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What changed in Adaptive Biotechnologies Corp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Adaptive Biotechnologies Corp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+392 added−471 removedSource: 10-K (2026-02-26) vs 10-K (2025-03-03)

Top changes in Adaptive Biotechnologies Corp's 2025 10-K

392 paragraphs added · 471 removed · 320 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

117 edited+39 added−68 removed173 unchanged
Biggest changeIntellectual Property Portfolio by the Numbers As of December 31, 2024, our intellectual property portfolio consisted of the following: • 847 patent applications filed worldwide directly or in conjunction with a co-owner or licensor since 2009; • 70 pending patent applications; • 416 issued and allowed patents across our immune medicine platform, including more than 151 patents related to diagnostic approaches in lymphoid malignancies; • 24 patent families directed to methods and tools useful in our immune medicine platform for non-target specific immunosequencing and research; • 17 patent families directed to methods and tools useful in diagnosis, prognosis and disease monitoring, including clonoSEQ, certain diagnostic methods and TCR-antigen binding; • 12 patent families directed to methods and tools useful in drug discovery, including our drug discovery screening processes, MIRA and pairSEQ; • 1 patent family directed to SARS-CoV-2 vaccines; • 11 patent families directed to novel antigen targets and immune medicine-based therapeutic modalities; • 4 patent families directed to gene sequencing technology; and • 28 trademarks registered and pending registration worldwide.
Biggest changeIntellectual Property Portfolio by the Numbers As of December 31, 2025, our intellectual property portfolio consisted of the following: • 64 pending patent applications; • 416 issued and allowed patents; • 17 patent families directed to methods and tools useful in our immune medicine platform for non-target specific immunosequencing and research, including pairSEQ; 13 • 15 patent families directed to methods and tools useful in diagnosis, prognosis and disease monitoring, including clonoSEQ and MIRA; • 8 patent families directed to therapeutic antibodies and peptides, including SARS-CoV-2 antibodies and peptide-major histocompatibility complex (pMHC) for treating MS; • 6 patent families directed to disease-specific TCRs useful for diagnosis, prognosis and treatment of diseases, such as Lyme disease and Crohn's disease; and • 3 patent families directed to gene sequencing technology.
For more information regarding the risks related to our intellectual property, see “Risk Factors—Risks Relating to our Intellectual Property.” Competition The biotechnology and pharmaceutical industries, including the fields of life sciences research, clinical diagnostics and drug discovery, are characterized by rapidly advancing technologies, intense competition and a strong emphasis on intellectual property.
For more information regarding the risks related to our intellectual property, see “Risk Factors—Risks Relating to our Intellectual Property.” Competition The biotechnology and pharmaceutical industries, including the fields of clinical diagnostics, life sciences research and drug discovery, are characterized by rapidly advancing technologies, intense competition and a strong emphasis on intellectual property.
Going forward, we will continue to generate data demonstrating the clinical utility of clonoSEQ in these and other NHL subtypes, and we will aim to further develop the emerging market for MRD testing for both clinical and biopharmaceutical use cases. 9 • Expand patient use cases by continuing to generate clinical evidence in clonoSEQ utility throughout the patient continuum of care . clonoSEQ MRD testing has the potential to inform patient management and support drug development in a wide range of contexts and at multiple time points, both for newly diagnosed and relapsed/refractory patients and both during and after treatment.
Going forward, we will continue to generate data demonstrating the clinical utility of clonoSEQ in these and other NHL subtypes, and we will aim to further develop the emerging market for MRD testing for both clinical and biopharmaceutical use cases. • Expand patient use cases by continuing to generate clinical evidence in clonoSEQ utility throughout the patient continuum of care . clonoSEQ MRD testing has the potential to inform patient management and support drug development in a wide range of contexts and at multiple time points, both for newly diagnosed and relapsed/refractory patients and both during and after treatment.
Despite their relatively low abundance, disease-specific TCRs can mount a systemic, persistent response to most perturbations because of the highly specialized properties of the immune response, as summarized in the table below: In order to fully leverage the natural properties of the immune system to develop clinical products, the enormous diversity and scale of the adaptive immune system must be taken into consideration, including the ability to accurately and reliably measure the relative frequency of each disease-specific T cell or B cell in the blood.
Despite their relatively low abundance, disease-specific TCRs can mount a systemic, persistent response to most perturbations because of the highly specialized properties of the immune response, as summarized in the table below: 5 In order to fully leverage the natural properties of the immune system to develop clinical products, the enormous diversity and scale of the adaptive immune system must be taken into consideration, including the ability to accurately and reliably measure the relative frequency of each disease-specific T cell or B cell in the blood.
Further, we believe that our clonoSEQ assay has the potential to accelerate the development of drugs in lymphoid cancers and enable treatment decisions which may lower payor cost through the discontinuation of costly drugs that are no longer needed. 8 clonoSEQ Clinical Diagnostic Testing Commercially Promoted Indications Our clonoSEQ diagnostic test detects and monitors the remaining number of cancer cells that are present in a patient’s body during and after treatment, known as MRD.
Further, we believe that our clonoSEQ assay has the potential to accelerate the development of drugs in lymphoid cancers and enable treatment decisions which may lower payor cost through the discontinuation of costly drugs that are no longer needed. clonoSEQ Clinical Diagnostic Testing Commercially Promoted Indications Our clonoSEQ diagnostic test detects and monitors the remaining number of cancer cells that are present in a patient’s body during and after treatment, known as MRD.
In January 2015, we acquired Sequenta, a San Francisco, California-based company that was also developing an NGS test for MRD. Our principal executive offices are located at 1165 Eastlake Avenue East, Seattle, Washington 98109, and our telephone number is (206) 659-0067. 26 Available Information We maintain a website at www.adaptivebiotech.com.
In January 2015, we acquired Sequenta, a San Francisco, California-based company that was also developing an NGS test for MRD. Our principal executive offices are located at 1165 Eastlake Avenue East, Seattle, Washington 98109, and our telephone number is (206) 659-0067. Available Information We maintain a website at www.adaptivebiotech.com.
This unique DNA sequence acts like a barcode that can be used to identify and track an individual receptor over time, as shown in the figure below: 5 The adaptive immune response requires millions of these unique receptors to be widely distributed and present in the blood in order to have the ability to rapidly respond to many different diseases simultaneously.
This unique DNA sequence acts like a barcode that can be used to identify and track an individual receptor over time, as shown in the figure below: The adaptive immune response requires millions of these unique receptors to be widely distributed and present in the blood in order to have the ability to rapidly respond to many different diseases simultaneously.
Some of these expanded cells directly attack the disease, and others form long-term memory to allow rapid recognition of the same antigens in the future and protect against reinfection. Unlike all other genes in the human genome, the genetic sequences of TCRs and BCRs rearrange over time through a complex biological process resulting in massive diversity.
Some of these expanded cells directly attack the disease, and others form long-term memory to allow rapid recognition of the same antigens in the future and protect against reinfection. 4 Unlike all other genes in the human genome, the genetic sequences of TCRs and BCRs rearrange over time through a complex biological process resulting in massive diversity.
We may therefore be constrained in our pricing strategies in markets outside of the U.S. For additional information on coverage and reimbursement in the U.S., see “ Risk Factors—Risks Relating to Government Regulation—Future Medicare payment rates are uncertain. ” 25 Our Compliance Program Our compliance program is intended to prevent and detect violations of law or our policies.
We may therefore be constrained in our pricing strategies in markets outside of the U.S. For additional information on coverage and reimbursement in the U.S., see “ Risk Factors—Risks Relating to Government Regulation—Future Medicare payment rates are uncertain. ” Our Compliance Program Our compliance program is intended to prevent and detect violations of law or our policies.
A violation of this statute is a felony and may result in fines, imprisonment or exclusion from governmental payor programs. The False Claims Act imposes liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal governmental payor program.
A violation of this statute is a felony and may result in fines, imprisonment or exclusion from governmental payor programs. 20 The False Claims Act imposes liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal governmental payor program.
OrbiMed will be entitled to 100% of the Revenue Interest Payments until it has received a total cumulative value of 165% of the Cumulative Purchaser Payments (the “Return Cap”), unless full repayment of the amount of the Return Cap has not been made by September 12, 2032, in which case the Return Cap shall be increased to 175% of the Cumulative Purchaser Payments.
OrbiMed will be entitled to 100% of the Revenue Interest Payments until it has received a total cumulative value of 165% of the Purchaser Payment (the “Return Cap”), unless full repayment of the amount of the Return Cap has not been made by September 12, 2032, in which case the Return Cap shall be increased to 175% of the Purchaser Payment.
Diagnosing and Monitoring Disease In connection with our acquisition (“Sequenta Acquisition”) of Sequenta, Inc. (“Sequenta”) in 2015, we purchased Sequenta’s extensive patent portfolio. The portfolio includes 124 patent applications which disclose and claim methods to identify and quantify T cell-based immune responses to antigen exposure using NGS.
Diagnosing and Monitoring Disease In connection with our acquisition (“Sequenta Acquisition”) of Sequenta, Inc. (“Sequenta”) in 2015, we purchased Sequenta’s extensive patent portfolio. The portfolio includes patent applications which disclose and claim methods to identify and quantify T cell-based immune responses to antigen exposure using NGS.
These documents are subject to investigation by the AFA and failure to comply with the requirements can lead to significant fines for companies and executives. If we were to have future growth in the European market, this law could potentially become applicable to us. U.S.
These documents are subject to investigation by the AFA and failure to comply with the requirements can lead to significant fines for companies and executives. If we were to have future growth in the European market, this law could potentially become applicable to us. 21 U.S.
Our trademark portfolio is designed to protect the brands for our products and services, both current and in the pipeline. 17 Trade Secrecy Program We have a trade secrecy program to prevent disclosure of our trade secrets to others, except under stringent conditions of confidentiality when disclosure is critical to our business.
Our trademark portfolio is designed to protect the brands for our products and services, both current and in the pipeline. Trade Secrecy Program We have a trade secrecy program to prevent disclosure of our trade secrets to others, except under stringent conditions of confidentiality when disclosure is critical to our business.
Although we have and maintain a system for compliance with privacy laws and regulations, failure to comply with them could expose us to potential FTC enforcement action and fines. 21 In addition, certain state laws govern the privacy and security of health information and personal information.
Although we have and maintain a system for compliance with privacy laws and regulations, failure to comply with them could expose us to potential FTC enforcement action and fines. In addition, certain state laws govern the privacy and security of health information and personal information.
Penetration is calculated as the number of annual clonoSEQ patients tested out of the prevalent population pool by indication. We believe that we are still in the early stages of clonoSEQ penetration in the indications identified above with significant opportunities to expand adoption.
Penetration is calculated as the number of annual clonoSEQ patients tested out of the prevalent population pool by indication. 8 We believe that we are still in the early stages of clonoSEQ penetration in the indications identified above with significant opportunities to expand adoption.
Under this proposed legislation, FDA would oversee IVCTs, by requiring premarket review for high-risk IVCTs which expose patients to serious or irreversible harm, requiring abbreviated premarket review or technology certification for new moderate-risk IVCTs, and exempting low-risk IVCTs from premarket review.
Under this proposed legislation, the FDA would oversee IVCTs, by requiring premarket review for high-risk IVCTs which expose patients to serious or irreversible harm, requiring abbreviated premarket review or technology certification for new moderate-risk IVCTs, and exempting low-risk IVCTs from premarket review.
If the FDA determines an RUO product is adulterated and misbranded, enforcement may also include a warning letter, seizure, an injunction and/or criminal fines for FDCA violations. Clinical Diagnostics in the U.S.
If the FDA determines an RUO product is adulterated and misbranded, enforcement may also include a warning letter, seizure, an injunction and/or criminal fines for FDCA violations. 16 Clinical Diagnostics in the U.S.
Laboratories performing high-complexity testing are required to meet more stringent requirements than laboratories performing less complex tests. In addition to CLIA requirements, we elect to participate in the accreditation program of the CAP. The U.S.
Laboratories performing high-complexity testing are required to meet more stringent requirements than laboratories performing less complex tests. 17 In addition to CLIA requirements, we elect to participate in the accreditation program of the CAP. The U.S.
Antigen exposure can be performed by incubation or presentation; for example, it can be performed via recombinant expression in another cell. These methods may also be used to pair the two TCR chains as well as to identify high avidity TCRs. Several patents have been granted as of December 31, 2024, including U.S.
Antigen exposure can be performed by incubation or presentation; for example, it can be performed via recombinant expression in another cell. These methods may also be used to pair the two TCR chains as well as to identify high avidity TCRs. Several patents have been granted as of December 31, 2025, including U.S.
Mergers and acquisitions involving life sciences research, clinical diagnostics or drug discovery companies in the immune medicine space may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
Mergers and acquisitions involving life sciences research and clinical diagnostics companies in the immune medicine space may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
Our patent claims extend to not only adaptive immune receptor molecules, but also to uniquely powerful techniques for sequencing immune cell receptors, determining clonality and immune competency, diagnosing disease, predicting responses to immunotherapy and identifying new drug candidates. Our granted patent protection generally expires in years ranging from 2029 to 2040.
