the
reporting period ended March 31, 2022, we changed how we classify
revenue and now present total revenue on the unaudited condensed
consolidated statements of operations. See Note 3, Revenue for
additional disaggregation of revenue under our Immune Medicine and
Minimal Residual Disease ("MRD") market opportunities.
10
Adaptive Biotechnologies Corporation
Notes to Unaudited Condensed Consolidated Financial Statements
(Continued)
(unaudited)
Restricted Cash
We had a restricted cash balance of $2.4
million and
$2.1
million as of September 30, 2022 and December 31, 2021,
respectively. Our restricted cash primarily relates to certain
balances we are required to maintain under lease arrangements for
some of our property and facility leases.
Revenue Interest Liability, Net and Related Imputed
Interest
The revenue interest liability balance associated with the Purchase
Agreement that we entered into in September 2022 is presented net
of issuance costs on our unaudited condensed consolidated balance
sheets. We impute our associated interest expense using the
effective interest rate method. We calculate an effective interest
rate which will amortize our related obligation to zero over the
anticipated repayment period. The effective interest rate may vary
during the term of the agreement depending on a number of factors,
including changes in forecasted GAAP revenues. We evaluate the
effective interest rate quarterly based on both achieved and
forecasted revenues, utilizing the prospective method. A
significant increase or decrease in forecasted revenue will
materially impact our interest expense and the time period for
repayment.
Concentrations of Risk
We are subject to a concentration of risk from a limited number of
suppliers, or in certain 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 ten
percent of our total revenue or accounts receivable, net balances
for the periods and as of each condensed consolidated balance sheet
date presented, respectively.
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 September 30,
|
|
Nine Months Ended September 30,
|
|
September 30,
|
|
December 31,
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Customer B
|
|
*%
|
|
*%
|
|
13.0%
|
|
*%
|
|
22.5%
|
|
11.3%
|
|
Customer D
|
|
*
|
|
*
|
|
*
|
|
*
|
|
11.9
|
|
*
|
|
Genentech, Inc. and Roche Group
|
|
45.1
|
|
39.8
|
|
38.2
|
|
42.6
|
|
*
|
|
*
|
|
* less than 10%
|
|
|
|
|
|
|
|
|
|
|
|
|
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.