Adaptive Biotechnologies Corp

Previous wording

We recognized revenue of $41.9 million and $37.6 million for the three months ended March 31, 2024 and 2023, respectively. Net loss attributable to Adaptive Biotechnologies Corporation was $47.5 million and $57.7 million for the three months ended March 31, 2024 and 2023, respectively. We have funded our operations to date principally from the sale of convertible preferred stock and common stock and, to a lesser extent, revenue and proceeds from the revenue interest purchase agreement we entered into in September 2022 with OrbiMed Royalty & Credit Opportunities IV, LP, an affiliate of OrbiMed Advisors LLC, as collateral agent and administrative agent for the purchasers party thereto (the “Purchase Agreement”). As of March 31, 2024 and December 31, 2023, we had cash, cash equivalents and marketable securities of $308.9 million and $346.4 million, respectively.

Current wording

We recognized revenue of $43.2 million and $48.9 million for the three months ended June 30, 2024 and 2023, respectively, and $85.1 million and $86.6 million for the six months ended June 30, 2024 and 2023, respectively. Net loss attributable to Adaptive Biotechnologies Corporation was $46.2 million and $47.8 million for the three months ended June 30, 2024 and 2023, respectively, and $93.7 million and $105.5 million for the six months ended June 30, 2024 and 2023, respectively. We have funded our operations to date principally from the sale of convertible preferred stock and common stock and, to a lesser extent, revenue and proceeds from the revenue interest purchase agreement we entered into in September 2022 with OrbiMed Royalty & Credit Opportunities IV, LP, an affiliate of OrbiMed Advisors LLC, as collateral agent and administrative agent for the purchasers party thereto (the “Purchase Agreement”). As of June 30, 2024 and December 31, 2023, we had cash, cash equivalents and marketable securities of $291.9 million and $346.4 million, respectively.

Previous wording

In 2024, in connection with an organizational realignment, we began operating our business as two reporting segments: MRD and Immune Medicine. These segments are organized by market opportunity in commercial diagnostics and drug discovery, respectively. See Note 13, Segment Informationfor more information regarding our segments and the assumptions used to allocate shared expenses, which are based on judgments and methods related to our 2024 organizational changes.

Current wording

In 2024, in connection with an organizational realignment, we began operating our business as two reporting segments: MRD and Immune Medicine. These segments are organized by market opportunity in commercial diagnostics and drug discovery, respectively. See Note 14, Segment Informationof the accompanying notes to the unaudited condensed consolidated financial statements included elsewhere in this report for more information regarding our segments and the assumptions used to allocate shared expenses. See “Management's Discussion and Analysis of Financial Condition and Results of Operations—2023 Quarterly Segment Information” included in our Quarterly Report on Form 10-Q for the three months ended March 31, 2024 filed with the SEC on May 7, 2024 for quarterly 2023 segment information.

Previous wording

We expect sales and marketing expenses to remain relatively consistent in the short term. In the long term, we expect sales and marketing expenses to increase in absolute dollars as we increase marketing activities to drive awareness and adoption of our products and services. However, we expect sales and marketing expenses to decrease as a percentage of revenue in the long term, subject to fluctuations from period to period due to the timing and magnitude of these expenses.

Current wording

We expect sales and marketing expenses to experience moderate increases in the short term. In the long term, we expect sales and marketing expenses to increase in absolute dollars as we increase marketing activities to drive awareness and adoption of our products and services. However, we expect sales and marketing expenses to decrease as a percentage of revenue in the long term, subject to fluctuations from period to period due to the timing and magnitude of these expenses.

Previous wording

We expect general and administrative expenses to remain relatively consistent in the short term and to decrease as a percentage of revenue in the long term.

Current wording

We expect general and administrative expenses to experience moderate increases in the short term and to decrease as a percentage of revenue in the long term.

Previous wording

(1) Adjusted EBITDA 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. See “Adjusted EBITDA” below for a reconciliation between Adjusted EBITDA and net loss attributable to Adaptive Biotechnologies Corporation, the most directly comparable GAAP financial measure, and a discussion about the limitations of Adjusted EBITDA.

Current wording

(1) Adjusted EBITDA 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. See “Adjusted EBITDA” below for a reconciliation between Adjusted EBITDA and net loss attributable to Adaptive Biotechnologies Corporation, the most directly comparable GAAP financial measure, and a discussion about the limitations of Adjusted EBITDA.