Our patent claims extend to not only adaptive immune receptor molecules, but also to uniquely powerful techniques for sequencing immune cell receptors, determining clonality and immune competency, diagnosing disease, predicting responses to immunotherapy and identifying new drug candidates. Our granted patent protection generally expires in years ranging from 2029 to 2042.
FDA proposed to phase out its general enforcement discretion for LDTs over a four-year period, subject to targeted enforcement discretion policies.
The FDA proposed to phase out its general enforcement discretion for LDTs over a four-year period, subject to targeted enforcement discretion policies.
Robins with Fred Hutch led to discoveries around immunosequencing methods and tools covered by 128 patents and patent applications in the U.S. and abroad which we exclusively licensed. Our rights are for all fields of use worldwide and are sublicensable.
Robins with Fred Hutch led to discoveries around immunosequencing methods and tools covered by multiple patents and patent applications in the U.S. and abroad which we exclusively licensed. Our rights are for all fields of use worldwide and are sublicensable.
We also received FDA clearance in 2021 for ALL from blood samples, launched in DLBCL and MCL, subtypes of NHL, under CLIA as a LDT and are actively advancing validation studies in certain other NHL sub-types such as CTCL.
We also received FDA clearance in 2021 for ALL from blood samples, launched in DLBCL and MCL, subtypes of NHL, under CLIA as an LDT and are actively advancing validation studies in certain other NHL sub-types such as CTCL.
Patent Portfolio We have developed an expansive patent portfolio in commercially important markets with claims to critical aspects of our technology, beginning with our first patent applications exclusively licensed from Fred Hutchinson Cancer Research Center (“Fred Hutch”) in 2009.
Patent Portfolio We have developed an expansive patent portfolio in commercially important markets with claims to critical aspects of our technology, beginning with our first patent application exclusively licensed from Fred Hutchinson Cancer Research Center (“Fred Hutch”) in 2009.
Many of our current or potential competitors, either alone or with their collaboration partners, have significantly greater financial resources and expertise in research and development, manufacturing, regulatory approval and compliance, and sales and distribution than we do.
Many of our current or potential competitors, either alone or with their collaboration partners, have significantly greater financial resources and expertise in research and development, manufacturing, regulatory approval and compliance than we do.
It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on social media channels. 27
It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media and others interested in our company to review the information we post on social media channels. 24
This includes countries within Europe that are not part of the EEA, such as the United Kingdom and Switzerland, and therefore operate under different privacy and data protection frameworks. In response to the advancements in artificial intelligence and machine learning, there are also global efforts to regulate the use of these technologies.
This includes countries within Europe that are not part of the EEA, such as the United Kingdom and Switzerland, and therefore operate under different privacy and data protection frameworks. In response to the advancements in AI and machine learning, there are also global efforts to regulate the use of these technologies.
Coverage and Reimbursement Generally Reimbursement and billing requirements of applicable laws and payors for diagnostic services are highly complex. Laboratories must bill various payors, such as private third-party payors, including managed care organizations (“MCO”) and state and federal health care programs, such as Medicare and Medicaid, and each may have different billing requirements.
Coverage and Reimbursement Generally Reimbursement and billing requirements of applicable laws and payors for diagnostic services are highly complex and subject to change. Laboratories must bill various payors, such as private third-party payors, including managed care organizations (“MCO”) and state and federal health care programs, such as Medicare and Medicaid, and each may have different billing requirements.
We believe the total addressable market for the MRD business is approximately $5.5 billion, approximately $4.8 billion of which is derivable from clinical testing. clonoSEQ is the first test authorized by the Food and Drug Administration (“FDA”) for the detection and monitoring of MRD in patients with multiple myeloma (“MM”), B cell acute lymphoblastic leukemia (“ALL”) and chronic lymphocytic leukemia (“CLL”), and it is also available as a CLIA-validated laboratory developed test (“LDT”) for patients with other lymphoid cancers, including diffuse large B cell lymphoma (“DLBCL”) and mantle cell lymphoma (“MCL”).
We believe the total addressable market for the MRD business is approximately $6.2 billion, approximately $5.3 billion of which is derivable from clinical testing. clonoSEQ is the first test authorized by the Food and Drug Administration (“FDA”) for the detection and monitoring of MRD in patients with multiple myeloma (“MM”), B cell acute lymphoblastic leukemia (“ALL”) and chronic lymphocytic leukemia (“CLL”), and it is also available as a CLIA-validated laboratory developed test (“LDT”) for patients with other lymphoid cancers, including diffuse large B cell lymphoma (“DLBCL”) and mantle cell lymphoma (“MCL”).
The license is for worldwide use in diagnosis, prognosis, treatment and monitoring of any proliferative disorder for which rearranged nucleic acids capable of encoding an immune receptor, whether productive or unproductive, or functional or nonfunctional, of a cell, excluding tumor infiltrating lymphocytes, of the proliferative disorder can be used as markers for the disorder, including, but not limited to, lymphoid and myeloid proliferative disorders, such as ALL, CLL, acute myeloid leukemia, chronic myelogenous leukemia, Hodgkin’s and NHL, plasma cell neoplasms, such as MM, monoclonal gammopathy of undetermined significance, monoclonal B cell lymphocytosis and myelodysplastic syndromes.
The license is for worldwide use in diagnosis, prognosis, treatment and monitoring of any proliferative disorder for which rearranged nucleic acids capable of encoding an immune receptor of a cell, excluding tumor infiltrating lymphocytes, of the proliferative disorder can be used as markers for the disorder, including, but not limited to, lymphoid and myeloid proliferative disorders, such as ALL, CLL, acute myeloid leukemia, chronic myelogenous leukemia, Hodgkin’s and NHL, plasma cell neoplasms, such as MM, monoclonal gammopathy of undetermined significance, monoclonal B cell lymphocytosis and myelodysplastic syndromes.
On May 26, 2017, the EU released a new regulatory framework, the In vitro Diagnostic Medical Device Regulation (“IVDR”), which will replace the IVDD. clonoSEQ obtained a CE mark in May 2019 for all B-cell malignancies with blood and bone marrow, and in August 2024, we announced that clonoSEQ received IVDR 2017/746 Class C risk certification issued by the Notified Body (BSI), which will be a requirement as of May 2026.
On May 26, 2017, the EU released a new regulatory framework, the IVDR, which will replace the IVDD. clonoSEQ obtained a CE mark in May 2019 for all B-cell malignancies with blood and bone marrow, and in August 2024, we announced that clonoSEQ received IVDR 2017/746 Class C risk certification issued by the Notified Body (BSI), which will be a requirement as of May 2026.
Over the years since, we have secured additional payor coverage for clonoSEQ aligned with our FDA label with Medicare, national private payors and large regional plans, expanding coverage to over 300 million covered lives for ALL and MM, over 200 million covered lives for CLL and over 70 million covered lives for DLBCL.
Over the years since, we have secured additional payor coverage for clonoSEQ aligned with our FDA label with Medicare, national private payors and large regional plans, expanding coverage to over 300 million covered lives for ALL and MM, over 270 million covered lives for CLL and over 90 million covered lives for DLBCL.
Actionability of clonoSEQ for tailoring treatment decisions in patients with MCL, CLL, MM and ALL continued to be demonstrated as referenced in 69 abstracts at the most recent ASH meeting in December of 2024. • Expanding regulatory and reimbursement expertise will help inform future clinical product development.
Actionability of clonoSEQ for tailoring treatment decisions in patients with MCL, CLL, MM and ALL continued to be demonstrated as referenced in over 90 abstracts at the most recent ASH meeting in December of 2025. • Expanding regulatory and reimbursement expertise will help inform future clinical product development.
There have been similar draft bills at the state level that would regulate machine learning, artificial intelligence, the Internet of Things, and human specimen use.
There have been similar draft bills at the state level that would regulate machine learning, AI, the Internet of Things, and human specimen use.
As of December 31, 2024, we owned or controlled 416 active issued patents and 70 patent applications whose claims are intended to cover what we do, what we plan to do and what others might do to compete with us.
As of December 31, 2025, we owned or controlled 416 active issued patents and 64 patent applications whose claims are intended to cover what we do, what we plan to do and what others might do to compete with us.
We incurred interest expense of $11.6 million, $13.8 million and $4.2 million under the Purchase Agreement for the year ended December 31, 2024, 2023 and 2022, respectively. Processing and Manufacturing We process both clinical and research use samples in our laboratory in Seattle, Washington.
We incurred interest expense of $11.8 million, $11.6 million and $13.8 million under the Purchase Agreement for the year ended December 31, 2025, 2024 and 2023, respectively. 12 Processing and Manufacturing We process both clinical and research use samples in our laboratory in Seattle, Washington.
Multiple patents have been granted from additional applications relating to MRD assessment, diagnostic methods and diagnostically significant TCRs filed by us, including U.S. Patent Nos. 9,824,179 and 11,047,008. Additional patent applications are pending to TCR-based diagnostic signals in specific indications, including COVID-19.
Multiple patents have been granted from additional applications relating to MRD assessment, diagnostic methods and diagnostically significant TCRs filed by us, including U.S. Patent Nos. 9,824,179 and 11,047,008. We have obtained patents to TCR-based diagnostic signals in specific indications, including COVID-19 and Lyme disease.
Throughout our processes, we apply a rigorous quality management system, which is designed to comply with the Quality System Regulation (“QSR”) and the requirements of the Clinical Laboratory Improvements Amendment of 1988 ("CLIA"), the College of American Pathologists ("CAP") and other applicable state licensing and accreditation requirements.
Throughout our processes, we apply a rigorous quality management system, which is designed to comply with the Quality System Regulation (“QSR”) and the requirements of the Clinical Laboratory Improvements Amendment of 1988 (“CLIA”), CAP and other applicable state licensing and accreditation requirements.
The federal physician payment transparency requirements (“Physician Payments Sunshine Act”) and its implementing regulations, which requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the State Children’s Health Insurance Program, with certain exceptions, to annually report to HHS information related to certain payments or other transfers of value made or distributed to covered recipients, defined to include doctors, dentists, optometrists, podiatrists, chiropractors, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and anesthesiologist assistants, certified nurse-midwives, and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.
The federal physician payment transparency requirements (“Physician Payments Sunshine Act”) and its implementing regulations, which requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the State Children’s Health Insurance Program, with certain exceptions, to annually report to HHS information related to certain payments or other transfers of value made or distributed to covered recipients, defined to include doctors, dentists, optometrists, podiatrists, chiropractors, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and anesthesiologist assistants, certified nurse-midwives, and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. 22 There are also state transparency and gift ban laws that require manufacturers to provide reports to state governments on pricing and marketing information.
A number of our processing steps utilize automated equipment to help ensure consistency and efficiency. Sequencing is performed using the Illumina NextSeq System, which we have appropriately qualified for the intended uses of our products and services.
A number of our processing steps utilize automated equipment to help ensure consistency and efficiency. Sequencing is performed using the Illumina NextSeq and NovaSeq X Plus systems, which we have appropriately qualified for the intended uses of our products and services.
MRD Pharma MRD Pharma focuses on offering our clonoSEQ assay to biopharmaceutical partners to advance drug development efforts. Through 2024, clonoSEQ was being used by over 40 biopharmaceutical companies in more than 170 active clinical trials and is used as a clinical endpoint in over 85 of these studies.
MRD Pharma MRD Pharma focuses on offering our clonoSEQ assay to biopharmaceutical partners to advance drug development efforts. Through 2025, clonoSEQ was being used by over 40 biopharmaceutical companies in more than 180 active trials and is used as a clinical endpoint in over 100 of these studies.
We have secured IVDR certification for the clonoSEQ assay to facilitate use of the assay in Europe, and we have licensed our technology to academic and commercial partner labs in Europe, Australia and Japan as a means to make clonoSEQ available locally, primarily for research purposes though some limited clinical testing is available in selected regions.
We have secured In vitro Diagnostic Medical Device Regulation (“IVDR”) certification for the clonoSEQ assay to facilitate use of the assay in Europe, and we have licensed our technology to academic and commercial partner labs in Europe, Australia and Japan as a means to make clonoSEQ available locally, primarily for research purposes though some limited clinical testing is available in selected regions.
Having obtained FDA marketing authorization and expanded coverage to greater than 300 million covered lives for multiple indications of clonoSEQ from Medicare, national private payors and large regional plans, we believe we have developed valuable core capabilities that will facilitate future product development through to regulatory approval and reimbursement. • Our proprietary immunomics database provides a robust product development engine.
Having obtained FDA marketing authorization and expanded coverage to greater than 300 million covered lives for multiple indications of clonoSEQ from Medicare, national private payors and large regional plans, we believe we have developed valuable core capabilities that will facilitate future product development through to regulatory approval and reimbursement. • Our proprietary immune medicine technologies and computational biology capabilities provide a robust product development engine.
We may also face competition from new market entrants developing blood-based tools for disease monitoring based on protein, circulating tumor DNA or circulating tumor cells.
We also face emerging competition from new market entrants developing and commercializing blood-based tools for disease monitoring based on protein, circulating tumor DNA or circulating tumor cells.
