Adaptive Biotechnologies inks deal with healthcare fund to beef up balance sheet

Adaptive moved into its new headquarters last September. Co-founders Harlan (left) and Chad Robins on the new plaza. (GeekWire Photo / Charlotte Schubert)

Adaptive Biotechnologies will raise up to $250 million in a deal announced Monday with healthcare investment firm OrbiMed, which will receive a cut of Adaptive’s revenue as part of the agreement.

OrbiMed will provide Adaptive with $125 million in non-dilutive financing, with the option for a second tranche of $75 million. Adaptive can also access an additional third tranche of $50 million for a potential merger and acquisition deals.

OrbiMed will receive 5% of the public biotech company’s GAAP revenues for the first $125 million, which will increase to 8% for the second tranche and 10% for the third. In a statement Monday announcing the deal, the companies described it as a “royalty financing agreement.”

“We are excited to work with OrbiMed on this creative royalty structure to continue unlocking the full potential of our immune medicine platform,” said Adaptive CEO and cofounder Chad Robins in the statement.

“The agreement will extend our cash runway while providing flexibility to invest in growth initiatives in both our MRD and immune medicine business areas,” added Robins, referring to the company’s products and services to detect MRD (minimal residual disease) in people with blood cancers.

Adaptive had $450 million in cash and marketable securities on hand at the end of the second quarter of 2022. Revenue for the second quarter came in at $43.7 million, a 13% increase from the second quarter of 2021, according to a recent financial report.

Though its revenue is rising, Adaptive tallied operating expenses of $96.2 million for the second quarter of 2022 and a net loss of $52.1 million, compared to $49.3 million in the year-ago period.

In May, the company restructured to focus on MRD and immune medicine, laying off about 100 employees, or 12% of its workforce.

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More recently, Adaptive’s MRD product clonoSEQ received expanded Medicare coverage for Diffuse Large B-Cell Lymphoma (DLBCL), a common type of lymphoma. ClonoSEQ test volume grew 53% versus the second quarter of 2021 and 17% over the first quarter of 2022, according to its financial report.

The company expects to pull in between $185 million to $195 million in revenue for 2022, with operating expenses between $410 million and $415 million.

Robins launched the company, a spinout of Fred Hutchinson Cancer Center, in 2009 with his brother, Chief Scientific Officer Harlan Robins. They took the company public in 2019 and cut the ribbon on a new 100,000 square-foot headquarters in Seattle last year.

“This investment reflects our confidence in Adaptive Biotechnologies and the potential to accelerate its significant contributions to the field of immune medicine,” said Matthew Rizzo, General Partner of OrbiMed, which was not a previous investor in the company.

“The company is well-positioned to deliver revenue growth while continuing to innovate and expand the applications of its platform in clinical diagnostics and drug discovery,” added Rizzo.

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