10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2024

For the transition period from _____to _____

Commission File Number: 001-38957

ADAPTIVE BIOTECHNOLOGIES CORPORATION

(Exact Name of Registrant as Specified in its Charter)

1165 Eastlake Avenue EastSeattle, Washington 98109

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (206)659-0067

Securities registered pursuant to Section 12(b) of the Act:

Title of each class TradingSymbol(s) Name of each exchange on which registered

Common stock, par value $0.0001 per share ADPT The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☒No☐

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes☐No☒

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒No☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes☒No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The NASDAQ Global Select Market on June 28, 2024 (the last business day of the Registrant’s most recently completed second fiscal quarter), was approximately $416,000,000.

As of February 26, 2025, the Registrant had 148,582,201 shares of common stock, $0.0001 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Annual Report on Form 10-K, to the extent not set forth herein, is incorporated herein by reference from the Registrant’s definitive proxy statement relating to the Annual Meeting of Shareholders to be held in 2025.

Table of Contents

Page

PART I 3

Item 1. Business 3

Item 1A. Risk Factors 28

Item 1B. Unresolved Staff Comments 72

Item 1C. Cybersecurity 72

Item 2. Properties 72

Item 3. Legal Proceedings 72

Item 4. Mine Safety Disclosures 72

Item 6. [Reserved] 73

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 87

Item 8. Financial Statements and Supplementary Data 88

Item 9A. Controls and Procedures 121

Item 9B. Other Information 123

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 123

Item 10. Directors, Executive Officers and Corporate Governance 124

Item 11. Executive Compensation 124

Item 14. Principal Accounting Fees and Services 124

Item 15. Exhibits, Financial Statement Schedules 125

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements that are based on management’s beliefs and assumptions and on information available to management. Some of the statements in the “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and elsewhere in this Annual Report on Form 10-K contain forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.

These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe we have a reasonable basis for each forward-looking statement contained in this Annual Report on Form 10-K, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements expressed or implied in this Annual Report on Form 10-K include, but are not limited to, statements about:

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the success of our significant investments in our continued research and development of new products;

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the success of developing, commercializing and achieving commercial market acceptance of clonoSEQ, Adaptive Immunosequencing, T cell receptor (“TCR”)-based cellular therapies, antibody-based therapeutics products and additional products beyond our portfolio;

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the potential for our identified research priorities to advance our proprietary immune medicine ("IM") platform or our future products;

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the success, cost and timing of our research and development activities, preclinical and clinical studies and, in certain instances, clinical trials and clinical validations;

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the potential benefits of collaborations, our ability to enter into collaborations or arrangements and our ability to attract collaborators with development, manufacturing, regulatory and commercialization expertise;

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the ability and willingness of our collaborators to continue development, manufacturing, distribution and commercialization activities relating to our jointly developed products;

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our ability to identify research priorities and apply a risk-mitigated strategy to efficiently discover and develop products and services, including new targets in autoimmunity and neurodegenerative disorders;

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our ability to obtain and maintain regulatory approval of our products;

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the pricing and reimbursement of our products following approval where required;

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our ability to obtain equipment and materials (including reagents or other materials that may also require additional internal validation) from our suppliers, and in some cases single suppliers;

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our ability to generate revenue and obtain funding for our operations, including funding necessary to complete further development of our current and future products, and if successful, commercialization;

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our ability to manage operating expenses;

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the size and growth potential of the markets for our products, and our ability to serve those markets, either alone or in combination with others;

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the rate and degree of market acceptance of our products;

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our financial performance;

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our expectations regarding our ability to obtain and maintain intellectual property protection for our immune medicine platform, products, and related technologies and the direction of such protection;

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regulatory developments in the United States (“U.S.”) and foreign countries;

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the success of competing products or services that are or may become available;

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developments relating to our competitors and our industry;

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our ability to attract and retain key scientific or management personnel;

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the impact of laws and regulations; and

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our estimates regarding expenses, future revenue, capital requirements and needs for additional financing.

In addition, you should refer to the “Risk Factors” section of this Annual Report on Form 10-K for a discussion of other important factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report on Form 10-K will prove to be accurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. The forward-looking statements herein represent our views as of the date of this Annual Report on Form 10-K. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Annual Report on Form 10-K.

In this Annual Report on Form 10-K, unless the context requires otherwise, all references to “we,” “our,” “us,” “Adaptive” and the “Company” refer to Adaptive Biotechnologies Corporation.

PART I

Item 1. Business

Overview

Throughout our history, we have advanced the field of immune medicine by harnessing the inherent biology of the adaptive immune system to transform the diagnosis and treatment of disease. We believe the adaptive immune system is nature’s most finely tuned diagnostic and therapeutic for most diseases, but the inability to decode it has prevented the medical community from fully leveraging its capabilities. Our immune medicine platform applies our proprietary technologies to read the diverse genetic code of a patient’s immune system and understand precisely how the immune system detects and treats disease in that patient. We capture these insights in our dynamic clinical immunomics database and related antigen annotations, which are underpinned by computational biology and machine learning, and use them to develop and commercialize clinical products and services that can be tailored to the needs of individual patients.

In 2024, we reorganized our company around two main businesses: the "MRD business," consisting of clinical assessment of minimal residual disease (“MRD”) in lymphoid malignancies, and "Immune Medicine" or the "IM business," built on drug discovery and development driven by immune medicine.

The MRD business focuses on the use of our highly sensitive, next-generation sequencing (“NGS”) assay to measure MRD in patients with hematologic malignancies. It is comprised of our clonoSEQ clinical diagnostic test, offered to clinicians, and our clonoSEQ assay, offered to biopharmaceutical partners to advance drug development efforts (“MRD Pharma”). We believe the total addressable market for the MRD business is approximately $5.5 billion, approximately $4.8 billion of which is derivable from clinical testing.

clonoSEQ is the first test authorized by the Food and Drug Administration (“FDA”) for the detection and monitoring of MRD in patients with multiple myeloma (“MM”), B cell acute lymphoblastic leukemia (“ALL”) and chronic lymphocytic leukemia (“CLL”), and it is also available as a CLIA-validated laboratory developed test (“LDT”) for patients with other lymphoid cancers, including diffuse large B cell lymphoma (“DLBCL”) and mantle cell lymphoma (“MCL”). With its industry-leading sensitivity, we believe clonoSEQ is uniquely situated for MRD testing in lymphoid cancers, both in the clinic and in biopharmaceutical trials. With the use of clonoSEQ, we are transforming how lymphoid cancers are treated.

The IM business focuses on the discovery and development of transformative immune-based therapies in the treatment of patients with cancer and autoimmune diseases. Our strategic priorities in the IM business include supporting our partner, Genentech, Inc. (“Genentech”), in its development of TCR-based cell therapies in oncology and developing targeted therapies using our differentiated precision immunology approach in select autoimmune indications.

The IM business leverages our proprietary ability to sequence, map, pair and characterize TCRs and B cell receptors (“BCRs”) at scale. We have created a powerful data engine to drive the development of novel therapies. These datasets, which we own, include more than 100,000 signatures of cancer and autoimmune disease and more than 2,000,000 matches of TCRs to disease-related antigens.

We believe that by tapping into these datasets, there is tremendous value in the development of immune-based therapeutics. In cancer, we are working with Genentech under our worldwide collaboration and license agreement (the “Genentech Agreement”) to develop TCR-based cell therapies to treat patients with solid tumors. Our role is to discover and characterize TCRs against cancer antigens. In 2023, Genentech secured the first FDA-cleared investigational new drug (“IND”) for a cell therapy product candidate under the Genentech Agreement. This milestone established an important TCR-based cell therapy product candidate proof of concept that supports our antigen-specific TCR discovery approach. In autoimmunity, we apply our immune medicine platform to discover the specific T cells that are attacking ‘self’ or healthy tissue. We focus on select autoimmune indications, such as multiple sclerosis (“MS”) and type 1 diabetes (“T1D”), among others, where we believe there is still a high unmet need to develop better, more targeted therapies with a better side effect profile. In MS and T1D, for example, we have successfully identified the subset of autoreactive TCRs that are likely causing these devastating diseases. Therapeutically, our goal is to eliminate or block the activation of these problem T cells and directly stop them from attacking healthy tissue.

Selected 2024 Results

In 2024, our revenue was $179.0 million, compared to $170.3 million in 2023. The increase was primarily driven by the MRD business, partially offset by a reduction in revenue recognized by the IM business mainly attributed to a decline in the amortization of the upfront payment from Genentech. Our operating expenses were significantly reduced as a result of continued streamlining of our operations during the year. Operating expenses were $341.5 million in 2024, including $7.2 million of non-cash asset impairment charges and $2.0 million in other restructuring charges, as compared to $397.3 million in 2023, of which $25.4 million represented non-cash asset impairment charges. As of December 31, 2024, cash, cash equivalents and marketable securities was $256.0 million.

MRD Business Highlights

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Total MRD revenue in 2024 was $145.5 million, representing 42% growth from 2023, which included $12.5 million in revenue from milestones. We grew clonoSEQ test volume by 35% year over year.

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Payor coverage has extended to over 300 million lives in ALL and MM, over 200 million lives in CLL and over 70 million lives in DLBCL. In addition, we obtained Medicare coverage for MCL and initiated promotional efforts in MCL in the fourth quarter of 2024.

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We obtained a new Medicare Clinical Laboratory Fee Schedule (“CLFS”) rate of $2,007 per test for clonoSEQ and MolDX updated the clonoSEQ episode pricing to $8,029 for all covered indications. This represents a 17% increase from the previous episode price and the previous implied per test rate under the episode structure.

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We have integrated the clonoSEQ clinical diagnostic test via the Epic System Corporation's (“Epic”) comprehensive electronic medical record (“EMR”) system into the records systems of 18 accounts through 2024 to enable easier test ordering.

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Our clonoSEQ assay was being used in more than 170 active trials being conducted by over 40 biopharmaceutical partners, including more than 85 trials where MRD is a clinical endpoint (14 of which use MRD as a primary endpoint).

IM Business Highlights

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In oncology, we are jointly pursuing with Genentech the development and delivery of the highest impact antigen-directed TCR based cell therapy for the treatment of patients with different solid tumor types. In 2024, we made significant progress to improve turnaround times and reduce costs, which we believe will enhance the profile of potential cell therapy product(s).

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In autoimmunity, we narrowed our focus to select T-cell medicated indications with high unmet clinical and commercial need, such as MS and T1D, among others. In these indications we successfully identified a subset of autoreactive or problem T cell receptors that are likely causing disease. Our therapeutic strategy is to eliminate or block the activation of these problem T cells and directly stop them from attacking healthy tissue. To date, we completed several antibody mouse immunization campaigns and successfully selected and functionally tested a subset of antibodies to a number of disease-causing targets in prioritized indications. Based on the data we collected, we nominated a lead indication and are focusing on the preclinical development of antibody therapeutic candidates in this first indication.

Our Immunosequencing Platform

The adaptive immune system is comprised of specific immune cells, called T cells and B cells, that hold the instructions for diagnosing and treating most diseases. These instructions enable specialized receptors that sit on the surface of TCRs and BCRs to identify, bind and destroy pathogens or human cells presenting foreign signals of disease (“antigens”). Unlike all other genes in the human genome, the genetic sequences of TCRs and BCRs rearrange over time creating massive genetic diversity. In contrast to the static human genome that is made up of approximately 30,000 genes, the adaptive immune repertoire of a healthy adult consists of more than 100 million different genes. This massive genetic diversity gives the immune system the ability to detect and respond to millions of different antigens associated with human disease.

Our immunosequencing platform combines a suite of proprietary chemistry, computational biology and machine learning to generate clinical immunomics data to decode the adaptive immune system. It extracts and interprets insights from the adaptive immune system with the scale, precision and speed required to enable the design of clinical products tailored to the specific genetics of each patient’s immune system.

A Primer: The Adaptive Immune System

Over millions of years, the adaptive immune system has evolved an elegant solution to keeping people healthy. It recognizes and responds to most antigens, whether they come from outside the body, such as a virus, or inside the body, such as mutations that drive cancer.

The innate and adaptive immune systems both play a role in human immunity. However, the adaptive immune system alone provides a specific response to signals of disease, or antigens. These disease specific antigens are primarily fragments of proteins that are recognized as foreign, such as proteins from a virus. However, antigens can be recognized as foreign even if they are not from a virus or pathogen. In cancer cells, tumor associated antigens (“TAAs”) are normal proteins that are aberrantly expressed in a tumor; neoantigens are mutated versions of normal proteins that are specific to the cancer and not found in healthy normal cells. Both TAAs and neoantigens are recognized by the immune system as foreign. For autoimmune disorders, the immune system loses the ability to distinguish between ‘self’ and ‘non-self’ and mistakenly recognizes normal protein fragments (“self-antigens”) as foreign, which results in attacking otherwise healthy tissue.

The Adaptive Immune Response

The key cells of the adaptive immune system that enable our bodies to mount responses against antigens are called T cells and B cells. T cells can destroy target cells directly, and B cells secrete antibodies, activating other parts of the immune system to destroy targets.

Each T cell and B cell has a unique Y-shaped receptor, which can recognize one or a small number of the millions of antigens to which our bodies are continuously exposed. When an adaptive immune response is initiated against a particular disease, the T cells and B cells encoding the disease-specific targeting receptors rapidly multiply through clonal expansion, allowing for a powerful immune response. Some of these expanded cells directly attack the disease, and others form long-term memory to allow rapid recognition of the same antigens in the future and protect against reinfection.

