Skip to main content
Premium Trial:

Request an Annual Quote

Adaptive Biotechnologies Expects Growth From FDA Panel MRD Vote, Cuts Staff by 7 Percent in Q1


NEW YORK – Adaptive Biotechnologies' management this week outlined several potential gains for the company's minimal residual disease (MRD) business in light of the recent news that a US Food and Drug Administration advisory panel unanimously endorsed MRD as an accelerated approval endpoint in multiple myeloma drug trials.

The Seattle-based immune sequencing firm also shed light on its strategic review that will separate its MRD and immune medicine businesses, disclosing that it reduced its headcount by almost 7 percent in Q1.

The company has been offering its FDA-cleared ClonoSeq test for hematologic cancers, including multiple myeloma, as part of its MRD business.

"In addition to ClonoSeq being the only FDA-cleared MRD assay for multiple myeloma, it is also the singular assay that can consistently deliver the sensitivity and standardization needed to meet the FDA performance standards," CEO and Cofounder Chad Robins claimed in a conference call with investors recapping the company's Q1 financial results on Tuesday. "This further solidifies ClonoSeq as the assay of choice for multiple myeloma drug developers."

Robins outlined how the FDA's Oncologic Drugs Advisory Committee (ODAC) vote might impact the company's MRD business in several ways. Adaptive can potentially accelerate revenue realization from existing studies, he said, and generate new bookings as pharma companies reprioritize their multiple myeloma programs to leverage a faster path to commercialization.

Susan Bobulsky, Adaptive's chief commercial officer for MRD, said the firm has already been in "active discussions" with its pharma partners to consider the implications of the ODAC vote.

"While many companies are waiting for the final FDA guidance, which we do expect to be shortly forthcoming, we already have a few studies that have been upgraded to primary endpoint, as well as a few new studies where MRD is going to be used as a primary endpoint directly as a result of the ODAC vote," Bobulsky said.

Additionally, ODAC's recommendation could have a "positive halo effect" for the continued acceptance of MRD as a standard measure of response in the clinic, Robins said.

Bobulsky added that the company has had "quite a few conversations around this topic, and clinicians are universally very, very excited on behalf of their patients."

"[Clinicians] also acknowledge the strength that this recommendation, coming directly from ODAC and ultimately likely from FDA, provides to the credibility of MRD as a measure of clinical response and as a tool they can use in dialogue with their patients to individualize their care," she noted.

During the first quarter, Adaptive also concluded a monthslong strategic review, which it initiated last November with Goldman Sachs.

In early April, the company announced that it will continue to operate its MRD and immune medicine businesses in-house but give them each more independence, with dedicated resources and separate reporting.

Robins said the company completed 90 percent of the reorganization in Q1 to realign its workforce, operations, and R&D investments around each business segment.

There is still "a little bit of transitory processes" remaining in separating the company's immune medicine pharma services lab from its production lab for the MRD business, he added.

According to CFO Kyle Piskel, the MRD and immune medicine businesses will have their own dedicated operational resources, sales and marketing team, and R&D investment. Meanwhile, general corporate functions, such as finance, legal, and HR, will continue to be managed centrally to avoid duplications.

In a quarterly filing with the US Securities and Exchange Commission, Adaptive disclosed that it also had layoffs in Q1 in conjunction with the restructuring. According to a company spokesperson, the firm eliminated 49 positions from "a mix of departments across the organization," representing almost 7 percent of its total headcount.

During Q1, Adaptive also initiated an antibody discovery campaign within its immune medicine business for multiple sclerosis and type 1 diabetes, aiming to discover, make, and test select therapeutic antibodies to generate preclinical data during 2024, Robins said.

The firm also reported its Q1 financial results. Revenues grew 11 percent year over year, to $41.9 million from $37.6 million, slightly less than the 12 percent increase the company had anticipated. Still, revenues beat the average Wall Street estimate of $38.8 million.

First quarter MRD revenue was $32.6 million, a 52 percent increase from $21.4 million in Q1 2023. Growth in the MRD business was partially driven by ClonoSeq clinical testing and MRD pharma partnerships, Piskel noted.

Immune medicine revenue was $9.2 million, down 43 percent from $16.2 million in Q1 2023. The decline was largely driven by anticipated lower amortization from a Genentech deal, which decreased by 49 percent year over year, as well as by decreases in immune medicine pharma services due to the company's strategic shift, Piskel said.

During the quarter, ClonoSeq test volume jumped 41 percent year over year from 12,079 to 17,040 assays.

The company's Q1 R&D expenses dropped 7 percent to $30.2 million from $32.6 million a year ago. Its SG&A spending dipped 3 percent to $41.9 million from $43.1 million.

The firm's first quarter net loss was $47.5 million, or $.33 per share, compared to a net loss of $57.7 million, or $.40 per share, in the same period a year ago. On average, analysts had been expecting a Q1 net loss of $.34 per share.

Adaptive finished the quarter with $71.2 million in cash and cash equivalents and $237.6 million in short-term marketable securities. Excluding one-time costs from restructuring activities, Piskel said the company now expects to burn an average of approximately $30.0 million for each of the remaining three quarters, which implies an annual cash burn of $130.0 million.

"We continue to preserve our strong capital position with approximately $309 million as of March 31, which enables us to bridge the MRD business to profitability and to support targeted investments in immune medicine," Robins said.

For full-year 2024, Adaptive now estimates its MRD business revenue to be between $135.0 million and $140.0 million, narrowing its previous range of $130.0 million to $140 million to reflect the milestone realizations that were previously not included in the guidance. The firm did not provide revenue guidance for the immune medicine business.

In morning trading on the Nasdaq, Adaptive's shares were up 15 percent at $3.59.