Department of Health and Human Services (“HHS”) issued regulations that establish standards for protecting the privacy and security of “protected health information” used or disclosed by certain healthcare providers and other “covered entities” and their “business associates.” Three principal data protection-related regulations with which we are required to comply have been issued in final form under HIPAA and HITECH: privacy regulations, security regulations and security breach notification regulations.
Department of Health and Human Services (“HHS”) issued regulations that establish standards for protecting the privacy and security of “protected health information” used or disclosed by certain healthcare providers and other “covered entities” and their “business associates.” Three principal data protection-related regulations with which we are required to comply have been issued in final form under HIPAA and HITECH: privacy regulations, security regulations and security breach notification regulations. 18 The privacy regulations govern the use and disclosure of protected health information by covered healthcare providers, as well as health insurance plans.
TCR-Antigen Binding We continue to make significant progress in our understanding of the T-cell mediated response across different indications. We filed 10 related patent applications for methods to produce antigen-exposed enriched T cell populations and identify their antigen specificities by comparison to a pre-exposure population of cells or by use of an algorithm.
TCR-Antigen Binding We continue to make significant progress in our understanding of the T-cell mediated response across different indications. We have obtained patents covering methods to produce antigen-exposed enriched T cell populations and identify their antigen specificities by comparison to a pre-exposure population of cells or by use of an algorithm.
In October 2022, we entered into a partnership with Epic to integrate clonoSEQ into Epic’s EMR system, which we believe will enable easier test ordering and results access for the clonoSEQ test. As of December 2024, clonoSEQ is integrated into the Epic instances at 18 customer accounts. In 2024, we entered into a partnership with Flatiron Health, Inc.
In October 2022, we entered into a partnership with Epic to integrate clonoSEQ into Epic’s EMR system, which we believe will enable easier test ordering and results access for the clonoSEQ test. As of December 2025, clonoSEQ is integrated into the Epic instances at 54 customer sites.
If OrbiMed has not received Revenue Interest Payments in the aggregate equal to or greater than the sum of its invested capital (the “Cumulative Purchaser Payments”) on or prior to September 12, 2028, the revenue interest rate shall be increased to a rate which, if applied retroactively to our cumulative Revenue Base, would have resulted in Revenue Interest Payments equal to the sum of all Cumulative Purchaser Payments.
If OrbiMed has not received Revenue Interest Payments in the aggregate equal to or greater than the Purchaser Payment on or prior to September 12, 2028, the revenue interest rate shall be increased to a rate which, if applied retroactively to our cumulative Revenue Base, would have resulted in Revenue Interest Payments equal to the Purchaser Payment.
We have filed additional patent applications relating to algorithmic-based methods to characterize antigen specificities. MIRA We developed and are pursuing patent protection for bioinformatic-based methods to determine the antigen specificity of TCRs by exposing T cells to a panel of multiple antigens.
We have also obtained additional patents relating to algorithmic-based methods to characterize antigen specificities. 14 MIRA We developed and have obtained patent protection for bioinformatic-based methods to determine the antigen specificity of TCRs by exposing T cells to a panel of multiple antigens.
However, if one of our suppliers fails to perform adequately or fulfill our needs, we may be required to incur significant costs and devote significant efforts to find new suppliers and may face delays in processing samples or developing and commercializing our products and services. For example, we have purchased the Illumina NextSeq System, and Illumina, Inc.
However, if one of our suppliers fails to perform adequately or fulfill our needs, we may be required to incur significant costs and devote significant efforts to find new suppliers and may face delays in processing samples or developing and commercializing our products and services.
On May 6, 2024, the FDA issued a final rule that amended the definition of in vitro diagnostics (IVDs) in its regulations to state that IVDs are medical devices under the federal Food, Drug, and Cosmetic Act including when the manufacturer of the IVD is a laboratory (the “LDT Final Rule”).
On May 6, 2024, the FDA issued a final rule that amended the definition of IVDs in its regulations to state that IVDs are medical devices under the FDCA including when the manufacturer of the IVD is a laboratory (the “LDT Final Rule”).
We received Medicare coverage for another NHL condition, MCL, effective July 2024. In January 2023, clonoSEQ was granted a Proprietary Laboratory Analysis (“PLA”) code. The code was routed to Medicare’s gapfill pricing process in 2023, and this process was completed in 2024. The clonoSEQ PLA code was published on Medicare’s CLFS with a price of $2,007, effective January 2025.
We received Medicare coverage for another NHL condition, MCL, effective July 2024. In January 2023, clonoSEQ was granted a Proprietary Laboratory Analysis (“PLA”) code. The code was routed to Medicare’s gapfill pricing process in 2023, and this process was completed in 2024.
As consideration for such payments, the Purchasers will have a right to receive certain revenue interests (the “Revenue Interests”) from us based on a percentage (the “Applicable Payment Percentage”) of all GAAP revenue (the “Revenue Base”). If only the First Payment has been made, the Applicable Payment Percentage shall be five percent of the quarterly Revenue Base.
As consideration for such payments, the Purchasers have a right to receive certain revenue interests (the “Revenue Interests”) from us based on a percentage (the “Applicable Payment Percentage”) of all GAAP revenue (the “Revenue Base”). The Applicable Payment Percentage is five percent of the quarterly Revenue Base.
Once we have tagged the relevant disease-associated sequence(s) for a given patient, they can be used as a unique "bar code" to track the presence and level of disease burden for that patient over time. A summary of the steps required to perform a clonoSEQ MRD test is as follows: 1.
Once we have tagged the relevant disease-associated sequence(s) for a given patient, they can be used as a unique "bar code" to track the presence and level of disease burden for that patient over time.
Other future competitors that elect to develop and commercialize their products for lymphoid malignancies may include companies marketing early cancer detection testing products for indications that do not currently compete with clonoSEQ, such as methods for MRD assessment directed at solid tumors.
Other future competitors that elect to develop and commercialize their products for lymphoid malignancies may include companies marketing early cancer detection testing products for indications that do not currently compete with clonoSEQ, such as methods for MRD assessment directed at solid tumors. Immune medicine is being pursued by several biotechnology companies as well as by large-cap biopharmaceutical companies.
As of December 31, 2024, we believe our penetration in the United States was as follows 1 : ALL MM CLL DLBCL MCL 25% 10% 5% 2% 6% (1) Percentages are an approximation and include US clinical use only and exclude patients in trials.
As of December 31, 2025, we believe our penetration in the United States was as follows 1 : ALL MM CLL DLBCL MCL 31% 14% 8% 3% 11% (1) Percentages are an approximation and include US clinical use only and exclude patients in trials.
As of December 31, 2024, we had filed 847 patent applications, 416 of which were issued and active as of that date, covering improvements in sequencing methods and new ways to leverage adaptive immune receptors for our MRD and IM business areas. • We are well capitalized and believe we are on a path to profitability for our MRD business.
As of December 31, 2025, we had 416 issued and allowed patents and 64 pending patent applications, covering improvements in sequencing methods and new ways to leverage adaptive immune receptors for our MRD and IM business areas. • We are well capitalized and believe we are on a path to profitability.
Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the relevant market. 18 Government Regulation Life Sciences Research Use Only Technologies Our core research product in IM, Adaptive Immunosequencing, is a research use only (“RUO”) tool in the U.S. that provides data to third parties such as biopharmaceutical companies that are themselves engaged in the research and development of potential diagnostic and therapeutic products and services for which they may later pursue investigation and clearance, authorization or approval from regulatory authorities, such as the FDA.
Government Regulation Life Sciences Research Use Only Technologies Our core research product in IM, Adaptive Immunosequencing, is a research use only (“RUO”) tool in the U.S. that provides data to third parties such as biopharmaceutical companies that are themselves engaged in the research and development of potential diagnostic and therapeutic products and services for which they may later pursue investigation and clearance, authorization or approval from regulatory authorities, such as the FDA.
Attorney offices within the DOJ, and state and local governments. We also may be subject to foreign fraud and abuse laws.
Department of Justice (“DOJ”) and individual U.S. Attorney offices within the DOJ, and state and local governments. We also may be subject to foreign fraud and abuse laws.
We also strive to provide compensation, benefits, and incentives that will both attract and retain talented employees. Our total rewards package includes market-competitive base pay, performance-based short-term incentives, health care, retirement benefits, paid time off, family leave, and access to a variety of health and wellness resources.
Our total rewards package includes market-competitive base pay, performance-based short-term incentives, health care, retirement benefits, paid time off, family leave and access to a variety of health and wellness resources.
We developed and are pursuing patent protection for multiple bioinformatic-based approaches to pairing the two chains of TCRs and BCRs, including one deployed in our pairSEQ technique. Our methods also allow for identification of receptor chain pairs which are specific to particular antigen targets.
We developed and have obtained patent protection for multiple bioinformatic-based approaches to pairing the two chains of TCRs and BCRs, including one deployed in our pairSEQ technique. Our methods also allow for identification of receptor chain pairs which are specific to particular antigen targets. Granted patents covering this technology include U.S. Patent No. 10,077,478.
The FCPA also requires companies whose securities are listed in the U.S. to meet its accounting provisions, which were designed to operate in tandem with the anti-bribery provisions, and require corporations covered by the provisions to (a) make and keep books and records that accurately and fairly reflect the transactions of the corporation and (b) devise and maintain an adequate system of internal accounting controls. 23 In Europe, various countries have adopted anti-bribery laws providing for severe consequences, in the form of criminal penalties or significant fines, for individuals or companies committing a bribery offence.
The FCPA also requires companies whose securities are listed in the U.S. to meet its accounting provisions, which were designed to operate in tandem with the anti-bribery provisions, and require corporations covered by the provisions to (a) make and keep books and records that accurately and fairly reflect the transactions of the corporation and (b) devise and maintain an adequate system of internal accounting controls.
T cells can destroy target cells directly, and B cells secrete antibodies, activating other parts of the immune system to destroy targets. Each T cell and B cell has a unique Y-shaped receptor, which can recognize one or a small number of the millions of antigens to which our bodies are continuously exposed.
Each T cell and B cell has a unique Y-shaped receptor, which can recognize one or a small number of the millions of antigens to which our bodies are continuously exposed.
To secure our obligations under the Purchase Agreement, we and our subsidiaries have granted OrbiMed a security interest in our core platform technology assets, subject to certain customary exclusions, as defined in the Purchase Agreement.
Pursuant to the Purchase Agreement, we received $124.4 million from the Purchasers (the “Purchaser Payment”), net of expenses. To secure our obligations under the Purchase Agreement, we and our subsidiaries have granted OrbiMed a security interest in our core platform technology assets, subject to certain customary exclusions, as defined in the Purchase Agreement.
A violation of the AKS may be grounds for the government or a whistleblower to assert that a claim for payment of items or services resulting from such violation constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. 22 The civil monetary penalties statute is another potential statute under which a clinical laboratory may be subject to enforcement.
A violation of the AKS may be grounds for the government or a whistleblower to assert that a claim for payment of items or services resulting from such violation constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.
Federal, State and Foreign Fraud and Abuse Laws In the U.S., there are various fraud and abuse laws with which we must comply and we are subject to regulation by various federal, state and local authorities, including CMS, other divisions of HHS, such as the Office of Inspector General (“OIG”), the U.S. Department of Justice (“DOJ”) and individual U.S.
One prominent law that has been finalized is the European Union's AI Act. 19 Federal, State and Foreign Fraud and Abuse Laws In the U.S., there are various fraud and abuse laws with which we must comply and we are subject to regulation by various federal, state and local authorities, including CMS, other divisions of HHS, such as the Office of Inspector General (“OIG”), the U.S.
TCR and BCR DNA, ribonucleic acid or cell-free DNA from samples, including blood and bone marrow, are used to detect, prognose and monitor disease, including autoimmune disease, infection and cancer. Sixty-two patents have been granted in the portfolio as of December 31, 2024, including U.S. Patent Nos. 8,628,927 and 8,236,503.
TCR and BCR DNA, ribonucleic acid or cell-free DNA from samples, including blood and bone marrow, are used to detect, prognose and monitor disease, including autoimmune disease, infection and cancer. This technology is protected with granted patents, including U.S. Patent Nos. 8,628,927 and 8,236,503.
Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include sanctions, including but not limited to, warning letters; fines, injunctions, and civil penalties; recall or seizure of the device; operating restrictions, partial suspension or total shutdown of production; refusal to grant 510(k) clearance or premarket approvals (“PMAs”) of new devices; withdrawal of clearance or approval; and civil or criminal prosecution. 19 Position outside of the United States In the European Union (“EU”), IVDs can be placed on the market by obtaining a “CE mark,” which demonstrates conformity via a self-certification with the In vitro Diagnostic Medical Device Directive (“IVDD”).
Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include sanctions, including but not limited to, warning letters; fines, injunctions, and civil penalties; recall or seizure of the device; operating restrictions, partial suspension or total shutdown of production; refusal to grant 510(k) clearance or premarket approvals (“PMAs”) of new devices; withdrawal of clearance or approval; and civil or criminal prosecution.
For instance, our clonoSEQ assay has the potential to assist physicians with critical clinical decisions, accelerate the development of drugs in lymphoid cancers and enable treatment decisions which may lower payor cost through the discontinuation of costly drugs that are no longer needed.
