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Adaptive Biotechnologies Reports First Quarter 2024 Financial Results

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Adaptive Biotechnologies reported a revenue of $41.9 million for the first quarter of 2024, with the MRD business contributing 78% of the revenue, showing a 52% growth compared to the same period in 2023. The clonoSEQ test volume also grew by 41% to 17,040 tests delivered. The company achieved regulatory milestones and received positive feedback from the FDA's ODAC. Despite an 11% increase in revenue year-over-year, Immune Medicine revenue saw a 43% decrease. Operating expenses decreased by 4% to $90.6 million. The net loss for the quarter was $47.5 million, showing improvement from the same period in 2023. Cash, cash equivalents, and marketable securities stood at $308.9 million as of March 31, 2024. Updated financial guidance for 2024 includes an increased revenue projection for the MRD business and a range for total company operating expenses.

Positive
  • Significant revenue growth of 52% in the MRD business compared to the first quarter of 2023.

  • Positive feedback from the FDA's ODAC supporting the use of MRD as a primary endpoint.

  • Strong cash position of $308.9 million as of March 31, 2024.

Negative
  • Immune Medicine revenue decreased by 43% compared to the first quarter of the prior year.

  • Net loss for the first quarter of 2024 was $47.5 million despite improvement from the same period in 2023.

  • Operating expenses of $90.6 million for the first quarter of 2024, representing a decrease of 4% year-over-year.

Adaptive Biotechnologies' first quarter financial results demonstrated a mixed performance with notable strengths in MRD revenue growth of 52%, outpacing the overall company revenue growth of 11%. The impressive increase in MRD test volume by 41% also underscores the company's expanding market presence in the diagnostics space. However, the 43% reduction in Immune Medicine revenue signals potential challenges in that segment, which investors should monitor closely. Despite a net loss, the reduction of operating expenses by 4% and a 23% cut within the Immune Medicine segment points to a strategic repositioning. The company's strong cash position of $308.9 million offers a substantial runway to achieve profitability for MRD and fund further R&D. The updated 2024 guidance reflects management's confidence in MRD's growth trajectory, albeit with caution advised for the Immune Medicine's uncertain revenue outlook.

The unanimous vote by the FDA’s Oncologic Drug Advisory Committee to support MRD as a primary endpoint for accelerated therapy approval in multiple myeloma is a significant validation of Adaptive Biotechnologies' core MRD technology. This endorsement could lead to broader adoption in the clinical setting, potentially increasing demand for the clonoSEQ test. The strategic focus on separate segment reporting indicates that Adaptive is honing its operational strategy to foster clear accountability and performance assessment. The launch of an antibody discovery campaign in Immune Medicine for conditions like multiple sclerosis and type 1 diabetes showcases the company's commitment to expanding their R&D pipeline and could, in the long term, diversify their revenue streams if preclinical data in 2024 lead to successful development programs.

For investors, the affirmative vote by the ODAC on MRD as a primary endpoint is an indication that Adaptive's technology is gaining clinical credibility and can potentially catalyze the adoption of Adaptive's tests in new therapeutic areas. However, the significance of the heavy reliance on the MRD segment, which now accounts for 78% of total revenue, cannot be overstated. The diversification of the business model through the Immune Medicine segment appears to be struggling, reflected by the sharp revenue decline. The cost reduction strategies and updated financial guidance suggest that Adaptive is taking steps to optimize its cost structure and improve operational efficiency, which can be positive for long-term sustainability, but the current success is highly contingent on the MRD sector's continued growth and the Immune Medicine's turnaround.

SEATTLE, May 07, 2024 (GLOBE NEWSWIRE) -- Adaptive Biotechnologies Corporation (“Adaptive Biotechnologies”) (Nasdaq: ADPT), a commercial stage biotechnology company that aims to translate the genetics of the adaptive immune system into clinical products to diagnose and treat disease, today reported financial results for the quarter ended March 31, 2024.

“This quarter, we implemented important decisions to maximize the value of our MRD and Immune Medicine businesses. I am confident in the steps we are taking to execute on their respective priorities with separate segment reporting,” said Chad Robins, chief executive officer and co-founder of Adaptive Biotechnologies. “Our cash position is strong and will enable us to bridge the MRD business to profitability while advancing key programs in Immune Medicine through gated investments.”

