Adaptive Biotechnologies Reports Second Quarter 2024 Financial Results

SEATTLE, Aug. 01, 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 June 30, 2024.

"We had another strong quarter with MRD revenue growth of 36% and delivered significant reductions in operating spend and cash burn versus prior year," said Chad Robins, chief executive officer and co-founder of Adaptive Biotechnologies. "I am encouraged by our progress towards MRD profitability and our execution on key Immune Medicine programs with disciplined capital allocation." 

Recent Highlights

• Revenue for the second quarter of 2024 was $43.2 million. The MRD business, which contributed 82% of revenue, grew 36% versus the second quarter of 2023.
• clonoSEQ test volume in the second quarter of 2024 grew 36% to 18,520 tests delivered versus the second quarter of 2023.
• Recognized $3.0 million in MRD regulatory milestone revenue resulting from a biopharmaceutical partner who used data from our MRD assay to support its drug approval. 
• Updated full year guidance to reflect a raise in the MRD revenue range, a decrease in operating spend and a reduction in annual cash burn. 

Second Quarter 2024 Financial Results

Revenue was $43.2 million for the quarter ended June 30, 2024, representing a 12% decrease from the second quarter in the prior year. MRD revenue was $35.3 million for the quarter, representing a 36% increase from the second quarter in the prior year. Immune Medicine revenue was $7.9 million for the quarter, representing a 66% decrease from the second quarter in the prior year.

Operating expenses for the second quarter of 2024, which include $7.2 million of long-lived assets impairment charges, were $90.5 million, compared to $96.7 million in the second quarter of the prior year, representing a decrease of 6%. Excluding the impact of the long-lived assets impairment charges, operating expenses for the second quarter of 2024 decreased 14% compared to the second quarter of 2023. MRD operating expenses for the second quarter of 2024, which include $2.8 million of the long-lived assets impairment charges, were $58.4 million, representing a 1% decrease from the second quarter in the prior year. Excluding the impact of the long-lived assets impairment charges, MRD operating expenses for the second quarter of 2024 decreased 6% compared to the same period in 2023. Immune Medicine operating expenses for the second quarter of 2024, which include $4.4 million of the long-lived assets impairment charges, were $26.1 million, representing a 15% decrease from the second quarter in the prior year. Excluding the impact of the long-lived assets impairment charges, Immune Medicine operating expenses for the second quarter of 2024 decreased 29% compared to the same period in 2023.

Interest and other income, net was $3.8 million for the second quarter of 2024, compared to $3.6 million in the second quarter of the prior year. Interest expense from our revenue interest purchase agreement was $2.7 million in the second quarter of 2024, compared to $3.6 million in the second quarter of the prior year.

Net loss was $46.2 million for the second quarter of 2024, compared to $47.8 million for the same period in 2023.

Adjusted EBITDA (non-GAAP) was a loss of $21.4 million for the second quarter of 2024, compared to a loss of $24.8 million for the second quarter of the prior year. MRD Adjusted EBITDA (non-GAAP) was a loss of $11.3 million for the quarter, compared to a loss of $23.1 million for the second quarter of the prior year. Immune Medicine Adjusted EBITDA (non-GAAP) was a loss of $7.0 million for the quarter, compared to $1.3 million for the second quarter of the prior year.

Cash, cash equivalents and marketable securities was $291.9 million as of June 30, 2024.

2024 Updated Financial Guidance

Adaptive Biotechnologies expects full year revenue for the MRD business to be between $140 million and $145 million, updated from the previous range between $135 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 and excluding one-time costs from asset impairments and other restructuring charges, to be between $340 million and $350 million, updated from the previous range between $350 million and $360 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 second quarter 2024 financial results after market close on Thursday, August 1, 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 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 measure, 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;
• 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

[email protected]

ADAPTIVE MEDIA

Erica Jones, Associate Corporate Communications Director

206-279-2423

[email protected]