For instance, our clonoSEQ assay has the potential to assist physicians with critical clinical decisions, accelerate the development of drugs in lymphoid cancers and enable treatment decisions which may lower payor cost through the discontinuation of costly drugs that are no longer needed. 6 The Technology clonoSEQ leverages our next-generation sequencing-based platform to sequence the patient's immune repertoire (B cells and/or T cells) with the goal of identifying and quantifying malignant B cells or T cells.
The combination of our large, quality data and our ability to generate additional insights creates a data foundation which we will continue to leverage to accelerate our target and drug discovery efforts. • Strong intellectual property protects our immune medicine platform and its applications.
The combination of our large, quality data and our ability to generate additional insights creates a data foundation which we will continue to leverage to accelerate our product research and development efforts that may have applicability across both of our business segments and lead to robust product development capabilities. • Strong intellectual property protects our immune medicine platform and its applications.
In cancer cells, tumor associated antigens (“TAAs”) are normal proteins that are aberrantly expressed in a tumor; neoantigens are mutated versions of normal proteins that are specific to the cancer and not found in healthy normal cells. Both TAAs and neoantigens are recognized by the immune system as foreign.
However, antigens can be recognized as foreign even if they are not from a virus or pathogen. In cancer cells, tumor associated antigens (“TAAs”) are normal proteins that are aberrantly expressed in a tumor; neoantigens are mutated versions of normal proteins that are specific to the cancer and not found in healthy normal cells.
These core values are threaded throughout the “Adapter lifecycle,” from candidate screening, to rewards and recognition and employee development and promotions, all in an effort to operationalize and reinforce their importance in our organization: • Make it happen. Individual ownership and accountability keep us moving forward . • Innovate fearlessly.
Our talented employees drive our mission and share core values that both stem from, and define, our culture. These core values are threaded throughout the “Adapter lifecycle,” from candidate screening, to rewards and recognition and employee development and promotions, all in an effort to operationalize and reinforce their importance in our organization: • Make it happen.
We use revenue from our IM Pharma partnerships to directly offset our own internal research and development investments in the drug discovery efforts of our IM business. 12 Our Competitive Strengths We harness the inherent biology of the adaptive immune system to develop clinical products and services that improve human health by leveraging our core competitive strengths. • Our clonoSEQ test is the only NGS based assay with broad reimbursement in the U.S. used to monitor MRD in multiple lymphoid malignancies that can obtain a sensitivity of detection of 1 in 1,000,000 cancer cells .
As we continue to monetize these offerings, we plan to evaluate opportunities to apply these same capabilities to develop our own clinical diagnostics in areas such as autoimmunity. 11 Our Competitive Strengths We harness the inherent biology of the adaptive immune system to develop clinical products and services that improve human health by leveraging our core competitive strengths. • Our clonoSEQ test is the only NGS based assay with broad reimbursement in the U.S. used to monitor MRD in multiple lymphoid malignancies that can obtain a sensitivity of detection of 1 in 1,000,000 cancer cells .
Unlike all other genes in the human genome, the genetic sequences of TCRs and BCRs rearrange over time creating massive genetic diversity. In contrast to the static human genome that is made up of approximately 30,000 genes, the adaptive immune repertoire of a healthy adult consists of more than 100 million different genes.
In contrast to the static human genome that is made up of approximately 30,000 genes, the adaptive immune repertoire of a healthy adult consists of more than 100 million different genes. This massive genetic diversity gives the immune system the ability to detect and respond to millions of different antigens associated with human disease.
For autoimmune disorders, the immune system loses the ability to distinguish between ‘self’ and ‘non-self’ and mistakenly recognizes normal protein fragments (“self-antigens”) as foreign, which results in attacking otherwise healthy tissue. The Adaptive Immune Response The key cells of the adaptive immune system that enable our bodies to mount responses against antigens are called T cells and B cells.
Both TAAs and neoantigens are recognized by the immune system as foreign. For autoimmune disorders, the immune system loses the ability to distinguish between ‘self’ and ‘non-self’ and mistakenly recognizes normal protein fragments (“self-antigens”) as foreign, which results in attacking otherwise healthy tissue.
While we acquire these reagents from Illumina on customary terms, if we had to replace the reagents we use, we may also need to acquire and qualify a replacement sequencer, validate the reagents and potentially revalidate aspects of our existing assays. 14 Intellectual Property We have an extensive global portfolio of intellectual property rights to protect our immune medicine platform, the products and services that draw on it and our reputation in the industry.
While we acquire these reagents from Illumina on customary terms, if we had to replace the reagents we use, we may also need to acquire and qualify a replacement sequencer, validate the reagents and potentially revalidate aspects of our existing assays.
For example, in multiple myeloma, patients have traditionally been prescribed indefinite maintenance therapy; however, in recent years novel treatment regimens are enabling newly diagnosed patients to achieve deeper and more sustained responses, which has increased provider interest in offering patients time off therapy.
For example, in MM, patients have traditionally been prescribed indefinite maintenance therapy; however, in recent years, novel treatment regimens are enabling newly diagnosed patients to achieve deeper and more sustained responses, which has increased provider interest in offering patients time off therapy, such as in the MIDAS study which included 718 patients and demonstrated that MRD-negative patients can safely forgo upfront transplant without compromising depth of response.
Although we take steps to protect our proprietary information and trade secrets, including through contractual means with our employees and consultants, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology. Accordingly, we may not be able to meaningfully protect our trade secrets.
In addition, we take other appropriate precautions, such as physical and technological security measures, to guard against misappropriation of our proprietary information by third parties. 15 Although we take steps to protect our proprietary information and trade secrets, including through contractual means with our employees and consultants, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe and our collaborators may not succeed in achieving significant commercial market acceptance for our current or future products and services due to a number of factors, including: • our ability, and that of our collaborators, to secure and maintain FDA and other regulatory clearance, authorization or approval for our products; • the agreement by third-party payors to reimburse our diagnostics, the scope and extent of which will affect patients’ willingness or ability to pay for our diagnostics, even in markets that we expect to be primarily self-pay, and will likely heavily influence physicians’ decisions to recommend our tests; • the rate of adoption of our immune medicine platform and related products and services by academic institutions, clinicians, key opinion leaders, advocacy groups and biopharmaceutical companies; and 37 • the impact of our investments in product innovation and commercial growth.
Biggest changeWe and our collaborators may not succeed in achieving significant commercial market acceptance for our current or future products and services due to a number of factors, including: • our ability, and that of our collaborators, to secure and maintain FDA and other regulatory clearance, authorization or approval for our products; • the agreement by third-party payors to reimburse our diagnostics, the scope and extent of which will affect patients’ willingness or ability to pay for our diagnostics, even in markets that we expect to be primarily self-pay, and will likely heavily influence physicians’ decisions to recommend our tests; • the rate of adoption of our immune medicine platform and related products and services by academic institutions, clinicians, key opinion leaders, advocacy groups and biopharmaceutical companies; and • the impact of our investments in product innovation and commercial growth. 32 Additionally, our customers and collaborators may decide to decrease or discontinue their use of our products and services due to changes in their research and development plans, failures in their clinical trials, financial constraints, the regulatory environment, negative publicity about our products and services, competing products or the reimbursement landscape, all of which are circumstances outside of our control.
The legal systems of many other countries do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biotechnology, which could make it difficult for us to stop the infringement of our patents in such countries.
The legal systems of many other countries do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biotechnology, which could make it difficult for us to stop the infringement of our patents in such countries.
The FDA can delay, limit or deny clearance, authorization or approval of a device for many reasons, including: • the inability to demonstrate to the satisfaction of the FDA that the products are safe or effective for their intended uses; • the disagreement of the FDA with the design, conduct or implementation of the clinical trials or the analysis or interpretation of data from preclinical studies, analytical studies or clinical trials; • serious and unexpected adverse device effects experienced by participants in clinical trials; • the data from preclinical studies, analytical studies and clinical trials may be insufficient to support clearance, authorization or approval, where required; • the inability to demonstrate that the clinical and other benefits of the device outweigh the risks; 49 • an advisory committee, if convened by the FDA, may recommend against approval of a PMA or other application or may recommend that the FDA require, as a condition of approval, additional preclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions, or even if an advisory committee makes a favorable recommendation, the FDA may still not approve the product; • the FDA may identify deficiencies in our marketing application; • the FDA may identify deficiencies in our or our collaborators’ manufacturing processes, facilities or analytical methods; • the potential for policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering clinical data or regulatory filings insufficient for clearance, authorization or approval; and • the FDA or foreign regulatory authorities may audit clinical trial data and conclude that the data is not sufficiently reliable to support a PMA.
The FDA can delay, limit or deny clearance, authorization or approval of a device for many reasons, including: • the inability to demonstrate to the satisfaction of the FDA that the products are safe or effective for their intended uses; • the disagreement of the FDA with the design, conduct or implementation of the clinical trials or the analysis or interpretation of data from preclinical studies, analytical studies or clinical trials; • serious and unexpected adverse device effects experienced by participants in clinical trials; • the data from preclinical studies, analytical studies and clinical trials may be insufficient to support clearance, authorization or approval, where required; • the inability to demonstrate that the clinical and other benefits of the device outweigh the risks; 44 • an advisory committee, if convened by the FDA, may recommend against approval of a PMA or other application or may recommend that the FDA require, as a condition of approval, additional preclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions, or even if an advisory committee makes a favorable recommendation, the FDA may still not approve the product; • the FDA may identify deficiencies in our marketing application; • the FDA may identify deficiencies in our or our collaborators’ manufacturing processes, facilities or analytical methods; • the potential for policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering clinical data or regulatory filings insufficient for clearance, authorization or approval; and • the FDA or foreign regulatory authorities may audit clinical trial data and conclude that the data is not sufficiently reliable to support a PMA.
Our Articles of Incorporation and Bylaws contain provisions that: • authorize “blank check” preferred stock, which could be issued by our board of directors without shareholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; • create a classified board of directors whose members serve staggered three-year terms, with one class being elected each year by our shareholders; 69 • specify that special meetings of our shareholders can be called only by our board of directors, the Chairperson of our board of directors, our chief executive officer or our president; • provide that a director may only be removed from the board of directors for cause and then only by the affirmative vote of our shareholders; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even if less than a quorum; • specify that only our board of directors may change the size of our board of directors; • establish an advance notice procedure for shareholder proposals to be brought before an annual meeting of our shareholders, including proposed nominations of persons for election to our board of directors; • specify that no shareholder is permitted to cumulate votes at any election of directors; • expressly authorize our board of directors to modify, alter or repeal our Bylaws; and • require supermajority votes of the holders of our common stock to amend specified provisions of our Articles of Incorporation and Bylaws.
Our Articles of Incorporation and Bylaws contain provisions that: • authorize “blank check” preferred stock, which could be issued by our board of directors without shareholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; • create a classified board of directors whose members serve staggered three-year terms, with one class being elected each year by our shareholders; 63 • specify that special meetings of our shareholders can be called only by our board of directors, the Chairperson of our board of directors, our chief executive officer or our president; • provide that a director may only be removed from the board of directors for cause and then only by the affirmative vote of our shareholders; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even if less than a quorum; • specify that only our board of directors may change the size of our board of directors; • establish an advance notice procedure for shareholder proposals to be brought before an annual meeting of our shareholders, including proposed nominations of persons for election to our board of directors; • specify that no shareholder is permitted to cumulate votes at any election of directors; • expressly authorize our board of directors to modify, alter or repeal our Bylaws; and • require supermajority votes of the holders of our common stock to amend specified provisions of our Articles of Incorporation and Bylaws.
Moreover, increasing efforts by governmental and third-party payors, in the U.S. and abroad, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for newly cleared, authorized or approved devices and medicines and, as a result, they may not cover or provide adequate payment for our clinical diagnostics or the cellular therapies to be sold by us or our collaborators.
Moreover, increasing efforts by governmental and third-party payors, in the U.S. and abroad, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for newly cleared, authorized or approved devices and medicines and, as a result, they may not cover or provide adequate payment for our clinical diagnostics or the therapies to be sold by us or our collaborators.
If we or our collaborators fail to comply with applicable regulatory requirements following clearance, authorization, approval, accreditation or licensure of any of our products and services, a regulatory agency may: • initiate an inspection of our or our collaborators’ facilities; • issue an untitled or warning letter asserting that we or our collaborators are in violation of law; • seek an injunction or impose civil or criminal penalties or monetary fines; • suspend or withdraw regulatory clearance, authorization or approval, or revoke a license or accreditation; • suspend any ongoing clinical studies; • delay or refuse clearance, authorization or approval of a pending regulatory submission or supplement submitted by us or our collaborators; • impose restrictions on our or our collaborators’ cleared, authorized, approved, accredited or licensed products or services; • seize or recall the product or service; • partially suspend or entirely shut down our or our collaborators’ manufacturing or laboratory operations; • issue advisories or other field actions; 52 • impose operating restrictions; • refuse to allow us or our collaborators to enter into supply contracts, including government contracts; or • refer matters to the DOJ or other enforcement or regulatory bodies.