Unlike all other genes in the human genome, the genetic sequences of TCRs and BCRs rearrange over time through a complex biological process resulting in massive diversity. The diversity of these receptors is made possible by a unique reshuffling of their genetic code known as V(D)J recombination (V=Variable, D=Diversity, J=Joining). This recombination process only occurs in T cells and B cells, and it results in each cell clone having a unique receptor-associated deoxyribonucleic acid (“DNA”) sequence. This unique DNA sequence acts like a barcode that can be used to identify and track an individual receptor over time, as shown in the figure below:

The adaptive immune response requires millions of these unique receptors to be widely distributed and present in the blood in order to have the ability to rapidly respond to many different diseases simultaneously. Even after a specific TCR binds to an antigen and clonally expands, the frequency of these expanded T-cell clones containing the TCR remains relatively low in relation to the estimated trillions of other T cells that are circulating. We now know that disease-specific TCRs that are clonally expanded in a patient’s blood are present, on average, at less than 1 cell out of 100,000 cells. Despite their relatively low abundance, disease-specific TCRs can mount a systemic, persistent response to most perturbations because of the highly specialized properties of the immune response, as summarized in the table below:

In order to fully leverage the natural properties of the immune system to develop clinical products, the enormous diversity and scale of the adaptive immune system must be taken into consideration, including the ability to accurately and reliably measure the relative frequency of each disease-specific T cell or B cell in the blood. For example, cancer-specific TCRs circulating in the blood of a cancer patient are only present at 1 out of 100,000 cells. Auto-reactive T cells specific to any given autoimmune disorder circulating in the blood are only present at 1 out of 1,000,000 cells. Accordingly, the ability to detect disease-specific T cells requires a technology that can quantitatively probe a minimum of hundreds of thousands to millions of blood cells from each sample. Our technology was built and validated to address this need.

We have developed a combination of technologies to perform the following key functions that broaden our understanding of immune-mediated biology:

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Sequencing. Our proprietary NGS-based immunosequencing methods provide sequences for single chains of “Y-shaped” TCRs or BCRs, which enables understanding of the quantity and diversity of T cells and B cells in a biological sample. In the context of hematologic malignancies, where B cells and T cells are the cancer cells, our platform technology allows us to identify and quantify residual disease burden (MRD) by sequencing BCR and TCR rearrangements within those cells with a high degree of sensitivity and precision. Our sequencing capabilities, together with our massive clinical immunomics database of immune receptor sequences, provide deep insights into individual and collective immune responses at a scale that is thousands of times greater than was previously possible.

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Antigen Identification. We have developed powerful approaches to identify disease-related antigens which trigger a T-cell response, even at levels of one T-cell in a million (as may occur in autoimmune disorders).

Human leukocyte antigen (“HLA”)-presented disease specific antigens. By applying proprietary screening methods, we can identify TCRs which cluster around a presumably identical HLA-presented antigen and identify that antigen by a process we call “de-orphanization”. Our massive database of TCRs and healthy control samples enables us to rapidly confirm whether such antigens are disease-specific, even if the antigen or its relationship to the disease was previously unknown.

Antigen-TCR mapping. MIRA (Multiplexed Identification of TCR Antigen Specificity) maps millions of TCRs to thousands of clinically relevant Class I and Class II antigens. MIRA is another proprietary method which enables us to elucidate in silico what potential diseases a patient’s immune system has been exposed to or is actively fighting.

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Pair. pairSEQ provides a combinatorial strategy to accurately pair both chains of Y-shaped immune cell receptors at high-throughput, which is challenging to do at scale using other methods because the two chains of the Y-shaped receptors are located on different chromosomes. The ability to accurately pair both chains of the receptors in a sample enables us to reconstruct receptors for therapeutic purposes.

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Characterize. Our platform characterizes binding, functionality and safety properties of antigen-specific, paired TCRs or BCRs. Our high-throughput sequencing and antibody discovery process allows us to select from a diversity of potent, naturally occurring, full length human receptors. We identify and focus on a subset of therapeutic-grade candidates to designate and further develop as TCR or antibody based therapeutic products.

MRD Business

The MRD business focuses on the use of our highly sensitive, FDA-authorized NGS assay to measure MRD in patients with hematologic malignancies. It is comprised of our clonoSEQ clinical diagnostic testing service for clinicians and our MRD Pharma service, which consists of offering our clonoSEQ assay to biopharmaceutical partners to advance drug development efforts.

We believe clonoSEQ is the preeminent MRD testing choice for hematological malignancies with industry leading sensitivity of 1 out of 1,000,000 cells, given sufficient sample input. By taking a baseline measurement prior to starting therapy and then tracking the number of cells at several time points following therapy initiation, hematologists can improve their ability to assess treatment response, predict long-term patient outcomes, monitor disease burden over time and detect potential relapse.

With the use of clonoSEQ, we are transforming how lymphoid cancers are treated by working with providers, biopharmaceutical partners and payors. For instance, our clonoSEQ assay has the potential to assist physicians with critical clinical decisions, accelerate the development of drugs in lymphoid cancers and enable treatment decisions which may lower payor cost through the discontinuation of costly drugs that are no longer needed.

The Technology

clonoSEQ leverages our next-generation sequencing-based platform to sequence the patient's immune repertoire (B cells and/or T cells) with the goal of identifying and quantifying malignant B cells or T cells. The testing process begins with analysis of a high disease burden sample (typically bone marrow, blood or tissue) collected at the time of a patient's initial diagnosis or relapse. This sample is used to identify the patient-specific sequence(s) that are associated with the malignancy. We do this by assessing the distribution and frequency of sequences found on the B cell or T cell receptors present in the sample and "tagging" the sequences that meet our validated criteria. Once we have tagged the relevant disease-associated sequence(s) for a given patient, they can be used as a unique "bar code" to track the presence and level of disease burden for that patient over time.

A summary of the steps required to perform a clonoSEQ MRD test is as follows:

DNA is extracted from a fresh biological specimen, typically bone marrow (gDNA), blood (gDNA) or plasma (cell-free DNA).

Extracted DNA quality is assessed, and rearranged immune receptors are amplified using a multiplex polymerase chain reaction (“PCR”).

Reaction-specific index barcode sequences for sample identification are added to the amplified receptor sequences by PCR.

Sequencing libraries are prepared from barcoded amplified DNA which are then sequenced by synthesis using NGS.

Raw sequence data are uploaded from the sequencing instrument to our analysis pipeline.

Sequence data is analyzed in a multi-step process, where a sample’s sequence data is first identified using the sample index sequences and the data is then processed using a proprietary algorithm with in-line controls to remove amplification bias.

Following completion of these data processing steps, a report is issued to indicate the presence or absence of malignant cells, to quantify their level and (in the case of longitudinal monitoring) to compare that level to previous results for the patient.

We offer our core clonoSEQ technology to two primary customer segments: we work with clinicians to provide clonoSEQ clinical diagnostic testing services to patients and we partner with biopharmaceutical companies to advance drug development efforts through use of our clonoSEQ assay in clinical trials.

Clinical Utility

For both clinical diagnostic testing and drug development, clinical data is core to the value of clonoSEQ as a decision-making tool, empowering clinicians to select the best patient treatment options based on MRD status and enabling biopharmaceutical companies to optimize the application of novel therapies. Some examples of recent expanded clinical use cases and advances in drug development efforts by our biopharmaceutical partners include:

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CEPHEUS is a phase 3 study evaluating the efficacy and safety of DARZALEX FASPRO in combination with bortezomib, lenalidomide, and dexamethasone (D-VRd) or VRd in patients with newly diagnosed MM who are transplant ineligible. Data presented at the 21st International Myeloma Society Annual Meeting (Usmani et al 2024) showed that the MRD negativity rate at 10-5 as measured by clonoSEQ was significantly higher with D-VRd versus VRd (60.9% versus 39.4%), meeting the primary endpoint of the study at a median follow-up of 58.7 months. The D-VRd arm also demonstrated higher rates of sustained MRD-negativity, progression free survival, and overall survival ("OS"). If approved, this new indication for daratumumab would be the first FDA-approved treatment regimen for newly diagnosed MM based on a study with MRD-negativity as the primary endpoint.

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Data from the FELIX study indicate that achieving deep molecular remission, defined as MRD levels below 10−6, correlates with improved outcomes in adult patients with relapsed/refractory B-cell acute lymphoblastic leukemia (B-ALL) treated with obecabtagene autoleucel. These findings were presented at the American Society of Hematology ("ASH") annual meeting in 2024 in an oral session titled Obecabtagene autoleucel (obe-cel) for Adult Relapsed/Refractory B-Cell Acute Lymphoblastic Leukemia (R/R B-ALL): Deep Molecular Remission May Predict Better Outcomes. The study found that 84% of treatment responders who had a clonoSEQ MRD test achieved MRD <10−6. This result was associated with more durable responses, and higher event-free survival and OS rates than those observed in patients with MRD ≥10-4 and between 10-4 and 10-6.

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Phase 3 data from the ECOG-ACRIN EA4151 trial indicate that autologous hematopoietic cell transplantation (auto-HCT) may not provide additional benefit for MCL patients in first complete remission (CR) who have undetectable minimal residual disease (uMRD) at a sensitivity of 10−6. The findings were presented at ASH 2024 in a late-breaking abstract titled, Lack of Benefit of Autologous Hematopoietic Cell Transplantation (auto-HCT) in Mantle Cell Lymphoma (MCL) Patients (pts) in First Complete Remission (CR) with Undetectable Minimal Residual Disease (uMRD): Initial Report from the ECOG-ACRIN EA4151 Phase 3 Randomized Trial (Abstract LBA6). Patients in CR with uMRD at 10−6 sensitivity by clonoSEQ in peripheral blood were randomized to receive either auto-HCT plus three years of maintenance rituximab (MR) or MR alone. Interim analysis, with a median follow-up of 2.7 years, showed no significant difference in OS between the two groups, suggesting that auto-HCT may be unnecessary for patients achieving deep remission as measured by highly sensitive MRD assessment.

We believe this clinical utility data shows that clonoSEQ is uniquely situated in MRD testing to help hematologists improve their ability to assess treatment response, predict long-term patient outcomes, monitor disease burden over time and detect potential relapse. Further, we believe that our clonoSEQ assay has the potential to accelerate the development of drugs in lymphoid cancers and enable treatment decisions which may lower payor cost through the discontinuation of costly drugs that are no longer needed.

clonoSEQ Clinical Diagnostic Testing

Commercially Promoted Indications

Our clonoSEQ diagnostic test detects and monitors the remaining number of cancer cells that are present in a patient’s body during and after treatment, known as MRD. We believe clonoSEQ has broad applicability across all lymphoid malignancies, including ALL, CLL, MM, and Non-Hodgkins Lymphoma (“NHL”) conditions, such as DLBCL, MCL and cutaneous T cell lymphoma (“CTCL”).

In September 2018, clonoSEQ was granted marketing authorization from the FDA, under the de novo process, for patients with MM and ALL to monitor their MRD from bone marrow samples. In August 2020, the clonoSEQ label was expanded to include patients with CLL from bone marrow and blood samples.

In December 2022, we launched commercial promotion of clonoSEQ as a CLIA-validated LDT to detect MRD in blood for patients with DLBCL by measuring circulating tumor DNA (“ctDNA”), which provides patients and clinicians with a powerful blood-based prognostic tool. We are advancing the regulatory strategy for our DLBCL test to support clinical adoption and increase its usage by our biopharmaceutical partners.

In November 2024, we launched commercial promotion of clonoSEQ as a CLIA-validated LDT to detect MRD in blood for patients with MCL.

Our clinical penetration of the patient opportunity with clonoSEQ has grown over the years in each indication. As of December 31, 2024, we believe our penetration in the United States was as follows1:

ALL MM CLL DLBCL MCL

(1) Percentages are an approximation and include US clinical use only and exclude patients in trials. Penetration is calculated as the number of annual clonoSEQ patients tested out of the prevalent population pool by indication.

We believe that we are still in the early stages of clonoSEQ penetration in the indications identified above with significant opportunities to expand adoption.

Adoption Strategy

We have a multi-pronged strategy to deepen penetration of clonoSEQ and improve our commercial and operational infrastructure through efforts to:

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Increase clinical testing in blood to facilitate adoption for clinicians in the community setting and increase frequency of testing across treatment settings. Testing with blood is less invasive for patients and less expensive as compared to MRD testing from bone marrow samples. Therefore, blood-based MRD testing may enable more frequent monitoring of patients over longer periods of time. We believe continued validation of clonoSEQ in blood will increase usage, particularly by clinicians in the community setting who perform fewer bone marrow aspirations. A study reported at the ASH annual meeting in 2023 demonstrated that MRD negativity confirmed by clonoSEQ in the blood of MM patients in early treatment for MM correlated well with progression free survival.