Recent Highlights

  • Revenue for the first quarter of 2024 was $41.9 million. The MRD business, which contributed 78% of revenue, grew 52% versus the first quarter of 2023.
  • clonoSEQ test volume in the first quarter of 2024 grew 41% to 17,040 tests delivered versus the first quarter of 2023.
  • Recognized $4.5 million within MRD revenue upon the achievement of regulatory milestones from biopharmaceutical clinical studies.
  • The FDA’s Oncologic Drug Advisory Committee (ODAC) voted unanimously in favor of the use of MRD as a primary endpoint to support the accelerated approval of new therapies for patients with multiple myeloma.
  • Following a strategic review, MRD and Immune Medicine will operate under Adaptive with dedicated resources, separate segment reporting and disciplined capital allocation.
  • Initiated antibody discovery campaign in Immune Medicine for multiple sclerosis and type 1 diabetes to discover, make and test select antibodies to generate preclinical data during 2024.

First Quarter 2024 Financial Results

Revenue was $41.9 million for the quarter ended March 31, 2024, representing an 11% increase from the first quarter in the prior year. MRD revenue was $32.6 million for the quarter, representing a 52% increase from the first quarter in the prior year. Immune Medicine revenue was $9.2 million for the quarter, representing a 43% decrease from the first quarter in the prior year.

Operating expenses were $90.6 million for the first quarter of 2024, compared to $94.8 million in the first quarter of the prior year, representing a decrease of 4%. MRD operating expenses were $59.9 million for the quarter, representing a 7% increase from the first quarter in the prior year. Immune Medicine operating expenses were $23.8 million for the quarter, representing a 25% decrease from the first quarter in the prior year.

Interest and other income, net was $4.2 million for the first quarter of 2024, compared to $3.0 million in the first quarter of the prior year. Interest expense from our revenue interest purchase agreement was $3.0 million in the first quarter of 2024, compared to $3.5 million in the first quarter of the prior year.

Net loss was $47.5 million for the first quarter of 2024, compared to $57.7 million for the same period in 2023.

Adjusted EBITDA (non-GAAP) was a loss of $28.2 million for the first quarter of 2024, compared to a loss of $37.1 million for the first quarter of the prior year. MRD Adjusted EBITDA (non-GAAP) was a loss of $17.3 million for the quarter, compared to a loss of $26.4 million for the first quarter of the prior year. Immune Medicine Adjusted EBITDA (non-GAAP) was a loss of $6.9 million for the quarter, compared to a loss of $7.4 million for the first quarter of the prior year.

Cash, cash equivalents and marketable securities was $308.9 million as of March 31, 2024.

2024 Updated Financial Guidance

Adaptive Biotechnologies expects full year revenue for the MRD business to be between $135 million and $140 million, updated from the previous range between $130 million and $140 million. No revenue guidance is provided for the Immune Medicine business.

We expect full year total company operating expenses, including cost of revenue, to be between $350 million and $360 million, updated from the previous range between $360 million and $370 million.

Management will provide further details on the outlook during the conference call.

Webcast and Conference Call Information

Adaptive Biotechnologies will host a conference call to discuss its first quarter 2024 financial results after market close on Tuesday, May 7, 2024 at 4:30 PM Eastern Time. The conference call can be accessed at http://investors.adaptivebiotech.com. The webcast will be archived and available for replay at least 90 days after the event.

About Adaptive Biotechnologies

Adaptive Biotechnologies (“we” or “our”) is a commercial-stage biotechnology company focused on harnessing the inherent biology of the adaptive immune system to transform the diagnosis and treatment of disease. We believe the adaptive immune system is nature’s most finely tuned diagnostic and therapeutic for most diseases, but the inability to decode it has prevented the medical community from fully leveraging its capabilities. Our proprietary immune medicine platform reveals and translates the massive genetics of the adaptive immune system with scale, precision and speed. We apply our platform to partner with biopharmaceutical companies, inform drug development, and develop clinical diagnostics across our two business areas: Minimal Residual Disease (MRD) and Immune Medicine. Our commercial products and clinical pipeline enable the diagnosis, monitoring, and treatment of diseases such as cancer, autoimmune disorders, and infectious diseases. Our goal is to develop and commercialize immune-driven clinical products tailored to each individual patient.

