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 ☐ 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, a 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.

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~July 31, 2019,~~May 2, 2024, the registrant had ~~124,287,992~~147,368,324 shares of common stock, $0.0001 par value per share, outstanding.

This report contains forward-looking statements that are based on management’s beliefs and assumptions and on information currently available to management. All statements contained in this report other than statements of historical fact are forward-looking statements, which include but are not limited to, statements about:

The forward-looking statements in this report also include statements regarding our ability to develop, commercialize and achieve market acceptance of our current and planned products and services, our research and development efforts and other matters regarding our business strategies, use of capital, results of operations and financial position and plans and objectives for future operations. In some cases, you can identify forward-looking statements by the 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. These risks, uncertainties and other factors are described under “Risk Factors,” “Management's Discussion and Analysis of Financial Condition and Results of ~~Operations,”~~Operations” and elsewhere in this report and in other documents we file with the Securities and Exchange Commission (the “SEC”) from time to time. We caution you that forward-looking 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. As a result, the forward-looking statements may not prove to be accurate. The forward-looking statements in this report represent our views as of the date of this report.

We undertake no obligation to update any forward-looking statements for any reason, except as required by law.

Unless otherwise stated or the context otherwise indicates, references to “we,” “us,” “our” and similar references refer to Adaptive Biotechnologies Corporation.

June 30,

December 31,

2019

2018

(unaudited)

Assets

Current assets

Cash and cash equivalents

$
48,458

$
55,030

Short-term marketable securities

374,543

109,988

Accounts receivable, net

7,252

4,807

Inventory

8,004

7,838

Prepaid expenses and other current assets

4,044

3,055

Total current assets

442,301

180,718

Long-term assets

Property and equipment, net

22,298

19,125

Restricted cash and other assets

5,040

247

Intangible assets, net

12,784

13,626

Goodwill

118,972

118,972

Total assets

$
601,395

$
332,688

Liabilities, convertible preferred stock and shareholders’ deficit

Current liabilities

Accounts payable

$
2,944

$
1,793

Accrued liabilities

5,019

2,562

Accrued compensation and benefits

4,429

4,641

Current portion of deferred rent

1,276

1,109

Current deferred revenue

61,194

12,695

Total current liabilities

74,862

22,800

Long-term liabilities

Convertible preferred stock warrant liability

2,602

336

Deferred rent liability, less current portion

5,455

6,102

Deferred revenue, less current portion

240,919

704

Total liabilities

323,838

29,942

Commitments and contingencies (Note 8)

Convertible preferred stock: $0.0001 par value, 93,762,517 shares authorized
   at June 30, 2019 and December 31, 2018, respectively; 93,039,737 and
   92,790,094 shares issued and outstanding at June 30, 2019 and December
   31, 2018, respectively; aggregate liquidation preference of $574,374 and
   $572,866 at June 30, 2019 and December 31, 2018, respectively

561,931

560,858

Shareholders’ deficit

Common stock: $0.0001 par value, 131,000,000 shares authorized at
   June 30, 2019 and December 31, 2018, respectively; 13,725,381 and
   12,841,536 shares issued and outstanding at June 30, 2019 and December
   31, 2018, respectively

1

1

Additional paid-in capital

46,160

37,902

Accumulated other comprehensive gain (loss)

382

(107
)
Accumulated deficit

(330,917
)

(295,908
)
Total shareholders’ deficit

(284,374
)

(258,112
)
Total liabilities, convertible preferred stock and shareholders’
   deficit

$
601,395

$
332,688

Theaccompanyingnotes are an integralpart of these condensed consolidated financial statements.

Condensed Consolidated Statements of ~~Convertible Preferred Stock~~Comprehensive Loss

Convertible
preferred stock

Common stock

Additional
paid-in

Accumulated
other
comprehensive

Accumulated

Total
shareholders’

Shares

Amount

Shares

Amount

capital

(loss) income

deficit

deficit

Balance as of March 31, 2018 (unaudited)

92,745,734

$
561,396

12,301,844

$
1

$
28,620

$
(283
)

$
(261,950
)

$
(233,612
)
Issuance of common stock for cash upon exercise of stock options (unaudited)

—

—

245,000

—

415

—

—

415

Issuance of Series E-1 convertible preferred stock for cash upon
   exercise of Series E-1 convertible preferred stock options at fair value (unaudited)

44,360

35

—

—

—

—

—

—

Vested Series E-1 convertible preferred stock option forfeitures (unaudited)

—

(767
)

—

—

476

—

291

767

Series E-1 convertible preferred stock option share-based compensation (unaudited)

—

—

—

—

1

—

—

1

Adjustment to redemption value for vested Series E-1 convertible
   preferred stock options (unaudited)

—

1

—

—

(1
)

—

—

(1
)
Change in redemption value for vested Series E-1 convertible
   preferred stock options (unaudited)

—

2

—

—

—

—

(2
)

(2
)
Common stock option share-based compensation (unaudited)

—

—

—

—

2,447

—

—

2,447

Other comprehensive income (unaudited)

—

—

—

—

—

43

—

43

Net loss (unaudited)

—

—

—

—

—

—

(12,493
)

(12,493
)
Balance as of June 30, 2018 (unaudited)

92,790,094

$
560,667

12,546,844

$
1

$
31,958

$
(240
)

$
(274,154
)

$
(242,435
)

Balance as of March 31, 2019 (unaudited)

93,023,694

$
561,210

12,930,536

$
1

$
40,981

$
92

$
(314,548
)

$
(273,474
)
Issuance of common stock for cash upon exercise of stock options (unaudited)

—

—

794,845

—

1,847

—

—

1,847

Issuance of Series E-1 convertible preferred stock for cash upon
   exercise of Series E-1 convertible preferred stock options at fair value (unaudited)

16,043

11

—

—

—

—

—

—

Change in redemption value for vested Series E-1 convertible
   preferred stock options (unaudited)

—

710

—

—

—

—

(710
)

(710
)
Common stock option share-based compensation (unaudited)

—

—

—

—

3,332

—

—

3,332

Other comprehensive income (unaudited)

—

—

—

—

—

290

—

290

Net loss (unaudited)

—

—

—

—

—

—

(15,659
)

(15,659
)
Balance as of June 30, 2019 (unaudited)

93,039,737

$
561,931

13,725,381

$
1

$
46,160

$
382

$
(330,917
)

$
(284,374
)

~~CondensedStatements of Convertible Preferred StockandShareholders’Deficit (Continued)~~

Balance as of December 31, 2017

92,656,029

$
561,333

12,208,731

$
1

$
24,972

$
(166
)

$
(249,423
)

$
(224,616
)
Adjustments to accumulated deficit for adoption of guidance on accounting for share-based payment transactions (unaudited)

—

—

—

—

140

—

(140
)

—

Issuance of common stock for cash upon exercise of stock options (unaudited)

—

—

338,113

—

823

—

—

823

Issuance of Series E-1 convertible preferred stock for cash upon
   exercise of Series E-1 convertible preferred stock options at fair value (unaudited)

134,065

100

—

—

—

—

—

—

Vested Series E-1 convertible preferred stock option forfeitures (unaudited)

—

(767
)

—

—

476

—

291

767

Series E-1 convertible preferred stock option share-based compensation (unaudited)

—

—

—

—

3

—

—

3

Adjustment to redemption value for vested Series E-1 convertible
   preferred stock options (unaudited)

—

3

—

—

(3
)

—

—

(3
)
Change in redemption value for vested Series E-1 convertible
   preferred stock options (unaudited)

—

(2
)

—

—

—

—

2

2

Common stock option share-based compensation (unaudited)

—

—

—

—

5,547

—

—

5,547

Other comprehensive loss (unaudited)

—

—

—

—

—

(74
)

—

(74
)
Net loss (unaudited)

—

—

—

—

—

—

(24,884
)

(24,884
)
Balance as of June 30, 2018 (unaudited)

92,790,094

$
560,667

12,546,844

$
1

$
31,958

$
(240
)

$
(274,154
)

$
(242,435
)

Balance as of December 31, 2018

92,790,094

$
560,858

12,841,536

$
1

$
37,902

$
(107
)

$
(295,908
)

$
(258,112
)
Issuance of common stock for cash upon exercise of stock options (unaudited)

—

—

883,845

—

1,880

—

—

1,880

Issuance of Series E-1 convertible preferred stock for cash upon
   exercise of Series E-1 convertible preferred stock options at fair value (unaudited)

249,643

109

—

—

—

—

—

—

Change in redemption value for vested Series E-1 convertible
   preferred stock options (unaudited)

—

964

—

—

—

—

(964
)

(964
)
Common stock option share-based compensation (unaudited)

—

—

—

—

6,378

—

—

6,378

Other comprehensive income (unaudited)

—

—

—

—

—

489

—

489

Net loss (unaudited)

—

—

—

—

—

—

(34,045
)

(34,045
)
Balance as of June 30, 2019 (unaudited)

93,039,737

$
561,931

13,725,381

$
1

$
46,160

$
382

$
(330,917
)

$
(284,374
)

~~Theaccompanying~~notes are an integralpart of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

1. Organization and Description of Business

~~OrganizationandDescription of Business~~

Adaptive Biotechnologies Corporation (“we,” “us” or “our”) is a commercial-stage company advancing the field of ~~immune-driven~~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 isapplies our proprietary technologies to read the ~~foundation for~~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 ~~expanding suite of~~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. The cornerstone~~services that can be tailored to the needs of ~~our immune medicine platform~~individual patients. We have commercial products and ~~core immunosequencing product, immunoSEQ, serves~~services and a robust pipeline of clinical products and services that we are designing to diagnose, monitor and enable the treatment of diseases, such as ~~our underlying research~~cancer and development engine and generates revenue from academic and biopharmaceutical customers. Our first clinical diagnostic product, clonoSEQ, is the first test authorized by the Food and Drug Administration (“FDA”) for the detection and monitoring of minimal residual disease (“MRD”) in patients with select blood cancers.autoimmune disorders.

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. We are headquartered in Seattle, Washington.

2. Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

~~Initial Public Offering~~

~~Our registration statement on Form S-1 related to~~The unaudited condensed consolidated financial statements include the accounts of Adaptive Biotechnologies Corporation, Adaptive Biotechnologies B.V., our ~~initial public offering (“IPO”) was declared effective on June 26, 2019,~~wholly-owned subsidiary, and ~~our common stock began trading on the Nasdaq Global Select Market on June 27, 2019. On July 1, 2019,~~Digital Biotechnologies, Inc., a corporate subsidiary we ~~completed our IPO~~have 70% ownership interest in. The remaining interest in which we issued and sold 17,250,000 shares of common stock, including shares issued upon the exercise in full of the underwriters’ over-allotment option, at a public offering price of $20.00. We received approximately $316.0 million in net proceeds, after deducting underwriting discounts and commission of approximately $24.2 million and offering expenses of approximately $4.8 million.

~~Immediately prior to the completion~~Digital Biotechnologies, Inc., held by certain of our ~~IPO on July 1, 2019, 93,039,737 shares of convertible preferred stock then outstanding converted into an equivalent number of shares of common stock. On July 1, 2019,~~related parties and their related family trusts, are shown in ~~connection with~~ the closing of our IPO, our amended and restated articles of incorporation, as filed with the Secretary of State of the State of Washington, and our amended and restated bylaws became effective. Also on July 1, 2019, we adopted a new equity incentive plan (“2019 Plan”), establishing an initial reserve of 15,519,170 shares under the 2019 Plan.

~~The~~unaudited condensed consolidated financial statements as ~~of June 30, 2019, including share~~noncontrolling interest. All intercompany transactions and ~~per share amounts, do not give effect to our IPO as it closed subsequent to June 30, 2019.~~balances have been eliminated upon consolidation.

2.	~~SignificantAccountingPolicies~~

~~Basisof Presentation and~~Useof Estimates

The preparation of condensed consolidated financial statements in conformity with ~~U.S.~~accounting principles generally accepted ~~accounting principles~~in the United States of America (“GAAP”) requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience and other relevant assumptions that we believe to be reasonable under the circumstances. Estimates are used in several areas including, but not limited to, estimates of progress to date for certain performance obligations and the transaction price for certain contracts with customers, share-based compensation, ~~including the fair value of stock, and~~imputing interest for our revenue interest purchase agreement (the “Purchase Agreement”) that we entered into in September 2022, the provision for income taxes, including related reserves, the analysis of goodwill impairment and ~~goodwill,~~the recoverability and impairment of long-lived assets, among others. These estimates generally involve complex issues and require judgments, involve the analysis of historical results and prediction of future trends, can require extended periods of time to resolve and are subject to change from period to period. Actual results may differ materially from management’s estimates.

Unaudited Interim Condensed Consolidated Financial Statements

In our opinion, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information. These unaudited condensed consolidated financial statements include all adjustments necessary to fairly state ~~the~~our financial position and the results of our operations and cash flows for interim periods in accordance with GAAP. All such adjustments were of a normal, recurring nature. Interim-period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with ~~our~~the audited consolidated financial statements and notes included in our ~~prospectus dated June 26, 2019~~Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission ~~(“SEC”~~(the “SEC”) on ~~June 27, 2019 in connection with our IPO (“Prospectus”).~~February 29, 2024.

Segment Information

We operate as two operating and reportable segments: MRD and Immune Medicine. We have determined that our chief executive officer is the chief operating decision maker (“CODM”). The CODM reviews operating results and other financial information presented at the MRD and Immune Medicine segment level, as well as on a consolidated basis, to make resource allocation decisions. The MRD and Immune Medicine segments are also our two reporting units.

Restricted Cash

We had a restricted cash balance of $3.0 million and $~~Equivalents~~2.9 million as of March 31, 2024 and December 31, 2023, respectively. Our restricted cash primarily relates to certain balances we are required to maintain under lease arrangements for some of our property and facility leases.

Goodwill

~~Cash~~Goodwill represents the excess of the purchase price over the net amount of attributed identifiable assets acquired and ~~cash equivalents are stated~~liabilities assumed in a business combination measured at fair value. ~~Cash equivalents include only securities having~~We assess goodwill for impairment annually on October 1, or more frequently if events or changes in circumstances would more likely than not reduce the fair value of one or both of our reporting units below their respective carrying value. We evaluate goodwill for impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value of one or both of our reporting units is less than their respective carrying amount. If we so determine, or if we choose to bypass the qualitative assessment, we perform a quantitative goodwill impairment test. If impairment exists, the carrying value of the allocated goodwill is reduced to its fair value through an ~~original maturity~~impairment charge recorded in the consolidated statements of ~~three months or less at the time~~operations. To date, we have not recognized any impairment of purchase. We limit our credit risk associated with cash and cash equivalents by placing our investments with banks that we believe are highly creditworthy and with highly rated money market funds. Cash and cash equivalents primarily consistgoodwill.

Concentrations of ~~bank deposits and investments in money market funds, as well as highly liquid U.S. government debt and agency securities and commercial paper with original maturities of three months or less.~~Risk

~~Concentrationsof Risk~~

We are subject to a concentration of risk from a limited number of suppliers, or in ~~some~~certain cases, single suppliers, for some of our laboratory instruments and materials. This risk is managed by targeting a quantity of surplus stock.

Cash, cash equivalents and marketable securities are financial instruments that potentially subject us to concentrations of credit risk. We invest in money market funds, United States (“U.S.”) government ~~debt~~treasury and agency securities, ~~U.S. government agency~~corporate bonds and commercial paper ~~and corporate bonds~~ with high-quality accredited financial institutions.

Significant customers are those ~~which~~that represent more than ~~10%~~ten percent of our total revenue or accounts receivable, ~~balance at~~net balances for the periods and as of each ~~respective~~condensed consolidated balance sheet ~~date. Revenue from these customers reflects their purchase of our products and services and we do not believe their loss would have a material adverse effect on our business.~~date presented, respectively.

For each significant customer, revenue as a percentage of total revenue for the periods presented and accounts receivable, net as a percentage of total accounts receivable, net as of the dates presented were as follows:

Revenue

Accounts Receivable, Net

Three Months Ended June 30,

Six Months Ended
June 30,

June 30,

December 31,

2019

2018

2019

2018

2019

2018

(unaudited)

(unaudited)

Customer A

12.7%

25.5%

*%

26.4%

32.7%

*%
Customer B

*

11.0

*

*

*

15.1
Customer C

*

*

*

*

*

13.2
Genentech, Inc.

40.0

*

43.6

*

*

*

* less than 10%

~~Revenue~~ ~~Recognition~~


	Revenue		Accounts Receivable, Net
	Three Months Ended March 31,		March 31,	December 31,
	2024	2023	2024	2023
Customer A	*%	*%	*%	*%
Customer B	*	*	*	*
Customer C	11.7	*	11.2	*
Genentech, Inc. and Roche Group	13.5	26.6	*	*
* less than 10%

~~We recognize revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”),~~ Revenue ~~from Contracts with Customers~~Recognition~~. Under ASC 606, for~~

For all revenue-generating contracts, we perform the following steps to determine the amount of revenue to be recognized: ~~(i)~~(1) identify the contract or contracts; ~~(ii)~~(2) determine whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; ~~(iii)~~(3) measure the transaction price, including the constraint on variable consideration; ~~(iv)~~(4) allocate the transaction price to the performance obligations based on estimated selling prices; and ~~(v)~~(5) recognize revenue when (or as) we satisfy each performance obligation. ~~The following is a summary of the application of the respective model to each of our revenue classifications.~~

Adaptive Biotechnologies Corporation

~~Overview~~

Our revenue is generated from immunosequencing (“sequencing”) products and services (“sequencing revenue”) and from regulatory or development support services leveraging our immune medicine platform (“development revenue”). When revenue generating contracts have elements of both sequencing revenue and development revenue, we allocate revenue based on the nature of the performance obligation and the allocated transaction price.

~~SequencingRevenue~~

Sequencing revenue reflects the amounts generated from providing sequencing services and testing through our immunoSEQ and clonoSEQ products and services to our research and clinical customers, respectively.

For research customers, contracts typically include an amount billed in advance of services (“upfront”), and subsequent billings as sample results are delivered to the customer. Upfront amounts received are recorded as deferred revenue, which we recognize as revenue upon satisfaction of performance obligations. We have identified two typical performance obligations under the terms of our

~~AdaptiveBiotechnologiesCorporation~~

Notesto Unaudited Condensed Consolidated Financial Statements (Continued)

~~research service contracts: sequencing services and related data analysis. We recognize revenue for both identified performance obligations as sample results are delivered to the customer.~~(unaudited)

~~For other~~

We derive revenue by providing diagnostic and research ~~customers who choose to purchase a research use only kit, the kits are sold on a price per kit basis with amounts payable upon delivery~~services in our Minimal Residual Disease (“MRD”) and Immune Medicine business areas. Our MRD revenue consists of ~~the kit. Payments received are recorded as deferred revenue. For these customers, we have identified one performance obligation: the delivery of sample results. We recognize~~ revenue ~~as the results are delivered to the customer based on a proportion of the estimated samples that can be reported on for each kit.~~

~~For clinical customers, we derive revenues~~generated from (1) providing our clonoSEQ ~~test~~report to clinical customers; (2) providing MRD sample testing services to biopharmaceutical customers and certain academic institutions, including investigator-led clinical trials; and (3) providing our clonoSEQ report or results to certain international laboratory sites through technology transfers. Our Immune Medicine revenue consists of revenue generated from (1) providing sample testing services for our commercial research product, Adaptive Immunosequencing, to biopharmaceutical customers and academic institutions; and (2) our collaboration agreements with Genentech, Inc. (“Genentech”) and other biopharmaceutical customers in areas of drug and target discovery.

