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Adaptive Biotechnologies Reports Fourth Quarter and Full Year 2023 Financial Results

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Adaptive Biotechnologies reports financial results for Q4 and full year 2023, highlighting revenue of $170.3 million, MRD business growth, and key milestones achieved in cancer and autoimmune disorders. Despite a decrease in revenue, the company remains optimistic for 2024, with a strong start and strategic partnerships in place.
Positive
  • Revenue for Q4 and full year 2023 was $45.8 million and $170.3 million, respectively.
  • MRD business saw 9% and 18% growth in revenue over the corresponding periods.
  • clonoSEQ test volume increased by 49% in Q4 2023, with a total of 56,496 tests delivered in 2023.
  • Signed partnership with Flatiron Health™ to integrate the clonoSEQ® Assay into their system.
  • Secured IND for the first cell therapy product candidate and continued strategic review for maximizing business value.
  • Operating expenses increased by 24% in Q4 2023, with a net loss of $69.5 million.
  • Adjusted EBITDA was a loss of $24.7 million for Q4 2023.
  • Full year 2023 revenue was $170.3 million, with MRD revenue at $102.7 million and Immune Medicine revenue at $67.5 million.
  • Net loss for 2023 was $225.3 million, with adjusted EBITDA at a loss of $116.4 million.
  • Cash, cash equivalents, and marketable securities were $346.4 million as of December 31, 2023.
  • 2024 financial guidance expects MRD business revenue between $130 million and $140 million, with operating expenses between $360 million and $370 million.
Negative
  • Revenue for Q4 2023 decreased by 17% compared to the same period in the prior year.
  • Immune Medicine revenue saw a significant decrease of 45% in Q4 2023.
  • Net loss increased to $69.5 million in Q4 2023 from $40.2 million in the same period in 2022.
  • Adjusted EBITDA was a loss of $24.7 million for Q4 2023, higher than the loss of $19.6 million in the prior year.
  • Full year 2023 revenue decreased by 8% compared to the prior year.
  • Immune Medicine revenue decreased by 31% in 2023 compared to 2022.
  • Net loss for 2023 was $225.3 million, higher than the $200.4 million in 2022.
  • Adjusted EBITDA was a loss of $116.4 million for 2023, slightly lower than the loss of $121.6 million in the prior year.

The reported financial results from Adaptive Biotechnologies indicate a mixed performance with contrasting trends between their two primary business segments. The Minimal Residual Disease (MRD) business shows robust growth, with a 53% increase in clonoSEQ tests delivered. This is a positive indicator of market penetration and adoption rates, which could suggest a strengthening competitive position in the MRD space. However, the Immune Medicine (IM) segment experienced a significant decline in revenue, which may raise concerns about the viability and market demand for these products.

From a financial perspective, the overall 8% decrease in year-over-year revenue, coupled with a net loss widening from the previous year, could signal potential headwinds in profitability and operational efficiency. The lease impairment charge is a noteworthy item, as it suggests a reassessment of the value of long-term assets, which can impact balance sheet health. Investors should consider the company's guidance for MRD revenue growth in 2024 and the lack of guidance for the IM business as indicative of management's focus and expectations for the coming year.

The company's cash reserves remain substantial, which provides a buffer to support operations and strategic initiatives. However, the increase in operating expenses, despite the decrease when excluding the lease impairment charge, warrants attention to cost management strategies. The Adjusted EBITDA figures, while still negative, show a modest improvement, suggesting some level of cost control in relation to revenue generation.

Adaptive Biotechnologies' strategic partnership with Flatiron Health to integrate clonoSEQ into OncoEMR is a pivotal development for the company. This integration could enhance the assay's accessibility to oncologists, potentially increasing its adoption in community oncology settings. The 49% increase in clonoSEQ test volume is a testament to the product's growing acceptance and could be further bolstered by this partnership.