Previous wording

The $11.2 million increase in MRD revenue was primarily due to a $5.9 million increase in revenue generated from providing clonoSEQ to clinical customers, a $4.5 million increase in revenue recognized upon the achievement of regulatory milestones by one of our biopharmaceutical customers and a $1.4 million increase in revenue generated from providing MRD sample testing services to biopharmaceutical customers. These increases were partially offset by a $0.6 million decrease in revenue generated from providing MRD sample testing services to investigator-led clinical trials. Our clonoSEQ test volume increased by 41% to 17,040 tests delivered in the three months ended March 31, 2024 from 12,079 tests delivered in the three months ended March 31, 2023.

Current wording

The $9.4 million increase in MRD revenue was primarily due to a $7.2 million increase in revenue generated from providing clonoSEQ to clinical customers, a $3.0 million increase in revenue recognized upon the achievement of regulatory milestones by one of our biopharmaceutical customers and a $0.2 million increase in revenue generated from providing MRD sample testing services to biopharmaceutical customers. These increases were partially offset by a $0.8 million decrease in revenue generated from providing MRD sample testing services to investigator-led clinical trials. Our clonoSEQ test volume increased by 36% to 18,520 tests delivered in the three months ended June 30, 2024 from 13,665 tests delivered in the three months ended June 30, 2023.

Previous wording

The $2.4 million decrease in research and development expenses was primarily attributable to a $1.2 million decrease in costs related to collaboration studies related to Immune Medicine, which was the primary driver of the $1.5 million decrease in depreciation and other expenses, and a $1.1 million decrease in cost of materials and allocated production laboratory expenses, which was driven primarily by decreased investments in drug discovery efforts, including collaboration efforts with Genentech, and decreased TCR-Antigen Map development activities.

Current wording

The $6.9 million decrease in research and development expenses was primarily attributable to a $3.9 million decrease in personnel costs and a $2.5 million decrease in cost of materials and allocated production laboratory expenses, which was driven primarily by decreased investments in drug discovery efforts, including collaboration efforts with Genentech, and decreased TCR-Antigen Map development activities.

Previous wording

The $1.2 million increase in interest and other income, net was primarily attributable to an increase in net interest income and investment amortization driven by increased interest rates and related yields of our invested cash and cash equivalents and marketable securities.

Current wording

The $0.2 million increase in interest and other income, net was primarily attributable to an increase in net interest income and investment amortization driven by increased interest rates and related yields of our invested cash and cash equivalents and marketable securities.

Previous wording

The $0.5 million decrease in interest expense was attributable to a change in our assumptions regarding the timeframe in which our Purchase Agreement will be fully repaid.

Current wording

The $0.9 million decrease in interest expense was attributable to a change in our assumptions regarding the timeframe in which our Purchase Agreement will be fully repaid.

Previous wording

The $7.0 million decrease in Immune Medicine revenue was primarily due to a $4.4 million decrease in revenue generated from the Genentech Agreement, which resulted from decreased collaboration expenses, and a $2.5 million decrease in revenue generated from our biopharmaceutical and academic customers.

Current wording

The $22.1 million decrease in Immune Medicine revenue was primarily due to a $20.3 million decrease in revenue generated from the Genentech Agreement, which resulted from decreased collaboration expenses and decreased revenue recognized from the $10.0 million regulatory milestone achieved in May 2023, and a $1.9 million decrease in revenue generated from our biopharmaceutical and academic customers.

Previous wording

The $0.6 million decrease in cost of revenue was primarily attributable to a $1.2 million decrease in overhead and labor costs, which was largely driven by reduced headcount and laboratory relocation and consolidation activities, and a $0.6 million decrease in cost of materials largely due to a reduction in inventory reserve expense. These decreases were partially offset by a $0.6 million increase in materials cost resulting from increased revenue sample volume and a $0.2 million increase related to higher usage of our production laboratory to process revenue samples versus research and development samples.

Current wording

The $0.8 million increase in cost of revenue was primarily attributable to a $2.4 million increase in cost of materials, $1.7 million of which resulted from increased revenue sample volume and $0.7 million of which was primarily related to an increase in inventory reserve expense. There was also a $1.2 million increase related to higher usage of our production laboratory to process revenue samples versus research and development samples and a $0.6 million increase in shipping and handling expenses. These increases were partially offset by a $4.0 million decrease in overhead costs, which was largely driven by reduced headcount and laboratory relocation and consolidation activities.

Previous wording

The nominal increase in sales and marketing expenses was primarily attributable to a $0.8 million increase in computer and software expenses, partially offset by a $0.4 million decrease in travel and customer event related expenses and a $0.3 million decrease in personnel costs.