If we or our collaborators fail to comply with applicable regulatory requirements following clearance, authorization, approval, accreditation or licensure of any of our products and services, a regulatory agency may: • initiate an inspection of our or our collaborators’ facilities; • issue an untitled or warning letter asserting that we or our collaborators are in violation of law; • seek an injunction or impose civil or criminal penalties or monetary fines; • suspend or withdraw regulatory clearance, authorization or approval, or revoke a license or accreditation; • suspend any ongoing clinical studies; • delay or refuse clearance, authorization or approval of a pending regulatory submission or supplement submitted by us or our collaborators; • impose restrictions on our or our collaborators’ cleared, authorized, approved, accredited or licensed products or services; • seize or recall the product or service; • partially suspend or entirely shut down our or our collaborators’ manufacturing or laboratory operations; • issue advisories or other field actions; 47 • impose operating restrictions; • refuse to allow us or our collaborators to enter into supply contracts, including government contracts; or • refer matters to the DOJ or other enforcement or regulatory bodies.
We expect to experience pricing pressures on our clinical diagnostics and cellular therapies sold by us and our collaborators due to the trend toward value-based pricing and coverage, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense.
We expect to experience pricing pressures on our clinical diagnostics and therapies sold by us and our collaborators due to the trend toward value-based pricing and coverage, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense.
Our obligations under the Purchase Agreement could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things: • requiring the dedication of a portion of our cash flow from operations to service the Purchase Agreement obligations, which will reduce the amount of cash available for other purposes, and if our cash inflows and capital resources are insufficient to allow us to make required payments, we may have to reduce or delay additional investments in our operations or seek additional capital; 67 • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital; and • if we fail to comply with the terms of the Purchase Agreement, resulting in an event of default that is not cured or waived, the Purchasers could seek to enforce their security interest.
Our obligations under the Purchase Agreement could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things: • requiring the dedication of a portion of our cash flow from operations to service the Purchase Agreement obligations, which will reduce the amount of cash available for other purposes, and if our cash inflows and capital resources are insufficient to allow us to make required payments, we may have to reduce or delay additional investments in our operations or seek additional capital; 61 • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital; and • if we fail to comply with the terms of the Purchase Agreement, resulting in an event of default that is not cured or waived, the Purchasers could seek to enforce their security interest.
In August 2024, clonoSEQ received IVDR certification in the EU, but our collaborators are only beginning to use clonoSEQ as an IVDR-compliant test in local EU clinical trials. We do not know how long we will be able to retain IVDR certification if regulatory requirements change or necessitate additional validations or approvals.
In August 2024, clonoSEQ received IVDR certification in the EU, but our collaborators are only beginning to use clonoSEQ as an IVDR-compliant test in local EU clinical trials. We do not know how long we will be able to retain IVDR certification, including if regulatory requirements change or necessitate additional validations or approvals.
Such occurrences, regardless of their outcome, could damage our reputation and adversely affect important business relationships with third parties, including managed care organizations, and other private third-party payors. The insurance coverage and reimbursement status of newly approved products, in a new category of diagnostics and therapeutics, is uncertain.
Such occurrences, regardless of their outcome, could damage our reputation and adversely affect important business relationships with third parties, including managed care organizations, and other private third-party payors. The insurance coverage and reimbursement status of newly approved products, in a new category of diagnostics, is uncertain.
Our executive officers have signed employment agreements with us, but their service is at-will and may end at any point in time. 39 Our research and development initiatives and laboratory operations depend on our ability to attract and retain highly skilled scientists, technicians and software engineers.
Our executive officers have signed employment agreements with us, but their service is at-will and may end at any point in time. Our research and development initiatives and laboratory operations depend on our ability to attract and retain highly skilled scientists, technicians and software engineers.
Conduct that results in a False Claims Act violation may also implicate various federal criminal statutes. 54 • The Criminal Health Care Fraud Statute, which imposes criminal and civil liability for knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program, including private third-party payors, and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Conduct that results in a False Claims Act violation may also implicate various federal criminal statutes. 49 • The Criminal Health Care Fraud Statute, which imposes criminal and civil liability for knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program, including private third-party payors, and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Moreover, disputes may also arise between us and our licensors regarding intellectual property subject to a license agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • whether, and the extent to which, our products, services, technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; 63 • our right to sublicense patent and other rights to third parties under collaborative development relationships; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; • the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our collaborators; and • the priority of invention of patented technology.
Moreover, disputes may also arise between us and our licensors regarding intellectual property subject to a license agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • whether, and the extent to which, our products, services, technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; 57 • our right to sublicense patent and other rights to third parties under collaborative development relationships; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; • the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our collaborators; and • the priority of invention of patented technology.
We expect to make significant investments in our continued research and development of new products and services, which may not be successful. We are seeking to leverage our immune medicine platform to develop a pipeline of future disease-specific research, therapeutic and diagnostic products.
We expect to make significant investments in our continued research and development of new products and services, which may not be successful. We are seeking to leverage our immune medicine platform to develop a pipeline of future disease-specific research and diagnostic products.
Sales of substantial amounts of our common stock or other equity securities in the public market, particularly by our directors, executive officers and significant shareholders, including upon the expiration of any lock-up periods entered into in connection with offerings of our common stock or other equity securities, or the perception that these sales could occur, could materially and adversely affect the price of our common stock and impair our ability to raise capital through the sale of equity securities. 68 We are subject to financial reporting and other requirements for which our accounting and other management systems and resources may not be adequately prepared.
Sales of substantial amounts of our common stock or other equity securities in the public market, particularly by our directors, executive officers and significant shareholders, including upon the expiration of any lock-up periods entered into in connection with offerings of our common stock or other equity securities, or the perception that these sales could occur, could materially and adversely affect the price of our common stock and impair our ability to raise capital through the sale of equity securities. 62 We are subject to financial reporting and other requirements for which our accounting and other management systems and resources may not be adequately prepared.
These exclusive-forum provisions may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees or cause shareholders to incur additional costs to bring claims in the forums designated in our Articles of Incorporation. 70 If a court were to find these exclusive-forum provisions in our Articles of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations.
These exclusive-forum provisions may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees or cause shareholders to incur additional costs to bring claims in the forums designated in our Articles of Incorporation. 64 If a court were to find these exclusive-forum provisions in our Articles of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations.
If required, the regulatory marketing authorization process required to bring our current or future LDTs into compliance may involve, among other things, successfully completing additional clinical validations and submitting to and obtaining clearance from the FDA for a premarket clearance (510(k)) submission or authorization for a de novo or approval of a PMA. 48 Furthermore, Congress is working on legislation that, if enacted, would clarify the FDA’s authority with respect to LDTs.
If required, the regulatory marketing authorization process required to bring our current or future LDTs into compliance may involve, among other things, successfully completing additional clinical validations and submitting to and obtaining clearance from the FDA for a premarket clearance (510(k)) submission or authorization for a de novo or approval of a PMA. 43 Furthermore, Congress is working on legislation that, if enacted, would clarify the FDA’s authority with respect to LDTs.
In addition, certain state and local laws may impose additional transparency and healthcare compliance requirements on medical device manufacturers, as well as certain restrictions or limits on interactions with healthcare professionals. 55 • The FTCA, which the FTC interprets to require taking appropriate steps to secure consumers’ personal information and considers the failures to do so to constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the FTCA.
In addition, certain state and local laws may impose additional transparency and healthcare compliance requirements on medical device manufacturers, as well as certain restrictions or limits on interactions with healthcare professionals. 50 • The FTCA, which the FTC interprets to require taking appropriate steps to secure consumers’ personal information and considers the failures to do so to constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the FTCA.
Therefore, inefficient or variable processes can cause variability in our operating results and damage our reputation. 32 In addition, our development laboratory operations could result in any number of errors or defects.
Therefore, inefficient or variable processes can cause variability in our operating results and damage our reputation. In addition, our development laboratory operations could result in any number of errors or defects.
AI practices and machine learning tools used by our commercial partners could present similar risks, and any of these outcomes could have a material adverse effect on our business, results of operations, or financial condition. 44 Risks Relating to Government Regulation We conduct our business in a heavily regulated industry, and changes in regulations or violations of regulations may, directly or indirectly, reduce our revenue, adversely affect our results of operations and financial condition and harm our business.
AI practices and machine learning tools used by our commercial partners could present similar risks, and any of these outcomes could have a material adverse effect on our business, results of operations, or financial condition. 39 Risks Relating to Government Regulation We conduct our business in a heavily regulated industry, and changes in regulations or violations of regulations may, directly or indirectly, reduce our revenue, adversely affect our results of operations and financial condition and harm our business.
In addition, government funding of agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable. 47 Disruptions at the FDA and other agencies may also slow the time necessary for new drugs and devices to be reviewed and cleared, authorized or approved by necessary government agencies, which would adversely affect our business.
In addition, government funding of agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable. 42 Disruptions at the FDA and other agencies may also slow the time necessary for new drugs and devices to be reviewed and cleared, authorized or approved by necessary government agencies, which would adversely affect our business.
We do not have a mechanism to dispute these retroactive adjustments and we cannot predict when, or how often, a payor might engage in these reviews. 30 If we are not successful in leveraging our platform to expand clonoSEQ in new indications or sample types and discover, develop and commercialize additional products and services, our ability to grow our business and achieve our strategic objectives would be impaired.
We do not have a mechanism to dispute these retroactive adjustments and we cannot predict when, or how often, a payor might engage in these reviews. 27 If we are not successful in leveraging our platform to expand clonoSEQ in new indications or sample types and discover, develop and commercialize additional products and services, our ability to grow our business and achieve our strategic objectives would be impaired.
Any of these occurrences may harm our and our collaborators’ ability to identify and develop future products and services, and may significantly harm our business, financial condition, result of operations and prospects. 53 We are subject to various laws and regulations, such as healthcare fraud and abuse laws, false claim laws and health information privacy and security laws, among others, and failure to comply with these laws and regulations may have an adverse effect on our business.
Any of these occurrences may harm our and our collaborators’ ability to identify and develop future products and services, and may significantly harm our business, financial condition, result of operations and prospects. 48 We are subject to various laws and regulations, such as healthcare fraud and abuse laws, false claim laws and health information privacy and security laws, among others, and failure to comply with these laws and regulations may have an adverse effect on our business.
As a result, increasingly high barriers are being erected to the entry of new products. 46 Our business could be harmed by the loss, suspension or other restriction on a license, certification or accreditation, or by the imposition of a fine or penalties, under CLIA, its implementing regulations or other state, federal and foreign laws and regulations affecting licensure or certification, or by future changes in these laws or regulations.
As a result, increasingly high barriers are being erected to the entry of new products. 41 Our business could be harmed by the loss, suspension or other restriction on a license, certification or accreditation, or by the imposition of a fine or penalties, under CLIA, its implementing regulations or other state, federal and foreign laws and regulations affecting licensure or certification, or by future changes in these laws or regulations.
These laws and regulations are increasing in complexity and number, may change frequently and sometimes conflict. 56 The HIPAA privacy, security and breach notification regulations, including the expanded requirements under HITECH, establish comprehensive federal standards with respect to the uses and disclosures of PHI by health plans, healthcare providers, including laboratories, and healthcare clearinghouses, in addition to setting standards to protect the confidentiality, integrity and security of PHI.
These laws and regulations are increasing in complexity and number, may change frequently and sometimes conflict. 51 The HIPAA privacy, security and breach notification regulations, including the expanded requirements under HITECH, establish comprehensive federal standards with respect to the uses and disclosures of PHI by health plans, healthcare providers, including laboratories, and healthcare clearinghouses, in addition to setting standards to protect the confidentiality, integrity and security of PHI.
In addition, because our clinical diagnostics and some of our potential therapeutic products will represent new approaches to the research, diagnosis, detection and treatment of diseases, we cannot accurately estimate how our products and services, and those jointly created with our collaborators, would be priced, whether reimbursement could be obtained or any potential revenue generated.
In addition, because our clinical diagnostics will represent new approaches to the research, diagnosis, detection and treatment of diseases, we cannot accurately estimate how our products and services, and those jointly created with our collaborators, would be priced, whether reimbursement could be obtained or any potential revenue generated.
This risk extends to the data we entrust to the third-party vendors and subcontractors that help us manage this sensitive data or otherwise process it on our behalf. 58 The secure processing, storage, maintenance and transmission of this critical information are vital to our operations and business strategy, and we devote significant resources to protecting such information.
This risk extends to the data we entrust to the third-party vendors and subcontractors that help us manage this sensitive data or otherwise process it on our behalf. 53 The secure processing, storage, maintenance and transmission of this critical information are vital to our operations and business strategy, and we devote significant resources to protecting such information.
Courts frequently render opinions in the biotechnology field that may affect the patentability of certain inventions or discoveries, including opinions that may affect the patentability of diagnostic methods and biological molecules. 61 The patent position of companies engaged in the development and commercialization of clinical diagnostic tests (like our clonoSEQ diagnostic test) and of biologic material (such as TCRs) are particularly uncertain.
Courts frequently render opinions in the biotechnology field that may affect the patentability of certain inventions or discoveries, including opinions that may affect the patentability of diagnostic methods and biological molecules. 55 The patent position of companies engaged in the development and commercialization of clinical diagnostic tests (like our clonoSEQ diagnostic test) and of biologic material (such as TCRs) are particularly uncertain.