Forward-Looking Statements

This press release contains forward-looking statements that are based on management’s beliefs and assumptions and on information currently available to management. All statements contained in this release other than statements of historical fact are forward-looking statements, including statements regarding our ability to develop, commercialize and achieve market acceptance of our current and planned products and services, our research and development efforts and other matters regarding our business strategies, use of capital, results of operations and financial position and plans and objectives for future operations.

In some cases, you can identify forward-looking statements by the words “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. These risks, uncertainties and other factors are described under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in the documents we file with the Securities and Exchange Commission from time to time. We caution you that forward-looking statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. As a result, the forward-looking statements may not prove to be accurate. The forward-looking statements in this press release represent our views as of the date hereof. We undertake no obligation to update any forward-looking statements for any reason, except as required by law.

Use of Non-GAAP Financial Measure

To supplement our unaudited condensed consolidated statements of operations and unaudited condensed consolidated balance sheets, which are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), this press release also includes references to Adjusted EBITDA, which is a non-GAAP financial measure that we define as net loss attributable to Adaptive Biotechnologies Corporation adjusted for interest and other income, net, interest expense, income tax (expense) benefit, depreciation and amortization expense, impairment costs for right-of-use and related long-lived assets, restructuring expense and share-based compensation expense. We define our segment Adjusted EBITDA in the same way to the extent the net loss attributable to Adaptive Biotechnologies Corporation and adjustments are allocable to each segment. We have provided reconciliations of net loss attributable to Adaptive Biotechnologies Corporation, the most directly comparable GAAP financial measures, to Adjusted EBITDA at the end of this press release.

Management uses Adjusted EBITDA, including segment Adjusted EBITDA, to evaluate the financial performance of our business and segments and to evaluate the effectiveness of our strategies. We present these figures because we believe it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry and it facilitates comparisons on a consistent basis across reporting periods. Further, we believe it is helpful in highlighting trends in our operating results because it excludes items that are not indicative of our core operating performance.

Adjusted EBITDA, including segment Adjusted EBITDA, has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. We may in the future incur expenses similar to the adjustments we make. In particular, we expect to incur meaningful share-based compensation expense in the future. Other limitations include that Adjusted EBITDA does not reflect:

  • all expenditures or future requirements for capital expenditures or contractual commitments;
  • changes in our working capital needs;
  • interest expense, which is an ongoing element of our costs to operate;
  • income tax (expense) benefit, which may be a necessary element of our costs and ability to operate;
  • the costs of replacing the assets being depreciated and amortized, which will often have to be replaced in the future;
  • the noncash component of employee compensation expense;
  • right-of-use and related long-lived assets impairment costs; and
  • the impact of earnings or charges resulting from matters we consider not to be reflective, on a recurring basis, of our ongoing operations, such as our restructuring activities and reductions in workforce.

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

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

ADAPTIVE MEDIA
Erica Jones, Associate Corporate Communications Director
206-279-2423
media@adaptivebiotech.com

Adaptive Biotechnologies
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
 
 Three Months Ended March 31, 
 2024  2023 
Revenue$41,873  $37,647 
Operating expenses     
Cost of revenue 18,051   18,681 
Research and development 30,245   32,601 
Sales and marketing 22,319   22,308 
General and administrative 19,597   20,831 
Amortization of intangible assets 423   419 
Total operating expenses 90,635   94,840 
Loss from operations (48,762)  (57,193)
Interest and other income, net 4,222   3,024 
Interest expense (2,993)  (3,531)
Net loss (47,533)  (57,700)
Add: Net loss attributable to noncontrolling interest 26   1 
Net loss attributable to Adaptive Biotechnologies Corporation$(47,507) $(57,699)
Net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted$(0.33) $(0.40)
Weighted-average shares used in computing net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted 145,787,527   143,511,142 
        