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Expand clonoSEQ in NHL. With the end goal of clonoSEQ becoming a universal MRD test for all lymphoid malignancies, we have developed a robust lifecycle development plan to generate sufficient clinical evidence to support increased adoption across lymphoid malignancies. NHL is a key area of focus for us, as it represents approximately 50% of all newly diagnosed patients with lymphoid malignancies in the U.S. DLBCL and MCL, our two current commercially promoted and Medicare-covered NHL subtypes, represent approximately 30% and 6% of NHL patients respectively. Going forward, we will continue to generate data demonstrating the clinical utility of clonoSEQ in these and other NHL subtypes, and we will aim to further develop the emerging market for MRD testing for both clinical and biopharmaceutical use cases.

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Expand patient use cases by continuing to generate clinical evidence in clonoSEQ utility throughout the patient continuum of care. clonoSEQ MRD testing has the potential to inform patient management and support drug development in a wide range of contexts and at multiple time points, both for newly diagnosed and relapsed/refractory patients and both during and after treatment. In addition to expanding the indications for which clonoSEQ has shown clinical utility, our evidence generation strategy also addresses the goal of expanding patient use cases within existing promoted indications. Our strategy for expanding use cases is informed by provider and biopharmaceutical feedback on current unmet needs as well as by the evolving treatment landscape. For example, in multiple myeloma, patients have traditionally been prescribed indefinite maintenance therapy; however, in recent years novel treatment regimens are enabling newly diagnosed patients to achieve deeper and more sustained responses, which has increased provider interest in offering patients time off therapy. To address this emerging trend, Adaptive and its collaborators have generated and will continue to generate data demonstrating the role of clonoSEQ to determine which patients can safely discontinue treatment and to monitor patients in treatment-free remission.

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Enhance customer experience with EMR integrations. In October 2022, we entered into a partnership with Epic to integrate clonoSEQ into Epic’s EMR system, which we believe will enable easier test ordering and results access for the clonoSEQ test. As of December 2024, clonoSEQ is integrated into the Epic instances at 18 customer accounts. In 2024, we entered into a partnership with Flatiron Health, Inc. (“Flatiron”), a leading provider of electronic health records (“EHR”) software and services for community oncology, to integrate clonoSEQ into Flatiron’s OncoEMRTM system. Through 2025 we expect to integrate more Epic accounts and launch the integration with Flatiron in the community to drive further clonoSEQ adoption.

In addition to these strategies, in January 2025, we entered into a multi-year exclusive strategic commercial collaboration with NeoGenomics, Inc. (“NeoGenomics”) that will integrate clonoSEQ with NeoGenomics’ COMPASS® and CHART® offerings in complex blood cancers. We have begun to collaborate with NeoGenomics to implement the commercial and operational infrastructure to support our partnership and expect to launch cross-promotional efforts later in 2025.

The strategies described above are geared toward driving adoption of clonoSEQ in the U.S., where reimbursement is well-established. Opportunities to expand clinical MRD testing using clonoSEQ also exist outside the U.S., although reimbursement for NGS MRD remains in nascent stages in most non-U.S. markets. We have secured IVDR certification for the clonoSEQ assay to facilitate use of the assay in Europe, and we have licensed our technology to academic and commercial partner labs in Europe, Australia and Japan as a means to make clonoSEQ available locally, primarily for research purposes though some limited clinical testing is available in selected regions. In 2025 we expect to license our technology to a new site in Israel. As our non-U.S. market access efforts continue to progress, we also anticipate expanding clinical use with our current lab partners in several countries.

Reimbursement

In January 2019, clonoSEQ received Medicare coverage aligned with the FDA label and National Comprehensive Cancer Network (“NCCN”) guidelines for longitudinal monitoring in MM and ALL. clonoSEQ is now incorporated in NCCN guidelines and used by all 33 NCCN cancer centers. Over the years since, we have secured additional payor coverage for clonoSEQ aligned with our FDA label with Medicare, national private payors and large regional plans, expanding coverage to over 300 million covered lives for ALL and MM, over 200 million covered lives for CLL and over 70 million covered lives for DLBCL.

In November 2021, MolDX published its local coverage decision (“LCD”) for MRD testing. This LCD not only affirmed the importance of MRD and clonoSEQ coverage in ALL, MM and CLL in bone marrow and blood, but it also provided a clear and efficient pathway for seeking expanded clonoSEQ coverage through technical assessments in NHL.

In July 2022, coverage expansion continued as we secured Medicare coverage for DLBCL, the most common form of NHL. We secured clonoSEQ coverage with Medicare for DLBCL patients regardless of line of therapy, treatment regimen or testing timepoint. clonoSEQ is the first and only MRD test to receive Medicare coverage in DLBCL. We received Medicare coverage for another NHL condition, MCL, effective July 2024.

In January 2023, clonoSEQ was granted a Proprietary Laboratory Analysis (“PLA”) code. The code was routed to Medicare’s gapfill pricing process in 2023, and this process was completed in 2024. The clonoSEQ PLA code was published on Medicare’s CLFS with a price of $2,007, effective January 2025. This price represents a 17% increase over our previously determined Medicare rate. Correspondingly, our Medicare episode rate for clonoSEQ was increased from $6,870 to $8,029.

We continue to enhance our average selling price (“ASP”) for clonoSEQ as we are increasing our investments in revenue cycle management to improve claims collection such as prior authorizations and the appeals process. Further, we will continue to sign new contracts with private payors who are not currently contracted with us and improve contracted rates for existing contracted private payors over time.

We also maintain a patient support program, Adaptive Assist, to facilitate access to clonoSEQ testing services for patients who could benefit from the clinical insights provided by clonoSEQ Clinical Testing. Patients can call to discuss their individual circumstances with one of our dedicated patient support representatives in order to better understand their coverage prior to clonoSEQ testing and to navigate the insurance process, including appeals for denied claims. We also offer financial assistance for qualified uninsured and under-insured patients who cannot afford their patient financial responsibility for clonoSEQ.

MRD Pharma

MRD Pharma focuses on offering our clonoSEQ assay to biopharmaceutical partners to advance drug development efforts. Through 2024, clonoSEQ was being used by over 40 biopharmaceutical companies in more than 170 active clinical trials and is used as a clinical endpoint in over 85 of these studies. Penetration of active industry sponsored clinical trials in lymphoid cancers as of December 31, 2024 varied per indication, with penetration in MM trials being the highest at over 40%.

In April 2024, FDA’s Oncologic Drug Advisory Committee (“ODAC”) voted unanimously in favor of the use of MRD as a primary endpoint to support the accelerated approval of new therapies for patients with MM. ODAC’s recommendation has the potential to accelerate MM patient access to novel therapies and to reduce drug development costs. clonoSEQ is the only FDA-cleared MRD assay for patients with MM, it is also the singular assay that can consistently deliver the sensitivity and standardization needed to meet the FDA’s performance standards. We believe these considerations distinguish clonoSEQ as a leading assay for MM drug developers.

Immune Medicine Business

The goal of our IM business is to scale our target discovery and drug discovery efforts to bring transformative therapies into the clinic either on our own or with a partner. The engine driving the immune medicine platform is our immunosequencing technology that allows us to tap into the massive diversity of the immune repertoire at unparalleled scale and specificity. Our immunosequencing approach utilizes multiplex, bias-controlled PCR to accurately and quantitatively sequence, map, pair and characterize millions of TCRs and BCRs at scale. The proprietary datasets we have generated to date include more than 100,000 signatures of disease (such as cancer and autoimmune conditions) and over 2,000,000 matches of paired TCRs to disease-related antigens.

We are developing a comprehensive map of the interaction between the immune system and disease (the “TCR-Antigen Map”) for use in identifying and validating disease signatures to improve the treatment of various immune-mediated diseases. Supported in part by a collaboration agreement with Microsoft Corporation (“Microsoft”) that we entered into in December 2017 (the “Microsoft Agreement”), we worked with Microsoft through 2024 to enable access to the necessary machine learning and computational infrastructure to build our TCR-Antigen Map, initially for diagnostic purposes. While the collaboration activities have since wound down, we own all data that we generated under the Microsoft Agreement and retain all rights, including commercialization rights, to the algorithms and products that we develop. Given our focus in drug discovery (discussed below), we have strategically repurposed our infrastructure, sizable immunomics database and AI and machine learning models and continue to map at scale TCR sequences to the disease antigens they bind to enable our discovery efforts where we believe we have the greatest opportunity to succeed and create long-term value. We expect to evolve our work with Microsoft and continue to access cloud services and super computing power to help scale our data generation and machine learning modeling efforts. We aim to accelerate development of a ‘digital’ TCR-antigen binding prediction model that will allow us to pursue multiple high-value therapeutic applications and achieve our business goals.

Drug Discovery

We are focusing our drug discovery programs to develop therapies on our own or in partnership. In these respects, our proprietary data and capabilities uniquely position the IM business to discover and develop differentiated therapeutic candidates such as TCR-based modalities, antibodies and potentially vaccines to better understand immune-mediate biology and treat challenging conditions such as cancer and autoimmune disorders.

Under the Genentech Agreement, the IM business supports Genentech in the development of cancer antigen-directed TCR-based cancer cell therapies for the treatment of patients with solid tumors. In 2023, a first FDA-cleared investigational new drug (“IND”) for a cell therapy product candidate was secured by Genentech. This milestone established an important TCR-based cell therapy product candidate proof of concept that supports our antigen-specific TCR discovery approach.

The IM business is also advancing a pipeline of potential immune-based therapies in autoimmune disorders such as MS and T1D, among other indications. In autoimmunity, the immune system attacks self-antigens, which are human proteins normally found in our body. Specifically, T cells lose their ability to distinguish ‘self’ from ‘non-self’ antigens which may cause disease. Both MS and T1D, for example, are T-cell mediated diseases that involve mostly unknown self-antigens for which current treatments lack specificity to disease-causing targets, leading to suboptimal efficacy and risk of significant side effects. In MS and T1D, we’ve successfully identified the subset of ‘autoreactive’ TCRs that are likely causing these devastating diseases. Therapeutically, our goal is to develop antibodies that directly eliminate or block the activation of these problem T cells and stop them from attacking healthy tissue. Functional characterization of select antibodies is ongoing with the goal of developing a robust preclinical data package, following which we aim to designate a therapeutic candidate.

IM Pharma Partnering

We are focused on partnering with major pharmaceutical and well-capitalized biotechnology companies to offer our sequencing services ("IM Pharma"). Specifically, we use our core immune repertoire sequencing capabilities to deliver to our customers rich immune receptor data that help to inform their drug development programs. A key application of our immune receptor data is to understand and monitor a patient’s immune response to a given drug in a clinical trial. Our datasets combined with our deep expertise in understanding the adaptive immune system enables us to support our partners in advancing their own pipeline of innovative medicines across indications and drug modalities. We use revenue from our IM Pharma partnerships to directly offset our own internal research and development investments in the drug discovery efforts of our IM business.

Our Competitive Strengths

We harness the inherent biology of the adaptive immune system to develop clinical products and services that improve human health by leveraging our core competitive strengths.

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Our clonoSEQ test is the only NGS based assay with broad reimbursement in the U.S. used to monitor MRD in multiple lymphoid malignancies that can obtain a sensitivity of detection of 1 in 1,000,000 cancer cells. This uniquely positions us to continue to gain clinical adoption in diagnostic testing for hematologic malignancies. Actionability of clonoSEQ for tailoring treatment decisions in patients with MCL, CLL, MM and ALL continued to be demonstrated as referenced in 69 abstracts at the most recent ASH meeting in December of 2024.

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Expanding regulatory and reimbursement expertise will help inform future clinical product development. Having obtained FDA marketing authorization and expanded coverage to greater than 300 million covered lives for multiple indications of clonoSEQ from Medicare, national private payors and large regional plans, we believe we have developed valuable core capabilities that will facilitate future product development through to regulatory approval and reimbursement.

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Our proprietary immunomics database provides a robust product development engine. We are using the adaptive immune system to build a dynamic clinical immunomics database that is machine learning/AI-enabled. We translate the natural capabilities of the immune system into the clinic by capturing the millions of diverse unique receptors present in a patient’s blood. The combination of our large, quality data and our ability to generate additional insights creates a data foundation which we will continue to leverage to accelerate our target and drug discovery efforts.

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Strong intellectual property protects our immune medicine platform and its applications. As of December 31, 2024, we had filed 847 patent applications, 416 of which were issued and active as of that date, covering improvements in sequencing methods and new ways to leverage adaptive immune receptors for our MRD and IM business areas.

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We are well capitalized and believe we are on a path to profitability for our MRD business. As of December 31, 2024, we had $256.0 million in cash, cash equivalents and marketable securities. In 2024, we focused on reducing our operating expense growth rate and improving margin profile.

Strategic Collaborations and Other Agreements

Genentech Agreement

In December 2018, we entered into the Genentech Agreement to develop, manufacture and commercialize novel neoantigen directed T cell therapies for the treatment of a broad range of cancers. Pursuant to the Genentech Agreement, we are responsible for the screening and identification of TCRs that can most effectively recognize and directly target specific neoantigens, while Genentech is responsible for clinical, regulatory and commercialization efforts. During the term of the Genentech Agreement, we have agreed to certain defined exclusivity obligations or restrictions with respect to the development and commercialization of certain cell therapies.