We could also suffer severe penalties, including criminal and civil penalties, disgorgement and other remedial measures. 60 Risks Relating to our Intellectual Property We may not be successful in obtaining or maintaining sufficient intellectual property protection for our products, services and technologies and uses thereof, and the scope of the intellectual property protection obtained may not be sufficiently broad.
We could also suffer severe penalties, including criminal and civil penalties, disgorgement and other remedial measures. 54 Risks Relating to our Intellectual Property We may not be successful in obtaining or maintaining sufficient intellectual property protection for our products, services and technologies and uses thereof, and the scope of the intellectual property protection obtained may not be sufficiently broad.
As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. 66 Risks Relating to our Common Stock and Capital Structure The market price of our common stock is volatile and is likely to continue to fluctuate substantially.
As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. 60 Risks Relating to our Common Stock and Capital Structure The market price of our common stock is volatile and is likely to continue to fluctuate substantially.
In addition, some countries have stricter consumer notice or consent requirements relating to personal data collection, use or sharing, have more stringent requirements relating to organizations’ privacy programs and provide stronger individual rights. 57 Moreover, international privacy and data security regulations are becoming more complex and may result in greater penalties.
In addition, some countries have stricter consumer notice or consent requirements relating to personal data collection, use or sharing, have more stringent requirements relating to organizations’ privacy programs and provide stronger individual rights. 52 Moreover, international privacy and data security regulations are becoming more complex and may result in greater penalties.
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, 2024.
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, 2025.
It would be costly and time-consuming to defend such claims. 65 Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that our current or future products, technologies and services may infringe.
It would be costly and time-consuming to defend such claims. 59 Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that our current or future products, technologies and services may infringe.
Our current and future products and services may never achieve significant commercial market acceptance. Our success depends on the market’s confidence that we can provide immune-driven research, therapeutic and diagnostic products and services that improve clinical outcomes, lower healthcare costs and enable better biopharmaceutical development.
Our current and future products and services may never achieve significant commercial market acceptance. Our success depends on the market’s confidence that we can provide immune-driven research and products and services that improve clinical outcomes, lower healthcare costs and enable better biopharmaceutical development.
Our competitors may succeed in developing and commercializing therapies or diagnostic products that are more accurate, more convenient to use or more cost-effective than our products or could prove to be safer, more effective, more convenient to administer or more cost-effective than any therapeutic products we may develop with our collaborators or that would render our products less competitive or obsolete.
Our competitors may succeed in developing and commercializing diagnostic products that are more accurate, more convenient to use or more cost-effective than our products or could prove to be safer, more effective, more convenient to administer or more cost-effective than any products we may develop with our collaborators or that would render our products less competitive or obsolete.
Additionally, aside from this achievement, we have limited experience in obtaining regulatory clearance, authorization or approval in international markets.
Aside from this achievement, we have limited experience in obtaining regulatory clearance, authorization or approval in international markets.
We may also be subject to enforcement action, including, among other things, significant regulatory fines or penalties. 50 Our employees, consultants and collaborators may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.
We may also be subject to enforcement action, including, among other things, significant regulatory fines or penalties. 45 Our employees, consultants and collaborators may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.
We may consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons, including to: • increase our sales and marketing efforts to drive market adoption of our life sciences research, clinical diagnostics and therapeutics; • fund development efforts for our current and future products and services; • expand our products and services into other disease indications and clinical applications; • acquire, license or invest in technologies; • acquire or invest in complementary businesses or assets; and • finance capital expenditures, such as our corporate headquarters expansion, and general and administrative expenses.
We may consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons, including to: • increase our sales and marketing efforts to drive market adoption of our life sciences research, immune medicine platform and clinical diagnostics; • fund development efforts for our current and future products and services; • expand our products and services into other disease indications and clinical applications; • acquire, license or invest in technologies; • acquire or invest in complementary businesses or assets; and • finance capital expenditures, such as our corporate headquarters expansion, and general and administrative expenses.
Accordingly, management applied a full valuation allowance against net deferred tax assets as of December 31, 2024. We may experience ownership changes in the future as a result of shifts in our stock ownership, which may be outside of our control.
Accordingly, management applied a full valuation allowance against net deferred tax assets as of December 31, 2025. We may experience ownership changes in the future as a result of shifts in our stock ownership, which may be outside of our control.
Changes in the reimbursement landscape may occur, which are outside of our control, and may impact the commercial viability of our products and services. 45 There is significant uncertainty related to the insurance coverage and reimbursement of newly cleared, authorized or approved products and services.
Changes in the reimbursement landscape may occur, which are outside of our control, and may impact the commercial viability of our products and services. 40 There is significant uncertainty related to the insurance coverage and reimbursement of newly cleared, authorized or approved products and services.
Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management and other employees. 64 We may not be able to protect and enforce our trademarks.
Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management and other employees. 58 We may not be able to protect and enforce our trademarks.
The uncertainties and costs surrounding the prosecution of our owned or in-licensed patent applications and the enforcement or defense of our owned or in-licensed issued patents could have a material adverse effect on our business. 62 Recent U.S.
The uncertainties and costs surrounding the prosecution of our owned or in-licensed patent applications and the enforcement or defense of our owned or in-licensed issued patents could have a material adverse effect on our business. 56 Recent U.S.
As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. 71 Item 1B. Un resolved Staff Comments Not applicable .
As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. 65 Item 1B. Un resolved Staff Comments Not applicable .
Additionally, the Purchasers under the Purchase Agreement have an option (the "Put Option") to terminate the Purchase Agreement and to require us to repurchase future Revenue Interests at a price of 120% to 175% of Cumulative Purchaser Payments, less the sum of all Revenue Interest Payments made by us to the Purchasers prior to such date, upon enumerated events such as a bankruptcy event, a material judgment against us, a material divestiture or a change of control.
Additionally, the Purchasers under the Purchase Agreement have an option (the "Put Option") to terminate the Purchase Agreement and to require us to repurchase future Revenue Interests at a price of 165% to 175% of the Purchaser Payment, less the sum of all Revenue Interest Payments made by us to the Purchasers prior to such date, upon enumerated events such as a bankruptcy event, a material judgment against us, a material divestiture or a change of control.
We expect to continue to incur significant expenses and operating losses as we continue to invest in the development of products and services utilizing our immune medicine platform to support the validation of additional clinical therapeutic and diagnostic products and services. We will need to generate significant additional revenue to achieve and sustain profitability.
We expect to continue to incur significant expenses and operating losses as we continue to invest in the development of products and services utilizing our immune medicine platform to support the validation of additional products and services. We will need to generate significant additional revenue to achieve and sustain profitability.
We or our collaborators may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our or their ability to conduct further clinical trials or obtain regulatory clearance, authorization or approval of or commercialize future products and services or improvements to current products and services, including: Evolving Regulatory Requirements and Policies • the area of “precision medicine” or “personalized medicine” and its regulation may be subject to ongoing changes in terms of regulatory requirements and governmental policies, in ways we cannot predict; Trial Design • regulatory authorities or ethical review boards, including IRBs, may not authorize commencement of a clinical trial or conduct a clinical trial at a prospective trial site; • there may be delays in reaching or failure to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; • the FDA or other regulatory authorities may disagree with a clinical trial design or a sponsor’s interpretation of data and may change the requirements for product clearance, authorization or approval even after they have reviewed and commented on the clinical trial design; • differences in trial design between early stage clinical trials and later-stage clinical trials may make it difficult to extrapolate the results of earlier clinical trials to later clinical trials; • the FDA or other regulatory authorities may disagree about whether study endpoints are clinically meaningful; • the number of patients, or amount of data, required for clinical trials, or improvements to current products, may be larger than anticipated, patient enrollment in these clinical trials may be slower than anticipated or patients may drop out of clinical trials at a higher rate than anticipated; Testing • changes may be made to product candidates after commencing clinical trials, which may require that previously completed stages of clinical testing be repeated or delay later stages of testing, for example, we, or our collaborators, may pursue one or more different product development pathways for our T cell therapeutic products; • clinical trials may fail to satisfy the applicable regulatory requirements of the FDA or other regulatory authorities responsible for oversight of the conduct of clinical trials in other countries; • regulators may elect to impose a clinical hold, or governing IRBs, data safety monitoring board or ethics committees may elect to suspend or terminate our clinical research or trials for various reasons, including non-compliance with regulatory requirements or a finding that the participants are being exposed to unacceptable risks to their health or the privacy of their health information being disclosed; • the cost of clinical trials of future products, or improvements to current products, may be greater than we anticipate; • we may not have sufficient capacity in our laboratories to perform testing as requested or volumes requested or with the requested turnaround times necessary for clinical trials; • the supply or quality of materials or data necessary to conduct clinical trials of future products, or improvements to current products, may be insufficient or inadequate; Trial Outcomes • the outcome of our collaborators’ preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results; • product candidates may be associated with negative or inconclusive results in clinical trials, and we or our collaborators may decide to deprioritize or abandon these product candidates, or regulatory authorities may require us to abandon them or impose onerous changes or requirements, which could lead to deprioritization or abandonment; 36 • product candidates may have undesirable side effects which could lead to serious adverse events, or other unexpected characteristics.
We or our collaborators may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our or their ability to conduct further clinical trials or obtain regulatory clearance, authorization or approval of or commercialize future products and services or improvements to current products and services, including: Evolving Regulatory Requirements and Policies • the area of “precision medicine” or “personalized medicine” and its regulation may be subject to ongoing changes in terms of regulatory requirements and governmental policies, in ways we cannot predict; Trial Design • regulatory authorities or ethical review boards, including institutional review boards (“IRBs”), may not authorize commencement of a clinical trial or conduct a clinical trial at a prospective trial site; • there may be delays in reaching or failure to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; • the FDA or other regulatory authorities may disagree with a clinical trial design or a sponsor’s interpretation of data and may change the requirements for product clearance, authorization or approval even after they have reviewed and commented on the clinical trial design; • differences in trial design between early stage clinical trials and later-stage clinical trials may make it difficult to extrapolate the results of earlier clinical trials to later clinical trials; • the FDA or other regulatory authorities may disagree about whether study endpoints are clinically meaningful; • the number of patients, or amount of data, required for clinical trials, or improvements to current products, may be larger than anticipated, patient enrollment in these clinical trials may be slower than anticipated or patients may drop out of clinical trials at a higher rate than anticipated; Testing • clinical trials may fail to satisfy the applicable regulatory requirements of the FDA or other regulatory authorities responsible for oversight of the conduct of clinical trials in other countries; • regulators may elect to impose a clinical hold, or governing IRBs, data safety monitoring board or ethics committees may elect to suspend or terminate our clinical research or trials for various reasons, including non-compliance with regulatory requirements or a finding that the participants are being exposed to unacceptable risks to their health or the privacy of their health information being disclosed; • the cost of clinical trials of future products, or improvements to current products, may be greater than we anticipate; • we may not have sufficient capacity in our laboratories to perform testing as requested or volumes requested or with the requested turnaround times necessary for clinical trials; • the supply or quality of materials or data necessary to conduct clinical trials of future products, or improvements to current products, may be insufficient or inadequate; Trial Outcomes • the outcome of our collaborators’ preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results; • product candidates may be associated with negative or inconclusive results in clinical trials, and we or our collaborators may decide to deprioritize or abandon these product candidates, or regulatory authorities may require us to abandon them or impose onerous changes or requirements, which could lead to deprioritization or abandonment; 31 • product candidates may have undesirable side effects which could lead to serious adverse events, or other unexpected characteristics.
In drug discovery, such errors may interfere with our collaborators’ clinical studies or result in adverse safety or efficacy profiles for their products in development.
Such errors may interfere with our collaborators’ clinical studies or result in adverse safety or efficacy profiles for their products in development.
Any of these developments could harm our business and operating results. Our efforts to develop products leveraging our TCR-antigen binding data may not be successful, and it may not yield the insights that we expect or on a timetable that allows development or commercialization of new therapeutic or diagnostic products.
Any of these developments could harm our business and operating results. 29 Our efforts to develop products leveraging our TCR-antigen binding data may not be successful, and it may not yield the insights that we expect or on a timetable that allows development or commercialization of new products or services.
Factors relating to our business that may contribute to these fluctuations include the following, as well as other factors described elsewhere in this Annual Report on Form 10-K: • the ability of our clinical sales teams to continue converting physicians from using incumbent products in the market to clonoSEQ and new diagnostic products and services we may develop; • our ability to continue driving repeat usage of the clonoSEQ diagnostic test by physicians and get reimbursed for that repeat usage by commercial and government payors for monitoring of MRD; • our ability to manage our growth and operating expenses; • the outcomes of research initiatives, clinical trials or other product development or approval processes conducted by our customers, us or our collaborators; • our ability to obtain positive coverage decisions for our tests from additional commercial payers; • the timing of upfront payments from our collaborators; • our ability and that of our collaborators to develop and successfully commercialize our products, including therapeutic products; • our ability to achieve collaboration-based milestones on currently contemplated timelines, or at all; • availability and extent of reimbursement by governmental and private payors for our products; • the level of demand for our products; • our relationships, and any associated exclusivity terms, with collaborators; • our contractual or other obligations to provide resources to fund our products and services and to provide resources to our collaborations; • delays or failures in advancement of future products in clinical trials by us or our collaborators; • risks associated with any future international expansion of our business, including the potential to conduct clinical trials and commercialize our products and services in multiple international locations; • our ability and that of our collaborators to consistently manufacture our products; • our dependence on, and the need to attract and retain, key management and other personnel; • our ability to obtain, protect and enforce our intellectual property rights; • our ability to prevent the theft or misappropriation of our intellectual property, know-how or technologies; • our ability to obtain additional capital that may be necessary to expand our business; • our ability to accurately report our financial results in a timely manner; • business interruptions such as power outages, strikes, acts of terrorism or natural disasters; and 29 • our ability to use our net operating loss (“NOL”) carryforwards to offset future taxable income.