Adaptive Biotechnologies
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
 
  March 31, 2024  December 31, 2023 
  (unaudited)    
Assets      
Current assets      
Cash and cash equivalents $71,233  $65,064 
Short-term marketable securities (amortized cost of $237,745 and $281,122, respectively)  237,639   281,337 
Accounts receivable, net  42,021   37,969 
Inventory  13,291   14,448 
Prepaid expenses and other current assets  9,850   11,370 
Total current assets  374,034   410,188 
Long-term assets      
Property and equipment, net  65,260   68,227 
Operating lease right-of-use assets  50,999   52,096 
Restricted cash  2,963   2,932 
Intangible assets, net  4,705   5,128 
Goodwill  118,972   118,972 
Other assets  3,390   3,591 
Total assets $620,323  $661,134 
Liabilities and shareholders’ equity      
Current liabilities      
Accounts payable $12,170  $7,719 
Accrued liabilities  7,914   8,597 
Accrued compensation and benefits  6,404   13,685 
Current portion of operating lease liabilities  9,594   9,384 
Current portion of deferred revenue  46,870   48,630 
Total current liabilities  82,952   88,015 
Long-term liabilities      
Operating lease liabilities, less current portion  86,900   89,388 
Deferred revenue, less current portion  44,160   44,793 
Revenue interest liability, net  131,545   130,660 
Total liabilities  345,557   352,856 
Commitments and contingencies      
Shareholders’ equity      
Preferred stock: $0.0001 par value, 10,000,000 shares authorized at March 31, 2024 and December 31, 2023; no shares issued and outstanding at March 31, 2024 and December 31, 2023      
Common stock: $0.0001 par value, 340,000,000 shares authorized at March 31, 2024 and December 31, 2023; 147,368,324 and 145,082,271 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively  14   14 
Additional paid-in capital  1,466,844   1,452,502 
Accumulated other comprehensive (loss) gain  (106)  215 
Accumulated deficit  (1,191,839)  (1,144,332)
Total Adaptive Biotechnologies Corporation shareholders’ equity  274,913   308,399 
Noncontrolling interest  (147)  (121)
Total shareholders’ equity  274,766   308,278 
Total liabilities and shareholders’ equity $620,323  $661,134 
         

Adjusted EBITDA

The following table sets forth a reconciliation between our Adjusted EBITDA and net loss attributable to Adaptive Biotechnologies Corporation, the most directly comparable GAAP financial measure, for each of the periods presented (in thousands, unaudited):

  Three Months Ended March 31, 
  2024  2023 
Net loss attributable to Adaptive Biotechnologies Corporation $(47,507) $(57,699)
Interest and other income, net  (4,222)  (3,024)
Interest expense  2,993   3,531 
Depreciation and amortization expense  5,214   5,423 
Restructuring expense  1,044    
Share-based compensation expense  14,298   14,671 
Adjusted EBITDA $(28,180) $(37,098)
         

Segment Information (Including Segment Adjusted EBITDA)

The following tables set forth our segment information for the three months ended March 31, 2024 and 2023, as well as the remaining quarterly periods in the prior year (in thousands, unaudited):

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FAQ

What was Adaptive Biotechnologies' revenue for the first quarter of 2024?

Adaptive Biotechnologies reported a revenue of $41.9 million for the first quarter of 2024.

What was the revenue contribution of the MRD business in the first quarter of 2024?

The MRD business contributed 78% of the revenue in the first quarter of 2024.

What was the growth percentage in the clonoSEQ test volume for the first quarter of 2024?

The clonoSEQ test volume grew by 41% to 17,040 tests delivered.

What was the net loss for the first quarter of 2024?

The net loss for the first quarter of 2024 was $47.5 million.

What was the cash position of Adaptive Biotechnologies as of March 31, 2024?

Adaptive Biotechnologies had a cash, cash equivalents, and marketable securities balance of $308.9 million as of March 31, 2024.

What is the updated revenue guidance for the MRD business in 2024?

Adaptive Biotechnologies expects full year revenue for the MRD business to be between $135 million and $140 million, updated from the previous range between $130 million and $140 million.

Adaptive Biotechnologies Corporation

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