Current wording

The $3.5 million decrease in sales and marketing expenses was primarily attributable to a $3.3 million decrease in personnel costs, driven primarily by reduced headcount. There was also a $0.8 million decrease in marketing expenses, driven largely by reduced clonoSEQ marketing activities, followed by reduced research and corporate marketing activities, respectively, a $0.7 million decrease in allocated facility costs and a $0.6 million decrease in travel and customer event related expenses. These decreases were partially offset by a $1.5 million increase in computer and software expenses.

Previous wording

The $1.2 million decrease in general and administrative expenses was primarily attributable to a $1.3 million decrease in building, facility and depreciation related expenses driven by office space transitions made to support laboratory consolidation activities, partially offset by a $0.6 million increase in third-party billing service fees.

Current wording

The $5.6 million decrease in general and administrative expenses was primarily attributable to a $3.0 million decrease in personnel costs, driven primarily by reduced headcount, a $2.0 million decrease in building, facility and depreciation related expenses driven by office space transitions made to support laboratory consolidation activities, a $0.6 million decrease in insurance costs, a $0.5 million decrease in consultant costs and a $0.4 million decrease in accounting and legal fees. These decreases were partially offset by a $1.1 million increase in third-party billing service fees.

Previous wording

Adjusted EBITDA 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. See Note 13, Segment Informationof the accompanying notes to the unaudited condensed consolidated financial statements included elsewhere in this report for more information regarding segment Adjusted EBITDA.

Current wording

Adjusted EBITDA 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. See Note 14, Segment Informationof the accompanying notes to the unaudited condensed consolidated financial statements included elsewhere in this report for more information regarding segment Adjusted EBITDA.

Previous wording

right-of-use and related long-lived assets impairment costs; and

Current wording

long-lived assets impairment costs; and

Previous wording

We have funded our operations to date principally from the sale of convertible preferred stock and common stock, and, to a lesser extent, revenue and proceeds from the Purchase Agreement. Pursuant to the Purchase Agreement entered into in September 2022, we received net cash proceeds of $124.4 million, after deducting issuance costs. We are also entitled to receive up to $125.0 million in subsequent installments as follows: (i) $75.0 million upon our request occurring no later than September 12, 2025 and (ii) $50.0 million upon our request in connection with certain permitted acquisitions occurring no later than September 12, 2025, in each case subject to certain funding conditions. As of March 31, 2024, we had cash, cash equivalents and marketable securities of $308.9 million.

Current wording

We have funded our operations to date principally from the sale of convertible preferred stock and common stock, and, to a lesser extent, revenue and proceeds from the Purchase Agreement. Pursuant to the Purchase Agreement entered into in September 2022, we received net cash proceeds of $124.4 million, after deducting issuance costs. We are also entitled to receive up to $125.0 million in subsequent installments as follows: (i) $75.0 million upon our request occurring no later than September 12, 2025 and (ii) $50.0 million upon our request in connection with certain permitted acquisitions occurring no later than September 12, 2025, in each case subject to certain funding conditions. As of June 30, 2024, we had cash, cash equivalents and marketable securities of $291.9 million.

Previous wording

The following table summarizes our uses and sources of cash for the three months ended March 31, 2024 and 2023 (in thousands):

Current wording

The following table summarizes our uses and sources of cash for the six months ended June 30, 2024 and 2023 (in thousands):

Previous wording

Cash used in operating activities during the three months ended March 31, 2024 was $38.4 million, which was primarily attributable to a net loss of $47.5 million and a net change in operating assets and liabilities of $10.3 million, partially offset by noncash share-based compensation of $14.3 million, noncash depreciation and amortization of $2.6 million, noncash lease expense of $1.4 million and noncash interest expense related to the Purchase Agreement of $0.9 million. The net change in operating assets and liabilities was primarily driven by a $4.1 million increase in accounts receivable, net, which includes $4.5 million in regulatory milestones recognized during the three months ended March 31, 2024, a $3.9 million reduction in accounts payable and accrued liabilities driven largely by the payout of our corporate bonus during the three months ended March 31, 2024, a $2.5 million decrease in operating lease right-of-use assets and liabilities and a $2.4 million reduction in deferred revenue. These changes were partially offset by a $1.5 million decrease in prepaid expenses and other current assets, which was driven largely by a decrease in prepaid software charges, and a $1.1 million decrease in inventory.