For agreements where we provide our clonoSEQ report to ordering physicians, ~~and we bill and receive payments from commercial third-party payors and medical institutions. In these transactions,~~ we have identified one performance obligation: the delivery of a clonoSEQ report. We bill and receive payments for these transactions from commercial, government and medical institution payors. As payment from the respective payors may vary based on the various reimbursement rates and patient responsibilities, we consider the transaction price to be variable and record an estimate of the transaction price, subject to the constraint for variable consideration, as revenue at the time of delivery. The estimate of transaction price is based on historical and expected reimbursement rates with the various payors, which are monitored in subsequent periods and adjusted, as necessary, based on actual collection experience.

~~In January 2019,~~Regarding our clonoSEQ ~~received~~coverage under Medicare, coverage aligned with the FDA label and National Comprehensive Cancer Network (“NCCN”) guidelines for longitudinal monitoring in multiple myeloma (“MM”) and B cell acute lymphoblastic leukemia (“ALL”). Wewe bill ~~Medicare for~~ an episode of treatment when we deliver the first eligible test ~~results.~~report. This billing contemplates all necessary tests required during a patient’s treatment cycle, which is currently estimated at approximately four tests per patient, including the initial sequence identification test. Revenue ~~is recognized~~recognition commences at the time the initial billable test ~~result~~report is delivered and is based upon cumulative tests delivered to date. ~~For~~We estimate the ~~three and six months ended June 30, 2019,~~number of tests we ~~recognized $0.3 million and $0.8 million relating~~expect to ~~the coverage policy, respectively; $0.1 million and $0.4 million of this revenue was related~~deliver over a patient’s treatment cycle based on historical testing frequencies for patients by indication. These estimates are subject to ~~tests delivered in periods prior to the three and six months ended June 30, 2019, respectively.~~change as we develop more information about utilization over time. Any unrecognized revenue from the initial billable test is recorded as deferred revenue and is recognized either as we deliver our estimate of the remaining tests in a patient’s treatment ~~cycle.~~cycle or when the likelihood becomes remote that a patient will receive additional testing.

~~DevelopmentRevenue~~

We derive revenue by providing services through development agreements to biopharmaceutical customers who seek access to our immune medicine platform technologies. We generate revenues from the delivery of professional support activities pertaining to the use of our proprietary immunoSEQ and clonoSEQ services in the development of the respective customers’ initiatives. The contract transaction price for ~~these contracts~~agreements we enter into with biopharmaceutical customers to further develop and commercialize their therapeutics may consist of a combination of non-refundable upfront fees, separately priced ~~sequencing~~MRD testing fees ~~progress based milestones~~ and milestone fees earned upon our customers’ achievement of certain regulatory ~~milestones. The development~~approvals. Depending on the contract, these agreements ~~may~~ include single or multiple performance obligations. Such performance obligations ~~depending on the contract. For certain contracts, we may perform~~include providing services to support ~~the biopharmaceutical~~our customers’ ~~regulatory submission as part of their registrational trials. These services include~~therapeutic development efforts, including regulatory support ~~pertaining to~~for our technology intended to be utilized as part of ~~the submission, development of~~our customers’ registrational trials, developing analytical plans for our ~~sequencing~~ data, ~~participation~~participating on joint research committees, ~~and assistance~~assisting in completing a regulatory ~~submission.~~submission and providing MRD testing services related to customer-provided samples for our customers' regulatory submissions. Generally, ~~these~~the support services, excluding MRD testing services, are not distinct within the context of the contract and ~~they~~thus are accounted for as a single performance obligation.

When sequencing services are separately priced customer options, we assess if a material right exists and, if not, the customer option to purchase additional sequencing services is not considered part of the contract. Except for any non-refundable upfront fees, the other forms of compensation represent variable consideration. Variable consideration related to progress based and regulatory milestones is estimated using the most likely amount method where variable consideration is constrained until it is probable that a significant reversal of cumulative revenue recognized will not occur. Progress milestones such as the first sample result delivered or final patient enrollment in a customer trial are customer dependent and are included in the transaction price when the respective milestone is probable of occurring. Milestone payments that are not within our customers’ control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. Determining whether regulatory milestone payments are probable is an area that requires significant judgment. In making this assessment, we evaluate the scientific, clinical, regulatory and other risks that must be managed, as well as the level of effort and investment required to achieve the respective milestone.

~~AdaptiveBiotechnologiesCorporation~~

~~Notesto Unaudited Condensed Financial Statements (Continued)~~

The primary method used to estimate standalone selling price for performance obligations is the adjusted market assessment approach. Using this approach, we evaluate the market in which we sell our services and estimate the price that a customer in that market would be willing to pay for our services. We recognize revenue using either an input or output measure of progress that faithfully depicts performance on a contract, depending on the contract. The measure used is dependent on the nature of the service to be provided in each contract. Selecting the measure of progress and estimating progress to date requires significant judgment.

~~Deferred Offering Costs~~

Deferred offering costs consist of fees and expenses incurred in connection with the anticipated sale of our common stock in the IPO, including the legal, accounting, printing and other IPO-related costs. Deferred offering costs of $4.8 million are capitalized and classified within restricted cash and other assets on the condensed balance sheet as of June 30, 2019.

~~Net LossPer ShareAttributableto CommonShareholders~~

We calculate our basic and diluted net loss per share attributable to common shareholders in conformity with the two-class method required for companies with participating securities. We consider our convertible preferred stock to be participating securities. In the event a dividend is declared or paid on common stock, holders of convertible preferred stock are entitled to a share of such dividend in proportion to the holders of common stock on an as-if converted basis. Under the two-class method, basic net loss per share attributable to common shareholders is calculated by dividing the net loss attributable to common shareholders by the weighted-average number of shares of common stock outstanding for the period. Net loss attributable to common shareholders is determined by allocating undistributed earnings between common and preferred shareholders. The diluted net loss per share attributable to common shareholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period determined using the treasury stock method. The net loss attributable to common shareholders was not allocated to the convertible preferred stock under the two-class method as the convertible preferred stock does not have a contractual obligation to share in our losses. For purposes of this calculation, convertible preferred stock, stock options and warrants to purchase common stock or convertible preferred stock are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common shareholders as their effect is anti-dilutive.

~~Recently Adopted~~ ~~AccountingPronouncements~~

~~In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09,~~ ~~Compensation—Stock Compensation~~ (Topic 718), intended to simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows. This guidance also allowed for an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur. We adopted this guidance as of January 1, 2018 and elected to account for forfeitures as they occur. We utilized a modified retrospective transition method, recorded the cumulative impact of applying this guidance, and recognized a cumulative increase to additional paid-in capital and an increase to accumulated deficit of $0.1 million.

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles—Goodwill and Other~~ ~~(Topic 350):~~ ~~Simplifying the Test for Goodwill Impairment~~, intended to simplify the goodwill impairment test. Under the new guidance, goodwill impairment is measured by the amount by which the carrying value of a reporting unit exceeds its fair value, without exceeding the carrying amount of goodwill allocated to that reporting unit. This guidance is effective January 1, 2022 and is required to be adopted on a prospective basis, with early adoption permitted. We adopted this guidance as of January 1, 2018 and the adoption did not have any impact on our financial statements.

~~In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation~~ ~~(Topic 718):~~ ~~Improvements to Nonemployee Share-Based Payment Accounting~~, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance is effective for us beginning in 2019, with early adoption permitted. We adopted the guidance effective January 1, 2019 and the adoption did not have any impact on our financial statements.

~~AdaptiveBiotechnologiesCorporation~~

~~Notesto Unaudited Condensed Financial Statements (Continued)~~

~~New Accounting Pronouncements Not Yet Adopted~~

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases~~ (Topic 842), intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheets and disclosing key information about leasing arrangements. This guidance is effective for us in fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Although we are currently evaluating the impact that adopting this guidance will have on our financial statements, we believe the most significant changes will be related to the recognition of the right-of-use assets and related lease liabilities related to our operating leases on the balance sheets.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments—Credit Losses~~ ~~(Topic 326):~~ ~~Measurement of Credit Losses on Financial Instruments~~, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. The guidance is effective for us beginning in 2020, with early adoption permitted. Although we are currently evaluating the impact that adopting this guidance prospectively will have on our financial statements, we do not expect the adoption to have a material impact on our financial statements.

~~In August 2018, the FASB issued ASU No. 2018-15,~~ ~~Intangibles—Goodwill and Other: Internal-Use Software~~ (Subtopic 350-40), to provide additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement. This guidance is effective for fiscal years beginning after December 15, 2019 and early adoption of the amendments in this update are permitted. We do not expect the adoption of this guidance to have a material impact on our financial statements.

3.	~~Revenue~~

~~Translational DevelopmentAgreements~~

On December 18, 2015, we entered into a translational development agreement with a biopharmaceutical customer for access to certain of our oncology immunosequencing research datasets, including full-time employee support, to accelerate the customer’s preclinical, nonclinical and clinical trial testing. Under the initial terms of the agreement we could be entitled to up to $40.0 million over a period of four years which does not include any separately negotiated research sequencing contracts. If the biopharmaceutical customer terminates the agreement prior to the end of the initial four-year research term for any reason other than a material uncured breach by us, then the biopharmaceutical partner has agreed to pay us $0.8 million. In May 2019, the agreement was subsequently amended to reduce the services provided, which in turn reduced the fourth year of eligible payments to $2.3 million.

We identified one performance obligation under this agreement, as the services were determined to be highly interrelated. We determined that any separately negotiated sequencing contracts are not performance obligations under the contract, as the contract did not contain any material rights related to such sequencing contracts. For the identified performance obligation, we assessed the work to be performed over the duration of the contract and determined that it is a consistent level of support throughout the period, and therefore revenue has been recognized straight-line over the contract term.

Revenue recognized from this translational development agreement, excluding separately negotiated research sequencing contracts, was $1.1 million and $2.5 million in the three months ended June 30, 2019 and 2018, respectively, and $1.1 million and $5.0 million in the six months ended June 30, 2019 and 2018, respectively.

In 2017, we entered into an agreement with a customer to provide services to accelerate its research initiatives. We identified one performance obligation under the agreement, as the services were determined to be highly interrelated. We determined that any separately negotiated sequencing contracts are not performance obligations under the contract, as the contract did not contain any material rights related to such sequencing contracts. Revenue recognized from this agreement, excluding sequencing revenue, was $0.1 million and $0.2 million in the three months ended June 30, 2019 and 2018, respectively, and $0.2 million and $0.3 million in the six months ended June 30, 2019 and 2018, respectively.

~~MRD DevelopmentAgreements~~

In 2017 and 2018, we entered into agreements with biopharmaceutical customers to further develop and commercialize clonoSEQ and the biopharmaceutical customers’ therapeutics. Under each of the agreements, we received or will receive non-refundable upfront payments and could receive substantial additional payments upon reaching certain progress milestones or achievement of certain regulatory milestones pertaining to the customers’ therapeutic and our clonoSEQ test.

~~AdaptiveBiotechnologiesCorporation~~

~~Notesto Unaudited Condensed Financial Statements (Continued)~~

Under the contracts, we identify performance obligations, which may include: (i) obligations to provide services supporting the customer’s regulatory submission activities as they relate to our clonoSEQ test; and (ii) sequencing services for customer-provided samples for their regulatory submissions. The transaction price allocated to the respective performance obligations is estimated using an adjusted market assessment approach for the regulatory support services and a standalone selling price for the estimated ~~immunosequencing~~MRD testing services. ~~At contract inception~~When MRD sample testing services are separately priced customer options, we ~~fully constrained any consideration related~~assess if a material right exists and, if not, the customer option to purchase additional MRD sample testing services is not considered part of the ~~regulatory milestones, as the achievement of such milestones is subject to third-party regulatory approval and the customers’ own submission decision-making.~~contract. We recognize revenue ~~relating~~related to ~~the sequencing~~MRD testing services over time using an output method based on the proportion of sample results delivered relative to the total amount of sample results expected to be delivered, ~~and~~ when expected to be a faithful depiction of progress. We use the same method to recognize the regulatory support services. When an output method based on the proportion of sample results delivered is not expected to be a faithful depiction of progress, we utilize an input method using a cost-based model based on estimates of effort ~~completed~~completed. Selecting the measure of progress and estimating progress to date requires significant judgment. Except for any non-refundable upfront fees, the other forms of compensation represent variable consideration. At contract inception, we fully constrain any consideration related to regulatory milestones, as the achievement of such milestones is subject to third-party regulatory approval and the customers’ own submission decision-making. Variable consideration related to regulatory milestones is estimated using the most likely amount method, where variable consideration is constrained until it is probable that a significant reversal of cumulative revenue will not occur. Milestone payments for regulatory approvals, which are not within our customers’ control, are not considered probable of being achieved until those approvals are received. Determining whether regulatory milestone payments are probable is an area that requires significant judgment. In making this assessment, we evaluate scientific, clinical, regulatory and other risks, as well as the level of effort and investment required to achieve the respective milestone.

For research customers who utilize either our MRD or Adaptive Immunosequencing services, contracts typically include an amount billed in advance of services (“upfront”) and subsequent billings as sample results are delivered to the customer. Upfront amounts received are recorded as deferred revenue, which we recognize as revenue upon satisfaction of performance obligations. We have identified two typical performance obligations under the terms of our research service contracts: (1) the delivery of our MRD data or Adaptive Immunosequencing for customer provided samples; and (2) related data analysis. We recognize revenue for both identified performance obligations as sample results are delivered to the customer. In periods where our sample estimates are reduced or a customer project is cancelled and, in either case, we have remaining related deferred revenue, we recognize revenue using a ~~cost-based model.~~cumulative catch-up approach based on the proportion of samples delivered to date relative to the total samples expected to be delivered.

New Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which intends to enhance reportable segment disclosures about significant segment expenses. This guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and the guidance is to be applied retrospectively. We ~~recognized $0.5 million~~are currently evaluating the impact of this guidance on our consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which primarily intends to enhance the rate reconciliation and ~~$0.6 million in development~~income taxes paid disclosures. This guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and the guidance is to be applied prospectively; retrospective application is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.

3. Revenue

We disaggregate our revenue ~~related to these~~from contracts inwith customers by business area and type of arrangement, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

The following table presents our disaggregated revenue for the periods presented (in thousands):


	Three Months Ended March 31,
	2024		2023
MRD revenue
Service revenue	$	28,126	$	21,427
Regulatory milestone revenue		4,500		—
Total MRD revenue		32,626		21,427
Immune Medicine revenue
Service revenue		4,559		7,102
Collaboration revenue		4,688		9,118
Total Immune Medicine revenue		9,247		16,220
Total revenue	$	41,873	$	37,647

During the three months ended ~~June 30, 2019 and 2018, respectively, and $0.8 million and $1.9~~March 31, 2024, we recognized $1.5 million in MRD service revenue related to Medicare reimbursements resulting from our determination that the ~~six~~likelihood of additional testing for specific patients was remote and from cancelled customer contracts. During the three months ended ~~June 30, 2019~~March 31, 2023, we recognized $1.0 million in MRD service revenue related to Medicare reimbursements resulting from our determination that the likelihood of additional testing for specific patients was remote and ~~2018, respectively.~~from cancelled customer contracts.

As of ~~June 30, 2019, in future periods~~March 31, 2024, we could receive up to an additional ~~$115.0~~$430.5 million in milestone payments in future periods if certain regulatory approvals are obtained by our customers’ therapeutics in connection with MRD data generated from our ~~clonoSEQ test.~~MRD product.

GenentechCollaboration Agreement

In December 2018, we entered into a worldwide collaboration and license agreement ~~(“Genentech Agreement”)~~ with Genentech ~~Inc. (“Genentech”~~(the “Genentech Agreement”) to leverage our capability to develop cellular therapies in oncology. Subsequent to receipt of regulatory approval in January 2019, we received a non-refundable, upfront payment of ~~$300.0~~$300.0 million in February ~~2019 and~~2019. Additionally, we received a $10.0 million milestone in 2023. We may be eligible to receive ~~more than $1.8~~$1.8 billion over time, including payments of up to ~~$75.0~~$65.0 million upon the achievement of specified regulatory milestones, up to ~~$300.0~~$300.0 million upon the achievement of specified development milestones and up to ~~$1,430.0~~$1,430.0 million upon the achievement of specified commercial milestones. In addition, we are separately able to receive tiered royalties at a rate ranging from the mid-single digits to the mid-teens on aggregate worldwide net sales of products arising from the strategic collaboration, subject to certain reductions, with aggregate minimum floors. Under the ~~agreement,~~Genentech Agreement, we are pursuing two product development pathways for novel T cell ~~immunotherapies~~therapeutic products in which Genentech intends to use T cell receptors (“TCRs”) screened by our immune medicine platform to engineer and manufacture cellular medicines:

•

Shared Products. The shared products will use “off-the-shelf” TCRs identified against cancer antigens shared among patients (“Shared Products”).

•

Personalized Product. The personalized product will use patient-specific TCRs identified by real-time screening of TCRs against cancer antigens in each patient (“Personalized Product”).

Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

•

~~Shared Products. The shared products will use “off-the-shelf” TCRs identified against cancer antigens shared among patients (“Shared Products”).~~

•

~~Personalized Product. The personalized product will use patient-specific TCRs identified by real-time screening of TCRs against cancer antigens in each patient (“Personalized Product”).~~

Under the terms of the ~~agreement,~~Genentech Agreement, we granted Genentech exclusive worldwide licenses to develop and commercialize TCR-based cellular therapies in the field of oncology, including licenses to existing shared antigen data packages. Additionally, Genentech has the right to determine which product candidates to further develop for commercialization purposes. We determined that this arrangement meets the criteria set forth in ~~ASC~~Accounting Standards Codification (“ASC”) Topic 808, Collaborative Arrangements (“ASC 808”), because both parties are active participants in the activity and are exposed to significant risks and rewards depending on the activity’s commercial failure or success. Because ASC 808 does not provide guidance on how to account for the activities under a collaborative arrangement, we applied the guidance in ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) to account for the activities related to the Genentech ~~collaboration.~~Agreement.

In applying ASC 606, we identified the following performance obligations at the inception of the agreement:

~~License to utilize on an exclusive basis all TCR-specific platform intellectual property to develop and commercialize any licensed products in the field of oncology.~~

License to utilize on an exclusive basis all TCR-specific platform intellectual property to develop and commercialize any licensed products in the field of oncology.

~~License to utilize all data and information within each shared antigen data package and any other know-how disclosed by us to Genentech in oncology.~~

License to utilize all data and information within each shared antigen data package and any other know-how disclosed by us to Genentech in oncology.

~~License to utilize all private antigen TCR product data in connection with research and development activities in the field of use.~~

License to utilize all private antigen TCR product data in connection with research and development activities in the field of use.

~~License to existing shared antigen data packages.~~

License to existing shared antigen data packages.

~~Research and development services for shared product development including expansion of shared antigen data packages.~~

Research and development services for Shared Products development, including expansion of shared antigen data packages.

~~Research and development services for private product development.~~

Research and development services for private product development.

~~Obligations to participate on various joint research, development and project committees.~~

Obligations to participate on various joint research, development and project committees.

~~Adaptive~~ ~~BiotechnologiesCorporation~~

~~Notesto Unaudited Condensed Financial Statements (Continued)~~

We determined that none of the licenses, research and development services or obligations to participate on various committees were distinct within the context of the contract, given such rights and activities were highly interrelated and there was substantial additional research and development to further develop the licenses. We considered factors such as the stage of development of the respective existing antigen data packages, the subsequent development that would be required to both identify and submit a potential target for investigational new drug acceptance under both product pathways and the variability in research and development pathways given Genentech’s control of product commercialization. Specifically, under the ~~agreement,~~Genentech Agreement, Genentech is not required to pursue development or commercialization activities pertaining to both product pathways and may choose to proceed with one or the ~~other as opposed to both.~~other. Accordingly, we determined that all of the identified performance obligations were attributable to one general performance obligation, which is to further the development of our TCR-specific platform, including data packages, and continue to make our TCR identification process available to Genentech to pursue either product pathway.