Factors relating to our business that may contribute to these fluctuations include the following, as well as other factors described elsewhere in this Annual Report on Form 10-K: • the ability of our clinical sales teams to continue converting physicians from using incumbent products in the market to clonoSEQ and new diagnostic products and services we may develop; • our ability to continue driving repeat usage of the clonoSEQ diagnostic test by physicians and get reimbursed for that repeat usage by commercial and government payors for monitoring of MRD; • our ability to manage our growth and operating expenses; • the outcomes of research initiatives, clinical trials or other product development or approval processes conducted by our customers, us or our collaborators; • our ability to obtain positive coverage decisions for our tests from additional commercial payors; • the timing of upfront payments from our customers and collaborators; • our ability and that of our collaborators to develop and successfully commercialize products, including drug candidates; • our ability to achieve collaboration-based milestones on currently contemplated timelines, or at all; • availability, extent and pricing of reimbursement by governmental and private payors for our products; • the level of demand for our products; • our relationships, and any associated exclusivity terms, with collaborators; • our contractual or other obligations to provide resources to fund our products and services and to provide resources to our collaborations; • delays or failures in advancement of future products in clinical trials by us or our collaborators; • risks associated with any future international expansion of our business, including the potential to conduct clinical trials and commercialize our products and services in multiple international locations; • our ability and that of our collaborators to consistently manufacture our products; • our dependence on, and the need to attract and retain, key management and other personnel; • our ability to obtain, protect and enforce our intellectual property rights; • our ability to prevent the theft or misappropriation of our intellectual property, know-how or technologies; • our ability to obtain additional capital that may be necessary to expand our business; • our ability to accurately report our financial results in a timely manner; • business interruptions such as laboratory disruptions, power outages, strikes, acts of terrorism or natural disasters; and • our ability to use our net operating loss (“NOL”) carryforwards to offset future taxable income. 26 The cumulative effects of factors discussed above could result in large fluctuations and unpredictability in our quarterly and annual operating results.
The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford the clinical diagnostic tests and therapeutics that we and our collaborators plan to develop and sell.
The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford the clinical diagnostic tests and drug candidates that we and our collaborators plan to develop and sell.
In this situation, Medicare coverage would be determined by the MAC for the jurisdiction where the hospital is located, which may not cover our tests. 51 Our products, and those jointly developed with our collaborators, may in the future be subject to product or service recalls.
In this situation, Medicare coverage would be determined by the MACs for the jurisdiction where the hospital is located, which may not cover our tests. 46 Our products, and those jointly developed with our collaborators, may in the future be subject to product or service recalls.
We also may pursue joint ventures or investments that leverage our immune medicine platform and industry experience to expand our offerings or distribution. We have no experience forming joint ventures and limited experience investing in or acquiring other companies.
We may pursue acquisitions of businesses and assets. We also may pursue joint ventures or investments that leverage our immune medicine platform and industry experience to expand our offerings or distribution. We have no experience forming joint ventures and limited experience investing in or acquiring other companies.
One of the goals of the NSA is to protect patients from “surprise” medical bills resulting from gaps in coverage for services provided by out-of-network providers, such as laboratories, related to patient visits at in-network facilities.
In addition, the NSA is intended to protect patients from “surprise” medical bills resulting from gaps in coverage for services provided by out-of-network providers, such as laboratories, related to patient visits at in-network facilities.
We have incurred significant losses since our inception. For the year ended December 31, 2024, 2023 and 2022, we incurred a net loss of $159.6 million, $225.3 million and $200.4 million, respectively. As of December 31, 2024, we had an accumulated deficit of $1.3 billion.
We have incurred significant losses since our inception. For the year ended December 31, 2025, 2024 and 2023, we incurred a net loss of $59.5 million, $159.6 million, and $225.3 million, respectively. As of December 31, 2025, we had an accumulated deficit of $1.4 billion.
Summary of Risk Factors Generally, the risks described below relate to the following: • our significant net losses since inception, expected net losses in the future and need for significant investments in products and services, as well as our ability to manage operating expenses in light of profitability goals; • market acceptance and our ability to increase the adoption of our products and services, including via coverage or reimbursement decisions related to our clinical diagnostic products; • our ability to increase our capacity, manage the evolution of our products and services, stay current in our rapidly changing industry and otherwise manage our growth; • our laboratory operations, including errors or defects in our products or services and our reliance on a limited number of suppliers, and in some cases single suppliers, for our equipment and materials, some of which include reagents or other materials that may also require additional internal validation prior to use; • our collaboration with Genentech and ability to develop and commercialize cellular therapeutics, including our ability to achieve milestones and realize the intended benefits of the collaboration; • our limited experience with the development and commercialization of therapeutic products, including cellular therapies and antibodies; • our expected and potential reliance on collaborators for development and clinical testing of therapeutic product candidates, which may fail at any time due to a number of possible unforeseen events; • the extensive regulation of our industry, including fraud and abuse laws and data privacy regulations; • the loss of any member of our senior management team, or of the support of key opinion leaders; and • the validity of our patents, protection of our trade secrets and related intellectual property matters. 28 Risks Relating to Our Business We have incurred significant losses since inception, we expect to incur losses in the future and we may not be able to generate sufficient revenue to achieve and maintain profitability.
Summary of Risk Factors Generally, the risks described below relate to the following: • our significant net losses since inception, expected net losses in the future and need for significant investments in products and services, as well as our ability to manage operating expenses in light of profitability goals; • market acceptance and our ability to increase the adoption of our products and services, including via coverage or reimbursement decisions related to our clinical diagnostic products; • our ability to increase our capacity, manage the evolution of our products and services, stay current in our rapidly changing industry and otherwise manage our growth; • our laboratory operations, including errors or defects in our products or services and our reliance on a limited number of suppliers, and in some cases single suppliers, for our equipment and materials, some of which include reagents or other materials that may also require additional internal validation prior to use; • our expected and potential reliance on biopharmaceutical collaborators for development and clinical testing of drug candidates, which may fail at any time due to a number of possible unforeseen events; • the extensive regulation of our industry, including fraud and abuse laws and data privacy regulations; • the loss of any member of our senior management team, or of the support of key opinion leaders; and • the validity of our patents, protection of our trade secrets and related intellectual property matters. 25 Risks Relating to Our Business We have incurred significant losses since inception, we expect to incur losses in the future and we may not be able to generate sufficient revenue to achieve and maintain profitability.
Products or services that initially show promise may fail to achieve the desired results or may not achieve acceptable levels of analytical accuracy or clinical utility. We may need to alter our products in development and repeat clinical studies before we identify a potentially successful product or service.
Products or services that initially show promise may fail to achieve the desired results or may not achieve acceptable levels of analytical accuracy or clinical utility. We may need to alter our products in development and repeat clinical studies before we identify a potentially successful product or service. Failure can occur at any stage of the development.
We have funded our operations to date principally from the sale of convertible preferred stock and common stock, including the sale of common stock in our initial public offering and follow-on offering, and, to a lesser extent, revenue as well as transactions pursuant to the Purchase Agreement.
We have funded our operations to date principally from the sale of convertible preferred stock and common stock, including the sale of common stock in our initial public offering and follow-on offering, revenue and transactions pursuant to the Purchase Agreement.
We also anticipate AI to be adopted more broadly throughout our organization to manage operational efficiencies, particularly as the technology evolves and improves. However, the use of AI and machine learning presents risks and challenges that could impact our business.
We also anticipate AI to be adopted more broadly throughout our organization to manage operational efficiencies, particularly as the technology evolves and improves. However, the use of AI and machine learning presents risks and challenges that could impact our business, including as a result of changing regulations and laws.
Consequently, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. As of December 31, 2024, we own or have rights to 416 active patents and patent applications filed in the U.S., Europe and elsewhere. Of these, there are 70 pending patent applications.
Consequently, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. As of December 31, 2025, we own or have rights to 416 active patents in the U.S., Europe and elsewhere. In addition, 64 patent applications are pending in the U.S., Europe and elsewhere.
As we continue to grow our immunomics database and advance our prediction modeling activities, we may be unable to translate these efforts into commercialization opportunities. Moreover, as our collaboration activities under the Microsoft Agreement are winding down, we may be less successful in pursuing these opportunities.
As we continue to grow our immunomics database and advance our prediction modeling activities, we may be unable to translate these efforts into commercialization opportunities. Moreover, as our collaboration activities under the Microsoft Agreement have concluded, we may be less successful in pursuing these opportunities in the future.
We may not succeed in discovering targets or advancing therapeutic product candidates in these collaborations and our collaborators may not succeed in developing and commercializing such products, which may cause us not to realize the expected monetary benefits of the collaborations.
We may not succeed in discovering targets and our collaborators may not succeed in developing and commercializing therapeutic product candidates, which may cause us not to realize the expected monetary benefits of the collaborations.
In addition, we may not succeed in accelerating the development of a ‘digital’ TCR-antigen binding prediction model that will allow us to pursue multiple high-value therapeutic applications and achieve our business goals in a timetable that is commercially viable for our products or our collaborators’ products, or at all.
In addition, we may not succeed in accelerating the development of a ‘digital’ TCR-antigen binding prediction model that will allow us to achieve our business goals in a timetable that is commercially viable for our products or our collaborators’ products, or at all.
We may not be able to attract and retain personnel or be able to build or adequately train an efficient and effective sales organization, which could negatively impact sales and market acceptance of our clinical diagnostics and limit our revenue growth and potential profitability. We have no experience marketing and selling therapeutic products.
We may not be able to attract and retain personnel or be able to build or adequately train an efficient and effective sales organization, which could negatively impact sales and market acceptance of our clinical diagnostics and limit our revenue growth and potential profitability.
In addition, we cannot eliminate the risk of accidental injury or contamination from these materials or wastes, which increase with the volume of material and sample transfers and could cause an interruption of our commercialization efforts, research and development programs, and business operations, as well as environmental damage resulting in costly cleanup and liabilities under applicable laws and regulations.
If we do not comply with applicable regulations, we may be subject to fines and penalties. 35 In addition, we cannot eliminate the risk of accidental injury or contamination from these materials or wastes, which increase with the volume of material and sample transfers and could cause an interruption of our commercialization efforts, research and development programs, and business operations, as well as environmental damage resulting in costly cleanup and liabilities under applicable laws and regulations.
Our present and future funding requirements will depend on many factors, including: • our ability to achieve revenue growth; • our rate of continued progress in establishing payor coverage and reimbursement arrangements with domestic and international commercial third-party payors and government payors for our clonoSEQ diagnostic test; • the cost of expanding our laboratory operations and offerings, including our sales and marketing efforts; • our rate of progress in supporting the development of cellular therapies developed under the Genentech Agreement; • our rate of progress in, and research and development expenses associated with, products and services in research and early development; • the effect of competing technological, product and market developments; • costs related to international expansion; and • the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products and services. 41 The various ways we could raise additional capital carry potential risks.
Our present and future funding requirements will depend on many factors, including: • our ability to achieve revenue growth; • our rate of continued progress in establishing payor coverage and reimbursement arrangements with domestic and international commercial third-party payors and government payors for our clonoSEQ diagnostic test; • the cost of expanding our laboratory operations and offerings, including our sales and marketing efforts; • our rate of progress in, and research and development expenses associated with, products and services in research and early development; • the effect of competing technological, product and market developments; • costs related to international expansion; and • the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products and services.
Under Medicare Part B, payment for most diagnostic laboratory tests is made under the Clinical Laboratory Fee Schedule (“CLFS”), which assigns payment amounts to tests based on billing codes.
Under Medicare Part B, payment for most diagnostic laboratory tests is made under the CLFS, which assigns payment amounts to tests based on billing codes.
The market price of our common stock has been and is likely to continue to be highly volatile, with a 52-week high closing price of $8.52 and a 52-week low closing price of $2.34, in each case as of February 26, 2025, and may fluctuate substantially due to many factors, many of which are beyond our control.
The market price of our common stock has been and is likely to continue to be highly volatile, with a 52-week high closing price of $20.46 and a 52-week low closing price of $6.67, in each case as of February 20, 2026, and may fluctuate substantially due to many factors, many of which are beyond our control.
Because new potential products may fail at any stage of development or commercialization and if we determine that any of our current or future products are unlikely to succeed, we may abandon them without any return on our investment.
