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Adaptive Biotechnologies Q4 Revenues Rise 25 Percent

NEW YORK – Adaptive Biotechnologies reported after the close of the market on Wednesday that its fourth quarter revenues increased 25 percent year over year, driven by development revenues.

For the three months ended Dec. 31, 2020, the Seattle-based immune sequencing firm tallied revenues of $30.2 million, compared to $24.2 million a year ago, and above analysts' average estimate of $26.9 million.

Fourth quarter sequencing revenue decreased 8 percent to $12.7 million from $13.9 million, due to COVID-19's effects on Adaptive's research business, partially offset by growth in pharma-related studies, while development revenue grew 69 percent to $17.5 million from $10.3 million a year ago, attributable to revenue from Genentech.

Adaptive made "significant progress throughout the year" and was able to grow the business despite the impact of the COVID-19 pandemic, CEO and Cofounder Chad Robins told investors on a conference call following the release of results. The firm's life science research business was the most impacted by the pandemic, he noted, but the company was able to enter into contracts with prominent contract research organizations and core labs to expand distribution of its research-use only immune sequencing kit.

Adaptive said that Q4 clinical testing volume for its ClonoSeq sequencing assay for minimal residual disease increased 41 percent to 4,539 tests from 3,218 tests. Adaptive President Julie Rubinstein said on the call that about 850 ordering clinicians were activated in 2020 and in Q4 orders were submitted by 738 unique health care providers. Healthcare providers ordering for the first time contributed to 20 percent of order volume in the year, she said.

Adaptive's Q4 R&D expenses jumped 69 percent to $35.8 million from $21.2 million a year ago, attributable to drug discovery activities related to the firm's Genentech partnership, validation efforts for T-Detect COVID, and expanding the label for ClonoSeq. Its SG&A spending grew 53 percent to $31.9 million from $20.8 million, due to increases in personnel and marketing costs and partially offset by savings in travel and customer event-related expenses.

The firm's fourth quarter net loss grew to $44.6 million, or $.33 per share, from $20.6 million, or $.17 per share, a year ago. Adaptive used approximately 137 million shares to calculate per-share loss in the recently completed quarter compared to about 124.4 million shares in Q4 2019. On average, analysts had been expecting a Q4 net loss of $.29 per share.

The company raised approximately $240 million in July 2020 in a public offering.

For full-year 2020, Adaptive reported total revenues of $98.4 million, a 16 percent increase from $85.1 million in 2019, and beating the analysts' average estimate of $95.1 million.

Full-year sequencing revenues fell 5 percent to $41.4 million from $43.5 million, due to pandemic-related delays in projects, while development revenues grew 37 percent to $56.9 million from $41.6 million, attributable to the Genentech partnership.

Clinical sequencing volume was 15,216 tests in 2020, up 50 percent from the prior year.

Adaptive's 2020 R&D expenses jumped 64 percent to $116.1 million from $70.7 million, while its SG&A expenses grew 61 percent to $110.9 million from $68.8 million.

Its full-year net loss was $146.2 million, or $1.11 per share, compared to a net loss of $69.6 million, or $1.01 per share, in 2019, missing the consensus Wall Street estimate of $1.08 loss per share. Adaptive used about 131.2 million shares to calculate per-share loss in 2020 compared to about 69.2 million shares in 2019.

Adaptive finished the year with $123.4 million in cash and cash equivalents and $564.8 million in short-term marketable securities.

On the call, Adaptive CFO Chad Cohen said the firm is providing full-year 2021 revenue guidance in the range of $145 million to $155 million, representing year-over-year growth of 52 percent at the midpoint. Adaptive projects sequencing revenues to represent 50 to 55 percent of revenues, which including expectations for ClonoSeq volumes to double. Development revenue is expected to increase from amortization of $300 million from the Genentech partnership and "mid-single digit millions" regulatory milestones related to minimal residual disease testing in the second half of the year, he said.

Revenues in general will be weighted to the back half of the year. "We anticipate a strong backlog of pharma contracts and new bookings to contribute to growth, so long as we continue to get access to samples," Cohen said.

In Thursday morning trading on the Nasdaq, shares of Adaptive were down just over 2 percent at $56.97.