Separately, we have a responsibility to Genentech to enter into a supply and manufacturing agreement for ~~patient specific~~patient-specific TCRs as it pertains to any Personalized Product therapeutic. We determined this was an option right of Genentech should they pursue commercialization of a Personalized Product therapy. Because of the uncertainty ~~as a result of~~resulting from the early stage of development, the novel approach of our collaboration with Genentech and our rights to future commercial milestones and royalty payments, we determined that this option right was not a material right that should be accounted for at inception. As such, we will account for the supply and manufacturing agreement when entered into between the parties.

We determined the initial transaction price shall be made up of only the ~~$300.0~~$300.0 million upfront, non-refundable payment, as all potential regulatory and development milestone payments were probable of significant revenue reversal asgiven their achievement was highly dependent on factors outside our control. As a result, these payments were fully constrained and were not included in the initial transaction price. In May 2023, one of the regulatory milestones was achieved, resulting in a $10.0 million addition to the transaction price, $7.7 million of which was recognized as ofrevenue in the three months ended June 30, ~~2019.~~2023, with the remainder included in deferred revenue to be recognized as revenue over the remaining research and development period. We ~~excluded~~continue to exclude the commercial milestones and potential royalties from the transaction price, as those items relate predominantly to the license rights granted to Genentech and will be assessed when and if such events occur.

Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

As there are potential substantive developments necessary, which Genentech may be able to direct, we determined that we would apply a proportional performance model to recognize revenue for our performance obligation. We measure proportional performance using an input method based on costs incurred relative to the total estimated costs of research and development efforts to pursue both the Shared ~~Product~~Products and Personalized Product pathways. When any of the potential regulatory and development milestones are no longer fully constrained and are included in the transaction price, such amounts will be recognized using the cumulative catch-up method based on proportional performance at such time. We currently expect to recognize revenue generated from the ~~revenue~~Genentech Agreement over a period of approximately ~~seven to eight~~nine years from the effective date. This estimate of the research and development period considers pursuit options of development activities supporting both the Shared ~~Product~~Products and ~~the~~ Personalized Product, but may be reduced or increased based on the various activities as directed by the joint committees, decisions made by Genentech, regulatory feedback or other factors not currently known.

WeIn total, we recognized ~~revenue of approximately $8.5~~$4.7 million and ~~$14.8~~$9.1 million ~~for~~in Immune Medicine collaboration revenue during the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2024 and 2023, respectively, related to the Genentech ~~collaboration.~~Agreement. Costs related to the Genentech ~~collaboration~~Agreement are included in research and development expenses.

4. Deferred Revenue

4.	~~Fair ValueMeasurements~~

~~The following table sets forth~~Deferred revenue from the ~~fair value of financial assets and liabilities that were measured at fair value on a recurring basis (in thousands):~~

June 30, 2019

Level 1

Level 2

Level 3

Total

(unaudited)

Financial assets

Money market funds

$
35,695

$
—

$
—

$
35,695

Commercial paper

—

88,161

—

88,161

U.S. government debt and agency securities

—

273,713

—

273,713

Corporate bonds

—

22,661

—

22,661

Total financial assets

$
35,695

$
384,535

$
—

$
420,230

Financial liabilities

Convertible preferred stock warrant liability

$
—

$
—

$
2,602

$
2,602

Total financial liabilities

$
—

$
—

$
2,602

$
2,602

~~Adaptive~~Genentech Agreement represents $8.4~~BiotechnologiesCorporation~~

~~Notesto Unaudited Condensed Financial Statements (Continued)~~

December 31, 2018

Level 1

Level 2

Level 3

Total

Financial assets

Money market funds

$
45,998

$
—

$
—

$
45,998

Commercial paper

—

16,887

—

16,887

U.S. government debt and agency securities

—

85,623

—

85,623

Corporate bonds

—

7,478

—

7,478

Total financial assets

$
45,998

$
109,988

$
—

$
155,986

Financial liabilities

Convertible preferred stock warrant liability

$
—

$
—

$
336

$
336

Total financial liabilities

$
—

$
—

$
336

$
336

Level 1 securities include highly liquid money market funds, which we measure the fair value based on quoted prices in active markets for identical assets or liabilities. Level 2 securities consist of U.S. government debt securities, U.S. government agency bonds, commercial paper and corporate bonds, and are valued based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. Of the Level 2 commercial paper and U.S. government debt and agency securities balances, $6.0 million and $4.0 million, respectively, is recorded as cash and cash equivalents. Level 3 liabilities that are measured at fair value on a recurring basis consist of a convertible preferred stock warrant liability. During the six months ended June 30, 2019, we recognized $2.3 million of expense related to the revaluation of the convertible preferred stock warrant liability in interest and other income, net.

~~The fair value of the convertible preferred stock warrant liability is estimated using the Black-Scholes option-pricing model. Certain inputs were utilized in the option-pricing model as follows:~~

June 30,
2019

December 31,
2018

(unaudited)

Fair value estimate

$
48.30

$
8.27

Expected term (in years)

1.81

2.31

Risk-free interest rate

1.8
%

2.5
%
Expected volatility

61.1
%

55.3
%
Expected dividend yield

—

—

$41.65.

~~Investments~~

~~Available-for-sale investments consisted of the following as of June 30, 2019 and December 31, 2018 (in thousands):~~

June 30, 2019

Amortized
Cost

Unrealized
Gain

Unrealized
Loss

Estimated
Fair Value

(unaudited)

Short-term marketable securities

Commercial paper

$
82,165

$
—

$
—

$
82,165

U.S. government debt and agency securities

269,366

351

(1
)

269,716

Corporate bonds

22,630

32

—

22,662

Total short-term marketable securities

$
374,161

$
383

$
(1
)

$
374,543

December 31, 2018

Amortized
Cost

Unrealized
Gain

Unrealized
Loss

Estimated
Fair Value

Short-term marketable securities

Commercial paper

$
16,887

$
—

$
—

$
16,887

U.S. government debt and agency securities

85,722

—

(99
)

85,623

Corporate bonds

7,486

—

(8
)

7,478

Total short-term marketable securities

$
110,095

$
—

$
(107
)

$
109,988

~~AdaptiveBiotechnologiesCorporation~~

~~Notesto Unaudited Condensed Financial Statements (Continued)~~

The following table presents the gross unrealized holding losses and fair value for investments in an unrealized loss position, and the length of time that individual securities have been in a continuous loss position, as of June 30, 2019 (in thousands):

Less Than 12 Months

12 Months Or Greater

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss

(unaudited)

Short-term marketable securities

U.S. government debt and agency securities

$
—

$
—

$
4,997

$
(1
)
Total short-term marketable securities

$
—

$
—

$
4,997

$
(1
)

We evaluated our securities for other-than-temporary impairment and considered the decline in market value for the securities to be primarily attributable to current economic and market conditions. It is not more likely than not that we will be required to sell the securities, and we do not intend to do so prior to the recovery of the amortized cost basis. Based on this analysis, these marketable securities were not considered to be other-than-temporarily impaired as of June 30, 2019.

~~All the corporate debt, U.S. government and agency securities and commercial paper have an effective maturity date of less than one year.~~

6.	~~GoodwillandIntangible Assets~~

~~There have been no changes in the carrying amount of goodwill since its recognition in 2015.~~

~~Intangible assets subject to amortization as of the dates presented consisted of the following (in thousands):~~

June 30, 2019

Gross Carrying Amount

Accumulated
Amortization

Net Carrying Amount

(unaudited)

Acquired developed technology

$
20,000

$
(7,462
)

$
12,538

Purchased intellectual property

325

(79
)

246

Balance at June 30, 2019

$
20,325

$
(7,541
)

$
12,784

December 31, 2018

Gross Carrying Amount

Accumulated
Amortization

Net Carrying Amount

Acquired developed technology

$
20,000

$
(6,636
)

$
13,364

Purchased intellectual property

325

(63
)

262

Balance at December 31, 2018

$
20,325

$
(6,699
)

$
13,626

The developed technology was acquired in connection with our acquisition of Sequenta, Inc. (“Sequenta”) in 2015. The remaining balance of the acquired technology and the purchased intellectual property is expected to be amortized over the next approximately 7.5 years.

~~As of June 30, 2019, expected future amortization expense for intangible assets was as follows (in thousands) (unaudited):~~

2019

$
856

2020

1,698

2021

1,698

2022

1,698

2023

1,698

Thereafter

5,136

Total future amortization expense

$
12,784

~~AdaptiveBiotechnologiesCorporation~~

~~Notesto Unaudited Condensed Financial Statements (Continued)~~

7.	~~Deferred Revenue~~

~~Deferred revenue by revenue classification was as follows (in thousands):~~

June 30,
2019

December 31,
2018

(unaudited)

Current deferred revenue

Sequencing

$
14,616

$
11,238

Development

46,578

1,457

Total current deferred revenue

61,194

12,695

Non-current deferred revenue

Sequencing

493

516

Development

240,426

188

Total non-current deferred revenue

240,919

704

Total current and non-current deferred revenue

$
302,113

$
13,399

~~Genentech deferred revenue represents $45.0 million and $240.2~~ million of the current and non-current ~~development~~ deferred revenue balances, respectively, ~~at June 30, 2019. In general,~~as of March 31, 2024 and $13.6 million and $41.1 million of the current ~~amounts will~~and non-current deferred revenue balances, respectively, as of December 31, 2023. We expect our current deferred revenue to be recognized as revenue within 12 ~~months and~~ months. We expect the ~~long-term amounts will~~majority of our non-current deferred revenue to be recognized as revenue over a period of approximately ~~seven to eight years.~~four years from March 31, 2024. This period of time represents an estimate of the research and development period to develop cellular therapies in oncology, which may be reduced or increased based on ~~the~~ various research and development activities.

Changes in deferred revenue during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2024 were as follows (in thousands):

Deferred revenue balance at December 31, 2018

$
13,399

Additions to deferred revenue during the period (unaudited)

308,055

Revenue recognized during the period (unaudited)

(19,341
)
Deferred revenue balance at June 30, 2019 (unaudited)

$
302,113


Deferred revenue balance at December 31, 2023	$	93,423
Additions to deferred revenue during the period		10,802
Revenue recognized during the period		(13,195	)
Deferred revenue balance at March 31, 2024	$	91,030

As of ~~June 30, 2019, $4.4~~March 31, 2024, $10.5 million was recognized as revenue that was included in the deferred revenue balance at December 31, ~~2018.~~ 2023.

5. Fair Value Measurements

The following tables set forth the fair values of financial assets as of March 31, 2024 and December 31, 2023 that were measured at fair value on a recurring basis (in thousands):


	March 31, 2024
	Level 1		Level 2		Level 3		Total
Financial assets
Money market funds	$	44,303	$	—	$	—	$	44,303
Commercial paper		—		10,777		—		10,777
U.S. government treasury securities		—		217,701		—		217,701
Corporate bonds		—		9,161		—		9,161
Total financial assets	$	44,303	$	237,639	$	—	$	281,942


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Financial assets
Money market funds	$	45,123	$	—	$	—	$	45,123
Commercial paper		—		10,630		—		10,630
U.S. government treasury and agency securities		—		264,426		—		264,426
Corporate bonds		—		6,281		—		6,281
Total financial assets	$	45,123	$	281,337	$	—	$	326,460

Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

Level 1 securities include highly liquid money market funds, for which we measure the fair value based on quoted prices in active markets for identical assets or liabilities. Level 2 securities consist of U.S. government treasury and agency securities, commercial paper and corporate bonds, and are valued based on recent trades of securities in inactive markets or on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

6. Investments

Available-for-sale investments consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):


	March 31, 2024
	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
Short-term marketable securities
Commercial paper	$	10,777	$	—	$	—		$	10,777
U.S. government treasury securities		217,805		25		(129	)		217,701
Corporate bonds		9,163		—		(2	)		9,161
Total short-term marketable securities	$	237,745	$	25	$	(131	)	$	237,639


	December 31, 2023
	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
Short-term marketable securities
Commercial paper	$	10,630	$	—	$	—		$	10,630
U.S. government treasury and agency securities		264,214		232		(20	)		264,426
Corporate bonds		6,278		3		—			6,281
Total short-term marketable securities	$	281,122	$	235	$	(20	)	$	281,337

All the U.S. government treasury and agency securities, commercial paper and corporate bonds designated as short-term marketable securities have an effective maturity date that is equal to or less than one year from the respective condensed consolidated balance sheet date. Those that are designated as long-term marketable securities have an effective maturity date that is more than one year from the respective condensed consolidated balance sheet date.

Accrued interest receivable is excluded from the amortized cost and estimated fair value of our marketable securities. Accrued interest receivable of $1.1 million and $1.0 million was presented separately within the prepaid expenses and other current assets balance on the unaudited condensed consolidated balance sheet as of March 31, 2024 and on the condensed consolidated balance sheet as of December 31, 2023, respectively.

The following table presents the gross unrealized holding losses and fair values for investments in an unrealized loss position, and the length of time individual securities have been in a continuous loss position, as of March 31, 2024 (in thousands):


	Less Than 12 Months					12 Months Or Greater
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. government treasury securities	$	134,826	$	(129	)	$	—	$	—
Corporate bonds		6,514		(2	)		—		—
Total available-for-sale securities	$	141,340	$	(131	)	$	—	$	—

We periodically review our available-for-sale securities to assess for credit impairment. Some of the factors considered in assessing impairment include the extent to which the fair value is less than the amortized cost basis, adverse conditions related to the security, an industry or geographic area, changes to security ratings or sector credit ratings and other relevant market data.

As ~~a result~~ of ~~cancelled customer sequencing contracts,~~March 31, 2024, we did not intend, nor were we more likely than not to be required, to sell our available-for-sale investments before the recovery of their amortized cost basis, which may be maturity. Based on our assessment, we concluded all impairment as of March 31, 2024 to be due to factors other than credit loss, such as changes in interest rates. A credit allowance was not recognized ~~$0.8 million~~and the impairment of ~~sequencing revenue during the six months ended June 30, 2019.~~our available-for-sale securities was recorded in other comprehensive loss.

7. Leases

~~Commitments and Contingencies~~

~~Operating Leases~~

We have ~~entered into various non-cancelable~~operating lease agreements for ~~our~~laboratory, office and ~~laboratory spaces.~~warehouse facilities in Seattle, Washington, South San Francisco, California and Bothell, Washington. As of March 31, 2024, we were not party to any finance leases.

Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

The following table reconciles our undiscounted operating lease cash flows to our operating lease liabilities, less current portion balance as of March 31, 2024 (in thousands):


2024 (excluding the three months ended March 31, 2024)	$	10,297
2025		14,098
2026		12,330
2027		11,944
2028		12,282
Thereafter		56,962
Total undiscounted lease payments		117,913
Less: Imputed interest rate		(21,419	)
Total operating lease liabilities		96,494
Less: Current portion		(9,594	)
Operating lease liabilities, less current portion	$	86,900

During the three months ended March 31, 2024 and 2023, cash paid for amounts included in the measurement of lease liabilities was $3.7 million and $3.4 million, respectively.

We have $2.1 million in letters of credit with one of our financial institutions in connection with certain of our leases.

8. Revenue Interest Purchase Agreement

In ~~July 2011,~~September 2022, we entered into 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 $125.0 million from the Purchasers at closing, less certain transaction expenses. We are also 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 and (ii) $50.0 million upon our request in connection with certain permitted acquisitions occurring no later than September 12, 2025, in each case subject to certain funding conditions.

As consideration for such payments, the Purchasers have a ~~non-cancelable lease agreement with~~right to receive certain revenue interests (the “Revenue Interests”) from us based on a ~~minority shareholder for laboratory and office space~~percentage of all GAAP revenue. Payments in Seattle, Washington. The lease terms were subsequently amended multiple times, most recently in June 2016. The lease terminates in June 2023. The lease also requires us to pay additional amounts for operating and maintenance expenses.

In October 2016, we entered into an agreement to sublease certain laboratory and office space in South San Francisco, California. The lease commenced in October 2016 and terminated in March 2019. The lease required us to pay additional amounts for operating and maintenance expenses.

In April 2018, we entered into a lease agreement to lease additional space in South San Francisco, California. The lease term is through March 2026 and provides for one five-year option. We will be responsible for our share of allocable operating expenses, tax expenses and utilities cost during the durationrespect of the ~~lease term.~~ Revenue Interests shall be made quarterly within 45 days following the end of each fiscal quarter (each, a “Revenue Interest Payment”).

Accounting Treatment

We accounted for the transaction as debt recorded at amortized cost using the effective interest rate method.

To determine the amortization of the Purchase Agreement obligation, we are required to estimate the amount and timing of future Revenue Interest Payments based on our estimate of the timing and amount of future revenues and calculate an effective interest rate which will amortize the obligation to zero over the amortization period. The calculated effective interest rate as of March 31, 2024 was 9.2%.

In connection with the ~~lease, the landlord funded agreed-upon improvements prior~~Purchase Agreement, we incurred debt issuance costs of $0.6 million. Debt issuance costs have been recorded to the lease commencement date of December 12, 2018. The landlord was solely responsible for the $2.4 million cost of such improvements, which we recognized as a leasehold improvement asset that depreciates beginning from the commencement date to the initial lease term,debt and ~~a corresponding leasehold incentive obligation, which is~~are being amortized over the ~~life~~estimated term of the ~~lease.~~

~~AdaptiveBiotechnologiesCorporation~~

~~Notesto Unaudited Condensed Financial Statements (Continued)~~

~~As of June 30, 2019, future minimum lease payments, exclusive of operating~~debt using the effective interest method, adjusted on a prospective basis for changes in the underlying assumptions and ~~maintenance costs, were as follows (in thousands) (unaudited):~~inputs.

The assumptions used in determining the expected repayment term of the obligation and amortization period of the issuance costs requires that we make estimates that could impact the short- and long-term classification of these costs, as well as the period over which these costs will be amortized. We periodically assess the amount and timing of expected Revenue Interest Payments based on internal forecasts. To the extent such payments are greater or less than our initial estimates or the timing of such payments is materially different than our original estimates, we will prospectively adjust the amortization of the revenue interest liability and the effective interest rate.

2019

$
1,781

2020

3,819

2021

3,917

2022

4,017

2023

2,295

Thereafter

2,315

Total future minimum lease payments

$
18,144

~~Rent expenses, inclusive of operating and maintenance costs, were $1.1 million and $0.9 million for~~The following table sets forth the revenue interest liability, net activity during the three months ended ~~June 30, 2019 and 2018, respectively, and $2.3~~March 31, 2024 (in thousands):


Revenue interest liability, net at December 31, 2023	$	130,660
Interest expense		2,993
Revenue interest payable		(2,108	)
Revenue interest liability, net at March 31, 2024	$	131,545

Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

Revenue interest payable of $2.1 million and ~~$1.8~~$2.3 million ~~for~~was included within the ~~six months ended June 30, 2019~~accounts payable balance on the unaudited condensed consolidated balance sheet as of March 31, 2024 and ~~2018,~~on the condensed consolidated balance sheet as of December 31, 2023, respectively.

9. Commitments and Contingencies

Legal Proceedings

We are subject to claims and assessments from time to time in the ordinary course of business. We will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. We ~~are~~were not ~~currently~~ party to any material legal ~~proceedings.~~proceedings as of March 31, 2024.