Furthermore, the secured IND for the first cell therapy product candidate represents a significant milestone in the company's pipeline development. It reflects Adaptive's progress in expanding its portfolio and entering the cell therapy space, which is a rapidly growing segment in the biotech industry. Investors should monitor the progression of this candidate, as it could be a key driver for future growth.

The strategic review aimed at maximizing the value of the MRD and Immune Medicine businesses suggests that Adaptive is exploring options to enhance shareholder value, potentially through partnerships, divestitures, or restructuring. This could lead to significant changes in the company's strategic direction and should be closely watched by stakeholders for its potential impact on the company's market position and financial health.

The growth in the MRD business reflects an increasing clinical adoption of the clonoSEQ Assay, which is used for detecting and monitoring minimal residual disease in blood cancers. This assay's performance in 2023 demonstrates its clinical utility and the trust it has gained among healthcare providers. The IND (Investigational New Drug) approval for the cell therapy product candidate marks a critical step towards clinical trials, signaling Adaptive's commitment to innovation and expansion into new therapeutic areas.

However, the decline in Immune Medicine revenue may point to challenges in product development or market competition in the autoimmune and cancer spaces. The field of immune medicine is complex and highly competitive, with many players investing in novel therapies. Adaptive's ability to recover and grow in this segment will likely depend on the success of their pipeline products and their differentiation from competitors.

Investors and stakeholders should recognize that the biotechnology sector is inherently high-risk, with long development cycles and significant regulatory hurdles. The financial health of companies like Adaptive Biotechnologies is closely tied to their R&D success, regulatory approvals and the ability to commercialize their products effectively.

SEATTLE, Feb. 14, 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 fourth quarter and full year ended December 31, 2023.

“2023 was a year of execution for MRD and strategic evolution for IM. The MRD business ended the year with 53% growth in clonoSEQ tests delivered and IM achieved key target and drug discovery milestones in cancer and autoimmune disorders,” said Chad Robins, chief executive officer and co-founder of Adaptive Biotechnologies. “2024 is off to a strong start. As momentum continues to build in both MRD and IM, we look forward to maximizing the value of each of these distinct opportunities for our patients and shareholders.”

Recent Highlights

  • Revenue for the fourth quarter and full year 2023 was $45.8 million and $170.3 million, respectively. The MRD business, which contributed over 60% of revenue, grew 9% and 18% over the corresponding periods. This growth was more than offset by an expected reduction in GNE amortization in the IM business.
  • clonoSEQ test volume increased 49% to 15,680 tests delivered in the fourth quarter of 2023, compared to the fourth quarter 2022 and ended the year with 56,496 tests delivered, up 53% versus 2022.
  • Signed partnership with Flatiron Health™, a leading provider of EHR software and services for community oncology, to integrate the clonoSEQ® Assay into Flatiron’s OncoEMR™ system.
  • IND secured for the first cell therapy product candidate; built regulated process workflow for the fully personalized cell therapy program.
  • Strategic review continues with the goal of maximizing the value of the MRD and Immune Medicine businesses.

Fourth Quarter 2023 Financial Results

Revenue was $45.8 million for the quarter ended December 31, 2023, representing a 17% decrease from the fourth quarter in the prior year. MRD revenue was $30.8 million for the quarter, representing a 9% increase from the fourth quarter in the prior year. Immune Medicine revenue was $15.0 million for the quarter, representing a 45% decrease from the fourth quarter in the prior year.

Operating expenses, which include a $25.4 million lease impairment charge, were $116.9 million for the fourth quarter of 2023, compared to $94.4 million in the fourth quarter of the prior year, representing an increase of 24%. Excluding the impact of the lease impairment charge, operating expenses for the fourth quarter of 2023 decreased 3% compared to the fourth quarter of the prior year. Interest and other income, net was $4.6 million for the fourth quarter of 2023, compared to $2.6 million in the fourth quarter of the prior year. Interest expense from our revenue interest purchase agreement was $3.0 million for the fourth quarter of 2023, compared to $3.6 million in the fourth quarter of the prior year.