In February 2019, we received a $300.0 million upfront payment from Genentech and, in 2023, we received a $10.0 million milestone payment for FDA IND acceptance of the first cell therapy product candidate under our Genentech Agreement. The Genentech Agreement provides that we also may be eligible to receive approximately $1.8 billion over time, including payments of up to $65.0 million upon the achievement of specified regulatory milestones, up to $300.0 million upon the achievement of specified development milestones, and up to $1.4 billion upon the achievement of specified commercial milestones. The Genentech Agreement further provides that Genentech will pay us tiered royalties at a rate ranging from the mid-single digits to the mid-teens on aggregate worldwide net sales of the products arising from the strategic collaboration, subject to certain reductions, with aggregate minimum floors. The Genentech Agreement accounted for 8%, 25% and 34% of our revenue for the year ended December 31, 2024, 2023 and 2022, respectively.

The Genentech Agreement will continue until the expiration of all royalty payments, but may be terminated by mutual agreement, upon an uncured material breach by either party, upon insolvency of either party, or by Genentech for convenience upon prior written notice.

Revenue Interest Purchase Agreement

In September 2022, we entered into a Revenue Interest Purchase Agreement (the "Purchase Agreement") with OrbiMed Royalty & Credit Opportunities IV, LP ("OrbiMed"), an affiliate of OrbiMed Advisors LLC, as collateral agent and administrative agent for the purchasers party thereto (the “Purchasers”). Pursuant to the Purchase Agreement, we received $124.4 million from the Purchasers (the "First Payment"), net of expenses. We will also be entitled to receive up to $125.0 million in subsequent installments as follows: (i) $75.0 million upon our request occurring no later than September 12, 2025 (the “Second Payment”) and (ii) $50.0 million upon our request in connection with certain permitted acquisitions occurring no later than September 12, 2025 (the “Third Payment”), in each case subject to certain funding conditions. To secure our obligations under the Purchase Agreement, we and our subsidiaries have granted OrbiMed a security interest in our core platform technology assets, subject to certain customary exclusions, as defined in the Purchase Agreement.

As consideration for such payments, the Purchasers will have a right to receive certain revenue interests (the “Revenue Interests”) from us based on a percentage (the “Applicable Payment Percentage”) of all GAAP revenue (the “Revenue Base”). If only the First Payment has been made, the Applicable Payment Percentage shall be five percent of the quarterly Revenue Base. If both the First Payment and Second Payment have been made, the Applicable Payment Percentage shall be eight percent of the quarterly Revenue Base. If each of the First Payment, Second Payment and Third Payment have been made, the applicable payment percentage applied to the Revenue Interest shall be ten percent of the quarterly Revenue Base. Payments in respect of the Revenue Interests shall be made quarterly within 45 days following the end of each fiscal quarter (each, a “Revenue Interest Payment”). If OrbiMed has not received Revenue Interest Payments in the aggregate equal to or greater than the sum of its invested capital (the “Cumulative Purchaser Payments”) on or prior to September 12, 2028, the revenue interest rate shall be increased to a rate which, if applied retroactively to our cumulative Revenue Base, would have resulted in Revenue Interest Payments equal to the sum of all Cumulative Purchaser Payments.

OrbiMed will be entitled to 100% of the Revenue Interest Payments until it has received a total cumulative value of 165% of the Cumulative Purchaser Payments (the “Return Cap”), unless full repayment of the amount of the Return Cap has not been made by September 12, 2032, in which case the Return Cap shall be increased to 175% of the Cumulative Purchaser Payments.

We incurred interest expense of $11.6 million, $13.8 million and $4.2 million under the Purchase Agreement for the year ended December 31, 2024, 2023 and 2022, respectively.

Processing and Manufacturing

We process both clinical and research use samples in our laboratory in Seattle, Washington. Our Seattle laboratory is CLIA-certified, CLEP-certified, College of American Pathologists (“CAP”)-accredited and International Organization for Standardization (“ISO”) 13485-certified, and IVDR-certified. After we intake samples sent to us from healthcare providers or research and biopharmaceutical customers, we extract DNA from the sample if required, amplify it and otherwise prepare it for our sequencing and data analysis. Throughout our processes, we apply a rigorous quality management system, which is designed to comply with the Quality System Regulation (“QSR”) and the requirements of the Clinical Laboratory Improvements Amendment of 1988 ("CLIA"), the College of American Pathologists ("CAP") and other applicable state licensing and accreditation requirements.

In order to process and sequence immune receptors in samples submitted to us, we utilize a combination of proprietary primer mixes and commercial materials, including a multiplex PCR master mix, enzymes, high throughput multi-cycle sequencing reagents and other materials, which we obtain and assemble as needed from various third-party vendors on customary terms. A number of our processing steps utilize automated equipment to help ensure consistency and efficiency. Sequencing is performed using the Illumina NextSeq System, which we have appropriately qualified for the intended uses of our products and services. During 2024 we worked on a key program to reduce operational costs in the lab by changing our NextSEQ sequencers to NovaSEQ X sequencers, which we expect to begin using in the second half of 2025.

For our TCR-antigen binding and drug discovery initiatives, we conduct our operations at our laboratories in Seattle, Washington and South San Francisco, California. These laboratories have cell sorting, tissue culture and other processing equipment.

We use a limited number of suppliers, or in some cases, single suppliers, for our laboratory equipment and materials. We manage this concentration risk by targeting or building to levels of surplus stock that, we believe, would allow us to locate alternative suppliers if needed. However, if one of our suppliers fails to perform adequately or fulfill our needs, we may be required to incur significant costs and devote significant efforts to find new suppliers and may face delays in processing samples or developing and commercializing our products and services. For example, we have purchased the Illumina NextSeq System, and Illumina, Inc. (“Illumina”) also supplies us with reagents that have been designed for use solely with this sequencer. While we acquire these reagents from Illumina on customary terms, if we had to replace the reagents we use, we may also need to acquire and qualify a replacement sequencer, validate the reagents and potentially revalidate aspects of our existing assays.

Intellectual Property

We have an extensive global portfolio of intellectual property rights to protect our immune medicine platform, the products and services that draw on it and our reputation in the industry.

As of December 31, 2024, we owned or controlled 416 active issued patents and 70 patent applications whose claims are intended to cover what we do, what we plan to do and what others might do to compete with us. From our earliest patent filings in 2009, our portfolio has been tailored to reflect our efforts to harness the adaptive immune system for research, diagnostic and therapeutic applications. Our patent claims extend to not only adaptive immune receptor molecules, but also to uniquely powerful techniques for sequencing immune cell receptors, determining clonality and immune competency, diagnosing disease, predicting responses to immunotherapy and identifying new drug candidates. Our granted patent protection generally expires in years ranging from 2029 to 2040.

Critical know-how we develop is protected by a trade secrecy program to ensure against inappropriate disclosure or use. Encompassed in our know-how is our proprietary database of coding sequences, antigen reactivities and safety profiles for immune receptors, which is vast and growing. Even with collaborators, access to our immune medicine platform technology is limited and tightly controlled through contracts and careful communication. We own our immune medicine platform, including improvements we or collaborators make to it, and retain rights in data resulting from its use.

We also pursue trademark registration for our product and service names and promotional slogans in our existing and projected markets.

Intellectual Property Portfolio by the Numbers

As of December 31, 2024, our intellectual property portfolio consisted of the following:

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847 patent applications filed worldwide directly or in conjunction with a co-owner or licensor since 2009;

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70 pending patent applications;

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416 issued and allowed patents across our immune medicine platform, including more than 151 patents related to diagnostic approaches in lymphoid malignancies;

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24 patent families directed to methods and tools useful in our immune medicine platform for non-target specific immunosequencing and research;

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17 patent families directed to methods and tools useful in diagnosis, prognosis and disease monitoring, including clonoSEQ, certain diagnostic methods and TCR-antigen binding;

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12 patent families directed to methods and tools useful in drug discovery, including our drug discovery screening processes, MIRA and pairSEQ;

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1 patent family directed to SARS-CoV-2 vaccines;

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11 patent families directed to novel antigen targets and immune medicine-based therapeutic modalities;

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4 patent families directed to gene sequencing technology; and

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28 trademarks registered and pending registration worldwide.

Patent Portfolio

We have developed an expansive patent portfolio in commercially important markets with claims to critical aspects of our technology, beginning with our first patent applications exclusively licensed from Fred Hutchinson Cancer Research Center (“Fred Hutch”) in 2009. Our ongoing patent strategy is to generate a return on our patenting investments, which values substantive quality over volume to build a defensible moat around technology we use as well as what others might develop to design around our position.

We prioritize pursuing patent claims with a reasonable likelihood of being granted. Where patentability for a particular invention is questionable, we often choose to protect it as a trade secret instead. In some instances, however, we may seek to push the patentability envelope when the state of the applicable patent laws are in flux, such as patent eligibility for naturally occurring molecules, including TCRs, in the U.S.

Methods of Measuring Adaptive Immunity

In 2009, a U.S. provisional patent application was filed to pursue protection for immunosequencing by our co-founder, Dr. Harlan Robins. The invention broadly relates to methods for assessing the adaptive immune system status of individuals. Rearranged V and J segment genes of TCRs or BCRs are targeted as biomarkers for assessing the status of the immune system at one or more points in time. Granted claims extend to the use of particular sets of amplification primers, while pending claims are being pursued to capture additional assessment techniques. Licensed exclusively to us by Fred Hutch, the application has since spawned 28 additional patent applications, many of which have been granted as of December 31, 2024, including U.S. Patent No. 9,809,813.

Optimizing Nucleic Acid Amplification Reactions

Amplification of nucleic acids can result in over- or under-representation of the amplified molecules, misrepresenting the number present in the source material, such as a blood sample. Dr. Robins invented a method to correct for such bias, thereby improving the precision of PCR-based quantification of TCR and BCR coding sequences in a sample. The claimed approach utilizes synthetic templates, reflecting nucleic acid sequences for rearranged V and J receptor segments in the sampled cells. Twenty-three related patent applications have since been filed, many of which have been granted as of December 31, 2024, including U.S. Patent Nos. 9,371,558 and 10,214,770.

Diagnosing and Monitoring Disease

In connection with our acquisition (“Sequenta Acquisition”) of Sequenta, Inc. (“Sequenta”) in 2015, we purchased Sequenta’s extensive patent portfolio. The portfolio includes 124 patent applications which disclose and claim methods to identify and quantify T cell-based immune responses to antigen exposure using NGS. TCR and BCR DNA, ribonucleic acid or cell-free DNA from samples, including blood and bone marrow, are used to detect, prognose and monitor disease, including autoimmune disease, infection and cancer. Sixty-two patents have been granted in the portfolio as of December 31, 2024, including U.S. Patent Nos. 8,628,927 and 8,236,503.

Our diagnostic methods also apply to the detection of MRD (the target of our B cell-based clonoSEQ diagnostic test for assessing how disease burden changes in response to treatment or during remission) and T-Detect (our T cell-based diagnostic tests). Multiple patents have been granted from additional applications relating to MRD assessment, diagnostic methods and diagnostically significant TCRs filed by us, including U.S. Patent Nos. 9,824,179 and 11,047,008. Additional patent applications are pending to TCR-based diagnostic signals in specific indications, including COVID-19.

TCR-Antigen Binding

We continue to make significant progress in our understanding of the T-cell mediated response across different indications. We filed 10 related patent applications for methods to produce antigen-exposed enriched T cell populations and identify their antigen specificities by comparison to a pre-exposure population of cells or by use of an algorithm. We have filed additional patent applications relating to algorithmic-based methods to characterize antigen specificities.

MIRA

We developed and are pursuing patent protection for bioinformatic-based methods to determine the antigen specificity of TCRs by exposing T cells to a panel of multiple antigens. Antigen exposure can be performed by incubation or presentation; for example, it can be performed via recombinant expression in another cell. These methods may also be used to pair the two TCR chains as well as to identify high avidity TCRs. Several patents have been granted as of December 31, 2024, including U.S. Patent No. 10,066,265.

pairSEQ

In nature, TCRs and BCRs exist as a heterodimer of paired chains, each of which is encoded on a different chromosome. Immunosequencing reveals the nucleotide structure of each individual chain, but not which chains match as cognate pairs. We developed and are pursuing patent protection for multiple bioinformatic-based approaches to pairing the two chains of TCRs and BCRs, including one deployed in our pairSEQ technique. Our methods also allow for identification of receptor chain pairs which are specific to particular antigen targets. Thirty-one related patent applications have been filed, 12 of which have matured into granted patents as of December 31, 2024, including U.S. Patent No. 10,077,478.

Assessing Responsiveness to Immunotherapy

Leveraging our immunosequencing technologies, we developed methods for predicting responses to immunotherapy, vaccines and infection. To those ends, rearranged TCR or BCR sequences are quantified and their levels or frequencies compared at different points in time. Twenty-one related patent applications have been filed, 8 of which have been granted as of December 31, 2024, including U.S. Patent No. 10,221,461.

Therapeutic Antibodies

We developed a therapeutic antibody discovery process called TruAB from which neutralizing antibodies have been and are being produced against target antigens in conditions such as SARS-CoV-2, Type 1 diabetes, influenza, Respiratory Syncytial Virus, inflammatory bowel disease and MS. Patent applications across 11 patent families to a number of these antibodies have been filed and are pending.

Vaccines

Together with our partner Nykode Therapeutics, we filed a patent application which is pending and directed to COVID-19 vaccines, the development of which was informed by our immunosequencing-based drug discovery efforts.

Therapeutic TCRs

We have a granted patent application to TCRs responsive to WT-1 antigens with potential utility in cell therapy against WT-1 related cancers. We have pursued a patent application to TCRs responsive to other cancer antigens which are of interest in our collaboration with Genentech.