Indemnification Agreements

In the ordinary course of business, we may provide indemnification of varying scope and terms to vendors, lessors, customers and other parties with respect to certain matters including, but not limited to, losses arising out of breach of our agreements with them or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with members of our ~~Board~~board of ~~Directors~~directors and certain of our executive officers that will require us to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments that we could be required to make under these indemnification agreements is, in many cases, unlimited. We have not incurred any material costs as a result of such indemnifications and are not currently aware of any indemnification claims.

10. Shareholders’ Equity

Common Stock

9.	~~Convertible Preferred Stock~~

~~Convertible preferred stock at June 30, 2019 consisted of the following (in thousands, except share data) (unaudited):~~

Shares
Authorized

Shares Issued
and
Outstanding

Amount

Liquidation
Preference

Series A

4,550,000

4,550,000

$
12,405

$
4,550

Series B

5,645,706

5,645,706

16,018

9,669

Series C

4,804,227

4,747,352

14,425

12,521

Series D

19,269,117

19,269,117

106,905

106,999

Series E

15,524,350

15,524,350

93,698

93,750

Series E-1

17,407,441

16,854,887

73,640
⁽¹⁾

101,785

Series F

21,761,676

21,761,676

195,013

195,100

Series F-1

4,800,000

4,686,649

49,827

50,000

Total convertible preferred stock

93,762,517

93,039,737

$
561,931

$
574,374

~~(1) Includes vested Series E-1 convertible preferred stock options of $0.7 million which are not included in the shares issued and outstanding.~~

~~AdaptiveBiotechnologiesCorporation~~

~~Notesto Unaudited Condensed Financial Statements (Continued)~~

10.	~~Shareholders’Deficit~~

~~CommonStock~~

~~We are authorized to issue 131,000,000 shares of common stock.~~ Our common stock has ~~a par value of $0.0001,~~ no preferences or privileges and is not redeemable. Holders of our common stock are entitled to one vote for each share of common stock ~~held.~~held. The holders of record of outstanding shares of common stock shall be entitled to receive, when, as and if declared, out of funds legally available, such cash and other dividends as may be declared from time to time.

~~We have~~Our 2019 Equity Incentive Plan (the “2019 Plan”) provides for annual increases in the number of shares that may be issued under the 2019 Plan on January 1, 2020 and on each subsequent January 1, thereafter, by a number of shares equal to the lesser of (a) 5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by our board of directors.

Furthermore, our Employee Stock Purchase Plan (the “ESPP”) provides for annual increases in the number of shares available for issuance under our ESPP on January 1, 2020 and on each January 1, thereafter, by a number of shares equal to the smallest of (a) 1% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by our board of directors.

Effective January 1, 2024, our 2019 Plan and ESPP reserves increased by 7,254,113 shares and 1,450,822 shares, respectively.

As of March 31, 2024, we had reserved shares of common stock for the ~~following as of June 30, 2019 (unaudited):~~following:


Shares ~~to be issued~~issuable upon ~~conversion~~the exercise of ~~all series of convertible preferred~~outstanding stock options granted			~~93,039,737~~13,588,812
Shares issuable upon the vesting of outstanding restricted stock units granted and the maximum outstanding market-based restricted stock units eligible to be ~~issued upon exercise of outstanding common stock options~~earned			~~17,681,436~~15,986,199
Shares available for future ~~stock option grants~~grant under the 2019 Equity Incentive Plan			~~3,155,968~~15,149,986
Shares ~~to be issued upon exercise of outstanding Series E-1 convertible preferred stock options~~available for future grant under the Employee Stock Purchase Plan			~~15,034~~5,686,170
~~Shares to be issued upon conversion of Series C convertible preferred stock in connection with warrant exercise~~			~~56,875~~
~~Shares to be issued upon conversion of common stock warrants~~			~~55,032~~
~~Shares~~Total shares of common stock reserved for future issuance			~~114,004,082~~50,411,167

~~Common~~ ~~Stock~~

Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

~~Warrants~~

11. Equity Incentive Plans

In connection with two transactions in 2012 and 2013, we granted warrants to purchase up to 55,032 shares of common stock. The warrants are exercisable at any time for a period of ten years from the date of issuance at a weighted-average exercise price of $0.37, except in the case of a warrant to purchase 20,000 shares of common stock at an exercise price of $0.45 per share that would have expired if unexercised prior to the closing of our IPO.

~~11.~~

~~Equity Incentive Plans~~

~~Adaptive~~2009Equity Incentive Plan

We adopted an equity incentive plan in 2009 ~~(“2009~~(the “2009 Plan”) that ~~provides~~provided for the issuance of incentive and nonqualified common stock options and other share-based awards for employees, directors and consultants. Under the 2009 Plan, the ~~option~~ exercise price for incentive and nonqualified stock options ~~may~~were not to be less than the fair market value of our common stock at the date of ~~grant as determined by our Board of Directors. Options~~grant. Stock options granted under this plan expire no later than ten years from the grant date and vesting was established at the time of grant. Pursuant to the terms of the 2019 Plan, any shares subject to outstanding stock options originally granted under the 2009 Plan that terminate, expire or lapse for any reason without the delivery of shares to the holder thereof shall become available for issuance pursuant to awards granted under the 2019 Plan. While no shares are available for future grant under the 2009 Plan, it continues to govern outstanding equity awards granted thereunder.

2019 Equity Incentive Plan

The 2019 Plan became effective immediately prior to the closing of our initial public offering in July 2019. The 2019 Plan provides for the issuance of awards in the form of stock options and other share-based awards for employees, directors and consultants. Under the 2019 Plan, the stock option exercise price per share shall not be less than the fair market value of a share of stock on the effective date of grant, as defined by the 2019 Plan, unless explicitly qualified under the provisions of Section 409A or Section 424(a) of the Internal Revenue Code of 1986. Additionally, unless otherwise specified, stock options granted under this plan expire no later than ten years from the grant date and vesting is established at the time of grant. Except for certain stock option and restricted stock unit grants made to non-employee directors, stock options and restricted stock units granted under the 2019 Plan generally vest over a four-year period, subject to continuous service through each applicable vesting date. As of ~~June 30, 2019,~~March 31, 2024, we ~~have 20,837,404~~had 39,881,924 shares of common stock ~~available~~authorized for issuance under the ~~2009~~2019 Plan.

~~A summary of our option activity during the six months ended June 30, 2019 is as follows:~~

Shares
Available
for Grant

Shares
Subject to
Outstanding
Options

Weighted-
Average
Exercise Price
per Share

Aggregate
Intrinsic Value
(in thousands)

Outstanding at December 31, 2018

6,827,996

14,893,253

$
4.59

$
39,864

Options granted (unaudited)

(3,890,331
)

3,890,331

7.55

Forfeited or cancelled (unaudited)

218,303

(218,303
)

6.19

Exercised (unaudited)

—

(883,845
)

2.13

Outstanding at June 30, 2019 (unaudited)

3,155,968

17,681,436

5.35

759,479

~~Sequenta 2008StockPlan, as amended~~

~~In connection with our acquisition of Sequenta~~Changes in ~~January 2015, we assumed Sequenta’s Equity Incentive Plan (“2008 Plan”), including all outstanding options and~~ shares available for ~~future issuance~~grant during the three months ended March 31, 2024 were as follows:


	Shares Available for Grant
Shares available for grant at December 31, 2023		15,299,763
2019 Equity Incentive Plan reserve increase effective January 1, 2024		7,254,113
Stock options and restricted stock units granted and the maximum market-based restricted stock units granted eligible to be earned		(8,399,478	)
Stock options and restricted stock units forfeited or expired		995,588
Shares available for grant at March 31, 2024		15,149,986

Stock Options

Stock option activity under the ~~2008~~2009 Plan ~~which are all~~and 2019 Plan during the three months ended March 31, 2024 was as follows:


	Shares Subject to Outstanding Stock Options			Weighted-Average Exercise Price per Share		Aggregate Intrinsic Value (in thousands)
Stock options outstanding at December 31, 2023		12,875,045		$	15.90
Stock options granted		1,008,364			3.99
Stock options forfeited		(195,745	)		17.55
Stock options expired		(67,952	)		17.31
Stock options exercised		(30,900	)		1.43
Stock options outstanding at March 31, 2024		13,588,812		$	15.02	$	108
Stock options vested and exercisable at March 31, 2024		9,662,208		$	16.25	$	108

The weighted-average remaining contractual life for stock options outstanding as of March 31, 2024 was 6.2 years. The weighted-average remaining contractual life for vested and exercisable ~~for Series E-1 convertible preferred stock.~~stock options as of March 31, 2024 was 5.2 years.

Adaptive Biotechnologies Corporation

~~AdaptiveBiotechnologiesCorporation~~

Notesto Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

~~A summary of our Series E-1 convertible preferred~~

Restricted Stock Units

Restricted stock ~~option~~unit activity under the 2019 Plan during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2024 was as follows:


	Restricted Stock Units Outstanding			Weighted-Average Grant Date Fair Value per Share
Nonvested restricted stock units outstanding at December 31, 2023		9,669,460		$	10.32
Restricted stock units granted		5,327,094			3.99
Restricted stock units forfeited		(731,891	)		10.05
Restricted stock units vested		(2,255,158	)		11.04
Nonvested restricted stock units outstanding at March 31, 2024		12,009,505		$	7.39

Market-Based Restricted Stock Units

In addition to the restricted stock units described above, our board of directors approved awards of market-based restricted stock units to our chief executive officer, former chief financial officer, president/chief operating officer and chief scientific officer in March 2024. The shares of common stock that may be earned under the awards granted to our chief executive officer, former chief financial officer, president/chief operating officer and chief scientific officer, which range from zero shares to 709,220 shares, 295,580 shares, 350,000 shares and 709,220 shares, respectively, are calculated based on our total shareholder return during a three-year performance period as measured against that of the group of companies comprising the S&P Biotechnology Select Industry Index as of the grant date, subject to certain adjustments to such index group. Except as expressly provided in the terms of each award's agreement, vesting is subject to the respective grantee's continuous service through the end of the three-year performance period. These market-based restricted stock units, along with those granted in March 2022 and March 2023, which had a weighted-average grant date fair value per share of $15.13 and under which zero shares to 1,912,674 shares may be earned, remained outstanding as ~~follows:~~of March 31, 2024.

Convertible
Preferred
Shares
Subject to
Outstanding
Options

Weighted-
Average
Exercise Price
per Share

Aggregate
Intrinsic Value
(in thousands)

Outstanding at December 31, 2018

264,677

$
0.44

$
1,826

Options granted (unaudited)

—

—

Forfeited or cancelled (unaudited)

—

—

Exercised (unaudited)

(249,643
)

0.44

Outstanding at June 30, 2019 (unaudited)

15,034

0.49

719

Grant Date Fair Value of Stock Options, Restricted Stock Units and Market-Based Restricted Stock Units Granted

The estimated grant date fair ~~value~~values of stock options granted during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2024 and ~~2018 was~~2023 were estimated using the Black-Scholes option-pricing model with the following ~~weighted-average assumptions for our 2009 Plan:~~assumptions:

	Adaptive 2009 Equity Incentive Plan
	Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2024	2023
	(unaudited)
Grant date fair value	$	8.55		$	6.55
Fair value of common stock							$3.99	$8.46
Expected term (in years)		6.06			6.16		5.27 - 6.08	5.27 - 6.08
Risk-free interest rate		2.4	%		2.7	%	4.2%	4.2% - 4.3%
Expected volatility		67.9	%		69.2	%	74.5% - 75.0%	71.2% - 71.6%
Expected dividend yield		—			—		—	—

The determination of the grant date fair value of stock options ~~on the date of grant~~granted using a Black-Scholes option-pricing model is affected by the ~~estimated~~ fair value of our common stock, as well as assumptions regarding a number of variables that are ~~complex,~~ subjective and generally require ~~significant~~ judgment to determine. The valuation assumptions were determined as follows:

Fair value of common stock—The grant date fair value of our common stock has been determined by our Board of Directors with input from management. The grant date fair value of the common stock was determined using valuation methodologies which utilize certain assumptions, including probability weighting of events, volatility, time to liquidation, a risk-free interest rate and an assumption for a discount for lack of marketability (Level 3 inputs). In determining the fair value of the common stock, the methodologies used to estimate the enterprise value were performed using methodologies, approaches and assumptions consistent with the American Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. For valuations after the closing of our IPO, our board of directors plans to determine the fair value of each share of common stock is based on the closing price of our common stock on the date of grant, or other relevant determination date, as reported on The Nasdaq Global Select Market.

Expected term—The expected ~~life~~term of stock options granted to employees and non-employee directors is determined using the “simplified” method, as illustrated in ASC Topic 718, Compensation—Stock Compensation, as we do not have sufficient exercise history to determine a better estimate of expected term. Under this approach, the expected term is ~~presumed to be~~based on the ~~average~~midpoint between the vesting date and the end of ~~the weighted-average vesting term and~~ the contractual term of the stock option.

Risk-free interest rate—We utilize a risk-free interest rate in the option valuation model based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected ~~term~~terms of the stock options.

Expected volatility—As we do not have sufficient trading history for our common stock, ~~the~~ expected volatility ishas been based on the historical volatility of our publicly traded industry peers utilizing a period of time consistent with our estimate of expected term. Beginning in 2024, expected volatility was based on a weighted average of our historical volatility and the historical volatility of our publicly traded industry peers utilizing a period of time consistent with our estimate of expected term.

Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

Expected dividend yield—We do not anticipate paying any cash dividends in the foreseeable future and, therefore, use an expected dividend yield of zero in the option valuation model.

~~Adaptive~~ ~~BiotechnologiesCorporation~~

~~Notesto Unaudited Condensed Financial Statements (Continued)~~

~~Share-based compensation expense~~The weighted-average grant date fair value per share of ~~$3.3 million and $2.4 million was recognized~~stock options granted during the three months ended ~~June 30, 2019~~March 31, 2024 and ~~2018,~~2023 was $2.70 and $5.61, respectively.

The grant date fair value of restricted stock units granted is based on the closing price of our common stock on the date of grant, or other relevant determination date, as reported on The Nasdaq Global Select Market. The weighted-average grant date fair value per share of restricted stock units granted during the three months ended March 31, 2024 and 2023 was $3.99 and $8.46, respectively.

The weighted-average grant date fair value per share of the market-based restricted stock units granted during the three months ended March 31, 2024 and 2023 was $6.49 and $13.82, respectively, and ~~$6.4~~was determined using a Monte Carlo valuation model, which uses assumptions such as volatility, risk-free interest rate and dividend estimated for the respective performance periods. The weighted-average grant date fair value per share of the target payout level of the market-based restricted stock units outstanding as of March 31, 2024, 1,988,347 shares, was $10.65. The aggregate share-based compensation expense of the market-based restricted stock units granted during the three months ended March 31, 2024 and 2023 was $6.7 million and ~~$5.6~~$9.8 million, ~~was~~respectively, and is recognized ~~during~~on a straight-line basis over the ~~six months ended June 30, 2019~~respective grants' three-year performance periods, which are also the requisite service periods. Attainment of each grant's respective market condition and ~~2018, respectively.~~ the number of shares earned and vested does not impact the related share-based compensation expense recognized. Share-based compensation expense will be reversed only if the respective grantee does not provide continuous service through the respective performance period for reasons other than those expressly provided in the terms of the respective award.

The compensation ~~costs~~cost related to stock options, restricted stock units and market-based restricted stock units for the three months ended March 31, 2024 and 2023 are included ~~in our~~on the unaudited condensed consolidated statements of operations as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018		Three Months Ended March 31,
	(unaudited)								2024		2023
Cost of revenue	$	113	$	92	$	243	$	176	$	906	$	1,294
Research and development		978		652		1,895		1,468		4,684		4,549
Sales and marketing		943		592		1,849		1,549		3,013		3,431
General and administration		1,298		1,112		2,391		2,357
General and administrative										5,695		5,397
Total share-based compensation expense	$	3,332	$	2,448	$	6,378	$	5,550	$	14,298	$	14,671

~~At June 30, 2019,~~As of March 31, 2024, unrecognized share-based compensation expense ~~related to unvested stock options was $33.2 million, which is expected to be recognized over a~~and the remaining weighted-average recognition period ~~of 3.16 years.~~were as follows:


	Unrecognized Share-Based Compensation Expense (in thousands)		Remaining Weighted-Average Recognition Period (in years)
Nonvested stock options	$	28,766		1.92
Nonvested restricted stock units		83,591		2.79
Nonvested market-based restricted stock units		14,271		2.28

~~12.~~

~~Net LossPer ShareAttributableto Common~~ ~~Shareholders~~

12. Net LossPer Share Attributable to Adaptive Biotechnologies Corporation Common Shareholders

The following table sets forth the computation of ~~the~~ basic and diluted net loss per share attributable to our common shareholders for the three months ended March 31, 2024 and 2023 (in thousands, except ~~shares~~share and per share amounts):


	Three Months Ended March 31,
	2024			2023
Net loss attributable to Adaptive Biotechnologies Corporation	$	(47,507	)	$	(57,699	)
Weighted-average shares used in computing net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted		145,787,527			143,511,142
Net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted	$	(0.33	)	$	(0.40	)

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

(unaudited)

Net loss

$
(15,659
)

$
(12,493
)

$
(34,045
)

$
(24,884
)
Fair value adjustments to redemption value for Series E-1
convertible preferred stock options

(710
)

(2
)

(964
)

2

Net loss attributable to common shareholders, basic and diluted

$
(16,369
)

$
(12,495
)

$
(35,009
)

$
(24,882
)
Weighted-average shares used in computing net loss per share

13,279,324

12,385,888

13,074,692

12,334,227

Net loss per share attributable to common shareholders, basic and
diluted

$
(1.23
)

$
(1.01
)

$
(2.68
)

$
(2.02
)

Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

~~Since we were in a~~Given the loss position for all periods presented, basic net loss per share attributable to our common shareholders is the same as diluted net loss per share attributable to our common shareholders, as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive.

The following weighted-average common stock equivalents were excluded from the calculation of diluted net loss per share attributable to our common shareholders for the ~~periods presented,~~three months ended March 31, 2024 and 2023, as they had an anti-dilutive effect:

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

(unaudited)

Convertible preferred stock (on as if converted basis)

93,028,311

92,768,158

92,973,101

92,751,261

2009 Plan stock options issued and outstanding

17,591,720

14,597,833

16,826,833

13,927,507

2008 Plan stock options issued and outstanding

26,460

364,625

81,670

403,591

Common stock warrants

55,032

55,032

55,032

55,032

Convertible preferred stock warrants

56,875

56,875

56,875

56,875

Total

110,758,398

107,842,523

109,993,511

107,194,266

~~Adaptive~~ ~~Biotechnologies~~


	Three Months Ended March 31,
	2024		2023
Stock options outstanding		13,085,872		13,800,485
Nonvested restricted stock units outstanding		10,341,199		7,386,862
Maximum nonvested market-based restricted stock units outstanding eligible to be earned		2,547,757		904,006
Total		25,974,828		22,091,353

13. Segment Information

~~Notes~~In 2024, in connection with an organizational realignment, we began operating our business as two reporting segments: MRD and Immune Medicine. These segments are organized by market opportunity in commercial diagnostics and drug discovery, respectively.

The MRD business focuses on the use of our highly sensitive, next-generation sequencing 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. Our MRD revenue consists of revenue generated from (1) providing our clonoSEQ report to clinical customers; (2) providing MRD sample testing services to biopharmaceutical customers and certain academic institutions, including investigator-led clinical trials; and (3) providing our clonoSEQ report or results to certain international laboratory sites through technology transfers.

