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Adaptive Biotechnologies Q3 Revenues Grow 1 Percent

NEW YORK – Adaptive Biotechnologies reported a 1 percent year-over-year increase in third quarter revenues after the close of the market on Tuesday.

For the three months ended Sept. 30, Adaptive reported $26.3 million in revenues, up from $26.1 million during the year-ago period and beating the consensus Wall Street estimate of $23.6 million.

By segment, sequencing revenues were $11.3 million, down 3 percent from $11.7 million in the prior-year period. Development revenues from biopharma partnerships grew 5 percent to $15.0 million from $14.4 million in Q3 2019 and included a $2.5 million milestone payment for data generated by Adaptive used by a pharma partner as a secondary endpoint in a US Food and Drug Administration approval.

Research sequencing volume decreased 38 percent to 6,541 sequences from 10,618 in Q3 2019 due to customers operating at lower capacity due to the pandemic. Clinical testing volume, representing ClonoSeq, increased 58 percent to 4,023 tests from 2,551 tests, the firm said.

"Over the last quarter, we have demonstrated the unique capability of our platform to translate the immune response at scale into data that informs the development of best-in-class, differentiated diagnostic and therapeutic solutions," Adaptive CEO and Cofounder Chad Robins said in a statement. "This pandemic has highlighted the key role of the immune response in our understanding of disease. COVID-19 is a prime example of the power of our platform to rapidly generate immune-driven solutions to any disease, including what we believe are best-in-class antibodies against the virus."

On a conference call with investors following the release of results, Adaptive President Julie Rubinstein said that while the research business was severely affected by the pandemic, the firm saw "encouraging uptake during the third quarter."

Clinical cancer centers are reopening and patients are returning to scheduled diagnostic testing, Adaptive CFO Chad Cohen said on the call. "[Clinical] testing volumes reflect normalization of volume growth" after a slowdown in Q2 2020 due to COVID-19.

Adaptive's net loss for the quarter totaled $36.7 million, or $.27 per share, compared to a net loss of $14.0 million, or $.11 per share, in Q3 2019, beating the consensus analyst estimate of $.28 loss per share. The weighted average number of shares used in computing net loss per share increased to approximately 134.4 million in the recently completed quarter, up from 124.3 million a year ago.

The firm's R&D expenses grew 48 percent to $30.3 million up from $20.5 million in the year-ago quarter, the result of higher levels of spending across initiatives, including the firm's antigen map and antibody discovery efforts. Adaptive's SG&A expenses totaled $26.6 million, up 51 percent from $17.6 million a year ago, driven by hiring activity, marketing investment to support ClonoSeq tests, and increased legal, accounting, and tax professional fees, offset by savings related to in-person customer events.

As of Sept. 30, 2020, Adaptive had $497.1 million in cash and cash equivalents, and $338.0 million in short-term marketable securities.

"As uncertainties related to COVID remain, guidance will remain withdrawn," Cohen said. He later added that the firm does not expect any more milestone payments for the remainder of the year.

Rubinstein noted that the firm plans to open a new lab in Q1 2021 in South San Francisco to support its T-cell receptor product plans, with the capacity to perform human clinical trials.

In morning trading on the Nasdaq, shares of Adaptive were up 11 percent at $52.57.

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