Net loss was $69.5 million for the fourth quarter of 2023, compared to $40.2 million for the same period in 2022.

Adjusted EBITDA (non-GAAP) was a loss of $24.7 million for the fourth quarter of 2023, compared to a loss of $19.6 million for the fourth quarter of the prior year.

Full Year 2023 Financial Results

Revenue was $170.3 million for the year ended December 31, 2023, representing an 8% decrease from the prior year. MRD revenue was $102.7 million in 2023, representing an 18% increase from the prior year. Immune Medicine revenue was $67.5 million in 2023, representing a 31% decrease from 2022.

Operating expenses for 2023, which include a $25.4 million lease impairment charge, were $397.3 million, compared to $385.5 million for 2022, representing an increase of 3%. Excluding the impact of the lease impairment charge, operating expenses for 2023 decreased 4% compared to the prior year. Interest and other income, net was $15.5 million in 2023, compared to $4.1 million in 2022. Interest expense from our revenue interest purchase agreement was $13.8 million in 2023, compared to $4.2 million in 2022.

Net loss was $225.3 million in 2023, compared to $200.4 million in 2022.

Adjusted EBITDA (non-GAAP) was a loss of $116.4 million for 2023, compared to a loss of $121.6 million in the prior year.

Cash, cash equivalents and marketable securities was $346.4 million as of December 31, 2023.

2024 Financial Guidance

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

We expect full year operating expenses, including cost of revenue, to be 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 fourth quarter and full year 2023 financial results after market close on Wednesday, February 14, 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 consolidated statements of operations and unaudited 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 have provided a reconciliation of net loss attributable to Adaptive Biotechnologies Corporation, the most directly comparable GAAP financial measure, to Adjusted EBITDA at the end of this press release.

Management uses Adjusted EBITDA to evaluate the financial performance of our business and the effectiveness of our business strategies. We present Adjusted EBITDA 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 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 in the presentation of Adjusted EBITDA. 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 March 2022 restructuring and reduction 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
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)

  Three Months Ended December 31,  Year Ended December 31, 
  2023  2022  2023  2022 
Revenue $45,784  $55,198  $170,276  $185,308 
Operating expenses            
Cost of revenue  19,616   16,589   75,553   57,909 
Research and development  28,746   31,222   122,117   141,756 
Sales and marketing  21,906   23,716   88,579   95,603 
General and administrative  20,726   22,428   83,934   88,527 
Amortization of intangible assets  429   429   1,699   1,699 
Impairment of right-of-use and related long-lived assets  25,429      25,429    
Total operating expenses  116,852   94,384   397,311   385,494 
Loss from operations  (71,068)  (39,186)  (227,035)  (200,186)
Interest and other income, net  4,613   2,602   15,531   4,056 
Interest expense  (3,012)  (3,585)  (13,800)  (4,238)
Net loss  (69,467)  (40,169)  (225,304)  (200,368)
Add: Net loss attributable to noncontrolling interest  26   41   54   177 
Net loss attributable to Adaptive Biotechnologies Corporation $(69,441) $(40,128) $(225,250) $(200,191)
Net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted $(0.48) $(0.28) $(1.56) $(1.40)
Weighted-average shares used in computing net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted  144,900,669   143,054,722   144,383,294   142,515,917 


Adaptive Biotechnologies
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)