In-Licensed and Acquired Intellectual Property Rights

While we have developed the majority of our immune medicine platform, products and services, we occasionally license or acquire third-party owned inventions to bolster the strength of our patent estate and ensure freedom to operate.

Early work by Dr. Robins with Fred Hutch led to discoveries around immunosequencing methods and tools covered by 128 patents and patent applications in the U.S. and abroad which we exclusively licensed. Our rights are for all fields of use worldwide and are sublicensable. To the extent any licensed granted patent rights extend to products or services sold by us, we pay Fred Hutch a royalty rate of 0.75% of net sales on licensed products.

Through our Sequenta Acquisition, we also obtained an exclusive paid-up license, with rights to sublicense, to patents filed in the U.S., Europe, Australia and China owned by iRepertoire, Inc. The license is for worldwide use in diagnosis, prognosis, treatment and monitoring of any proliferative disorder for which rearranged nucleic acids capable of encoding an immune receptor, whether productive or unproductive, or functional or nonfunctional, of a cell, excluding tumor infiltrating lymphocytes, of the proliferative disorder can be used as markers for the disorder, including, but not limited to, lymphoid and myeloid proliferative disorders, such as ALL, CLL, acute myeloid leukemia, chronic myelogenous leukemia, Hodgkin’s and NHL, plasma cell neoplasms, such as MM, monoclonal gammopathy of undetermined significance, monoclonal B cell lymphocytosis and myelodysplastic syndromes.

In addition to the patent estate acquired from Sequenta, we also acquired ownership of immunosequencing-related patent portfolios from Imdaptive, Inc. and ImmunID S.A.S.

Trademarks

We own various trademarks, applications and unregistered trademarks in the U.S. and other commercially important markets, including our company name, product and service names and other trade or service marks. Our trademark portfolio is designed to protect the brands for our products and services, both current and in the pipeline.

Trade Secrecy Program

We have a trade secrecy program to prevent disclosure of our trade secrets to others, except under stringent conditions of confidentiality when disclosure is critical to our business. Our trade secrets include the composition of certain reagents, assay protocols and immunosequencing-related data, such as immune receptor sequences. We protect trade secrets and know-how by establishing confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and collaborators. These agreements provide that all confidential information developed or made known during the course of an individual’s or entities’ relationship with us must be kept confidential during and after the relationship. These agreements also provide that all inventions resulting from work performed for us or relating to our business and conceived or completed during the period of employment or assignment, as applicable, shall be our exclusive property. In addition, we take other appropriate precautions, such as physical and technological security measures, to guard against misappropriation of our proprietary information by third parties.

Although we take steps to protect our proprietary information and trade secrets, including through contractual means with our employees and consultants, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology. Accordingly, we may not be able to meaningfully protect our trade secrets. For more information regarding the risks related to our intellectual property, see “Risk Factors—Risks Relating to our Intellectual Property.”

Competition

The biotechnology and pharmaceutical industries, including the fields of life sciences research, clinical diagnostics and drug discovery, are characterized by rapidly advancing technologies, intense competition and a strong emphasis on intellectual property. Given the breadth and promise of immune medicine, we face substantial competition from many different sources, including life sciences tools, diagnostics, pharmaceutical and biotechnology companies, academic research institutions and governmental agencies and public and private research institutions across various components of our platform and product and service offerings. Due to the significant interest and growth in immune medicine more broadly, we expect the intensity of the competition to increase. However, we believe our scale, precision and speed, and the resulting clinical applicability, distinguish us from our competitors. The MRD business also benefits from an established commercial footprint and reputation in our target market, our demonstrated regulatory and reimbursement know-how and our extensive patent portfolio.

In clinical diagnostics, clonoSEQ faces competition primarily from customers utilizing either conventional and next-generation flow cytometry in-house or via a reference lab or contract research organization. We may also face competition from new market entrants developing blood-based tools for disease monitoring based on protein, circulating tumor DNA or circulating tumor cells. Other future competitors that elect to develop and commercialize their products for lymphoid malignancies may include companies marketing early cancer detection testing products for indications that do not currently compete with clonoSEQ, such as methods for MRD assessment directed at solid tumors.

In drug discovery, clinical trials in the field of immune medicine are being pursued by a number of industry and academic players.

Immune medicine is being pursued by several biotechnology companies as well as by large-cap biopharmaceutical companies. Many of our current or potential competitors, either alone or with their collaboration partners, have significantly greater financial resources and expertise in research and development, manufacturing, regulatory approval and compliance, and sales and distribution than we do. Mergers and acquisitions involving life sciences research, clinical diagnostics or drug discovery companies in the immune medicine space may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and in acquiring technologies complementary to, or necessary for, our programs.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize research or diagnostic products or services that are more accurate, more convenient to use or more cost-effective than our products or services. Competitor therapeutic products could also prove safer, more effective, more convenient to administer or more cost-effective than any therapeutic products we may develop with our collaborators. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the relevant market.

Government Regulation

Life Sciences Research Use Only Technologies

Our core research product in IM, Adaptive Immunosequencing, is a research use only (“RUO”) tool in the U.S. that provides data to third parties such as biopharmaceutical companies that are themselves engaged in the research and development of potential diagnostic and therapeutic products and services for which they may later pursue investigation and clearance, authorization or approval from regulatory authorities, such as the FDA.

RUO products belong to a separate regulatory classification under a long-standing FDA regulation. From an FDA perspective, products that are intended for research use only and are labeled as RUO are exempt from most regulatory controls and are therefore not subject to the regulatory requirements discussed below for clinical diagnostic products. Thus, RUO products may be used or distributed for research use without first obtaining FDA clearance, authorization or approval. The products must bear the statement: “For Research Use Only. Not for use in diagnostic procedures.” RUO products cannot make any claims related to safety, effectiveness or diagnostic utility, and they cannot be intended for human clinical diagnostic use. Accordingly, a product labeled RUO but intended or promoted for clinical diagnostic use may be viewed by the FDA as adulterated and misbranded under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and subject to FDA enforcement action. The FDA will consider the totality of the circumstances surrounding distribution and use of an RUO product, including how the product is marketed and to whom, when determining its intended use. If the FDA disagrees with a company’s RUO status for its product, the company may be subject to FDA enforcement activities, including, without limitation, requiring the company to seek clearance, authorization or approval for the products. If the FDA determines an RUO product is adulterated and misbranded, enforcement may also include a warning letter, seizure, an injunction and/or criminal fines for FDCA violations.

Clinical Diagnostics in the U.S.

Our first diagnostic product, clonoSEQ, was granted marketing authorization by the FDA for the detection and monitoring of MRD in bone marrow samples in patients with MM and ALL under the de novo process in September 2018, which classified clonoSEQ and future DNA-based tests to measure MRD in hematological malignancies as Class II devices, as explained further below. In August 2020, we received FDA clearance for clonoSEQ, following a 510(k) submission, for CLL in bone marrow as well as blood samples. We also received FDA clearance in 2021 for ALL from blood samples, launched in DLBCL and MCL, subtypes of NHL, under CLIA as a LDT and are actively advancing validation studies in certain other NHL sub-types such as CTCL.

In the U.S., medical devices are subject to extensive regulation by the FDA under the FDCA and its implementing regulations, and other federal and state statutes and regulations. The FDA regulates the design, development, preclinical, analytical and clinical testing, manufacture, safety, effectiveness, clearance, authorization or approval, record-keeping, packaging, labeling, storage, adverse event reporting, advertising, promotion, marketing, sales, distribution and import and export of medical devices. In vitro diagnostic products (“IVDs”) are a type of medical device and include reagents and instruments used in the diagnosis or detection of diseases, conditions or infections, including, without limitation, the presence of certain chemicals, genetic information or other biomarkers. Predictive, prognostic and screening tests can also be IVDs.

After a medical device is placed on the market, numerous regulatory requirements apply. These include:

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compliance with the FDA’s QSR, which requires manufacturers to follow stringent design, testing, control, documentation, record maintenance, including maintenance of complaint and related investigation files, and other quality assurance controls during the manufacturing process;

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labeling regulations, which prohibit the promotion of products for uncleared, or unapproved uses, or “off-label” uses, and impose other restrictions on labeling; and

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obligations to investigate and report to the FDA adverse events, including deaths, or serious injuries that may have been or were caused by a medical device and malfunctions in the device that would likely cause or contribute to a death or serious injury if it were to recur.

Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include sanctions, including but not limited to, warning letters; fines, injunctions, and civil penalties; recall or seizure of the device; operating restrictions, partial suspension or total shutdown of production; refusal to grant 510(k) clearance or premarket approvals (“PMAs”) of new devices; withdrawal of clearance or approval; and civil or criminal prosecution.

Position outside of the United States

In the European Union (“EU”), IVDs can be placed on the market by obtaining a “CE mark,” which demonstrates conformity via a self-certification with the In vitro Diagnostic Medical Device Directive (“IVDD”). On May 26, 2017, the EU released a new regulatory framework, the In vitro Diagnostic Medical Device Regulation (“IVDR”), which will replace the IVDD. clonoSEQ obtained a CE mark in May 2019 for all B-cell malignancies with blood and bone marrow, and in August 2024, we announced that clonoSEQ received IVDR 2017/746 Class C risk certification issued by the Notified Body (BSI), which will be a requirement as of May 2026. The IVDR requires, among other things, that clonoSEQ meet conformity assessments, performance evaluations, and performance studies to improve health and safety and adopt a systematic post-market surveillance plan and report that includes the manufacturer’s trend reporting.

U.S. Federal and State Regulation of Laboratories

Given that aspects of our business at certain facilities involve acting as a clinical laboratory, we are required to hold certain federal and state licenses, certifications and permits to conduct our business.

As to federal certifications, CLIA establishes rigorous quality standards for all laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease, or the impairment of, or assessment of health. As a clinical laboratory, we must obtain a CLIA certificate based on the complexity of testing performed at the laboratory, such as a Certificate of Compliance for high-complexity testing. CLIA also mandates compliance with various operational, personnel, facilities administration, quality and proficiency requirements, intended to ensure that their clinical laboratory testing services are accurate, reliable and timely. CLIA compliance and certification is also a prerequisite to be eligible to bill for services provided to government payors and for many private payors. Furthermore, we are subject to survey and inspection every two years to assess compliance with program standards and may be subject to additional unannounced inspections. Laboratories performing high-complexity testing are required to meet more stringent requirements than laboratories performing less complex tests.

In addition to CLIA requirements, we elect to participate in the accreditation program of the CAP. The U.S. Centers for Medicare & Medicaid Services (“CMS”), the agency that oversees CLIA, has deemed CAP standards to be equally or more stringent than CLIA regulations and has approved CAP as a recognized accrediting organization. Inspection by CAP is performed in lieu of CMS inspections for accredited laboratories. Therefore, because we are accredited by the CAP Laboratory Accreditation Program, we are deemed to also comply with CLIA.

CLIA provides that a state may adopt laboratory regulations that are more stringent than those under federal law, and a number of states have implemented their own more stringent laboratory regulatory requirements. Select states, including Washington, have laboratory regulations that have been deemed by the federal government to be at least as stringent as CLIA, and thus laboratories licensed under those state regimes are exempt from CLIA and the state Department of Health is permitted to issue a CLIA number, along with a state Medical Test Site license, rather than a certificate being issued by CMS. Our laboratory holds the required Washington license. State laws may require that laboratory personnel meet certain qualifications, specify certain quality control procedures, facility requirements or prescribe record maintenance requirements.

Several states additionally require the licensure of out-of-state laboratories that accept specimens from those states. For example, New York requires a laboratory to hold a permit which is issued after an on-site inspection and approval of each LDT offered by a laboratory, and has various, more stringent requirements than CLIA and CAP, including those for personnel qualifications, proficiency testing, physical facility and equipment and quality control standards. Our laboratory holds the required licenses for Maryland, Rhode Island, Pennsylvania, New York and California.

From time to time, other states may require out-of-state laboratories to obtain licensure in order to accept specimens from the state. If we identify any other state with such requirements, or if we are contacted by any other state advising us of such requirements, we intend to follow instructions from the state regulators as to how we should comply with such requirements.

If a clinical laboratory is found to be out of compliance with CLIA certification, CAP accreditation or a state license or permit, the applicable regulatory agency may, among other things, suspend, restrict or revoke the certification, accreditation, license or permit to operate the clinical laboratory, assess civil monetary penalties and impose specific corrective action plans, among other sanctions.

LDTs in the U.S.

The FDA has historically exercised enforcement discretion to not regulate most LDTs. As such, LDTs have not been subject to FDA’s marketing clearance and approval processes, or post-marketing controls, for medical devices. LDTs are generally considered to be tests that are designed, developed, validated and used within a single laboratory. Laboratories certified as “high complexity” under CLIA may develop, manufacture, validate and run LDTs. clonoSEQ is available as an LDT for use in assessing MRD for other lymphoid malignancies, including NHL and use in other specimen types, at our Seattle, Washington laboratory.

