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Adaptive Biotechnologies Revenues Rise 26 Percent in Q4, 57 Percent in 2021

NEW YORK – Adaptive Biotechnologies reported after the close of the market on Tuesday that its fourth quarter revenues increased 26 percent year over year, while full-year revenues climbed 57 percent, driven by sequencing and development revenues.

"2021 was a year of key achievements for Adaptive, which set a solid base for many upcoming catalysts in 2022," Chad Robins, the company's cofounder and CEO, told investors on a conference call following the release of the financial results.

For the three months ended Dec. 31, 2021, the Seattle-based immune sequencing firm tallied revenues of $37.9 million, compared to $30.2 million a year ago, and above analysts' average estimate of $36.7 million.

Fourth quarter sequencing revenue increased 81 percent to $23.1 million from $12.7 million, driven by pharmaceutical and clinical customers, while development revenue dropped 15 percent to $14.9 million from $17.5 million a year ago, due to lower amortization of the Genentech upfront payment.

Adaptive said that clinical testing volume for its ClonoSeq sequencing assay for minimal residual disease increased 41 percent to 6,356 tests in the quarter, from 4,539 tests in Q4 of 2020.

The company's Q4 R&D expenses dipped 3 percent to $34.7 million from $35.8 million a year ago, which the firm attributed to lower material costs and production volume that were partially offset by increased personnel costs. Its SG&A spending grew 57 percent to $50.0 million from $31.9 million, driven by an expansion of the firm's organization and commercial support, a larger facility footprint, higher depreciation costs, and growth in personnel and consultant expenses.

The firm's fourth quarter net loss grew to $61.4 million, or $.43 per share, from $44.6 million, or $.33 per share, a year ago. Adaptive used approximately 141 million shares to calculate per-share loss in the recently completed quarter compared to about 137 million shares in Q4 2020. On average, analysts had been expecting a Q4 net loss of $.45 per share.

For full-year 2021, Adaptive reported revenues of $154.3 million, a 57 percent increase from $98.4 million in 2020, beating analysts' average estimate of $152.8 million.

Full-year sequencing revenues jumped 90 percent to $78.9 million from $41.4 million, while development revenues grew 32 percent to $75.4 million from $56.9 million, attributable to increased revenues from the Genentech partnership and $7.5 million in milestone payments from the firm's minimal residual disease pharmaceutical partners.

The company said its 2021 research sequencing volume increased by 42 percent year over year to 32,146 sequences delivered. Clinical sequencing volume excluding T-Detect COVID increased by 48 percent compared to 2020, to 22,516 clinical tests delivered. Robins told investors that the number of ordering healthcare providers and ordering accounts for the clinical tests "experienced significant growth" of 57 percent and 32 percent, respectively, compared to 2020, and approximately 28 percent of all tests were done in blood.

"During 2021, over 30,000 consumers ordered a T-Detect COVID test," Robins noted. "We will continue to offer the test to consumers with modest promotional activities to maintain awareness and monitor the demand behaviors as the pandemic evolves."

Adaptive's 2021 R&D expenses climbed 23 percent to $142.3 million from $116.1 million, while its SG&A expenses grew 53 percent to $170.0 million from $110.9 million, mainly due to additional personnel costs along with increased investments in marketing efforts.

Its full-year net loss was $207.3 million, or $1.48 per share, compared to a net loss of $146.2 million, or $1.11 per share, in 2020, beating the consensus Wall Street estimate of a $1.49 loss per share. Adaptive used about 140.3 million shares to calculate per-share loss in 2021 compared to about 131.2 million shares in 2020.

Adaptive finished the year with $139.1 million in cash and cash equivalents and $214.0 million in short-term marketable securities.

For 2022, the firm projected full-year revenue in the range of $185 million to $195 million, representing year-over-year growth of 23 percent at the midpoint. ​​Adaptive anticipates sequencing revenues to represent 60 percent of revenues and development revenues to account for 40 percent. This represents sequencing revenues growth in the mid-40s percent range year over year while development revenues are expected to remain roughly flat. Development revenues will continue to include the amortization of the $300 million upfront payment from the Genentech partnership and "low-mid teens millions" in potential pharma milestones, the company said.

Kyle Piskel, Adaptive's interim CFO, said the firm expects Q1 2022 to be the "low watermark," mainly due to "normal seasonality coupled with an Omicron overhang from Q4 and no anticipated milestones during the quarter."

"During the last few weeks of December, we experienced a slowdown with the intersection of the Omicron surge and the holidays," said Robins. "However, we have seen an uptake in January and anticipate that our commercial investments, data readouts, and expansion of our commercial offering will enable us to overcome last year's headwinds such that we accelerate our growth trajectory in 2022."

In morning trading on the Nasdaq, the company's shares were down 1.6 percent at $14.48.