The Immune Medicine 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. Our Immune Medicine revenue consists of revenue generated from (1) providing sample testing services for our commercial research product, Adaptive Immunosequencing, to biopharmaceutical customers and academic institutions; and (2) our collaboration agreements with Genentech and other biopharmaceutical customers in areas of drug and target discovery.

There are no inter-segment revenues. See Note 3, Revenue for more information about each segment's revenue. Our CODM evaluates performance of the MRD segment based on both revenue and Adjusted EBITDA and evaluates performance of the Immune Medicine segment based on Adjusted EBITDA. Adjusted EBITDA for each of our segments includes costs that are directly aligned to each segment, as well as certain allocated shared expenses. These shared expenses primarily relate to our general and administrative functions, our non-laboratory facility space in our corporate headquarters and our production laboratory. We use the relative direct headcount assigned to each of the respective segments and our production laboratory sample volume to allocate these expenses. We do not allocate certain expenses, such as our corporate insurance costs, external legal and audit costs and expenses related to our investor relations, chief executive officer and other related support functions. Additionally, we do not allocate costs related to our idle facility in Seattle, Washington, interest expense related to our Purchase Agreement nor interest and other income, net. Given these unallocated costs and income are not included in the measurements reviewed by the CODM to assess each segment's performance, they are included in "Unallocated Corporate" below. Our allocation methodology will be periodically evaluated and may change. Our CODM is not regularly provided nor reviews assets when assessing each segment's performance and to allocate resources. As such, assets for reportable segments are not disclosed.

Adaptive Biotechnologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(unaudited)

~~13.~~

~~SubsequentEvents~~

~~On July 1, 2019, we completed~~The following tables set forth our ~~IPO. For~~segment information for the three months ended March 31, 2024 and 2023 (in thousands):


	Three Months Ended March 31, 2024
	MRD			Immune Medicine			Unallocated Corporate			Total
Revenue	$	32,626		$	9,247		$	—		$	41,873
Operating expenses		59,886			23,841			6,908			90,635
Adjusted EBITDA(1)		(17,259	)		(6,927	)		(3,994	)		(28,180	)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss	$	(27,260	)	$	(14,593	)	$	(5,680	)	$	(47,533	)
Net loss attributable to noncontrolling interest		—			—			26			26
Net loss attributable to Adaptive Biotechnologies Corporation		(27,260	)		(14,593	)		(5,654	)		(47,507	)
Interest and other income, net		—			—			(4,222	)		(4,222	)
Interest expense(2)		—			—			2,993			2,993
Depreciation and amortization expense		2,701			2,082			431			5,214
Restructuring expense(3)		467			577			—			1,044
Share-based compensation expense(4)		6,833			5,007			2,458			14,298
Adjusted EBITDA(1)	$	(17,259	)	$	(6,927	)	$	(3,994	)	$	(28,180	)


	Three Months Ended March 31, 2023
	MRD			Immune Medicine			Unallocated Corporate			Total
Revenue	$	21,427		$	16,220		$	—		$	37,647
Operating expenses		56,025			31,672			7,143			94,840
Adjusted EBITDA(1)		(26,386	)		(7,427	)		(3,285	)		(37,098	)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss	$	(34,597	)	$	(15,452	)	$	(7,651	)	$	(57,700	)
Net loss attributable to noncontrolling interest		—			—			1			1
Net loss attributable to Adaptive Biotechnologies Corporation		(34,597	)		(15,452	)		(7,650	)		(57,699	)
Interest and other income, net		—			—			(3,024	)		(3,024	)
Interest expense(2)		—			—			3,531			3,531
Depreciation and amortization expense		2,056			2,753			614			5,423
Share-based compensation expense(4)		6,155			5,272			3,244			14,671
Adjusted EBITDA(1)	$	(26,386	)	$	(7,427	)	$	(3,285	)	$	(37,098	)

(1) Adjusted EBITDA is a non-GAAP financial measure. See “Management's Discussion and Analysis of Financial Condition and Results of Operations—Adjusted EBITDA” for an explanation for how it is calculated and used by management.

(2) Represents costs associated with our revenue interest liability and noncash interest costs associated with the amortization of the related deferred issuance costs. See Note 8, Revenue Interest Purchase Agreement for details regarding this event, including the automatic conversion of all shares of our convertible preferred stock into common stock, our amended and restated articles of incorporation and bylaws and our 2019 Plan, please refer to Note 1 – Organization and Description of Business – Initial Public Offering.

In August 2019, we entered into an operating lease to rent 100,000 square feet in a to-be-constructed building in Seattle, Washington. Shell construction is expected to be completed in 2020. The lease term commences on the date that the landlord delivers the premises to us for construction of certain tenant improvements. Rent obligations commence 10 months thereafter, and the lease term ends 142 months form the date rent commences, subjectPurchase Agreement.

(3) Represents costs associated with our organizational realignment to our two segments initiated in the three months ended March 31, 2024. These costs primarily related to one-time termination benefits and ongoing benefit arrangements.

(4) Represents share-based compensation expense related to stock option, restricted stock unit and market-based restricted stock unit awards. See Note 11, Equity Incentive Plans for details on our share-based compensation expense.

Segment information for the three months ended March 31, 2023 is presented on a comparable basis to twice extend the lease for five years. The lease is cancellable under certain circumstances if the landlord fails to deliver the premises to us by May 1, 2021. We plan to occupy the new building in 2021, once interior construction is finished. The lease also requires us to pay additional amounts for operating and maintenance expenses. In connection with the new lease, we also entered into a letter of credit of $2.1 million with one of our existing financial institutions.

~~Furthermore, in August 2019, we amended the lease for our current headquarters in Seattle, Washington to expand the size~~that of the existing premises by approximately 8,400 square feet. Rent obligations of the expanded premises commence four months after the landlord delivers the premises to us for construction of certain tenant improvements,current period and ~~the lease term for both the existing premises~~is based on judgments and ~~the expanded premises ends 142 months after the commencement date of the new lease mentioned above, subject to~~allocation methods from our ~~option to twice extend the lease for five years. If the new lease does not commence, the lease term for the existing premises and the expanded premises ends March 31, 2024.~~recent organizational changes.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with ~~our~~the unaudited condensed consolidated financial statements and related notes and the other financial information appearing elsewhere in this report, as well as the other financial information we file with the SEC from time to time. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and ~~uncertainties.~~ uncertainties relating to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements.

As a result of many factors, including those factors set forth in the “Risk Factors” section of this report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are advancing the field of ~~immune-driven~~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 itthe immune system detects and treats disease in that patient. We capture these insights in our dynamic clinical immunomics database and related antigen annotations, which isare underpinned by computational biology and machine learning, and use them to develop and commercialize clinical products and services that ~~we are tailoring~~can be tailored to ~~each~~the needs of individual ~~patient. We have two~~patients. Our existing and future commercial products and services are aligned to two business areas which we refer to as MRD and ~~a robust pipeline of~~Immune Medicine.

Our current product and service offerings in MRD related to the MRD market are our clonoSEQ clinical ~~products~~diagnostic test, offered to clinicians, and ~~services that we are designing~~our clonoSEQ or MRD assay, offered to ~~diagnose, monitor and enable the treatment of diseases such as cancer, autoimmune conditions and infectious diseases.~~

Our immune medicine platform is the foundation for our expanding suite of products and services. The cornerstone of our platform and core immunosequencing product, immunoSEQ, serves as our underlying research andbiopharmaceutical partners to advance drug development ~~engine and generates revenue from academic and biopharmaceutical customers.~~efforts (“MRD Pharma”). Our first clinical diagnostic product, clonoSEQ, is the first test authorized by the ~~FDA~~Food and Drug Administration for the detection and monitoring of MRD in patients with MMmultiple myeloma, B cell acute lymphoblastic leukemia and ~~ALL~~chronic lymphocytic leukemia, and is ~~being validated~~also available as a CLIA-validated laboratory developed test for patients with other ~~blood cancers.~~lymphoid cancers, including diffuse large B-cell lymphoma. With the use of clonoSEQ, we are transforming how lymphoid cancers are treated by working with providers, pharmaceutical partners and payors.

Immune Medicine leverages our proprietary ability to sequence, map, pair and characterize T cell receptors (“TCRs”) and B cell receptors (“BCRs”) at scale to drive opportunities in cancer, autoimmune disorders, infectious diseases and neurodegenerative disorders. Our core research product, Adaptive Immunosequencing, serves as our underlying research and development engine and generates revenue from biopharmaceutical and academic customers. Leveraging our collaboration with Microsoft ~~to create~~Corporation, we are creating the TCR-Antigen Map. We are using the TCR-Antigen Map ~~we are also developing a diagnostic product, immunoSEQ Dx, that may enable early detection~~to identify and validate disease signatures to improve the diagnosis and treatment of many ~~diseases from a single blood test. Our therapeutic product candidates, being developed under the Genentech Agreement,~~diseases. In Drug Discovery, we use our proprietary capabilities to discover new drug targets and leverage our ~~platform~~validated TCR and BCR discovery approaches to ~~identify specific immune cells to develop into cellular therapies in oncology.~~

Since our inception, we have devoted a majority of our resources to research and development activities to develop our immune medicine platform, which enables the delivery of our products and services for life sciences research, clinical diagnostics and drug discovery customers.

For our life science research customers, we provide two categories of products and services using immunoSEQ, our core sequencing and immunomics tracking technology. First, we provide immunosequencing services, the revenue from which we record as sequencing revenue. Second, we provide certain research customers professional support, for which we may receive payments upon those customers achieving specified milestones. We record these support activities as development revenue.

For our clinical diagnostics customers, we sell our clonoSEQ diagnostic tests, which include our immunosequencing services and are thus recorded as sequencing revenue. In the future, we intend to sell other diagnostics products and services, which we also expect to record as sequencing revenue.

~~For our current drug discovery collaborator, Genentech, we screen, identify and characterize TCRs in support of our collaboration. We record revenue from this collaboration as development revenue.~~

Historically, we have sold immunoSEQ as a fee-for-service offering to academic centers and biopharmaceutical customers and further deepened those relationships over time by supporting their development initiatives. These research offerings have comprised the vast majority of our revenue to date, although our business is pursuing broader opportunities. As we continue to expand the use of our clonoSEQ diagnostic tests, develop and commercialize immunoSEQ Dxdiscover and develop TCR or antibody therapeutic assets. Drug Discovery includes our worldwide collaboration and ~~commercialize therapeutic product candidates~~license agreement with ~~our drug discovery collaborator, we expect our mix of revenue to shift to clinical products and services, which we believe will become our largest sources of revenue.~~

We are actively pursuing opportunities to deepen our relationships with current customers and initiate relationships with new customers. We have an experienced, specialty salesforce that is targeting department heads, laboratory directors, principal investigators, core facility directors, clinicians, payors and research scientists and pathologists at leading academic institutions, biopharmaceutical companies, research institutions and contract research organizations. As MRD assessment becomes standard practice for patient management across a range of blood cancers, we believe it will be essential for clinicians and patients to have access to a highly accurate, sensitive and standardized MRD assessment tool. We are focused on establishing and maintaining collaborative relationships with payors, developing health economic evidence and building billing and patient access infrastructure to expand reimbursement coverage for our clinical diagnostics.

~~Adaptive~~Genentech (the “Genentech Agreement”).~~BiotechnologiesCorporation~~

We ~~generated~~recognized revenue of ~~$22.1~~$41.9 million and ~~$34.8~~$37.6 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2024 and ~~$11.6~~2023, respectively. Net loss attributable to Adaptive Biotechnologies Corporation was $47.5 million and ~~$21.3~~$57.7 million for the three ~~and six~~ months ended ~~June 30, 2018,~~March 31, 2024 and 2023, respectively. Our net losses were $15.7 million and $34.0 million for the three and six months ended June 30, 2019, respectively, and $12.5 million and $24.9 million for the three and six months ended June 30, 2018. We have funded our operations to date principally from the sale of convertible preferred stock and common stock and, to a lesser extent, ~~sequencing~~revenue and ~~development revenue.~~proceeds from the revenue interest purchase agreement we entered into in September 2022 with OrbiMed Royalty & Credit Opportunities IV, LP, an affiliate of OrbiMed Advisors LLC, as collateral agent and administrative agent for the purchasers party thereto (the “Purchase Agreement”). As of ~~June 30, 2019~~March 31, 2024 and December 31, ~~2018,~~2023, we had cash, cash equivalents and marketable securities of ~~$423.0~~$308.9 million and ~~$165.0~~$346.4 million, respectively. In December 2018, we entered into the Genentech Agreement pursuant to which we received a $300.0 million initial upfront payment in February 2019, may be eligible to receive approximately $1.8 billion over time, including payments upon achievement of specified development, regulatory and commercial milestones, and may receive additional royalties on sales of products commercialized under this agreement.

In 2024, in connection with an organizational realignment, we began operating our business as two reporting segments: MRD and Immune Medicine. These segments are organized by market opportunity in commercial diagnostics and drug discovery, respectively. See Note 13, Segment Information for more information regarding our segments and the assumptions used to allocate shared expenses, which are based on judgments and methods related to our 2024 organizational changes.

The following tables set forth our segment information for the periods presented (in thousands):

(1)Adjusted EBITDA is a non-GAAP financial measure. See “Adjusted EBITDA” below for an explanation for how it is calculated and used by management.

We derive revenue by providing diagnostic and research services in our MRD and Immune Medicine business areas. Our MRD revenue consists of revenue generated from (1) providing our clonoSEQ report to clinical customers; (2) providing MRD sample testing services to biopharmaceutical customers and certain academic institutions, including investigator-led clinical trials; and (3) providing our clonoSEQ report or results to certain international laboratory sites through technology transfers. We disclose our clonoSEQ test volume, which includes the number of clonoSEQ reports and results we have provided to ordering physicians in the United States (“U.S.”) and international technology transfer sites. These volumes do not include sample results from our biopharmaceutical customers or academic institutions utilizing our MRD services. Our Immune Medicine revenue consists of revenue generated from (1) providing sample testing services for our commercial research product, Adaptive Immunosequencing, to biopharmaceutical customers and academic institutions; and (2) our collaboration agreements with Genentech and other biopharmaceutical customers in areas of drug and target discovery.

For our clinical customers, we primarily derive revenue from ~~two sources: (i) sequencing~~providing our clonoSEQ report to ordering physicians. We bill commercial, government and medical institution payors based on reports delivered to ordering physicians. Amounts paid for clonoSEQ by commercial, government and medical institution payors vary based on respective reimbursement rates and patient responsibilities, which may differ from our targeted list price. We recognize clinical revenue by evaluating customer payment history, contracted reimbursement rates, if applicable, and other adjustments to estimate the amount of revenue that is collectible.

For our clonoSEQ coverage under Medicare, we bill an episode of treatment when we deliver the first eligible test report. This billing contemplates all necessary tests required during a patient’s treatment cycle, which is currently estimated at approximately four tests per patient, including the initial sequence identification test. Revenue recognition commences at the time the initial billable test report is delivered and is based upon cumulative tests delivered to date. Any unrecognized revenue from the initial billable test is recorded as deferred revenue and ~~(ii) development revenue.~~

~~Sequencing revenue.~~ ~~Sequencing revenue reflects~~recognized either as we deliver our estimate of the ~~amounts generated from providing sequencing services through immunoSEQ to research customers and from providing testing services through clonoSEQ to clinical and research customers.~~remaining tests in a patient’s treatment cycle or when the likelihood becomes remote that a patient will receive additional testing.

For our research customers, which include biopharmaceutical customers and academic institutions for both our MRD and Adaptive Immunosequencing services, delivery of the ~~sequencing~~respective test results may include some level of professional support and analysis. Terms with biopharmaceutical customers generally include non-refundable payments made in advance of services (“upfront ~~payments,~~payments”), which we record as deferred revenue. For all research customers, we recognize revenue as we deliver sequencing results. From time to time, we offer discounts in order to gain rights and access to certain datasets. Revenue is recognized net of these discounts and costs associated with these services are reflected in cost of revenue.

~~For~~ In periods where our ~~clinical customers,~~sample estimates are reduced or a customer project is cancelled and, in either case, we ~~derive~~have remaining related deferred revenue, ~~from providing our clonoSEQ test report to ordering physicians. We bill commercial payors and medical institutions as~~ we ~~deliver test results to ordering physicians. Amounts paid for clonoSEQ diagnostic tests by commercial payors and medical institutions vary~~recognize revenue using a cumulative catch-up approach based on ~~respective reimbursement rates and patient responsibilities, which may vary from our targeted list price. To~~the proportion of samples delivered to date relative to the ~~majority~~total samples expected to be delivered. Certain of our ~~clonoSEQ diagnostic test~~MRD revenue has been received from medical institutions. We recognize clinical revenue by evaluating customer payment history and estimating the amount of revenue that is collectible. As of December 31, 2018, we did not have reimbursement available to us through any government payors for clonoSEQ.

~~In January 2019, clonoSEQ received Medicare coverage aligned~~arrangements with the FDA label and NCCN guidelines for longitudinal monitoring in MM and ALL. We bill Medicare for an episode of treatment when we deliver the first eligible test results. This billing contemplates all necessary tests required during a patient’s treatment cycle, which is currently estimated at approximately four tests per patient, including the initial sequence identification test. Revenue is recognized at the time the initial billable test result is delivered and is based upon cumulative tests delivered to date. Any unrecognized revenuebiopharmaceutical customers include cash consideration from the ~~initial billable test~~achievement of regulatory milestones of the respective biopharmaceutical customers’ therapeutics. Such revenue is ~~recorded as deferred revenue and recognized as we deliver the remaining tests in a patient’s treatment cycle.~~constrained from recognition until it becomes probable that such milestone will be achieved.

Under certain agreements with our biopharmaceutical customers who seek access to our platform to support their therapeutic development ~~activities. Additionally,~~activities, revenues are generated from research and development support services that we generate development revenue from the achievement of regulatory milestones. We enter into collaboration and similar agreements with these customers. When these agreements include sequencing activities, we separately classify those activities as sequencing revenue.provide. These agreements may ~~also~~ include substantial non-refundable upfront payments, which we recognize ~~as development revenue~~ over time as we perform the respective services. Revenue recognized from these activities relate primarily to the Genentech Agreement.

We expect our MRD revenue to increase ~~over~~in the long term ~~particularly~~ as we continue to increase our MRD clinical testing volume through increased penetration in our existing covered patient populations, expand into new patient populations and optimize payor coverage. Our MRD revenue may fluctuate period to period due to the ~~mix~~uncertain timing of ~~revenue migrates to clinical diagnostics and drug discovery. The pace by~~receipt of our biopharmaceutical customer samples, which ~~this mix migrates will be determined by~~may cause uncertainty in the ~~level of customer adoption and frequency of use~~delivery of our products and ~~services. However,~~services, the recognition of milestones related to regulatory approvals of our biopharmaceutical customers’ therapeutics and changes in estimates of our clinical revenue reimbursement rates.

We expect our Immune Medicine revenue to decrease in the short term primarily due to our expected reduction in revenue generated from the Genentech Agreement. Over the long term, we expect our Immune Medicine revenue to increase as we or our collaborators advance therapies to commercialization. Our Immune Medicine revenue may fluctuate from period to period due to the ~~uncertain nature~~timing of ~~delivery~~expenses incurred, changes in estimates of total anticipated costs related to the Genentech Agreement and other events not within our ~~product~~control, including the recognition of milestones under the Genentech Agreement and ~~services and milestone achievement.~~the timing of receipt of customer samples from our biopharmaceutical customers.