On May 6, 2024, the FDA issued a final rule that amended the definition of in vitro diagnostics (IVDs) in its regulations to state that IVDs are medical devices under the federal Food, Drug, and Cosmetic Act including when the manufacturer of the IVD is a laboratory (the “LDT Final Rule”). FDA proposed to phase out its general enforcement discretion for LDTs over a four-year period, subject to targeted enforcement discretion policies. LDTs that do not fall within the final rule’s targeted enforcement discretion policies are expected to comply with certain medical device regulatory requirements such as medical device reporting and complaint handling requirements beginning on May 6, 2025, and other requirements such as registration and listing and premarket authorization, among others, will become phased in over the next three years.

On the legislative front, Congress introduced the Verifying Accurate Leading-edge IVCT Development Act (“VALID Act”) several times to establish a framework for the FDA to oversee marketing of in vitro clinical tests (“IVCTs”), such as test kits and LDTs. Under this proposed legislation, FDA would oversee IVCTs, by requiring premarket review for high-risk IVCTs which expose patients to serious or irreversible harm, requiring abbreviated premarket review or technology certification for new moderate-risk IVCTs, and exempting low-risk IVCTs from premarket review. If enacted, certain categories of LDTs would have been grandfathered and exempt from certain regulatory requirements including premarket review, labeling requirements, test design requirements, and quality requirements. The VALID Act bill has yet to be passed in any form.

Federal and State Privacy, Security and Breach Notification Laws

Many state and federal laws govern the processing of personal information or individually identifiable health information. At the federal level, under the administrative simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), the U.S. Department of Health and Human Services (“HHS”) issued regulations that establish standards for protecting the privacy and security of “protected health information” used or disclosed by certain healthcare providers and other “covered entities” and their “business associates.” Three principal data protection-related regulations with which we are required to comply have been issued in final form under HIPAA and HITECH: privacy regulations, security regulations and security breach notification regulations.

The privacy regulations govern the use and disclosure of protected health information by covered healthcare providers, as well as health insurance plans. They also set forth certain rights that an individual has with respect to his or her protected health information maintained by a covered health care provider, including the right to access or amend certain records containing protected health information or to request restrictions on the use or disclosure of protected health information. The security regulations establish requirements for safeguarding the confidentiality, integrity and availability of protected health information that is electronically transmitted or electronically stored. HITECH, among other things, established certain health information security breach notification requirements. A covered entity must notify HHS and each affected individual of a breach of unsecured protected health information and must also notify the media if the breach involves more than 500 individuals.

HIPAA violations are subject to civil and criminal penalties. Additionally, to the extent that we submit electronic healthcare claims and payment transactions that do not comply with the electronic data transmission standards established under HIPAA and HITECH, payments to us may be delayed or denied.

Section 5(a) of the Federal Trade Commission Act (“FTCA”) has also been used to regulate data privacy and security at the federal level. According to the U.S. Federal Trade Commission (“FTC”), failing to take appropriate steps to keep consumers’ personal information secure or using or disclosing personal information in violation of a company’s privacy notice may constitute unfair or deceptive acts or practices in or affecting commerce in violation of the FTCA. The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business and the cost of available tools to improve security and reduce vulnerabilities. Although we have and maintain a system for compliance with privacy laws and regulations, failure to comply with them could expose us to potential FTC enforcement action and fines.

In addition, certain state laws govern the privacy and security of health information and personal information. Some of the state laws governing health information privacy and security are more stringent than HIPAA (including providing a private right to litigate for patients under these state laws) and often differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. There has also recently been an influx of state privacy and security laws that introduce similar compliance complexities, including the Washington state My Health My Data Act, the California Consumer Privacy Act in combination with the California Privacy Rights Act and associated regulations and the Colorado Privacy Act. In addition, there are state breach notification laws in every state, as well as in the District of Columbia, Guam and Puerto Rico. Failure to comply with these laws, where applicable, can result in the imposition of significant civil or criminal penalties and private litigation as further detailed in the “Risk Factors” section.

In addition to laws that directly impose privacy and data protection obligations on companies, there is also a growing interest in laws and regulations that govern data areas that are related to, but not completely related to data privacy. One area of these laws relates to use and testing of genetic and genomic data. In addition to the federal Genetic Information Nondiscrimination Act, there are a number of state laws that have recently passed (e.g., the California Genetic Information Privacy Act) and that continue to make appearances on states’ legislative schedules. There have been similar draft bills at the state level that would regulate machine learning, artificial intelligence, the Internet of Things, and human specimen use.

General Data Protection Regulation in the EU and other International Privacy Laws

The General Data Protection Regulation (“GDPR”) is a legal framework that sets requirements for the collection and processing of personal information of individuals within the European Economic Area (“EEA”). The GDPR sets out the principles for data management and the rights of the individual, while also imposing very significant fines that can be revenue-based. It applies to U.S. companies that process personal information of persons in the EEA in connection with the offer of products or services to those persons, or the monitoring of such persons’ behavior. It may also apply when a U.S. company processes personal information in the context of the activities of an entity established in the EEA. The GDPR became enforceable on May 25, 2018. The regulation is a comprehensive privacy law, meaning that it applies to all types of personal information, including the human resources record of employees and even the Internet Protocol addresses of people using online services.

Many other countries and regions also have privacy and data protection laws, some of which are modeled after the European framework. This includes countries within Europe that are not part of the EEA, such as the United Kingdom and Switzerland, and therefore operate under different privacy and data protection frameworks.

In response to the advancements in artificial intelligence and machine learning, there are also global efforts to regulate the use of these technologies. One prominent law that has been finalized is the European Union's AI Act.

Federal, State and Foreign Fraud and Abuse Laws

In the U.S., there are various fraud and abuse laws with which we must comply and we are subject to regulation by various federal, state and local authorities, including CMS, other divisions of HHS, such as the Office of Inspector General (“OIG”), the U.S. Department of Justice (“DOJ”) and individual U.S. Attorney offices within the DOJ, and state and local governments. We also may be subject to foreign fraud and abuse laws.

In the U.S., the Anti-Kickback Statute (“AKS”) prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for patient referrals for, or purchasing, leasing, ordering or arranging for the purchase, lease or order of, any healthcare item or service reimbursable under a governmental payor program. Courts have stated that a financial arrangement may violate the AKS if any one purpose of the arrangement is to encourage patient referrals or other federal healthcare program business, regardless of whether there are other legitimate purposes for the arrangement. The definition of “remuneration” has been broadly interpreted to include anything of value, including gifts, discounts, meals, travel, credit arrangements, payments of cash, consulting fees, waivers of co-payments, ownership interests and providing anything at less than its fair market value. Recognizing that the AKS is broad and may technically prohibit many innocuous or beneficial arrangements within the healthcare industry, the OIG issued a series of regulatory “safe harbors.” These safe harbor regulations set forth certain provisions, which, if met, will assure healthcare providers and other parties that they will not be prosecuted under the AKS. The failure of a transaction or arrangement to fit within a specific safe harbor does not necessarily mean that the transaction or arrangement is illegal or that prosecution under the AKS will be pursued. In those instances, arrangements will be evaluated on a case-by-case basis to determine whether enforcement will be pursued. Penalties for AKS violations are severe and can include imprisonment, criminal fines, civil monetary penalties and exclusion from participation in federal healthcare programs. The regulations establishing safe harbor protection are subject to change and could affect future operations. Many states also have anti-kickback statutes, some of which may apply to items or services reimbursed by any third-party payor, including commercial insurers as well as patient self-pay. A violation of the AKS may be grounds for the government or a whistleblower to assert that a claim for payment of items or services resulting from such violation constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

The civil monetary penalties statute is another potential statute under which a clinical laboratory may be subject to enforcement. Among other things, the civil monetary penalties statute imposes fines against any person who is determined to have presented, or caused to be presented, claims to a federal healthcare program that the person knows, or should know, is for an item or service that was not provided as claimed or is false or fraudulent. The civil monetary penalties statute also prohibits a person from offering or providing remuneration to any Medicare or Medicaid beneficiary that is likely to influence the individual to order or receive its items or services from a particular provider or supplier.

The exclusion statute requires the exclusion of entities and individuals who have been convicted of federal-program related crimes or healthcare felony fraud or controlled substance charges. The statute also permits the exclusion of those that have been convicted of any form of fraud, the AKS, for obstructing an investigation or audit, certain controlled substance offenses, those whose healthcare license has been revoked or suspended and those who have filed claims for excessive charges or unnecessary services. If we were to be excluded, our products and services would be ineligible for reimbursement from any federal programs, including Medicare and Medicaid, and no other entity participating in those programs would be permitted to enter into contracts with us. In order to preserve access to beneficial healthcare items and services, the government may elect to exclude officers and key employees of manufacturers, rather than excluding the organization. Such enforcement actions would prohibit us from engaging those individuals, which could adversely affect operations and result in significant reputational harm.

Congress has also enacted statutes that impose criminal liability for healthcare fraud and abuse. The Health Care Fraud Statute prohibits knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private payors. A violation of this statute is a felony and may result in fines, imprisonment or exclusion from governmental payor programs such as the Medicare and Medicaid programs. The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefit programs, items or services-public or private. A violation of this statute is a felony and may result in fines, imprisonment or exclusion from governmental payor programs.

The False Claims Act imposes liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal governmental payor program. The qui tam provisions of the False Claims Act allow a private individual to bring actions on behalf of the federal government alleging that the defendant has defrauded the federal government by submitting a false claim to the federal government and permit such individuals to share in any amounts paid by the entity to the government in fines or settlement. Qui tam complaints are filed under seal, and the cases may progress for a number of years before a complaint is unsealed and a healthcare provider or supplier becomes aware of its existence. When an entity is determined to have violated the False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civil penalties for each false claim. The False Claims Act is the federal government’s primary civil tool in healthcare fraud cases. False Claims Act liability is not limited to direct providers of health items or services. The government has asserted liability under the False Claims Act against manufacturers and other third parties who caused another party to file a false claim.

In addition, various states have enacted false claim laws analogous to the federal False Claims Act, although many of these state laws apply where a claim is submitted to any third-party payor and not merely a governmental payor program.

On October 25, 2018, the Substance Use-Disorder Prevention that Promoted Opioid Recovery and Treatment for Patients and Communities Act of 2018 (“SUPPORT Act”) was enacted. The SUPPORT Act included the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”), which establishes an all-payor anti-kickback prohibition that extends to arrangements with recovery homes, clinical laboratories and clinical treatment facilities. EKRA includes a number of statutory exceptions and directs agencies to develop further exceptions. Current exceptions in some cases reference and in others differ from the AKS safe harbors. Significantly, the prohibitions apply with respect to the soliciting or receipt of remuneration for any referrals to recovery homes, clinical treatment facilities, or clinical laboratories, whether or not related to treating substance use disorders. Further, the prohibitions cover the payment or offer of remuneration to induce a referral to, or in exchange for, an individual using the services of, such providers. This law creates additional risk that relationships with referral sources could be problematic.

For anti-corruption legislation, the U.S. Foreign Corrupt Practices Act (“FCPA”) has historically been widely enforced. It is the first to introduce corporate liability, responsibility for third parties and extraterritoriality for corruption offences, meaning companies and persons can be held criminally and civilly responsible for corruption offences committed abroad. It was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. With the enactment of certain amendments in 1998, the anti-bribery provisions of the FCPA now also apply to foreign firms and persons who cause, directly or through agents, an act in furtherance of such a corrupt payment to take place within the territory of the U.S. The FCPA also requires companies whose securities are listed in the U.S. to meet its accounting provisions, which were designed to operate in tandem with the anti-bribery provisions, and require corporations covered by the provisions to (a) make and keep books and records that accurately and fairly reflect the transactions of the corporation and (b) devise and maintain an adequate system of internal accounting controls.

In Europe, various countries have adopted anti-bribery laws providing for severe consequences, in the form of criminal penalties or significant fines, for individuals or companies committing a bribery offence. Violations of these anti-bribery laws, or allegations of such violations, could have a negative impact on our business, results of operations and reputation. For instance, in the United Kingdom, under the Bribery Act 2010, which came into effect in July 2011, a bribery offense occurs when a person offers, gives or promises to give a financial or other advantage to induce or reward another individual to improperly perform certain functions or activities, including any function of a public nature. Bribery of foreign public officials also falls within the scope of the Bribery Act 2010. Under this regime, an individual found in breach of the Bribery Act 2010 faces imprisonment of up to 10 years. In addition, the individual can be subject to an unlimited fine, if found to have committed an offense, as can commercial organizations that are found to have failed to prevent bribery. In 2016, France passed an anti-bribery and compliance law (“Sapin II”), and the French anti-corruption agency (“AFA”) was established. The Sapin II law makes it compulsory for companies within the scope of the law to implement internal procedures to fight corruption. One of the items that must be prepared is a corruption risk map, as well as an anti-corruption code of conduct. These documents are subject to investigation by the AFA and failure to comply with the requirements can lead to significant fines for companies and executives. If we were to have future growth in the European market, this law could potentially become applicable to us.

U.S. Physician Referral Prohibitions

The Physician Self-Referral Law (“Stark Law”) prohibits physicians from referring patients to entities with which the physician or an immediate family member has a financial relationship, such as ownership, investment or compensation, for designed health services (“DHS”) payable by Medicare and Medicaid, unless the financial arrangement meets an applicable exception. DHS includes clinical laboratory tests. Penalties for violating the Stark Law include the return of funds received for all prohibited referrals, fines, civil monetary penalties and possible exclusion from federal health care programs. In addition to the Stark Law, many states have their own self-referral bans, which may extend to all self-referrals, regardless of the payor. See “Risk Factors—Risks Relating to Government Regulation—We are subject to various laws and regulations, such as healthcare fraud andabuse laws, false claim laws and health information privacy and security laws, among others, and failure to comply with these laws and regulations may have an adverse effect on our business.”

