NEW YORK – Adaptive Biotechnologies reported after the close of the market on Thursday that its second quarter revenues decreased 12 percent year over year, mainly due to declining immune medicine revenue. Meanwhile, minimal residual disease (MRD) revenue grew 36 percent, prompting the firm to raise its full-year revenue guidance for this part of its business.
For the three months ended June 30, the Seattle-based company booked revenues of $43.2 million versus $48.9 million a year ago, exceeding analysts' consensus estimate of $38.7 million.
"Our second quarter results are extremely encouraging. We were laser-focused on fueling growth on the top line, reducing spending, and managing our capital. This is exactly what we achieved this quarter," Adaptive Biotechnologies CEO and Cofounder Chad Robins told investors in a conference call recapping the quarter's financial results.
Roughly 82 percent of revenues, or $35.3 million, were from the firm's MRD business versus $25.9 million in Q2 2023. According to CFO Kyle Piskel, ClonoSeq clinical testing and MRD pharma partnerships drove approximately 66 percent and 34 percent of the segment’s growth during the quarter, respectively.
More specifically, ClonoSeq clinical testing revenue grew 43 percent versus the prior-year period. The number of tests delivered reached a new record of over 18,500 during the quarter, representing 36 percent year-over-year growth.
Meanwhile, revenue from MRD pharma partnerships increased 28 percent compared to Q2 2023, including a $3 million milestone payment from a multiple myeloma drug approval.
Robins said the US Food and Drug Administration advisory panel’s endorsement this spring of MRD as an accelerated approval endpoint in multiple myeloma drug trials has already had a "positive impact" on the company’s MRD pharma business.
Within the last few months, the company has already booked two studies and is "in advanced discussions" for another three new studies to use MRD as a primary endpoint for multiple myeloma drug trials, he said. Additionally, two existing studies have converted MRD from a secondary endpoint to a primary endpoint.
Adaptive’s immune medicine business generated $7.9 million in revenues for the quarter, representing a 66 percent year-over-year decline from $23.0 million in the year-ago period. Piskel said the drop was primarily driven by an anticipated 82 percent decrease in amortization from a Genentech deal and no related milestone in the quarter.
The firm's Q2 R&D spending dropped 21 percent to $25.4 million from $32.2 million a year ago. Its SG&A expenses declined 17 percent to $38.2 million from $46.2 million a year ago. The decrease in operating expenses was largely driven by Adaptive’s restructuring initiatives announced earlier this year, which included a headcount reduction as well as a laboratory relocation and consolidation.
Adaptive’s Q2 net loss narrowed to $46.2 million, or $.31 per share, from a net loss of $47.8 million, or $.33 per share, a year ago. On average, analysts had anticipated a loss per share of $.33.
The company ended the quarter with $59.8 million in cash and cash equivalents and $232.1 million in short-term marketable securities.
As a result of the strong growth in Q2, Adaptive increased its full-year revenue guidance for the MRD business. It now expects revenues for this business to be between $140 million and $145 million, compared to a previous range of $135 million to $140 million. It did not provide revenue guidance for its immune medicine business.
In morning trading on the Nasdaq, Adaptive's shares were up almost 2 percent to $4.53.