Adaptive Biotechnologies(ADPT) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited statements show significant revenue growth alongside a wider net loss and a decrease in total assets Condensed Consolidated Balance Sheets Total assets decreased to $1.03 billion, driven by a reduction in marketable securities and deferred revenue Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $184,186 | $123,436 | | Short-term marketable securities | $414,227 | $564,833 | | Total Assets | $1,033,374 | $1,116,414 | | Total current liabilities | $116,648 | $105,197 | | Total Liabilities | $340,064 | $373,148 | | Total Shareholders' Equity | $693,310 | $743,266 | Condensed Consolidated Statements of Operations Quarterly revenue grew 83% year-over-year to $38.5 million, while the net loss widened to $49.3 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | 6 Months 2021 | 6 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $38,505 | $20,988 | $76,947 | $41,898 | | Loss from Operations | $(49,765) | $(36,909) | $(91,045) | $(71,529) | | Net Loss | $(49,301) | $(33,535) | $(89,943) | $(64,938) | | Net Loss Per Share | $(0.35) | $(0.26) | $(0.64) | $(0.51) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased significantly to $95.5 million for the six-month period Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(95,458) | $(62,683) | | Net cash provided by investing activities | $135,266 | $320,251 | | Net cash provided by financing activities | $20,942 | $11,296 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail revenue recognition policies, significant customer concentration, and potential future milestone payments - Revenue is generated from Sequencing (clonoSEQ, T-Detect COVID, immunoSEQ) and Development services for biopharmaceutical customers[40][41][42] - The Genentech collaboration includes a $300 million upfront payment recognized over seven to eight years and over $1.8 billion in potential future milestones[48][51] - The company could receive up to an additional $327.0 million in milestone payments from its MRD development agreements upon regulatory approvals[47] Significant Customer Revenue Concentration | Customer | % of Total Revenue (Q2 2021) | % of Total Revenue (6 Months 2021) | | :--- | :--- | :--- | | Genentech, Inc. and Roche Group | 46.0% | 44.1% | Management's Discussion and Analysis of Financial Condition and Results of Operations Management highlights 83% quarterly revenue growth, rising operating expenses, and a strong liquidity position Results of Operations Revenue growth was driven by increased sequencing volume and development milestones, offset by higher R&D and commercial investments - Clinical sequencing volume (excluding T-Detect COVID) increased by 75% to 5,475 tests, and research sequencing volume increased by 65% to 6,900 sequences in Q2 2021 compared to Q2 2020[118] Revenue Comparison (in thousands) | Revenue Type | Q2 2021 | Q2 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Sequencing revenue | $18,555 | $7,985 | $10,570 | 132% | | Development revenue | $19,950 | $13,003 | $6,947 | 53% | | Total revenue | $38,505 | $20,988 | $17,517 | 83% | Operating Expense Comparison (in thousands) | Expense Category | Q2 2021 | Q2 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cost of revenue | $10,765 | $4,912 | $5,853 | 119% | | Research and development | $37,800 | $25,992 | $11,808 | 45% | | Sales and marketing | $23,216 | $14,332 | $8,884 | 62% | | General and administrative | $16,066 | $12,238 | $3,828 | 31% | Liquidity and Capital Resources The company maintains sufficient liquidity with $689.5 million in cash and marketable securities to fund operations for at least 12 months - As of June 30, 2021, the company had cash, cash equivalents, and marketable securities totaling $689.5 million[140] - Management believes existing cash is sufficient to fund operations and capital requirements for at least the next 12 months[140] Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(95,458) | $(62,683) | | Net cash provided by investing activities | $135,266 | $320,251 | | Net cash provided by financing activities | $20,942 | $11,296 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure relates to interest rate changes affecting its cash and investment portfolio - The company is primarily exposed to market risk from changes in interest rates related to its cash and investment portfolio[151] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[152] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect - As of the reporting date, the company is not involved in any material legal proceedings[153] Risk Factors No material changes have been made to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020[154] Unregistered Sales of Equity Securities and Use of Proceeds This section is not applicable as there were no unregistered sales of equity securities during the reporting period - No unregistered sales of equity securities occurred during the period[155] Exhibits This section lists the exhibits filed with the report, including required officer certifications and interactive data files - The report includes required CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[159][160][161][162]