Adaptive Biotechnologies Condensed Consolidated Statements of Operations (in thousands, except share and per share amounts) (unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Revenue		$	43,190			$	48,926			$	85,063			$	86,573
Operating expenses
Cost of revenue			19,317				17,910				37,368				36,591
Research and development			25,353				32,237				55,598				64,838
Sales and marketing			20,314				23,872				42,633				46,180
General and administrative			17,895				22,302				37,492				43,133
Amortization of intangible assets			424				423				847				842
Impairment of long-lived assets			7,205				—				7,205				—
Total operating expenses			90,508				96,744				181,143				191,584
Loss from operations			(47,318	)			(47,818	)			(96,080	)			(105,011	)
Interest and other income, net			3,766				3,612				7,988				6,636
Interest expense			(2,696	)			(3,605	)			(5,689	)			(7,136	)
Net loss			(46,248	)			(47,811	)			(93,781	)			(105,511	)
Add: Net loss attributable to noncontrolling interest			26				1				52				2
Net loss attributable to Adaptive Biotechnologies Corporation		$	(46,222	)		$	(47,810	)		$	(93,729	)		$	(105,509	)
Net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted		$	(0.31	)		$	(0.33	)		$	(0.64	)		$	(0.73	)
Weighted-average shares used in computing net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted			147,414,095				144,397,693				146,600,811				143,956,867

Adaptive Biotechnologies Condensed Consolidated Balance Sheets (in thousands, except share and per share amounts)
		June 30, 2024				December 31, 2023
		(unaudited)
Assets
Current assets
Cash and cash equivalents		$	59,824			$	65,064
Short-term marketable securities (amortized cost of $232,238 and $281,122, respectively)			232,056				281,337
Accounts receivable, net			35,610				37,969
Inventory			13,214				14,448
Prepaid expenses and other current assets			10,848				11,370
Total current assets			351,552				410,188
Long-term assets
Property and equipment, net			55,418				68,227
Operating lease right-of-use assets			48,521				52,096
Restricted cash			2,976				2,932
Intangible assets, net			4,281				5,128
Goodwill			118,972				118,972
Other assets			3,152				3,591
Total assets		$	584,872			$	661,134
Liabilities and shareholders' equity
Current liabilities
Accounts payable		$	9,867			$	7,719
Accrued liabilities			6,709				8,597
Accrued compensation and benefits			9,519				13,685
Current portion of operating lease liabilities			9,806				9,384
Current portion of deferred revenue			52,225				48,630
Total current liabilities			88,126				88,015
Long-term liabilities
Operating lease liabilities, less current portion			84,370				89,388
Deferred revenue, less current portion			38,844				44,793
Revenue interest liability, net			132,082				130,660
Other long-term liabilities			20				—
Total liabilities			343,442				352,856
Commitments and contingencies
Shareholders' equity
Preferred stock: $0.0001 par value, 10,000,000 shares authorized at June 30, 2024 and December 31, 2023; no shares issued and outstanding at June 30, 2024 and December 31, 2023			—				—
Common stock: $0.0001 par value, 340,000,000 shares authorized at June 30, 2024 and December 31, 2023; 147,462,201 and 145,082,271 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively			14				14
Additional paid-in capital			1,479,832				1,452,502
Accumulated other comprehensive (loss) gain			(182	)			215
Accumulated deficit			(1,238,061	)			(1,144,332	)
Total Adaptive Biotechnologies Corporation shareholders' equity			241,603				308,399
Noncontrolling interest			(173	)			(121	)
Total shareholders' equity			241,430				308,278
Total liabilities and shareholders' equity		$	584,872			$	661,134

Adjusted EBITDA

The following is a reconciliation of net loss attributable to Adaptive Biotechnologies Corporation, the most directly comparable GAAP financial measure, to Adjusted EBITDA for the periods presented (in thousands, unaudited):

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net loss attributable to Adaptive Biotechnologies Corporation		$	(46,222	)		$	(47,810	)		$	(93,729	)		$	(105,509	)
Interest and other income, net			(3,766	)			(3,612	)			(7,988	)			(6,636	)
Interest expense			2,696				3,605				5,689				7,136
Depreciation and amortization expense			5,003				5,653				10,217				11,076
Impairment of long-lived assets			7,205				—				7,205				—
Restructuring expense			680				—				1,724				—
Share-based compensation expense			12,958				17,345				27,256				32,016
Adjusted EBITDA		$	(21,446	)		$	(24,819	)		$	(49,626	)		$	(61,917	)

Segment Information (Including Segment Adjusted EBITDA)