Corporate Practice of Medicine in the U.S.

Numerous states have enacted laws prohibiting business corporations, such as us, from practicing medicine and employing or engaging physicians to practice medicine, generally referred to as the prohibition against the corporate practice of medicine. These laws are designed to prevent interference in the medical decision-making process by anyone who is not a licensed physician. For example, California’s Medical Board has indicated that determining what diagnostic tests are appropriate for a particular condition and taking responsibility for the ultimate overall care of the patient, including providing treatment options available to the patient, would constitute the unlicensed practice of medicine if performed by an unlicensed person. Violation of these corporate practice of medicine laws may result in civil or criminal fines, as well as sanctions imposed against us or the professional through licensure proceedings. Typically, such laws are only applicable to entities that have a physical presence in the state.

Other Regulatory Requirements

Our laboratory is subject to federal, state and local regulations relating to the handling and disposal of regulated medical waste, hazardous waste and biohazardous waste, including chemical, biological agents and compounds, blood and bone marrow samples and other human tissue. Typically, we use outside vendors who are contractually obligated to comply with applicable laws and regulations to dispose of such waste. These vendors are licensed or otherwise qualified to handle and dispose of such waste.

Our partners in the development of therapeutic agents are responsible for developing and manufacturing those products. In so doing, they are subject to FDA and Medicare regulatory requirements related to, among other things, manufacture, promotion, price reporting and fraud and abuse laws.

Our laboratories are subject to extensive requirements related to workplace safety established by the U.S. Occupational Safety and Health Administration. These include requirements to develop and implement programs to protect workers from exposure to blood-borne pathogens by preventing or minimizing any exposure through needle stick or similar penetrating injuries.

U.S. Healthcare Reform

In the U.S., a number of legislative and regulatory changes at the federal and state levels have sought to reduce healthcare costs and improve the quality of healthcare. For example, in March 2010, the Affordable Care Act (“ACA”) became law. This law substantially changed the way healthcare is financed by both commercial and government payors, and it has significantly impacted our industry.

We anticipate there will continue to be proposals by legislators at both the federal and state levels, regulators and commercial payors to reduce costs while trying to expand individual healthcare benefits. If enacted, some such proposals could expand or contract the insured population, increasing or decreasing demand for our products and services. On the other hand, some proposals could impose additional limitations on the prices we will be able to charge for our tests or on the coverage of or the amounts of reimbursement available for our tests from payors, including commercial payors and government payors.

The federal physician payment transparency requirements (“Physician Payments Sunshine Act”) and its implementing regulations, which requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the State Children’s Health Insurance Program, with certain exceptions, to annually report to HHS information related to certain payments or other transfers of value made or distributed to covered recipients, defined to include doctors, dentists, optometrists, podiatrists, chiropractors, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and anesthesiologist assistants, certified nurse-midwives, and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

There are also state transparency and gift ban laws that require manufacturers to provide reports to state governments on pricing and marketing information. Several states have enacted legislation requiring medical device manufacturers to, among other things, establish marketing compliance programs, file periodic reports with the state, and make periodic public disclosures on sales and marketing activities, and such laws may also prohibit or limit certain other sales and marketing practices. These laws may adversely affect our sales, marketing and other activities by imposing administrative and compliance burdens on us. Although we have a system for tracking and reporting “sunshine” law required information, if we fail to do so as required, we could be subject to government enforcement action and potential penalties.

Coverage and Reimbursement Generally

Reimbursement and billing requirements of applicable laws and payors for diagnostic services are highly complex. Laboratories must bill various payors, such as private third-party payors, including managed care organizations (“MCO”) and state and federal health care programs, such as Medicare and Medicaid, and each may have different billing requirements. Depending on the reimbursement arrangement and applicable law, the party that reimburses us for our services may be a third party who provides coverage to the patient, such as an insurance company or MCO, a state or federal healthcare program, or the patient. Additionally, the audit requirements we must meet to ensure compliance with applicable laws and regulations, as well as our internal compliance policies and procedures, add further complexity to the billing process. As such, we are at risk of being paid less or no part of our price for our products for reasons including:

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variability in coverage and information requirements among various payors;

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patient financial assistance programs;

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missing, incomplete or inaccurate billing information provided by ordering physicians;

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billings to payors with whom we do not have contracts;

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disputes with payors as to which party is responsible for payment; and

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disputes with payors as to the appropriate level of reimbursement.

In addition, we may not be free to determine the price charged for our products. For instance, the No Surprises Act (“NSA”) was enacted on December 27, 2020 and took effect on January 1, 2022. One of the goals of the NSA is to protect patients from “surprise” medical bills resulting from gaps in coverage for services provided by out-of-network providers, such as laboratories, related to patient visits at in-network facilities. The NSA limits the amount out-of-network laboratories may charge a patient for laboratory services ordered during an in-network facility visit. In addition, the NSA establishes an independent dispute resolution process for determining the amount of reimbursement for the laboratory service in the event that the laboratory and insurer cannot agree on a rate.

Certain countries, including a number of member states of the EU, set prices and make reimbursement decisions for diagnostics and pharmaceutical products. Additionally, some countries require approval of the maximum sale price of a product before it can be marketed, and this price may be reviewed during the product lifecycle, or mandatory discounts or profit caps may be applied. In many countries, the pricing review period begins after marketing or product licensing approval is granted or the CE mark is obtained. We may therefore be constrained in our pricing strategies in markets outside of the U.S.

For additional information on coverage and reimbursement in the U.S., see “Risk Factors—Risks Relating to Government Regulation—Future Medicare payment rates are uncertain.”

Our Compliance Program

Our compliance program is intended to prevent and detect violations of law or our policies. It was developed in view of both adopting the principles of the AdvaMed Code of Ethics and addressing the HHS OIG’s elements of a compliance program. We have designed our compliance program to fit the size, resources, market position and other unique aspects of our company. Our code of conduct is our statement of ethical and compliance principles that guide our daily operations. In addition, we have developed policies and procedures, and corresponding education and training, to effectively communicate our standards to employees as it relates to job functions and legal obligations under applicable state and federal healthcare program requirements, as well as those outside the U.S. We regularly perform live and process monitoring activities on a risk-based approach, and audit capabilities are built into our transparency procedures. We maintain a hotline available via multiple channels to report any known or suspected compliance violations, and we have a strict non-retaliation policy for all claims brought forward in good faith.

Our People and Culture

Our employees, internally referred to as “Adapters,” are passionate about immune medicine, empowered by scientific discipline and fueled by our foresight and curiosity about the adaptive immune system.

As of December 31, 2024, we had 619 full-time employees of which 94 hold medical or doctoral degrees. None of our employees are subject to a collective bargaining agreement and we have not experienced any work stoppages. We believe relations with our employees are good.

Our talented employees drive our mission and share core values that both stem from, and define, our culture. These core values are threaded throughout the “Adapter lifecycle,” from candidate screening, to rewards and recognition and employee development and promotions, all in an effort to operationalize and reinforce their importance in our organization:

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Make it happen. Individual ownership and accountability keep us moving forward.

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Innovate fearlessly. Push against boundaries and think boldly to achieve world-changing results.

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Debate openly. Value discussions inspired by different points of view.

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Work together. Demonstrate you care about the success of others. The same goes for our partners and customers—together we can achieve more.

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Follow True North. Show up with integrity and do the right thing.

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Have fun. Fun makes everything better.

We believe our employees are highly engaged, and we were recognized consecutively from 2018 to 2022 by the Puget Sound Business Journal as one of Washington State’s Best Places to Work. We were also nationally certified as a Great Place to Work in 2021 and 2022, and we won GeekWire’s Workplace of the Year Award in 2023.

We continually strive to maintain a culture of excellence, empathy and belonging. We believe Adapters can be their best when they can be themselves, and we celebrate what everyone brings to the table.

We also strive to provide compensation, benefits, and incentives that will both attract and retain talented employees. Our total rewards package includes market-competitive base pay, performance-based short-term incentives, health care, retirement benefits, paid time off, family leave, and access to a variety of health and wellness resources. Additionally, we offer employees recurring equity grants to reinforce a sense of “shared ownership, shared success.”

Corporate Information

We were incorporated in the State of Washington on September 8, 2009 under the name Adaptive TCR Corporation. On December 21, 2011, we changed our name to Adaptive Biotechnologies Corporation. In January 2015, we acquired Sequenta, a San Francisco, California-based company that was also developing an NGS test for MRD. Our principal executive offices are located at 1165 Eastlake Avenue East, Seattle, Washington 98109, and our telephone number is (206) 659-0067.

Available Information

We maintain a website at www.adaptivebiotech.com. The contents of our website are not incorporated in, or otherwise to be regarded as part of, this Annual Report on Form 10-K. We make available, free of charge on our website, access to our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we file or furnish them electronically with the Securities and Exchange Commission (“SEC”). Investors and others should note that we announce material financial information to our investors using our investor relations website (http://investors.adaptivebiotech.com), SEC filings, press releases, public conference calls and webcasts. We use these channels as well as social media to communicate with our members and the public about our company, our services and other issues. It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on social media channels.

Item 1A. Risk Factors

Investing in our Company involves a high degree of risk. You should carefully consider the following risks and uncertainties, together with all other information in this Annual Report on Form 10-K, including our consolidated financial statements and related notes and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section, before investing in our Company. Any of the risk factors we describe below could adversely affect our business, financial condition, results of operations, prospects or the trading price of our securities. The risks described below are not the only ones we face and additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business, financial condition, operating results, prospects and the trading price of our securities.

Summary of Risk Factors

Generally, the risks described below relate to the following:

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our significant net losses since inception, expected net losses in the future and need for significant investments in products and services, as well as our ability to manage operating expenses in light of profitability goals;

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market acceptance and our ability to increase the adoption of our products and services, including via coverage or reimbursement decisions related to our clinical diagnostic products;

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our ability to increase our capacity, manage the evolution of our products and services, stay current in our rapidly changing industry and otherwise manage our growth;

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our laboratory operations, including errors or defects in our products or services and our reliance on a limited number of suppliers, and in some cases single suppliers, for our equipment and materials, some of which include reagents or other materials that may also require additional internal validation prior to use;

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our collaboration with Genentech and ability to develop and commercialize cellular therapeutics, including our ability to achieve milestones and realize the intended benefits of the collaboration;

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our limited experience with the development and commercialization of therapeutic products, including cellular therapies and antibodies;

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our expected and potential reliance on collaborators for development and clinical testing of therapeutic product candidates, which may fail at any time due to a number of possible unforeseen events;

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the extensive regulation of our industry, including fraud and abuse laws and data privacy regulations;

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the loss of any member of our senior management team, or of the support of key opinion leaders; and

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the validity of our patents, protection of our trade secrets and related intellectual property matters.

Risks Relating to Our Business

We have incurred significant losses since inception, we expect to incur losses in the future and we may not be able to generate sufficient revenue to achieve and maintain profitability.

We have incurred significant losses since our inception. For the year ended December 31, 2024, 2023 and 2022, we incurred a net loss of $159.6 million, $225.3 million and $200.4 million, respectively. As of December 31, 2024, we had an accumulated deficit of $1.3 billion. We have funded our operations to date principally from the sale of convertible preferred stock and common stock, including the sale of common stock in our initial public offering and follow-on offering, and, to a lesser extent, revenue as well as transactions pursuant to the Purchase Agreement. We expect to continue to incur significant expenses and operating losses as we continue to invest in the development of products and services utilizing our immune medicine platform to support the validation of additional clinical therapeutic and diagnostic products and services. We will need to generate significant additional revenue to achieve and sustain profitability.

Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.

Our financial condition and operating results have varied in the past and will continue to fluctuate from quarter-to-quarter and year-to-year in the future due to a variety of factors, many of which are beyond our control. Factors relating to our business that may contribute to these fluctuations include the following, as well as other factors described elsewhere in this Annual Report on Form 10-K:

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the ability of our clinical sales teams to continue converting physicians from using incumbent products in the market to clonoSEQ and new diagnostic products and services we may develop;

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our ability to continue driving repeat usage of the clonoSEQ diagnostic test by physicians and get reimbursed for that repeat usage by commercial and government payors for monitoring of MRD;

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our ability to manage our growth and operating expenses;

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the outcomes of research initiatives, clinical trials or other product development or approval processes conducted by our customers, us or our collaborators;

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our ability to obtain positive coverage decisions for our tests from additional commercial payers;

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the timing of upfront payments from our collaborators;

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our ability and that of our collaborators to develop and successfully commercialize our products, including therapeutic products;

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our ability to achieve collaboration-based milestones on currently contemplated timelines, or at all;

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availability and extent of reimbursement by governmental and private payors for our products;

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the level of demand for our products;

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our relationships, and any associated exclusivity terms, with collaborators;

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our contractual or other obligations to provide resources to fund our products and services and to provide resources to our collaborations;

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delays or failures in advancement of future products in clinical trials by us or our collaborators;

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risks associated with any future international expansion of our business, including the potential to conduct clinical trials and commercialize our products and services in multiple international locations;

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our ability and that of our collaborators to consistently manufacture our products;

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our dependence on, and the need to attract and retain, key management and other personnel;

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our ability to obtain, protect and enforce our intellectual property rights;

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our ability to prevent the theft or misappropriation of our intellectual property, know-how or technologies;

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our ability to obtain additional capital that may be necessary to expand our business;

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our ability to accurately report our financial results in a timely manner;

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business interruptions such as power outages, strikes, acts of terrorism or natural disasters; and

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our ability to use our net operating loss (“NOL”) carryforwards to offset future taxable income.