  December 31, 
  2023  2022 
Assets      
Current assets      
Cash and cash equivalents $65,064  $90,030 
Short-term marketable securities (amortized cost of $281,122 and $412,282, respectively)  281,337   408,166 
Accounts receivable, net  37,969   40,057 
Inventory  14,448   14,453 
Prepaid expenses and other current assets  11,370   9,440 
Total current assets  410,188   562,146 
Long-term assets      
Property and equipment, net  68,227   83,447 
Operating lease right-of-use assets  52,096   80,763 
Restricted cash  2,932   2,398 
Intangible assets, net  5,128   6,827 
Goodwill  118,972   118,972 
Other assets  3,591   2,064 
Total assets $661,134  $856,617 
Liabilities and shareholders’ equity      
Current liabilities      
Accounts payable $7,719  $8,084 
Accrued liabilities  8,597   12,424 
Accrued compensation and benefits  13,685   15,935 
Current portion of operating lease liabilities  9,384   9,230 
Current portion of deferred revenue  48,630   64,115 
Total current liabilities  88,015   109,788 
Long-term liabilities      
Operating lease liabilities, less current portion  89,388   98,772 
Deferred revenue, less current portion  44,793   58,599 
Revenue interest liability, net  130,660   125,360 
Total liabilities  352,856   392,519 
Commitments and contingencies      
Shareholders’ equity      
Preferred stock: $0.0001 par value, 10,000,000 shares authorized at December 31, 2023 and 2022; no shares issued and outstanding at December 31, 2023 and 2022      
Common stock: $0.0001 par value, 340,000,000 shares authorized at December 31, 2023 and 2022; 145,082,271 and 143,105,002 shares issued and outstanding at December 31, 2023 and 2022, respectively  14   14 
Additional paid-in capital  1,452,502   1,387,349 
Accumulated other comprehensive gain (loss)  215   (4,116)
Accumulated deficit  (1,144,332)  (919,082)
Total Adaptive Biotechnologies Corporation shareholders’ equity  308,399   464,165 
Noncontrolling interest  (121)  (67)
Total shareholders’ equity  308,278   464,098 
Total liabilities and shareholders’ equity $661,134  $856,617 


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 December 31,  Year Ended December 31, 
  2023  2022  2023  2022 
Net loss attributable to Adaptive Biotechnologies Corporation $(69,441) $(40,128) $(225,250) $(200,191)
Interest and other income, net  (4,613)  (2,602)  (15,531)  (4,056)
Interest expense  3,012   3,585   13,800   4,238 
Depreciation and amortization expense  5,392   5,286   22,231   20,920 
Impairment of right-of-use and related long-lived assets  25,429      25,429    
Restructuring expense           2,023 
Share-based compensation expense  15,556   14,294   62,908   55,477 
Adjusted EBITDA $(24,665) $(19,565) $(116,413) $(121,589)

FAQ

What was the revenue for Q4 and full year 2023?

The revenue for Q4 2023 was $45.8 million, and for the full year 2023, it was $170.3 million.

What was the growth in clonoSEQ test volume in Q4 2023?

The clonoSEQ test volume increased by 49% in Q4 2023, with a total of 56,496 tests delivered in 2023.

What was the net loss for Q4 2023?

The net loss for Q4 2023 was $69.5 million.

What was the revenue guidance for MRD business in 2024?

Adaptive Biotechnologies expects full year revenue for the MRD business to be between $130 million and $140 million in 2024.

What were the operating expenses for 2023?

Operating expenses for 2023 were between $360 million and $370 million.

Adaptive Biotechnologies Corporation

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About ADPT

we are a commercial-stage, biotechnology organization located in the hot biotech locations of seattle, washington and south san francisco, ca. our world class scientists have invented a patent-pending technology that combines advances in high-throughput sequencing with state-of-the-art computer infrastructure to provide an in-depth analysis of the t- and b-cell repertoire, a specific and important part of the immune system. this information is driving the r&d community to support the fights against cancer, auto-immune disease, and much, much more. we're often asked to describe our company culture. it is very easy ... we're a hard working group of top-notch individuals who are passionate about wanting to make a difference in the world. we know our employees are our most valuable asset, and every employee’s contribution is appreciated. open communication and collaboration are always encouraged in every interaction throughout the organization. we have high expectations of ourselves, and