Cost of revenue includes the cost of materials, personnel-related expenses ~~(comprised of~~(including salaries, benefits and share-based compensation), shipping and handling expenses, equipment ~~and~~costs, allocated facility costs associated with processing samples and professional support ~~for~~costs related to our ~~sequencing revenue.~~service revenue activities. Allocated facility costs include depreciation of laboratory equipment, as well as allocated facility occupancy and information technology costs. Costs associated with processing samples are recorded as expense, regardless of the timing of revenue recognition. As such, cost of revenue and related volume does not always trend in the same direction as revenue recognition and related volume.

~~Adaptive~~ Additionally, costs to support the Genentech Agreement are a component of our research and development expenses.~~BiotechnologiesCorporation~~

We expect cost of revenue to increase in absolute dollars in the long term as we grow our ~~sequencing~~sample testing volume, but the cost per sample to decrease over the long term due to the efficiencies we may gain as ~~sequencing~~assay volume increases from improved utilization of our laboratory capacity, automation and other value engineering initiatives. If our sample volume throughput is reduced, cost of revenue as a percentage of total revenue may be adversely impacted due to fixed overhead costs.

Research and development expenses ~~comprise~~consist of laboratory materials costs, personnel-related expenses (including salaries, benefits and share-based compensation), equipment costs, allocated facility ~~costs,~~and information technology costs and contract service expenses. Research and development activities support further development and refinement of existing assays and products, discovery of new technologies and investments ~~into~~in our immune medicine platform. We also include in research and development expenses the costs associated with software development of applications to support future commercial opportunities, as well as development activities to support laboratory scaling and ~~workflow, as well as development of applications to support future commercial opportunities.~~workflow. We are currently conducting research and development activities for several products and services and we typically use our laboratory materials, personnel, facilities, information technology and other development resources across multiple development programs. Additionally, certain of these research and development activities benefit more than one of our product opportunities. We dohave not ~~track~~historically tracked research and development expenses by specific product candidates.

AThe costs to support the Genentech Agreement are a component of our research and development ~~activities is~~expenses. Additionally, a component of our research and development expenses are costs supporting clinical and analytical validations to obtain regulatory approval for future clinical products and services. Some of these activities have generated and may in the future generate ~~development~~ revenue.

We expect ~~our~~ research and development expenses to ~~continue to increase~~decrease in ~~absolute dollars as we innovate~~the short term and ~~expand the application of our platform. However, we expect research and development expenses~~ to decrease as a percentage of revenue in the long term, ~~and they~~although the percentage may fluctuate ~~as a percentage of revenue~~ from period to period due to the timing and extent of our ~~efforts needed to develop~~development and ~~commercialize new products and services.~~commercialization efforts.

Sales and marketing expenses ~~consist primarily of~~include personnel-related expenses (including salaries, benefits and share-based compensation) for commercial sales, product and account management, marketing, reimbursement, medical education and business development personnel that support commercialization of our platform products. In addition, these expenses include external costs such as advertising expenses, customer education and promotional expenses, market analysis expenses, conference fees, travel expenses and allocated facility and information technology costs.

We expect ~~our~~sales and marketing expenses to remain relatively consistent in the short term. In the long term, we expect sales and marketing expenses to increase in absolute dollars as we ~~expand our commercial sales, marketing and business development teams and~~ increase marketing activities to drive awareness and adoption of our products and services. However, we expect sales and marketing expenses to decrease as a percentage of revenue in the long term, ~~though they may fluctuate as a percentage of revenue~~subject to fluctuations from period to period due to the timing and magnitude of these expenses.

General and administrative expenses ~~consist primarily of~~include personnel-related expenses ~~including~~(including salaries, benefits and share-based ~~compensation, salaries and benefits~~compensation) for our personnel in executive, legal, finance and accounting, human resources and other administrative functions, including third-party clinical billing services. In addition, these expenses include insurance costs, external legal costs, accounting and tax service expenses, consulting fees and allocated ~~facilities~~facility and information technology costs.

We expect ~~our~~ general and administrative expenses to ~~continue to increase~~remain relatively consistent in ~~absolute dollars as we increase headcount~~the short term and incur costs associated with operating as a public company, including expenses related to legal, accounting, regulatory matters, maintaining compliance with exchange listing and requirements of the SEC, director and officer insurance premiums and investor relations. Though expected to increase in absolute dollars, we expect these expenses to decrease as a percentage of revenue in the long term.

~~Adaptive~~Interest expense includes costs associated with our revenue interest liability related to the Purchase Agreement and noncash interest costs associated with the amortization of the related deferred issuance costs. We impute interest expense using the effective interest rate method. We calculate an effective interest rate which will amortize our related obligation to zero over the anticipated repayment period. A significant increase or decrease in or changes in timing of forecasted revenue will prospectively impact our interest expense.~~BiotechnologiesCorporation~~

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

(unaudited)

(in thousands, except share and per share amounts)

Statements of Operations Data:

Revenue

Sequencing revenue

$
11,865

$
8,281

$
17,948

$
14,061

Development revenue

10,273

3,287

16,856

7,222

Total revenue

22,138

11,568

34,804

21,283

Operating expenses

Cost of revenue

5,734

5,044

10,722

9,033

Research and development

16,527

9,452

29,010

18,307

Sales and marketing

8,897

5,329

16,714

10,376

General and administrative

6,662

4,632

13,666

9,175

Amortization of intangible assets

423

424

842

843

Total operating expenses

38,243

24,881

70,954

47,734

Loss from operations

(16,105
)

(13,313
)

(36,150
)

(26,451
)
Interest and other income, net

446

820

2,105

1,567

Net loss

(15,659
)

(12,493
)

(34,045
)

(24,884
)
Fair value adjustment to Series E-1 convertible preferred
   stock options

(710
)

(2
)

(964
)

2

Net loss attributable to common shareholders

$
(16,369
)

$
(12,495
)

$
(35,009
)

$
(24,882
)
Net loss per share attributable to common shareholders, basic
   and diluted

$
(1.23
)

$
(1.01
)

$
(2.68
)

$
(2.02
)
Weighted-average shares used in computing net loss per share
   attributable to common shareholders, basic and diluted

13,279,324

12,385,888

13,074,692

12,334,227

Other Fianncial and Operating Data:

Adjusted EBITDA ⁽¹⁾

$
(10,903
)

$
(9,374
)

$
(26,119
)

$
(17,959
)

The following table sets forth our statements of operations data and other financial and operating data for the periods presented (in thousands, except share and per share amounts):

(1) Adjusted EBITDA is a non-GAAP financial measure that we define as net loss attributable to Adaptive Biotechnologies Corporation adjusted for interest and other income, net, interest expense, income tax (expense) benefit, ~~(expense),~~ depreciation and amortization expense, impairment costs for right-of-use and related long-lived assets, restructuring expense and share-based compensation ~~expenses. Please refer to~~expense. See “Adjusted EBITDA” below for a reconciliation between Adjusted EBITDA and net loss attributable to Adaptive Biotechnologies Corporation, the most directly comparable GAAP financial measure, and a discussion about the limitations of Adjusted EBITDA.

Comparison of the Three Months Ended ~~June 30, 2019~~March 31, 2024 and ~~2018~~2023

~~Total revenue was $22.1~~The $11.2 million ~~for the three months ended June 30, 2019 compared to $11.6 million for the three months ended June 30, 2018, representing an increase of approximately $10.6 million, or 91%.~~

~~Sequencing revenue increased to $11.9 million for the three months ended June 30, 2019, representing an increase of $3.6 million, or 43%. The~~ increase in ~~sequencing~~MRD revenue was primarily ~~attributable~~due to ~~an increase of $2.6 million in revenue generated from biopharmaceutical and academic customers and~~ a ~~$1.0~~$5.9 million increase in revenue generated from providing clonoSEQ to clinical customers, a $4.5 million increase in revenue recognized upon the achievement of regulatory milestones by one of our biopharmaceutical customers and a $1.4 million increase in revenue generated from providing MRD sample testing services to biopharmaceutical customers.

~~Research sequencing~~ These increases were partially offset by a $0.6 million decrease in revenue generated from providing MRD sample testing services to investigator-led clinical trials. Our clonoSEQ test volume increased by ~~22%~~41% to ~~9,084 sequences delivered in the three months ended June 30, 2019 from 7,457 sequences delivered in the three months ended June 30, 2018. Clinical sequencing volume increased by 50% to 2,388 clinical~~17,040 tests delivered in the three months ended ~~June 30, 2019~~March 31, 2024 from ~~1,587 clinical~~12,079 tests delivered in the three months ended ~~June 30, 2018.~~March 31, 2023.

~~Development revenue increased to $10.3 million for the three months ended June 30, 2019, representing an increase of~~The $7.0 million ~~or 213%. The increase~~decrease in Immune Medicine revenue was primarily ~~attributable~~due to ~~$8.6~~a $4.4 million ofdecrease in revenue generated from the Genentech Agreement, ~~offset by~~which resulted from decreased collaboration expenses, and a ~~$1.4~~$2.5 million decrease in revenue generated from ~~translational agreements~~our biopharmaceutical and ~~a $0.2 million decrease in revenue generated from MRD development agreements.~~academic customers.

~~Cost of revenue was $5.7~~The $0.6 million ~~for the three months ended June 30, 2019, compared to $5.0 million for the three months ended June 30, 2018, representing an increase of $0.7 million, or 14%. The increase~~decrease in cost of revenue was primarily attributable to ~~an increase of~~a $1.2 million decrease in overhead and labor costs, which was largely driven by reduced headcount and laboratory relocation and consolidation activities, and a $0.6 million decrease in ~~the cost of overhead and $0.1 million in the~~ cost of materials largely due to ~~the~~a reduction in inventory reserve expense. These decreases were partially offset by a $0.6 million increase in materials cost resulting from increased revenue sample volume and a $0.2 million increase related to higher usage of our production laboratory ~~expansion~~to process revenue samples versus research and ~~increased sample volumes.~~development samples.

The following table presents disaggregated research and development expenses by cost classification for the periods presented:

~~Research~~The $2.4 million decrease in research and development expenses were $16.5 million for the three months ended June 30, 2019, compared to $9.5 million for the three months ended June 30, 2018, representing an increase of approximately $7.1 million, or approximately 75%. The increase was primarily attributable to ~~$4.0~~a $1.2 million decrease in ~~additional~~costs related to collaboration studies related to Immune Medicine, which was the primary driver of the $1.5 million decrease in depreciation and other expenses, and a $1.1 million decrease in cost of materials and allocated production laboratory expenses, ~~to support our TCR~~which was driven primarily by decreased investments in drug discovery efforts, including collaboration efforts with Genentech, and ~~other platform expansions, a $2.4 million increase in personnel costs, a $0.5 million increase in depreciation and other expenses and a $0.2 million increase in software and cloud services.~~

~~Adaptive~~decreased TCR-Antigen Map development activities.~~BiotechnologiesCorporation~~

The nominal increase in sales and marketing expenses were $8.9 million for the three months ended June 30, 2019, compared to $5.3 million for the three months ended June 30, 2018, representing an increase of $3.6 million, or approximately 67%. The increase was primarily attributable to $2.3 million in additional personnel costs, $0.6 million in additional consulting and marketing expenses and $0.5 million in additional travel, entertainment and customer event related expenses. An additional $0.1 million in computer and software expenses also contributed to the overall increase.

General and administrative expenses were $6.7 million for the three months ended June 30, 2019, compared to $4.6 million for the three months ended June 30, 2018, representing an increase of approximately 2.0 million, or approximately 44%. The increase was primarily attributable to $1.3 million in additional personnel costs, $0.2 million in additional travel and entertainment related expenses and $0.2 million in additional consulting fees. A $0.1a $0.8 million increase in computer and software expenses, partially offset by a $0.4 million decrease in travel and customer event related expenses and a ~~$0.1~~$0.3 million decrease in personnel costs.

The $1.2 million decrease in general and administrative expenses was primarily attributable to a $1.3 million decrease in building, facility and depreciation related expenses driven by office space transitions made to support laboratory consolidation activities, partially offset by a $0.6 million increase in ~~insurance expenses also contributed to the overall increase.~~third-party billing service fees.

Interest and other income was $0.4 million for the three months ended June 30, 2019, compared to $0.8 million for the three months ended June 30, 2018, representing a decrease of $0.4 million, or approximately negative 46%. The decrease was primarily attributable to the $2.2 million impact of revaluing a convertible preferred stock warrant liability in the second quarter of 2019 due to an increase in valuation of our common stock, offset by a $1.9$1.2 million increase in interest ~~earned on~~ and ~~investment amortization of a larger portfolio.~~

Total revenue was $34.8 million for the six months ended June 30, 2019 compared to $21.3 million for the six months ended June 30, 2018, representing an increase of $13.5 million, or approximately 64%.

~~Sequencing revenue increased to $17.9 million for the six months ended June 30, 2019, representing an increase of $3.9 million, or 28%. The increase in sequencing revenue~~other income, net was primarily attributable to an increase ~~of $2.3 million~~ in ~~revenue generated from biopharmaceutical~~net interest income and ~~academic customers,~~investment amortization driven by increased interest rates and related yields of our invested cash and cash equivalents and marketable securities.

The $0.5 million decrease in interest expense was attributable to a ~~mix to higher priced products~~change in our assumptions regarding the timeframe in which our Purchase Agreement will be fully repaid.

(1)Adjusted EBITDA is a non-GAAP financial measure. See “Adjusted EBITDA” below for an explanation for how it is calculated and ~~services, and a $1.6~~used by management.

Research sequencing volume decreased by 2% to 13,975 sequences delivered in the six months ended June 30, 2019 from 14,315 sequences delivered in the six months ended June 30, 2018. Clinical sequencing volume increased by 44% to 4,399 clinical tests delivered in the six months ended June 30, 2019 from 3,053 clinical tests delivered in the six months ended June 30, 2018.

Development revenue increased to $16.9 million for the six months ended June 30, 2019, representing an increase of $9.6 million, or 133%. The increase was primarily attributable to $14.8 million of revenue generated from the Genentech Agreement, offset by a $4.0 million decrease in revenue generated from translational agreements and a $1.2 million decrease in revenue generated from MRD ~~development agreements.~~

Cost of revenue was $10.7 million for the six months ended June 30, 2019, compared to $9.0 million for the six months ended June 30, 2018, representing an increase of $1.7 million, or 19%. The increase in cost of revenueAdjusted EBITDA was primarily attributable to an $11.2 million increase ~~of $1.5 million~~ in ~~the cost of overhead and $0.1 million in the cost of materials due to the production laboratory expansion and increased sample volumes, as well as~~MRD revenue, partially offset by an increase in ~~personnel costs of $0.1 million. This~~MRD operating expenses. The $0.5 million increase in Immune Medicine Adjusted EBITDA was ~~offset~~primarily attributable to reductions in Immune Medicine operating expenses driven primarily by ~~a $0.1 million decrease in computer and software expenses.~~

~~The following table presents disaggregated~~reduced research and development expenses, ~~by cost classification for the periods presented:~~

Research and development expenses were $29.0 million for the six months ended June 30, 2019, compared to $18.3 million for the six months ended June 30, 2018, representing an increase of $10.7 million, or 58%. The increase was primarily attributable to $5.5 million in additional cost of materials and allocated production laboratory expenses to support our TCR discovery efforts and other platform expansions, $4.0 million increase in personnel costs, a $0.8 million increase in depreciation and other expenses, a $0.3 million increase in software and cloud service costs and an increase in allocable facilities and information technology costs of $0.2 million.

Sales and marketing expenses were $16.7 million for the six months ended June 30, 2019, compared to $10.4 million for the six months ended June 30, 2018, representing an increase of $6.3 million, or 61%. The increase was primarily attributable to $3.9 million in additional personnel costs, $1.2 million in additional travel, entertainment and customer event related expenses and $1.0 million in

~~additional consulting and marketing expenses. An additional $0.2 million in computer and software expenses also contributed to the overall increase.~~

General and administrative expenses were $13.7 million for the six months ended June 30, 2019, compared to $9.2 million for the six months ended June 30, 2018, representing an increase of $4.5 million, or 49%. The increase was primarily attributable to $1.7 million in additional personnel costs, $1.2 million in additional business taxes, largely due to the Genentech upfront payment received in February 2019, and a $0.9 million increase in legal, tax, accounting and consultant fees. A $0.2 million increase in computer and software expenses, a $0.2 million increase in travel and entertaining expenses, a $0.1 million increase in insurance expense and a $0.1 million increase in administration costs also contributed to the overall increase.

Interest income was $2.1 million for the six months ended June 30, 2019, compared to $1.6 million for the six months ended June 30, 2018, representing an increase of $0.5 million, or approximately 34%. The increase was primarily attributable to a $2.8 million increase in interest earned on and investment amortization of a larger portfolio,partially offset by ~~the $2.3~~a $7.0 million ~~impact of revaluing a convertible preferred stock warrant liability~~decrease in ~~2019.~~Immune Medicine revenue.

Adjusted EBITDA is a non-GAAP financial measure that we define as net loss attributable to Adaptive Biotechnologies Corporation adjusted for interest and other income, net, interest expense, income tax (expense) benefit, ~~(expense),~~ depreciation and amortization expense, impairment costs for right-of-use and related long-lived assets, restructuring expense and share-based compensation ~~expenses.~~expense. We define our segment Adjusted EBITDA in the same way to the extent the net loss attributable to Adaptive Biotechnologies Corporation and adjustments are allocable to each segment. See Note 13, Segment Information of the accompanying notes to the unaudited condensed consolidated financial statements included elsewhere in this report for more information regarding segment Adjusted EBITDA.

Management uses Adjusted EBITDA, including segment Adjusted EBITDA, to evaluate the financial performance of our business and segments and to evaluate the effectiveness of our ~~business~~ strategies. We present ~~Adjusted EBITDA~~these figures because we believe it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry and it facilitates comparisons on a consistent basis across reporting periods. Further, we believe it is helpful in highlighting trends in our operating results because it excludes items that are not indicative of our core operating performance.

Adjusted EBITDA, including segment Adjusted EBITDA, has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. We may in the future incur expenses similar to the adjustments ~~in the presentation of Adjusted EBITDA.~~we make. In particular, we expect to incur meaningful share-based compensation expense in the future. Other limitations include that Adjusted EBITDA does not reflect:

In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

The following is a reconciliation of ~~our~~ net loss attributable to Adaptive Biotechnologies Corporation, the most directly comparable GAAP financial measure, to Adjusted EBITDA for the periods presented (in thousands):

(1) Represents costs associated with our revenue interest liability and noncash interest costs associated with the amortization of the related deferred issuance costs. See Note 8, Revenue Interest Purchase Agreement of the accompanying notes to the unaudited condensed consolidated financial statements included elsewhere in this report for details on the Purchase Agreement.

(2) Represents costs associated with our organizational realignment to our two segments initiated in the three months ended March 31, 2024. These costs primarily related to one-time termination benefits and ongoing benefit arrangements.

~~(1)~~(3) Represents share-based compensation expense related to stock option, restricted stock unit and market-based restricted stock unit awards. See Note 11, Equity Incentive Plans of the accompanying notes to ~~our~~the unaudited condensed consolidated financial statements ~~appearing~~included elsewhere in this report for details on our share-based compensation expense.

We have incurred losses since inception and have incurred negative cash flows from operations ~~from~~since inception through ~~December~~March 31, ~~2018.~~2024, with the exception of certain 2019 periods for which we had positive cash flows from operations. As of ~~June 30, 2019,~~March 31, 2024, we had an accumulated deficit of ~~$330.9 million.~~$1.2 billion.