Current wording

Cash used in operating activities during the six months ended June 30, 2024 was $55.7 million, which was primarily attributable to a net loss of $93.8 million and a net change in operating assets and liabilities of $7.5 million, partially offset by noncash share-based compensation of $27.3 million, noncash impairment of long-lived assets of $7.2 million related to our restructuring activities, noncash depreciation and amortization of $5.5 million, noncash lease expense of $2.7 million, noncash interest expense related to the Purchase Agreement of $1.4 million and inventory reserve expense of $1.4 million. The net change in operating assets and liabilities was primarily driven by a $4.8 million decrease in operating lease right-of-use assets and liabilities, a $3.5 million reduction in accounts payable and accrued liabilities driven largely by the payout of our corporate bonus during the three months ended March 31, 2024, and a $2.4 million reduction in deferred revenue. These changes were partially offset by a $2.4 million decrease in accounts receivable, net and a $0.5 million decrease in prepaid expenses and other current assets driven largely by a decrease in prepaid insurance charges.

Previous wording

Cash used in operating activities during the three months ended March 31, 2023 was $59.2 million, which was primarily attributable to a net loss of $57.7 million and a net change in operating assets and liabilities of $24.5 million, partially offset by noncash share-based compensation of $14.7 million, noncash depreciation and amortization of $3.8 million, noncash lease expense of $1.8 million, noncash interest expense related to the Purchase Agreement of $1.6 million and inventory reserve expense of $1.1 million. The net change in operating assets and liabilities was primarily driven by a $15.9 million reduction in accounts payable and accrued liabilities driven largely by the payout of our corporate bonus during the three months ended March 31, 2023, an $8.5 million reduction in deferred revenue related primarily to revenue recognized from the Genentech Agreement, a $6.6 million increase in inventory and a $2.2 million decrease in operating lease right-of-use assets and liabilities. These changes were partially offset by a $9.1 million decrease in accounts receivable, net primarily related to collections from our biopharmaceutical customers, including receipt of an MRD milestone payment.

Current wording

Cash used in operating activities during the six months ended June 30, 2023 was $82.7 million, which was primarily attributable to a net loss of $105.5 million and a net change in operating assets and liabilities of $24.0 million, partially offset by noncash share-based compensation of $32.0 million, noncash depreciation and amortization of $7.5 million, noncash lease expense of $3.6 million, noncash interest expense related to the Purchase Agreement of $2.8 million and inventory reserve expense of $0.8 million. The net change in operating assets and liabilities was primarily driven by a $13.9 million reduction in deferred revenue related primarily to revenue recognized from the Genentech Agreement, a $7.9 million reduction in accounts payable and accrued liabilities driven largely by the payout of our corporate bonus during the three months ended March 31, 2023, a $6.5 million increase in inventory and a $4.5 million decrease in operating lease right-of-use assets and liabilities. These changes were partially offset by an $8.5 million decrease in accounts receivable, net primarily related to collections from our biopharmaceutical customers.

Previous wording

Cash provided by investing activities during the three months ended March 31, 2024 was $44.5 million, which was primarily attributable to proceeds from maturities of marketable securities of $99.5 million, partially offset by purchases of marketable securities of $53.5 million and purchases of property and equipment of $1.5 million.

Current wording

Cash provided by investing activities during the six months ended June 30, 2024 was $50.4 million, which was primarily attributable to proceeds from maturities of marketable securities of $189.8 million, partially offset by purchases of marketable securities of $136.2 million and purchases of property and equipment of $3.2 million.

Previous wording

Cash provided by investing activities during the three months ended March 31, 2023 was $63.0 million, which was primarily attributable to proceeds from maturities of marketable securities of $155.0 million, partially offset by purchases of marketable securities of $89.1 million and purchases of property and equipment of $2.9 million.

Current wording

Cash provided by investing activities during the six months ended June 30, 2023 was $100.3 million, which was primarily attributable to proceeds from maturities of marketable securities of $295.4 million, partially offset by purchases of marketable securities of $188.5 million and purchases of property and equipment of $6.6 million.

Previous wording

Cash provided by financing activities during the three months ended March 31, 2023 was $0.7 million, which was attributable to proceeds from the exercise of stock options.

Current wording

Cash provided by financing activities during the six months ended June 30, 2024 was $0.1 million, which was attributable to proceeds from the exercise of stock options.

Previous wording

Cash provided by financing activities during the three months ended March 31, 2024 was attributable to proceeds from the exercise of stock options.

Current wording

Cash provided by financing activities during the six months ended June 30, 2023 was $2.1 million, which was attributable to proceeds from the exercise of stock options.

Previous wording

imputing interest for the Purchase Agreement; and

Current wording

imputing interest for the Purchase Agreement;