The cumulative effects of factors discussed above could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on our past results as an indication of our future performance. In any particular period, our operating results could be below the expectations of securities analysts or investors, which could cause our stock price to decline.

While as a general matter we intend to periodically report on the status of our development initiatives, including anticipated next steps, we may not provide forward-looking guidance on the timing of those next steps. In addition, we do not control the timing of disclosure of any such milestones related to any of our products that are managed by our collaborators. Any disclosure by us or our collaborators of data that is perceived as negative may have a material adverse impact on our stock price or overall valuation. Our stock price may decline as a result of unexpected clinical trial results in one or more of our products, including adverse safety events reported for any of our products.

If third-party payors, including private payors and government healthcare programs, do not provide coverage of, or adequate reimbursement for, our clinical diagnostic products, our commercial success will be negatively affected.

Our diagnostic revenue depends in part on achieving broad coverage and reimbursement for our clonoSEQ tests from payors, including both private and government payors. Certain large private payors have issued policies that decline to cover testing methods that they regard as experimental or investigational. Other payors may issue similar non-coverage policies. If payors do not provide coverage of, or do not provide adequate reimbursement for, a substantial portion of the price of our diagnostic tests, we may need to seek payment from the patient where this is not precluded by law or contract, which may adversely affect demand for our tests. Coverage determinations by a payor may depend on a number of factors, including, but not limited to, a payor’s determination that a certain diagnostic test is appropriate, medically necessary or cost-effective. If we are unable to provide payors with sufficient evidence of the clinical utility and validity of our diagnostic tests, they may not provide coverage, or may provide limited coverage, which will adversely affect our revenues and our ability to succeed. To the extent that more competitors enter our markets, the availability of coverage and the reimbursement rate for our tests and new diagnostic products may decrease as we encounter pricing pressure from our competitors.

Each payor makes its own decision regarding coverage of our tests and the applicable payment rates, and payors may not provide adequate coverage or reimbursement for our current or future products. Although we may contract with certain payors, working with payors through contract or otherwise to assure reimbursement is time-consuming and costly and outcomes are uncertain. In addition, the determinations by a payor whether to cover our clinical diagnostic product and the amount it will reimburse for them are often made on an indication-by-indication basis. In cases where there is no coverage policy or we do not have a contracted rate for reimbursement as a participating provider, the patient is typically responsible for a greater share of the cost of the test, which may result in further delay of our revenue, increase our collection costs or decrease the likelihood of collection. Through our Adaptive Assist patient support program, we provide clonoSEQ diagnostic tests for reduced rates or without charge to eligible low-income patients that may result in payors requiring us to provide evidence of eligibility of such patients to pay reduced out-of-pocket amounts.

Our claims for reimbursement from payors may be denied upon submission, and we may need to take additional steps to receive payment, such as appealing the denials. Such appeals and other processes are time-consuming, expensive and may not result in payment. Payors may perform audits of historically paid claims and attempt to recoup funds years after the funds were initially distributed if the payors believe the funds were paid in error or determine that our clonoSEQ diagnostic tests or other clinical diagnostic products were medically unnecessary. In addition, similar to federal payors, state and federal laws permit commercial payors to seek civil and criminal penalties against a manufacturer if they feel they have been defrauded. If a payor audits our claims and issues a negative audit finding, and we are not able to overturn the audit findings through appeal, the recoupment may result in a material adverse effect on our revenue. Additionally, in some cases commercial payors for whom we are not a participating provider may elect at any time to review claims previously paid and determine the amount they paid was too much. In these situations, the payor will typically notify us of their decision and then offset whatever amount they determine they overpaid against amounts they owe us on current claims. We do not have a mechanism to dispute these retroactive adjustments and we cannot predict when, or how often, a payor might engage in these reviews.

If we are not successful in leveraging our platform to expand clonoSEQ in new indications or sample types and discover, develop and commercialize additional products and services, our ability to grow our business and achieve our strategic objectives would be impaired.

Our strategy is to leverage our immune medicine platform to discover, develop and potentially commercialize additional therapeutic and diagnostic products and services for various disease states. In particular, for clonoSEQ we are attempting to generate sufficient clinical evidence to support the utility of MRD in additional lymphoid cancers beyond ALL, MM, CLL, DLBCL and MCL while also demonstrating the clinical utility of blood as a sample type for all lymphoid cancers. If we are unable to generate compelling evidence supporting clonoSEQ use in other indications or sample types, we may not succeed in expanding our clonoSEQ product platform.

In our immune medicine business, our focus on target antigen discovery and development of therapeutic products, including antibodies and cellular therapies, faces significant challenges in the identification, validation, development, clinical testing and marketing approval of new products. If we or our collaborators are unable to discover novel targets and develop transformative immune-based therapies, we may not succeed in commercializing new therapeutic products.

Identifying new products and services requires substantial technical, financial and human resources, whether or not any products or services are ultimately developed or commercialized. We may pursue what we believe is a promising opportunity to leverage our platform only to discover that certain of our risk or resource allocation decisions were incorrect or insufficient, or that individual products, services or our science in general has technology or biology risks that were previously unknown or underappreciated. Our strategy of pursuing the value of our immune medicine platform over a long time horizon and across a broad array of human diseases may not be effective. In the event material decisions in any of these areas turn out to be incorrect or sub-optimal, we may experience a material adverse impact on our business and ability to fund our operations and we may never realize what we believe is the potential of our immune medicine platform.

We expect to make significant investments in our continued research and development of new products and services, which may not be successful.

We are seeking to leverage our immune medicine platform to develop a pipeline of future disease-specific research, therapeutic and diagnostic products. For example, we continually expand our immunomics database and TCR-antigen binding with a view toward advancing target antigen discovery to leverage in developing therapies such as prophylactic or therapeutic antibodies. In addition, we are developing certain therapeutic product candidates under our collaboration agreement with Genentech by leveraging our platform to identify TCRs that can be engineered into personalized cellular therapeutic products.

We are also attempting to leverage our immune medicine platform to discover and develop potential therapeutic antibodies in autoimmune indications. This effort was informed by our previous investment in discovering, making and testing antibodies for the treatment of COVID-19. Our antibody discovery and development efforts in autoimmunity are early, and we continue to evolve and mature our programs. As we generate and analyze data on our antibody discovery work and programs, we may find that our initial hypotheses regarding any disease state are not supported by a larger data set or further analysis. If we are unable to demonstrate compelling data regarding the effectiveness of our antibody discovery and development capabilities, we may incur substantial costs but not be able to commercialize any related product.

Developing new products is a speculative and risky endeavor. Products or services that initially show promise may fail to achieve the desired results or may not achieve acceptable levels of analytical accuracy or clinical utility. We may need to alter our products in development and repeat clinical studies before we identify a potentially successful product or service. Therapeutic product development is expensive, may take years to complete and can have uncertain outcomes. Failure can occur at any stage of the development. If, after development, a product or service appears successful, we or our collaborators (if any) may, depending on the nature of the product or service, still need to obtain FDA and other regulatory clearances, authorizations or approvals before we can market it. The clearance, authorization or approval pathways at the FDA and other regulatory authorities are likely to involve significant time, as well as additional research, development and clinical study expenditures. The FDA or other regulatory authorities may not clear, authorize or approve any future product we develop. Even if we develop a product that receives regulatory clearance, authorization or approval, we or our collaborators would need to commit substantial resources to commercialize, sell and market it before it could be profitable, and the product may never be commercially successful. Additionally, development of any product may be disrupted or made less viable by the development of competing products.

Because new potential products may fail at any stage of development or commercialization and if we determine that any of our current or future products are unlikely to succeed, we may abandon them without any return on our investment. If we are unsuccessful in developing additional products, our potential for growth may be impaired.

We rely on a limited number of suppliers or, in many cases, single suppliers, for laboratory equipment and materials and may not be able to find replacements or immediately transition to alternative suppliers.

We rely on a limited number of suppliers, or in many cases single suppliers, to provide certain sequencers, reagents, equipment and other materials that we use in our laboratory operations and product development. An interruption in our laboratory operations, kit distribution, technology transfer, or development activities could occur if we encounter delays, quality issues or other difficulties in securing these sequencers, equipment, reagents or other materials, and if we cannot then obtain an acceptable substitute. In such an event, we would likely be required to incur significant costs and devote significant efforts to find new suppliers, acquire and qualify new equipment, validate new reagents and revalidate aspects of our existing assays, which may cause delays in our processing of samples or development and commercialization of products. Any such interruption could significantly affect our business, financial condition, results of operations and reputation. Internal changes in processes or compositions of our reagents or other materials may also require validation efforts by us and supply of new materials from our suppliers which could impact timing of production and levels of inventory while such changes are being implemented.

For example, we have purchased and rely on the Illumina NextSeq System and plan to rely in the future on the NovaSeq X system. Illumina supplies us with reagents that have been designed for use solely with this sequencer and Illumina is the sole provider of maintenance and repair services for the Illumina NextSeq System. We also license our laboratory information management software from Illumina and receive services from Illumina related to that software. In addition, Illumina is not obligated to meet all of our requirements for reagent supply. In the event Illumina ceases or slows its production of, or is otherwise unwilling or unable to continue to supply the sequencer reagents necessary for and currently used in our business at or near current pricing, we may be required to purchase different reagents from Illumina or to purchase from a different reagent vendor under terms and conditions which could be less favorable to us. Any disruption in Illumina’s operations or the suppliers of our reagents, materials or other equipment could impact our ability to do business.

We believe there are only a few other equipment manufacturers that are currently capable of supplying the equipment necessary for our laboratory operations and product development, including sequencers and various associated reagents. The use of sequencers manufactured by a company other than Illumina would require us to alter our laboratory operations. Transitioning to and qualifying a new sequencer would be time-consuming and expensive, may result in interruptions in our laboratory operations, could affect the performance specifications of our laboratory operations or could require that we revalidate the reagents we use in immunosequencing, potentially including our clonoSEQ diagnostic testing services, and could require us to obtain additional clearance, authorization, approval, accreditation, or licensure for the changes. We may not be able to secure and implement alternative sequencers, associated reagents and other materials without experiencing interruptions in our workflow. In the case of an alternative supplier to Illumina, any replacement sequencers and various associated reagents may not be available or may not meet our quality control and performance requirements for our laboratory operations. If we should encounter delays or difficulties in securing, reconfiguring or revalidating the equipment and reagents we require for our products and services, our business, financial condition, results of operations and reputation could be adversely affected.

Errors or defects in our products or services could harm our reputation, decrease market acceptance of our products or services or expose us to product liability claims.

We are creating new products, many of which are initially based on largely untested technologies. As all of our products and services progress, we or others may determine that we made product or service level scientific or technological mistakes or omissions. The testing processes utilize a number of complex and sophisticated biochemical, informatics, optical and mechanical processes, many of which are highly sensitive to external factors and variation between testing runs. Refinements to our processes may initially result in unanticipated issues that reduce the efficiency or increase variability. In particular, DNA sequencing, which is a key component of these processes, could be inefficient with higher than expected variability thereby increasing total sequencing costs and reducing the number of samples we can process in a given time period, which may negatively impact customer turnaround time. Therefore, inefficient or variable processes can cause variability in our operating results and damage our reputation.

In addition, our development laboratory operations could result in any number of errors or defects. Our quality assurance system or product development processes may fail to prevent us from inadvertent problems with samples, sample quality, lab processes including sequencing, software, data upload or analysis, raw materials, reagent manufacturing, assay quality or design, or other components or processes. In addition, our assays may have quality or design errors, and we may have inadequate procedures or instrumentation to process samples, assemble our proprietary primer mixes and commercial materials, upload and analyze data, or otherwise conduct our development laboratory operations. If we provide products or services with undiscovered errors to our customers, our clinical diagnostics may falsely indicate a patient has a disease or fail to detect disease in a patient who requires treatment. We believe our customers are likely to be particularly sensitive to product and service defects, errors and delays, including if our products and services fail to indicate the presence of residual disease with high accuracy from clinical specimens or if we fail to list or inaccurately indicate the presence or absence of disease in our test report. In drug discovery, such errors may interfere with our collaborators’ clinical studies or result in adverse safety or efficacy profiles for their products in development. This may harm our customers’ businesses and may cause us to incur significant costs, divert the attention of key personnel, encourage regulatory enforcement action against us, create a significant customer relations problem for us and cause our reputation to suffer. We may also be subject to liability claims for damages related to errors or defects in our products. Any of these developments could harm our business and operating results.

Our efforts to develop products leveraging our TCR-antigen binding data may not be successful, and it may not yield the insights that we expect or on a timetable that allows development or commercialization of new therapeutic or diagnostic products.

ADPT US Equity

ADPT · 10-K · period ended 2024-12-31

Item 1. Business

Item 1A. Risk Factors

ADPT US Equity☆

ADPT · 10-K · period ended 2024-12-31

Item 1. Business

Item 1A. Risk Factors

ADPT US Equity