We have funded our operations to date principally from the sale of convertible preferred stock and common stock, and, to a lesser extent, ~~sequencing~~revenue and ~~development revenue. In December 2018, we~~proceeds from the Purchase Agreement. Pursuant to the Purchase Agreement entered into ~~the Genentech Agreement pursuant to which~~in September 2022, we received ~~a $300.0~~net cash proceeds of $124.4 million, ~~initial upfront payment~~after deducting issuance costs. We are also entitled to receive up to $125.0 million in ~~February 2019, may receive approximately $1.8 billion over time, including payments~~subsequent installments as follows: (i) $75.0 million upon ~~achievement of specified development, regulatory~~our request occurring no later than September 12, 2025 and ~~commercial milestones, and may receive additional royalties on sales of products commercialized under this agreement.~~(ii) $50.0 million upon our request in connection with certain permitted acquisitions occurring no later than September 12, 2025, in each case subject to certain funding conditions. As of ~~June 30, 2019,~~March 31, 2024, we had cash, cash equivalents and marketable securities of ~~$423.0~~$308.9 million.

We believe ~~our cash flows from operations and~~ our existing cash, cash equivalents and marketable securities ~~together with the net proceeds from our IPO that closed July 1, 2019,~~ will be sufficient to fund our operating expenses and capital expenditure requirements through at least the next 12 months. We may consider raising additional capital to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons.

We plan to utilize the existing cash, cash equivalents and marketable securities on hand primarily to fund our commercial and marketing activities associated with our clinical products and services, continued research and development initiatives for our pipeline candidates and drug discovery initiatives, ongoing investments into our immune medicine platform and scaling of our laboratory operations with our anticipated growth. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Currently, our funds are held in money market funds and marketable securities consisting of U.S. government debt securities, U.S. government agency bonds, commercial paper and corporate bonds.

As revenue from sales of immunoSEQ and clonoSEQ is expected to grow, we expect our accounts receivable and inventory balances to increase. Any increase in accounts receivable and inventory may not be completely offset by increases in accounts payable and accrued expenses, which could result in greater working capital requirements. Moreover, following the closing of our IPO, we expect to incur additional costs associated with operating as a public company, including expenses related to legal, accounting, regulatory, exchange listing and SEC compliance matters.

If our available cash, cash equivalents and marketable securities balances ~~net proceeds from our IPO that closed July 1, 2019~~ and anticipated cash ~~flow from operations~~flows are insufficient to satisfy our liquidity requirements, we may request an additional installment under the Purchase Agreement, seek to sell additional equity or convertible debt securities, enter into a credit facility or another form of third-party funding or seek other debt financing. The sale of equity and convertible debt securities may result in dilution to our shareholders and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. ~~Additional~~This additional capital may not be available on reasonable terms, or at all.

We plan to utilize the existing cash, cash equivalents and marketable securities on hand primarily to fund our commercial and marketing activities associated with clonoSEQ, our continued investments in streamlining our laboratory operations and our continued research and development initiatives related to drug discovery. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to capital preservation and liquidity. Currently, our funds are held in money market funds and marketable securities consisting of U.S. government treasury securities, commercial paper and corporate bonds.

While we may experience variability in revenue in the near term, over the long-term we expect revenue from our current and future products and services to grow. Accordingly, we expect our accounts receivable and inventory balances to increase. Our levels of accounts receivable may fluctuate relative to our revenue for a number of reasons, including the timing of milestone triggers and related payment of those milestones, as well as reductions in revenue derived from the upfront payment received under the Genentech Agreement and an increase in revenue generated from clinical customers, which may result in more billings in arrears as opposed to upfront payments. Any increase in accounts receivable and inventory may not be completely offset by increases in accounts payable and accrued expenses, which could result in greater working capital requirements.

There have been no material changes outside the ordinary course of business to our contractual obligations and commitments as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024.

See Note 7, Leases and Note 8, Revenue Interest Purchase Agreement of the accompanying notes to the unaudited condensed consolidated financial statements included elsewhere in this report for more information regarding our contractual obligations relating to lease agreements and the Purchase Agreement, respectively.

The following table summarizes our uses and sources of cash for the ~~periods presented~~three months ended March 31, 2024 and 2023 (in thousands):

Cash provided by operating activities during the six months ended June 30, 2019 was $262.3 million, which was primarily attributable to a net change in our operating assets and liabilities of $286.1 million, non-cash share-based compensation of $6.4 million, non-cash depreciation and amortization of $1.8 million and a $2.3 million fair value adjustment of the convertible preferred stock warrant liability due to an increase in valuation of our common stock, partially offset by a net loss of $34.0 million. The net change in our operating assets and liabilities primarily reflects an increase in deferred revenue of $288.7 million, primarily due to the $300.0 million upfront payment by Genentech, and an increase in accounts payable and accrued liabilities of $1.3 million primarily due to growth in operating expenses and timing of vendor payments, partially offset by an increase in accounts receivable of $2.4 million primarily due to an increase in sequencing revenue paid in arrears rather than upfront by biopharmaceutical customers, an increase in prepaid expenses and other current assets of $0.9 million primarily due to receivables from investment maturities and a $0.5 million decrease in deferred rent due to increased cash rent payments.

Cash used in operating activities during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2024 was ~~$15.2~~$38.4 million, which was primarily attributable to a net loss of ~~$24.9 million, partially offset by non-cash share-based compensation of $5.6 million, non-cash depreciation and amortization of $2.5~~$47.5 million and a net change in ~~our~~ operating assets and liabilities of ~~$1.7~~$10.3 million, partially offset by noncash share-based compensation of $14.3 million, noncash depreciation and amortization of $2.6 million, noncash lease expense of $1.4 million and noncash interest expense related to the Purchase Agreement of $0.9 million. The net change in ~~our~~ operating assets and liabilities ~~reflects~~was primarily driven by a ~~$5.4~~$4.1 million increase in ~~deferred revenue primarily due to upfront payments from MRD biopharmaceutical agreements, a decrease in~~ accounts receivable, ~~of $1.2~~net, which includes $4.5 million ~~primarily due to~~in regulatory milestones recognized during the ~~timing of receipts, partially offset by an increase in inventory of $2.9~~three months ended March 31, 2024, a $3.9 million ~~to support growth in revenue and research and development activities, a decrease~~reduction in accounts payable and accrued liabilities driven largely by the payout of ~~$1.0 million primarily due to~~our corporate bonus ~~payments~~during the three months ended March 31, 2024, a $2.5 million decrease in operating lease right-of-use assets and liabilities and a $2.4 million reduction in ~~marketing and legal payables, an increase~~deferred revenue. These changes were partially offset by a $1.5 million decrease in prepaid expenses and other current assets, ~~of $0.4~~which was driven largely by a decrease in prepaid software charges, and a $1.1 million ~~primarily due to receivables from investment maturities and reductions~~decrease in ~~deferred rent of $0.4 million due to increased cash rent payments.~~inventory.

Cash used in ~~investing~~operating activities during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2023 was ~~$267.5~~$59.2 million, which was primarily attributable to a net loss of $57.7 million and a net change in operating assets and liabilities of $24.5 million, partially offset by noncash share-based compensation of $14.7 million, noncash depreciation and amortization of $3.8 million, noncash lease expense of $1.8 million, noncash interest expense related to the Purchase Agreement of $1.6 million and inventory reserve expense of $1.1 million. The net change in operating assets and liabilities was primarily driven by a $15.9 million reduction in accounts payable and accrued liabilities driven largely by the payout of our corporate bonus during the three months ended March 31, 2023, an $8.5 million reduction in deferred revenue related primarily to revenue recognized from the Genentech Agreement, a $6.6 million increase in inventory and a $2.2 million decrease in operating lease right-of-use assets and liabilities. These changes were partially offset by a $9.1 million decrease in accounts receivable, net primarily related to collections from our biopharmaceutical customers, including receipt of an MRD milestone payment.

Cash provided by investing activities during the three months ended March 31, 2024 was $44.5 million, which was primarily attributable to proceeds from maturities of marketable securities of $99.5 million, partially offset by purchases of marketable securities of ~~$358.7~~$53.5 million and purchases of property and equipment of ~~$5.4 million, partially offset~~$1.5 million.

~~Cash used in~~ investing activities during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2023 was ~~$32.0~~$63.0 million, which was primarily attributable to proceeds from maturities of marketable securities of $155.0 million, partially offset by purchases of marketable securities of ~~$110.9~~$89.1 million and purchases of property and equipment of ~~$1.6 million, partially offset by maturities of marketable securities of $80.5~~$2.9 million.

Cash used by financing activities during the six months ended June 30, 2019 was $1.4 million, which was primarily attributable to payment of deferred IPO costs of $3.4 million, partially offset by proceeds of $2.0 million from the exercise of stock options.

Cash provided by financing activities during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2024 was ~~$0.9 million, which was primarily~~ attributable to proceeds from the exercise of stock options.

Cash provided by financing activities during the three months ended March 31, 2023 was $0.7 million, which was attributable to proceeds from the exercise of stock options.

Our principal contractual obligations and commitments were reported in our Prospectus. As of June 30, 2019, there have been no material changes to our contractual obligations and commitments as disclosed in our Prospectus.

Utilization of our ~~NOL~~net operating loss (“NOL”) carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986 (“Section 382”) and similar state provisions. The annual limitation may result in the expiration of NOL carryforwards and credits before utilization. If there should be an ownership change, our ability to utilize our NOL carryforwards and credits could be limited. We have completed a Section 382 analysis for changes in ownership through December 31, 2023 and continue to monitor for changes that could trigger a limitation. Based on this analysis, we do not expect to have ~~determined there are no~~any permanent limitations on the utilization of ~~approximately $186.9 million of~~ our federal NOLs. Under the Tax Cuts and Jobs Act of 2017, federal NOLs asincurred in 2018 and future years may be carried forward indefinitely, but the deductibility of ~~December 31, 2018.~~such federal NOLs is subject to an annual limitation. NOLs generated prior to 2018 are eligible to be carried forward up to 20 years. Based on the available objective evidence, management determined that it was more likely than not that the net deferred tax assets would not be realizable as of December 31, ~~2018.~~2023. Accordingly, management applied a full valuation allowance against net deferred tax assets as of December 31, ~~2018.~~2023.

~~As of June 30, 2019 and December 31, 2018, we have not had any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.~~

We have prepared ~~our~~the unaudited condensed consolidated financial statements in accordance with GAAP. Our preparation of these unaudited condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities and related disclosures at the date of the unaudited condensed consolidated financial statements, as well as revenue and expense recorded during the reporting periods. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and or other relevant assumptions that we believe to be reasonable under the circumstances. Estimates are used in several areas, including, but not limited to, estimates of progress to date for certain performance obligations and the transaction price for certain contracts with customers, ~~share-based compensation, including~~imputing interest for the ~~fair value of common stock granted prior to our IPO,~~Purchase Agreement, the provision for income taxes, including related reserves, the analysis of goodwill impairment and ~~goodwill,~~the recoverability and impairment of long-lived assets, among others. These estimates generally involve complex issues and require judgments, involve the analysis of historical results and prediction of future trends, can require extended periods of time to resolve and are subject to change from period to period. Actual results may differ materially from management’s estimates.

While our significant accounting policies are described in more detail in our ~~Prospectus,~~Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024, as well as in Note 2, Significant Accounting Policies of the accompanying notes to ~~our~~the unaudited condensed consolidated financial statements included elsewhere in this report, we believe the following accounting policies are critical to the judgments and estimates used in the preparation of ~~our~~the unaudited condensed consolidated financial statements:

There have been no material changes to our critical accounting policies and estimates as previously disclosed in our ~~Prospectus.~~

~~We are an “emerging growth company” within~~Annual Report on Form 10-K for the meaning of the JOBS Act. The JOBS Act allows an emerging growth company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. We have elected to use this extended transition period and, as a result, our financial statements may not be comparable to companies that comply with public company effective dates. We also intend to rely on other exemptions provided by the JOBS Act, including not being required to complyyear ended December 31, 2023 filed with the ~~auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.~~

We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year following the fifth anniversary of the closing of the IPO, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act of 1934, as amended (“Exchange Act”), which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

See Note 2,Significant Accounting Policies of the accompanying notes to the unaudited condensed consolidated financial statements included elsewhere in this report for more information.

We are exposed to market risk for changes in interest rates related primarily to our cash and cash equivalents and marketable securities. As of ~~June 30, 2019, we had cash~~March 31, 2024, there have been no material changes to our market risks as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. We do not enter into investments for trading purposes and cash equivalents of $48.5 million, held primarily in cash deposits, money market funds, commercial paper and U.S. government debt securities. Our marketable securities are held in U.S. government debt securities, U.S. government agency bonds, commercial paper and corporate bonds. As of June 30, 2019, we had short-term marketable securities of $374.5 million. Our primary exposurehave not used any derivative financial instruments to ~~market~~manage our interest rate risk is interest income sensitivity, which is affected by changes in the general level of interest rates in the United States. As of June 30, 2019, a hypothetical 100 basis point increase in interest rates would have resulted in an approximate $1.4 million decline of the fair value of our available-for-sale securities. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur.exposure.

Under the supervision and with the participation of our management, including our ~~Chief Executive Officer~~chief executive officer and ~~Chief Financial Officer,~~chief financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, our ~~Chief Executive Officer~~chief executive officer and ~~Chief Financial Officer~~chief financial officer have concluded that our disclosure controls and procedures were effective as of ~~June 30, 2019.~~March 31, 2024. There was not any change in our internal control over financial reporting (as such term is defined in ~~Rules~~Rule 13a-15(f) under the Exchange Act) during the ~~quarter~~three months ended ~~June 30, 2019~~March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we may be subject to legal proceedings. We are not currently a party to or aware of any proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Investing in our common stock involves a high degree of risk. ~~Our risk factors~~We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in ~~our Prospectus and incorporated herein by reference, and there have been no material changes to such risk factors. You should carefully consider~~this report, the risks and uncertainties that we ~~describe~~believe are most important for you to consider are discussed in Part I, Item 1A under the ~~Prospectus, together~~caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with ~~all~~the SEC on February 29, 2024. The risk factors may be important to understanding other ~~information~~statements in this report ~~including our~~and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes ~~and the “Management’s Discussion and Analysis~~in this report. The occurrence of ~~Financial Condition~~any single risk or any combination of risks could materially and ~~Results of Operations” section of this report, before investing in our common stock. Any of the risk factors we describe in the Prospectus could~~ adversely affect our business, operations, product pipeline, operating results, financial condition ~~results of operations~~ or ~~prospects. The market price~~liquidity, and consequently, the value of our ~~common stock could decline if one or more of these risks or uncertainties actually occur, causing you to lose all or part of your investment in our common stock. Additional~~securities. Further, 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 and prospects. There have been no material changes to the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024.

~~During the quarter ended June 30, 2019, we had the following unregistered securities transactions:~~

The issuances of the securities described above were exempt from registration pursuant to Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering or Rule 701 promulgated under the Securities Act as transactions pursuant to compensatory benefit plans. The shares of common stock issued upon the exercise of options are deemed to be restricted securities for purposes of the Securities Act.

On July 1, 2019, we closed our IPO, in which we issued and sold 17,250,000 shares of our common stock (including the full exercise of the underwriters’ overallotment option) at a public offering price of $20.00 per share for an aggregate offering price of $345.0 million. Net proceeds to us were $316.0 million after deducting aggregate underwriting discounts and commissions of $24.2 million and estimated offering expenses of $4.8 million. Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and BofA Securities, Inc. acted as joint lead book-running managers for the offering. Cowen and Company, LLC and Guggenheim Securities, LLC acted as book-running managers for the offering. William Blair & Company, L.L.C. and BTIG, LLC acted as co-managers for the offering. All of the shares of common stock issued and sold in the offering were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-231838), which was declared effective by the SEC on June 26, 2019. Following the sale of these shares, the offering terminated. No payments were made by us to directors, officers or persons owning 10% or more of any class of our equity securities or to any of our affiliates. There has been no material change in the planned use of proceeds from our IPO as described in our Prospectus. As our IPO closed after the period covered by this report, none of the proceeds from our IPO were used during the period covered by this report.


Washington	27-0907024
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
~~1551~~1165 Eastlake Avenue East ~~Suite 200~~ Seattle, Washington	~~98102~~98109
(Address of principal executive offices)	(Zip Code)


		Page
PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of ~~Convertible Preferred Stockand~~Shareholders’~~Deficit~~ Equity	7
	Condensed Consolidated Statements of Cash Flows	98
	Notes to Unaudited Condensed Consolidated Financial Statements	109
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2523
Item 3.	Quantitative and Qualitative Disclosures ~~about~~About Market Risk	3634
Item 4.	Controls and Procedures	3634
PART II.	OTHER INFORMATION	3735
Item 1.	Legal Proceedings	3735
Item 1A.	Risk Factors	3735
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3735
Item 3.	Defaults Upon Senior Securities	3735
Item 4.	Mine Safety Disclosures	3835
Item 5.	Other Information	3835
Item 6.	Exhibits	3836
Signatures		3937


	March 31, 2024			December 31, 2023
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	71,233		$	65,064
Short-term marketable securities (amortized cost of $237,745 and $281,122, respectively)		237,639			281,337
Accounts receivable, net		42,021			37,969
Inventory		13,291			14,448
Prepaid expenses and other current assets		9,850			11,370
Total current assets		374,034			410,188
Long-term assets
Property and equipment, net		65,260			68,227
Operating lease right-of-use assets		50,999			52,096
Restricted cash		2,963			2,932
Intangible assets, net		4,705			5,128
Goodwill		118,972			118,972
Other assets		3,390			3,591
Total assets	$	620,323		$	661,134
Liabilities and shareholders’ equity
Current liabilities
Accounts payable	$	12,170		$	7,719
Accrued liabilities		7,914			8,597
Accrued compensation and benefits		6,404			13,685
Current portion of operating lease liabilities		9,594			9,384
Current portion of deferred revenue		46,870			48,630
Total current liabilities		82,952			88,015
Long-term liabilities
Operating lease liabilities, less current portion		86,900			89,388
Deferred revenue, less current portion		44,160			44,793
Revenue interest liability, net		131,545			130,660
Total liabilities		345,557			352,856
Commitments and contingencies (Note 9)
Shareholders’ equity
Preferred stock: $0.0001 par value, 10,000,000 shares authorized at March 31, 2024 and December 31, 2023; no shares issued and outstanding at March 31, 2024 and December 31, 2023		—			—
Common stock: $0.0001 par value, 340,000,000 shares authorized at March 31, 2024 and December 31, 2023; 147,368,324 and 145,082,271 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively		14			14
Additional paid-in capital		1,466,844			1,452,502
Accumulated other comprehensive (loss) gain		(106	)		215
Accumulated deficit		(1,191,839	)		(1,144,332	)
Total Adaptive Biotechnologies Corporation shareholders’ equity		274,913			308,399
Noncontrolling interest		(147	)		(121	)
Total shareholders’ equity		274,766			308,278
Total liabilities and shareholders’ equity	$	620,323		$	661,134


