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Adaptive Bio Narrows 2022 Revenue Guidance, Outlines Financial Expectations

NEW YORK – Adaptive Biotechnologies said after the close of the market on Thursday that it is tapering full-year revenue guidance to the range of $185 million to $190 million from the previous expectation of $185 million to $195 million.

In addition, the Seattle-based adaptive immune system biotechnologies firm shared its long-term financial expectations, including the ability to achieve cash flow breakeven in 2026.

For the three months ended Sept. 30, Adaptive recorded $47.8 million in revenues, a 21 percent increase from $39.5 million during the year-ago period and beating the consensus Wall Street estimate of $48 million. Of the total revenues, 58 percent were from the company’s immune medicine business arm, and 42 percent were from the minimal residual disease (MRD) business arm.

"As we approach year-end, we are well-positioned to finish strong in both [the] MRD and immune medicine [businesses]," Adaptive CEO and Cofounder Chad Robins told investors on a conference call recapping the Q3 financial results.

Third quarter immune medicine revenue was $27.9 million, up 18 percent year-over-year from last year’s $23.6 million. Immune medicine revenue was primarily driven by the growth from its collaboration with Roche's Genentech to develop tailored cellular therapies, along with growth from its other pharma partners and academic customers, partially offset by the decrease in its T-Detect COVID offering, according to the company.

Adaptive's MRD revenue for the quarter was $20 million, representing a 26 percent increase from $15.9 million in Q3 2021. The MRD revenue was primarily driven by clonoSeq clinical testing and pharma partnerships, partially offset by a $1.5 million decrease in MRD regulatory milestones. Specifically, the clonoSeq test volume, including international sales, increased 52 percent in the recently completed quarter to 9,649 tests from 6,341 in the same period last year.

Robins also noted that the company plans to launch its CLIA-validated diffuse large B-cell lymphoma (DLBCL) product at the American Society of Hematology (ASH) annual meeting later this year.

Adaptive's net loss for the quarter was $45.3 million, or $.32 per share, compared to a net loss of $56 million, or $.40 per share, in Q3 2021. It beat the analysts' average estimate of a loss per share of $.38. The number of weighted average shares used to calculate the loss per share figure for Q3 2022 was approximately 142.9 million compared to 140.8 million in Q3 of 2020.

The firm's R&D expenses dipped 1 percent to $35.7 million from $36.1 million in the year-ago quarter, mainly attributed to its decreased investments in the T-Detect franchise, and partially offset by higher drug discovery expenditures related to its Genentech collaboration. The company previously announced that it will halt the commercialization of its T-Detect franchise.

Adaptive's Q3 2022 SG&A expenses were $42.3 million, down 6 percent from $45.1 million a year ago, largely due to the firm’s ongoing efforts to drive operating leverage.

During the call, Adaptive CFO Tycho Peterson also announced that the company is adjusting the full-year revenue range from the previous $185 million to $195 million to $185 million to $190 million. To that end, he said the firm now expects the contribution from MRD and immune medicine businesses to be approximately 47 percent and 53 percent, respectively, in comparison to the 50-50 split the company previously anticipated.

For operating expenses, Peterson said, Adaptive now expects the full-year expectation to be under $400 million compared to the previous $410 million to $415 million. This adjustment "reflects our ongoing efforts to drive efficiencies from a number of areas," he added.

Peterson also outlined the company’s long-term financial expectations to investors. "We worked extensively on our latest long-range plan to ensure that we are allocating capital prudently and investing behind the project to support our growth profile with higher returns," he said.

According to Peterson, Adaptive expects revenue compounded at an annual growth rate (CAGR) to be 20 percent to 30 percent through 2027. The company estimates its operating expenses to grow at a much slower pace with "prudent spend management," leading to positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2025. In addition, he said the operating model will give the firm the ability to reach cash flow breakeven in 2026.

Beyond that, Robins said that Adaptive has inked a non-dilutive royalty financing agreement with OrbiMed, a healthcare investor, for up to $250 million. "This agreement extends our cash runway to over three years while providing the flexibility to make strategic investments," he said.

Adaptive ended the quarter with cash, cash equivalents, and marketable securities of $527.8 million.

In Friday morning trading on Nasdaq, Adaptive shares were up 12 percent to $8.74.