The following tables set forth our segment information for the three and six months ended June 30, 2024 and 2023, respectively (in thousands, unaudited):

		Three Months Ended June 30, 2024
		MRD				Immune Medicine				Unallocated Corporate				Total
Revenue		$	35,284			$	7,906			$	—			$	43,190
Operating expenses			58,361				26,133				6,014				90,508
Adjusted EBITDA			(11,289	)			(7,033	)			(3,124	)			(21,446	)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss		$	(23,077	)		$	(18,228	)		$	(4,943	)		$	(46,248	)
Net loss attributable to noncontrolling interest			—				—				26				26
Net loss attributable to Adaptive Biotechnologies Corporation			(23,077	)			(18,228	)			(4,917	)			(46,222	)
Interest and other income, net			—				—				(3,766	)			(3,766	)
Interest expense			—				—				2,696				2,696
Depreciation and amortization expense			2,604				1,967				432				5,003
Impairment of long-lived assets			2,819				4,386				—				7,205
Restructuring expense			561				119				—				680
Share-based compensation expense			5,804				4,723				2,431				12,958
Adjusted EBITDA		$	(11,289	)		$	(7,033	)		$	(3,124	)		$	(21,446	)

		Three Months Ended June 30, 2023
		MRD				Immune Medicine				Unallocated Corporate				Total
Revenue		$	25,882			$	23,044			$	—			$	48,926
Operating expenses			58,944				30,681				7,119				96,744
Adjusted EBITDA			(23,079	)			1,264				(3,004	)			(24,819	)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss		$	(33,063	)		$	(7,636	)		$	(7,112	)		$	(47,811	)
Net loss attributable to noncontrolling interest			—				—				1				1
Net loss attributable to Adaptive Biotechnologies Corporation			(33,063	)			(7,636	)			(7,111	)			(47,810	)
Interest and other income, net			—				—				(3,612	)			(3,612	)
Interest expense			—				—				3,605				3,605
Depreciation and amortization expense			2,267				2,608				778				5,653
Share-based compensation expense			7,717				6,292				3,336				17,345
Adjusted EBITDA		$	(23,079	)		$	1,264			$	(3,004	)		$	(24,819	)

		Six Months Ended June 30, 2024
		MRD				Immune Medicine				Unallocated Corporate				Total
Revenue		$	67,910			$	17,153			$	—			$	85,063
Operating expenses			118,247				49,974				12,922				181,143
Adjusted EBITDA			(28,548	)			(13,960	)			(7,118	)			(49,626	)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss		$	(50,337	)		$	(32,821	)		$	(10,623	)		$	(93,781	)
Net loss attributable to noncontrolling interest			—				—				52				52
Net loss attributable to Adaptive Biotechnologies Corporation			(50,337	)			(32,821	)			(10,571	)			(93,729	)
Interest and other income, net			—				—				(7,988	)			(7,988	)
Interest expense			—				—				5,689				5,689
Depreciation and amortization expense			5,305				4,049				863				10,217
Impairment of long-lived assets			2,819				4,386				—				7,205
Restructuring expense			1,028				696				—				1,724
Share-based compensation expense			12,637				9,730				4,889				27,256
Adjusted EBITDA		$	(28,548	)		$	(13,960	)		$	(7,118	)		$	(49,626	)

		Six Months Ended June 30, 2023
		MRD				Immune Medicine				Unallocated Corporate				Total
Revenue		$	47,309			$	39,264			$	—			$	86,573
Operating expenses			114,969				62,353				14,262				191,584
Adjusted EBITDA			(49,465	)			(6,163	)			(6,289	)			(61,917	)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss		$	(67,660	)		$	(23,088	)		$	(14,763	)		$	(105,511	)
Net loss attributable to noncontrolling interest			—				—				2				2
Net loss attributable to Adaptive Biotechnologies Corporation			(67,660	)			(23,088	)			(14,761	)			(105,509	)
Interest and other income, net			—				—				(6,636	)			(6,636	)
Interest expense			—				—				7,136				7,136
Depreciation and amortization expense			4,323				5,361				1,392				11,076
Share-based compensation expense			13,872				11,564				6,580				32,016
Adjusted EBITDA		$	(49,465	)		$	(6,163	)		$	(6,289	)		$	(61,917	)