	Three Months Ended March 31,
	2024			2023
Net loss	$	(47,533	)	$	(57,700	)
Other comprehensive (loss) income
Change in unrealized gains and losses on investments		(321	)		2,211
Comprehensive loss		(47,854	)		(55,489	)
Add: Comprehensive loss attributable to noncontrolling interest		26			1
Comprehensive loss attributable to Adaptive Biotechnologies Corporation	$	(47,828	)	$	(55,488	)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	June 30,			December 31,
	2019			2018
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	48,458		$	55,030
Short-term marketable securities		374,543			109,988
Accounts receivable, net		7,252			4,807
Inventory		8,004			7,838
Prepaid expenses and other current assets		4,044			3,055
Total current assets		442,301			180,718
Long-term assets
Property and equipment, net		22,298			19,125
Restricted cash and other assets		5,040			247
Intangible assets, net		12,784			13,626
Goodwill		118,972			118,972
Total assets	$	601,395		$	332,688
Liabilities, convertible preferred stock and shareholders’ deficit
Current liabilities
Accounts payable	$	2,944		$	1,793
Accrued liabilities		5,019			2,562
Accrued compensation and benefits		4,429			4,641
Current portion of deferred rent		1,276			1,109
Current deferred revenue		61,194			12,695
Total current liabilities		74,862			22,800
Long-term liabilities
Convertible preferred stock warrant liability		2,602			336
Deferred rent liability, less current portion		5,455			6,102
Deferred revenue, less current portion		240,919			704
Total liabilities		323,838			29,942
Commitments and contingencies (Note 8)
Convertible preferred stock: $0.0001 par value, 93,762,517 shares authorized at June 30, 2019 and December 31, 2018, respectively; 93,039,737 and 92,790,094 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively; aggregate liquidation preference of $574,374 and $572,866 at June 30, 2019 and December 31, 2018, respectively		561,931			560,858
Shareholders’ deficit
Common stock: $0.0001 par value, 131,000,000 shares authorized at June 30, 2019 and December 31, 2018, respectively; 13,725,381 and 12,841,536 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively		1			1
Additional paid-in capital		46,160			37,902
Accumulated other comprehensive gain (loss)		382			(107	)
Accumulated deficit		(330,917	)		(295,908	)
Total shareholders’ deficit		(284,374	)		(258,112	)
Total liabilities, convertible preferred stock and shareholders’ deficit	$	601,395		$	332,688

	Convertible preferred stock					Common stock				Additional paid-in			Accumulated other comprehensive			Accumulated			Total shareholders’
	Shares		Amount			Shares		Amount		capital			(loss) income			deficit			deficit
Balance as of March 31, 2018 (unaudited)		92,745,734	$	561,396			12,301,844	$	1	$	28,620		$	(283	)	$	(261,950	)	$	(233,612	)
Issuance of common stock for cash upon exercise of stock options (unaudited)		—		—			245,000		—		415			—			—			415
Issuance of Series E-1 convertible preferred stock for cash upon exercise of Series E-1 convertible preferred stock options at fair value (unaudited)		44,360		35			—		—		—			—			—			—
Vested Series E-1 convertible preferred stock option forfeitures (unaudited)		—		(767	)		—		—		476			—			291			767
Series E-1 convertible preferred stock option share-based compensation (unaudited)		—		—			—		—		1			—			—			1
Adjustment to redemption value for vested Series E-1 convertible preferred stock options (unaudited)		—		1			—		—		(1	)		—			—			(1	)
Change in redemption value for vested Series E-1 convertible preferred stock options (unaudited)		—		2			—		—		—			—			(2	)		(2	)
Common stock option share-based compensation (unaudited)		—		—			—		—		2,447			—			—			2,447
Other comprehensive income (unaudited)		—		—			—		—		—			43			—			43
Net loss (unaudited)		—		—			—		—		—			—			(12,493	)		(12,493	)
Balance as of June 30, 2018 (unaudited)		92,790,094	$	560,667			12,546,844	$	1	$	31,958		$	(240	)	$	(274,154	)	$	(242,435	)

Balance as of March 31, 2019 (unaudited)		93,023,694	$	561,210			12,930,536	$	1	$	40,981		$	92		$	(314,548	)	$	(273,474	)
Issuance of common stock for cash upon exercise of stock options (unaudited)		—		—			794,845		—		1,847			—			—			1,847
Issuance of Series E-1 convertible preferred stock for cash upon exercise of Series E-1 convertible preferred stock options at fair value (unaudited)		16,043		11			—		—		—			—			—			—
Change in redemption value for vested Series E-1 convertible preferred stock options (unaudited)		—		710			—		—		—			—			(710	)		(710	)
Common stock option share-based compensation (unaudited)		—		—			—		—		3,332			—			—			3,332
Other comprehensive income (unaudited)		—		—			—		—		—			290			—			290
Net loss (unaudited)		—		—			—		—		—			—			(15,659	)		(15,659	)
Balance as of June 30, 2019 (unaudited)		93,039,737	$	561,931			13,725,381	$	1	$	46,160		$	382		$	(330,917	)	$	(284,374	)

Balance as of December 31, 2017	92,656,029	$	561,333		12,208,731	$	1	$	24,972		$	(166	)	$	(249,423	)	$	(224,616	)
Adjustments to accumulated deficit for adoption of guidance on accounting for share-based payment transactions (unaudited)	—		—		—		—		140			—			(140	)		—
Issuance of common stock for cash upon exercise of stock options (unaudited)	—		—		338,113		—		823			—			—			823
Issuance of Series E-1 convertible preferred stock for cash upon exercise of Series E-1 convertible preferred stock options at fair value (unaudited)	134,065		100		—		—		—			—			—			—
Vested Series E-1 convertible preferred stock option forfeitures (unaudited)	—		(767	)	—		—		476			—			291			767
Series E-1 convertible preferred stock option share-based compensation (unaudited)	—		—		—		—		3			—			—			3
Adjustment to redemption value for vested Series E-1 convertible preferred stock options (unaudited)	—		3		—		—		(3	)		—			—			(3	)
Change in redemption value for vested Series E-1 convertible preferred stock options (unaudited)	—		(2	)	—		—		—			—			2			2
Common stock option share-based compensation (unaudited)	—		—		—		—		5,547			—			—			5,547
Other comprehensive loss (unaudited)	—		—		—		—		—			(74	)		—			(74	)
Net loss (unaudited)	—		—		—		—		—			—			(24,884	)		(24,884	)
Balance as of June 30, 2018 (unaudited)	92,790,094	$	560,667		12,546,844	$	1	$	31,958		$	(240	)	$	(274,154	)	$	(242,435	)

Balance as of December 31, 2018	92,790,094	$	560,858		12,841,536	$	1	$	37,902		$	(107	)	$	(295,908	)	$	(258,112	)
Issuance of common stock for cash upon exercise of stock options (unaudited)	—		—		883,845		—		1,880			—			—			1,880
Issuance of Series E-1 convertible preferred stock for cash upon exercise of Series E-1 convertible preferred stock options at fair value (unaudited)	249,643		109		—		—		—			—			—			—
Change in redemption value for vested Series E-1 convertible preferred stock options (unaudited)	—		964		—		—		—			—			(964	)		(964	)
Common stock option share-based compensation (unaudited)	—		—		—		—		6,378			—			—			6,378
Other comprehensive income (unaudited)	—		—		—		—		—			489			—			489
Net loss (unaudited)	—		—		—		—		—			—			(34,045	)		(34,045	)
Balance as of June 30, 2019 (unaudited)	93,039,737	$	561,931		13,725,381	$	1	$	46,160		$	382		$	(330,917	)	$	(284,374	)


	Common Stock				Additional		Accumulated Other			Accumulated			Noncontrolling			Total
	Shares		Amount		Paid-In Capital		Comprehensive (Loss) Gain			Deficit			Interest			Shareholders’ Equity
Balance at December 31, 2022		143,105,002	$	14	$	1,387,349	$	(4,116	)	$	(919,082	)	$	(67	)	$	464,098
Issuance of common stock for cash upon exercise of stock options		145,758		—		672		—			—			—			672
Vesting of restricted stock units		1,029,209		—		—		—			—			—			—
Share-based compensation expense		—		—		14,671		—			—			—			14,671
Other comprehensive income		—		—		—		2,211			—			—			2,211
Net loss		—		—		—		—			(57,699	)		(1	)		(57,700	)
Balance at March 31, 2023		144,279,969	$	14	$	1,402,692	$	(1,905	)	$	(976,781	)	$	(68	)	$	423,952

Balance at December 31, 2023		145,082,271	$	14	$	1,452,502	$	215		$	(1,144,332	)	$	(121	)	$	308,278
Issuance of common stock for cash upon exercise of stock options		30,900		—		44		—			—			—			44
Vesting of restricted stock units, net		2,255,153		—		—		—			—			—			—
Share-based compensation expense		—		—		14,298		—			—			—			14,298
Other comprehensive loss		—		—		—		(321	)		—			—			(321	)
Net loss		—		—		—		—			(47,507	)		(26	)		(47,533	)
Balance at March 31, 2024		147,368,324	$	14	$	1,466,844	$	(106	)	$	(1,191,839	)	$	(147	)	$	274,766

	June 30, 2019
	Level 1		Level 2		Level 3		Total
	(unaudited)
Financial assets
Money market funds	$	35,695	$	—	$	—	$	35,695
Commercial paper		—		88,161		—		88,161
U.S. government debt and agency securities		—		273,713		—		273,713
Corporate bonds		—		22,661		—		22,661
Total financial assets	$	35,695	$	384,535	$	—	$	420,230
Financial liabilities
Convertible preferred stock warrant liability	$	—	$	—	$	2,602	$	2,602
Total financial liabilities	$	—	$	—	$	2,602	$	2,602

	December 31, 2018
	Level 1		Level 2		Level 3		Total
Financial assets
Money market funds	$	45,998	$	—	$	—	$	45,998
Commercial paper		—		16,887		—		16,887
U.S. government debt and agency securities		—		85,623		—		85,623
Corporate bonds		—		7,478		—		7,478
Total financial assets	$	45,998	$	109,988	$	—	$	155,986
Financial liabilities
Convertible preferred stock warrant liability	$	—	$	—	$	336	$	336
Total financial liabilities	$	—	$	—	$	336	$	336

	June 30, 2019			December 31, 2018
	(unaudited)
Fair value estimate	$	48.30		$	8.27
Expected term (in years)		1.81			2.31
Risk-free interest rate		1.8	%		2.5	%
Expected volatility		61.1	%		55.3	%
Expected dividend yield		—			—

	June 30, 2019
	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
	(unaudited)
Short-term marketable securities
Commercial paper	$	82,165	$	—	$	—		$	82,165
U.S. government debt and agency securities		269,366		351		(1	)		269,716
Corporate bonds		22,630		32		—			22,662
Total short-term marketable securities	$	374,161	$	383	$	(1	)	$	374,543

	Less Than 12 Months				12 Months Or Greater
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
	(unaudited)
Short-term marketable securities
U.S. government debt and agency securities	$	—	$	—	$	4,997	$	(1	)
Total short-term marketable securities	$	—	$	—	$	4,997	$	(1	)

	June 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(unaudited)
Acquired developed technology	$	20,000	$	(7,462	)	$	12,538
Purchased intellectual property		325		(79	)		246
Balance at June 30, 2019	$	20,325	$	(7,541	)	$	12,784

2019	$	856
2020		1,698
2021		1,698
2022		1,698
2023		1,698
Thereafter		5,136
Total future amortization expense	$	12,784

Deferred revenue balance at December 31, 2018	$	13,399
Additions to deferred revenue during the period (unaudited)		308,055
Revenue recognized during the period (unaudited)		(19,341	)
Deferred revenue balance at June 30, 2019 (unaudited)	$	302,113

2019	$	1,781
2020		3,819
2021		3,917
2022		4,017
2023		2,295
Thereafter		2,315
Total future minimum lease payments	$	18,144

	Shares Authorized		Shares Issued and Outstanding		Amount			Liquidation Preference
Series A		4,550,000		4,550,000	$	12,405		$	4,550
Series B		5,645,706		5,645,706		16,018			9,669
Series C		4,804,227		4,747,352		14,425			12,521
Series D		19,269,117		19,269,117		106,905			106,999
Series E		15,524,350		15,524,350		93,698			93,750
Series E-1		17,407,441		16,854,887		73,640	⁽¹⁾		101,785
Series F		21,761,676		21,761,676		195,013			195,100
Series F-1		4,800,000		4,686,649		49,827			50,000
Total convertible preferred stock		93,762,517		93,039,737	$	561,931		$	574,374

	Shares Available for Grant			Shares Subject to Outstanding Options			Weighted- Average Exercise Price per Share		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2018		6,827,996			14,893,253		$	4.59	$	39,864
Options granted (unaudited)		(3,890,331	)		3,890,331			7.55
Forfeited or cancelled (unaudited)		218,303			(218,303	)		6.19
Exercised (unaudited)		—			(883,845	)		2.13
Outstanding at June 30, 2019 (unaudited)		3,155,968			17,681,436			5.35		759,479

2019	$	1,431
2020		3,053
2021		5,802
2022		9,706
2023		9,975
Thereafter		105,270
Total future minimum lease payments	$	135,237


	Three Months Ended December 31, 2023
	MRD			Immune Medicine			Unallocated Corporate			Total
Revenue	$	30,762		$	15,022		$	—		$	45,784
Operating expenses		58,183			26,280			32,389			116,852
Adjusted EBITDA(1)		(17,763	)		(2,979	)		(3,923	)		(24,665	)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss	$	(27,421	)	$	(11,258	)	$	(30,788	)	$	(69,467	)
Net loss attributable to noncontrolling interest		—			—			26			26
Net loss attributable to Adaptive Biotechnologies Corporation		(27,421	)		(11,258	)		(30,762	)		(69,441	)
Interest and other income, net		—			—			(4,613	)		(4,613	)
Interest expense		—			—			3,012			3,012
Depreciation and amortization expense		2,413			2,529			450			5,392
Impairment of right-of-use and related long-lived assets		—			—			25,429			25,429
Share-based compensation expense		7,245			5,750			2,561			15,556
Adjusted EBITDA(1)	$	(17,763	)	$	(2,979	)	$	(3,923	)	$	(24,665	)


	Three Months Ended September 30, 2023
	MRD			Immune Medicine			Unallocated Corporate			Total
Revenue	$	24,668		$	13,251		$	—		$	37,919
Operating expenses		55,977			26,400			6,498			88,875
Adjusted EBITDA(1)		(21,616	)		(4,986	)		(3,229	)		(29,831	)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss	$	(31,309	)	$	(13,148	)	$	(5,869	)	$	(50,326	)
Net loss attributable to noncontrolling interest		—			—			26			26
Net loss attributable to Adaptive Biotechnologies Corporation		(31,309	)		(13,148	)		(5,843	)		(50,300	)
Interest and other income, net		—			—			(4,282	)		(4,282	)
Interest expense		—			—			3,652			3,652
Depreciation and amortization expense		2,489			2,546			728			5,763
Share-based compensation expense		7,204			5,616			2,516			15,336
Adjusted EBITDA(1)	$	(21,616	)	$	(4,986	)	$	(3,229	)	$	(29,831	)


	Three Months Ended June 30, 2023
	MRD			Immune Medicine			Unallocated Corporate			Total
Revenue	$	25,882		$	23,044		$	—		$	48,926
Operating expenses		58,944			30,681			7,119			96,744
Adjusted EBITDA(1)		(23,079	)		1,264			(3,004	)		(24,819	)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss	$	(33,063	)	$	(7,636	)	$	(7,112	)	$	(47,811	)
Net loss attributable to noncontrolling interest		—			—			1			1
Net loss attributable to Adaptive Biotechnologies Corporation		(33,063	)		(7,636	)		(7,111	)		(47,810	)
Interest and other income, net		—			—			(3,612	)		(3,612	)
Interest expense		—			—			3,605			3,605
Depreciation and amortization expense		2,267			2,608			778			5,653
Share-based compensation expense		7,717			6,292			3,336			17,345
Adjusted EBITDA(1)	$	(23,079	)	$	1,264		$	(3,004	)	$	(24,819	)

	Three Months Ended June 30,				Change					Percent of Revenue
(in thousands, except percentages)	2019		2018		$		%			2019			2018
	(unaudited)
Revenue
Sequencing revenue	$	11,865	$	8,281	$	3,584		43	%		54	%		72	%
Development revenue		10,273		3,287		6,986		213			46			28
Total revenue	$	22,138	$	11,568	$	10,570		91	%		100	%		100	%


	Three Months Ended March 31,
(in thousands)	2024		2023		Change
Research and development materials and allocated production laboratory expenses	$	4,989	$	6,106	$	(1,117	)
Personnel expenses		18,823		19,031		(208	)
Allocable facilities and information technology expenses		2,830		2,707		123
Software and cloud services expenses		1,289		984		305
Depreciation and other expenses		2,314		3,773		(1,459	)
Total	$	30,245	$	32,601	$	(2,356	)

	Six Months Ended June 30,				Change					Percent of Revenue
(in thousands, except percentages)	2019		2018		$		%			2019			2018
	(unaudited)
Revenue
Sequencing revenue	$	17,948	$	14,061	$	3,887		28	%		52	%		66	%
Development revenue		16,856		7,222		9,634		133			48			34
Total revenue	$	34,804	$	21,283	$	13,521		64	%		100	%		100	%


		Incorporated by Reference
Exhibit Number	Exhibit Title	Form	File No.	Exhibit	Filing Date	Filed Herewith
3.1	Amended and Restated Articles of Incorporation	8-K	001-38957	3.1	7/1/2019
3.2	Amended and Restated Bylaws	8-K	001-38957	3.2	7/1/2019
4.1	Seventh Amended and Restated Investors’ Rights Agreement among the Registrant and certain of its shareholders, dated May 30, 2019	S-1	333-231838	4.1	5/30/2019
10.1†	Master Terms & Conditions of Sale between Illumina, Inc. and the Registrant, dated May 28, 2019	S-1/A	333-231838	10.3	6/17/2019
10.2	Amended and Restated Side Letter Agreement among Viking Global Equities LP, Viking Global Equities II LP, VGE III Portfolio Ltd., Viking Long Fund Master Ltd. and the Registrant, dated May 8, 2019	S-1	333-231838	10.5	5/30/2019
10.3	Form of Amended and Restated Employment Agreement between the Registrant and certain of its executive officers	S-1	333-231838	10.7	5/30/2019
10.4	Form of Amended and Restated Employment Agreement between the Registrant and each of Lance Baldo, MD and Francis T. Lo	S-1	333-231838	10.8	5/30/2019
10.5	Form of Restated Non-Employee Director Change in Control Agreement between the Registrant and each of its non-employee directors	S-1	333-231838	10.9	5/30/2019
10.6	Executive Severance Agreement between the Registrant and Chad Cohen, dated May 1, 2019	S-1	333-231838	10.10	5/30/2019
10.7	Executive Severance Agreement between the Registrant and Lance Baldo, MD, dated April 22, 2019	S-1	333-231838	10.11	5/30/2019
10.8	Executive Severance Agreement between the Registrant and Charles Sang, dated May 1, 2019	S-1	333-231838	10.12	5/30/2019
10.9	Form of Indemnification Agreement between the Registrant and each of its directors and executive officers	S-1	333-231838	10.13	5/30/2019
10.10	Adaptive Biotechnologies Corporation Non-Employee Director Compensation Policy	S-1/A	333-231838	10.14	6/17/2019
10.11	Adaptive Biotechnologies Corporation 2009 Equity Incentive Plan and form of award agreement thereunder	S-1	333-231838	10.15	5/30/2019
10.12	Adaptive Biotechnologies Corporation 2019 Equity Incentive Plan and form of award agreement thereunder					X
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
31.2	Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
32.1*	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
32.2*	Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X


SIGNATURES ~~101.INS~~	~~XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.~~	X
~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document~~	X
~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~	X
~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~	X
~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~	X
~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~	X


†	Portions of this exhibit have been omitted pursuant to Item 601 of Regulation S-K promulgated under the Securities Act because the information is not material and would be competitively harmful if publicly disclosed.
*	This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.


	Adaptive Biotechnologies Corporation

Date: ~~August 13, 2019~~May 7, 2024	By:	/s/ Chad Robins
		Chad Robins
		Chief Executive Officer and Director (Principal Executive Officer)

Date: ~~August 13, 2019~~May 7, 2024	By:	/s/ ~~Chad Cohen~~Kyle Piskel
		~~Chad Cohen~~Kyle Piskel
		Chief Financial Officer (Principal Financial ~~and Accounting~~ Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company