Because new potential products may fail at any stage of development or commercialization and if we determine that any of our current or future products are unlikely to succeed, we may abandon them without any return on our investment. If we are unsuccessful in developing additional products, our potential for growth may be impaired.
We have licensed our technology to certain international sites including but not limited to France, Germany, Italy, the United Kingdom, Spain, and Australia for research use only of our clonoSEQ assay and in some cases, for clinical use of clonoSEQ.
We have completed a technology transfer process for research use and in some cases clinical use of our clonoSEQ assay to certain international sites including but not limited to sites in France, Germany, Italy, the United Kingdom, Spain, Australia, Japan and Israel.
Our strategy is to leverage our immune medicine platform to discover, develop and potentially commercialize additional therapeutic and diagnostic products and services for various disease states.
Our strategy is to leverage our immune medicine platform to discover, develop and potentially commercialize additional products and services to diagnose and treat various disease states.
Due to the significant interest and growth in immune medicine more broadly, we expect the intensity of the competition to increase. 38 For instance, in clinical diagnostics, our clonoSEQ MRD test faces competition from both conventional and next-generation flow cytometry performed either in-house by our target customers or by reference labs, as well as from labs and institutions advancing research-use-only MRD technologies for clinical applications and commercial-stage oncology diagnostics companies extending the application of their solid tumor (ctDNA) MRD products into the hematology MRD space.
For instance, in clinical diagnostics, our clonoSEQ MRD test faces competition from both conventional and next-generation flow cytometry performed either in-house by our target customers or by reference labs, as well as from labs and institutions advancing research-use-only MRD technologies for clinical applications and commercial-stage oncology diagnostics companies extending the application of their solid tumor (ctDNA) MRD products into the hematology MRD space.
If we raise funds by issuing equity securities, dilution to our shareholders could result. Any preferred equity securities issued also could provide for rights, preferences or privileges senior to those of holders of our common stock.
The various ways we could raise additional capital carry potential risks. If we raise funds by issuing equity securities, dilution to our shareholders could result. Any preferred equity securities issued also could provide for rights, preferences or privileges senior to those of holders of our common stock.
For example, the U.S. government introduced the Lower Drug Costs Now Act of 2019 to reduce the cost of drugs. This blueprint contains certain measures that HHS is already working to implement. In addition, the No Surprises Act (“NSA”) took effect in January 2022.
For example, the U.S. government introduced the Lower Drug Costs Now Act of 2019 to reduce the cost of drugs. This blueprint contains certain measures that HHS is already working to implement.
To the extent the NSA limits the price charged for our diagnostic products or cellular therapeutics, the commercial viability of those products may be adversely affected.
To the extent the NSA or PAMA limits the payment for our diagnostic products, the commercial viability of those products may be adversely affected.
Any failure by us or our collaborators to maintain such clearance, authorization or approval could impair or cause a delay in our ability to profit from these collaborations. Products and services offered RUO may be subject to regulatory scrutiny. Certain of our products are currently provided on a RUO basis, not for use in the diagnosis or treatment of disease.
Any failure by us or our collaborators to maintain such clearance, authorization or approval could impair or cause a delay in our ability to profit from these collaborations. Products and services offered on an RUO basis may be subject to regulatory scrutiny.
If we are unsuccessful in developing additional products, our potential for growth may be impaired. 31 We rely on a limited number of suppliers or, in many cases, single suppliers, for laboratory equipment and materials and may not be able to find replacements or immediately transition to alternative suppliers.
We rely on a limited number of suppliers or, in many cases, single suppliers, for laboratory equipment and materials and may not be able to find replacements or immediately transition to alternative suppliers.
We carry insurance for damage to our property and the disruption of our business, but this insurance may not cover all of the risks associated with damage or disruption to our business, may not provide coverage in amounts sufficient to cover our potential losses and may not continue to be available to us on acceptable terms, if at all. 40 We use biological and hazardous materials that require considerable expertise and expense for handling, storage and disposal and may result in claims against us.
We carry insurance for damage to our property and the disruption of our business, but this insurance may not cover all of the risks associated with damage or disruption to our business, may not provide coverage in amounts sufficient to cover our potential losses and may not continue to be available to us on acceptable terms, if at all.
If we lose the support of key thought leaders, it may be difficult to establish products and services enabled by our immune medicine platform as industry standards, which may limit our revenue growth and ability to achieve profitability.
The loss of the services of one or more of our current consultants or advisors might impede the achievement of our research, development, regulatory and commercialization objectives. 34 If we lose the support of key thought leaders, it may be difficult to establish products and services enabled by our immune medicine platform as industry standards, which may limit our revenue growth and ability to achieve profitability.
CMS uses the data reported by laboratories to calculate a payment rate for each CLFS test, other than those coded with miscellaneous codes and certain others, based on the volume-weighted median of the private payor rates. These rates apply for three years, except that payment rates for advanced diagnostic laboratory tests apply for one year.
CMS uses the data reported by laboratories to calculate a payment rate for each CLFS test, other than those tests coded with miscellaneous codes and certain others (including those for which no applicable information is reported), based on the volume-weighted median of the private payor rates.
If we are unable to make meaningful progress in leveraging our prediction models to successfully develop and in the future commercialize new therapeutic products, diagnostic products or services, our business results will be negatively impacted. We are exposed to risks associated with our agreement with Genentech, and we may not realize the advantages we expect from it.
If we are unable to make meaningful progress in leveraging our prediction models to successfully develop and in the future commercialize new products or services, our business results will be negatively impacted.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe internal body with executive oversight of our cybersecurity program is our Privacy and Information Security Steering Committee (“PISSC”), which applies a multidisciplinary framework to cybersecurity risks and risk assessment by integrating information security, privacy and human resources expertise, oversight and reporting.
Biggest changeWe have two internal bodies with management oversight of our cybersecurity program: our Privacy and Information Security Steering Committee (“PISSC”), which applies a high-level multidisciplinary framework to cybersecurity risks and risk assessment; and our Information Security Council (“ISC”), which oversees strategic operational information security matters in alignment with our technology operations.
This includes but is not limited to the organization of information security to assign roles and responsibilities within Adaptive, access control to restrict employees’ access to view only that information that is relevant to their roles, information security incident management, and compliance to broadly ensure alignment with applicable laws and regulations.
This includes but is not limited to the organization of information security to assign roles and responsibilities within Adaptive, access controls to restrict employees’ access to view only that information that is relevant to their roles, information security incident management, and compliance to broadly ensure alignment with applicable laws and regulations.
The PISSC is made up of our Privacy Officer, Chief Operations Officer (who is also acting as head of our security team), Chief Financial Officer, General Counsel and Chief People Officer and meets on a quarterly basis.
The PISSC is made up of our Privacy Officer, Chief Operations Officer, Chief Financial Officer, Head of Legal, SVP of Technology, SVP of Operations, and Chief People Officer and meets on a quarterly basis.
Our board of directors is kept apprised of cybersecurity risks and assessments through regular presentations to the Audit Committee regarding our information security and privacy governance and reports on information security and privacy incidents.
Our information security team and related staff are certified with leading cybersecurity governing bodies and provide our company with extensive expertise in cybersecurity and risk management. Our board of directors is kept apprised of cybersecurity risks and assessments through regular presentations to the Audit Committee regarding our information security and privacy governance and reports on information security and privacy incidents.
We perform an annual risk assessment conducted by an outside assessor and conduct vendor risk assessments for third party vendors to evaluate how their systems may impact our business in the event of a cybersecurity incident.
We perform an annual risk assessment conducted by an outside assessor and conduct vendor risk assessments for third party vendors to evaluate their cybersecurity posture, as well as to identify and address any potential risks they may pose to our business.
Removed
Julie Rubinstein, who serves as our Chief Operations Officer, is leading our security team on an interim basis and is supported by a fractional chief information security officer.
Added
The ISC is led by our Privacy Officer in coordination with our SVP of Technology and Head of Legal and is comprised of additional information security and technology organization stakeholders. Our PISSC and ISC collectively have more than 20 years of experience in cybersecurity and risk management.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAdditionally, we lease approximately 33,300 square feet of laboratory and office space in South San Francisco, California, pursuant to an amended lease that expires March 2026, subject to our option to extend the lease for five years.
Biggest changeThe lease expires in October 2031, subject to an early termination option in 2028 and an option to twice extend the lease for five years. Additionally, we lease approximately 33,300 square feet of laboratory and office space in South San Francisco, California, pursuant to an amended lease that expires March 2026.
Item 2. Pr operties Our corporate headquarters is located in Seattle, Washington, where we lease approximately 100,000 square feet. The lease expires in August 2033, subject to our option to twice extend the lease for five years.
Item 2. Pr operties Our corporate headquarters is located in Seattle, Washington, where we lease approximately 100,000 square feet. The lease expires August 2033, subject to our option to twice extend the lease for five years.
In a separate Seattle, Washington location, we lease approximately 65,500 square feet pursuant to a lease that expires October 2032, subject to our option to twice extend the lease for five years. Both of our Seattle, Washington locations contain office and laboratory space. We also lease approximately 27,000 square feet of a warehouse in Bothell, Washington.
In a separate Seattle, Washington location, we lease approximately 65,500 square feet pursuant to a lease that expires in October 2032, subject to our option to twice extend the lease for five years. Both of our Seattle, Washington locations contain office and laboratory space. We also lease approximately 27,000 square feet of a warehouse in Bothell, Washington.
Removed
The lease expires in October 2031, subject to an early termination option in 2028 and an option to twice extend the lease for five years.
Added
In November 2025, we entered into a lease to rent approximately 7,700 square feet of laboratory and office space in South San Francisco, California. The lease commenced February 2026, rent obligations commence October 2026 and the lease expires May 2029, subject to our option to extend the lease for three years.
Removed
We also lease approximately 3,100 square feet of office space in New York City, New York, pursuant to a lease that expires November 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine Safe ty Disclosures Not applicable . 72 PAR T II
Biggest changeRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. 66 Item 4. Mine Safe ty Disclosures Not applicable . 67 PAR T II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 72 PART II 73 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 73 Item 6. [Reserved] 73 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 74 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 87 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 67 PART II 68 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 68 Item 6. [Reserved] 68 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 69 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 81 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe offering price of our common stock in our initial public offering, which had a closing stock price of $40.30 on June 27, 2019, was $20.00 per share. The stock price performance below is based on historical data and is not necessarily indicative of, nor intended to forecast, future performance of our common stock.
Biggest changeThe stock price performance below is based on historical data and is not necessarily indicative of, nor intended to forecast, future performance of our common stock.
Holders of Record As of February 26, 2025, there were approximately 73 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these record holders.
Holders of Record As of February 20, 2026, there were approximately 61 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these record holders.
The graph assumes $100 was invested in our common stock at the market close on June 27, 2019, which was our initial trading day. Data for the NASDAQ Composite Index and the NASDAQ Biotechnology Index assume reinvestment of dividends.
The graph assumes $100 was invested at the market close on December 31, 2020 in each of our common stock, the NASDAQ Composite Index and the NASDAQ Biotechnology Index. Data for the NASDAQ Composite Index and the NASDAQ Biotechnology Index assume reinvestment of dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCash used in operating activities during the year ended December 31, 2023 was $156.3 million, which was primarily attributable to a net loss of $225.3 million and a net change in operating assets and liabilities of $46.2 million, partially offset by noncash share-based compensation of $62.9 million, noncash impairment of right-of-use and related long-lived assets of $25.4 million, noncash depreciation and amortization of $13.0 million, noncash lease expense of $6.9 million, noncash interest expense related to the Purchase Agreement of $5.3 million and inventory reserve expense of $1.4 million.
Biggest changeNoncash adjustments consist primarily of share-based compensation, depreciation and amortization and noncash lease expense. Net cash used in operating activities was $46.0 million as compared to $95.2 million for the year ended December 31, 2025 and 2024, respectively.
See Note 10, Leases of the accompanying notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information, including the timing of cash payments related to these lease obligations. In connection with certain of our lease agreements, we have $2.1 million in letters of credit with one of our financial institutions.
See Note 10, Leases of the accompanying notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information, including the timing of cash payments related to our lease obligations. In connection with certain of our lease agreements, we have $2.1 million in letters of credit with one of our financial institutions.
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, corporate bonds and commercial paper.
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 and agency securities, corporate bonds and commercial paper.
In the fourth quarter of 2024, we obtained Medicare coverage for MCL and initiated promotional efforts in MCL. We also recently obtained a new Medicare CLFS rate of $2,007 per test for clonoSEQ and MolDX updated the clonoSEQ episode pricing to $8,029 for all covered indications.
In the fourth quarter of 2024, we obtained Medicare coverage for MCL and initiated promotional efforts in MCL. We also obtained a new Medicare CLFS rate of $2,007 per test for clonoSEQ and MolDX updated the clonoSEQ episode pricing to $8,029 for all covered indications.
Revenue Recognition Our revenue arrangements may include upfront payments for the performance of services in the future, which have both fixed and variable consideration. Non-refundable upfront fees and funding for related development services are generally considered fixed consideration, while milestone payments are identified as variable consideration.
Revenue Recognition Our revenue arrangements may include upfront payments for the performance of services in the future, which have both fixed and variable consideration. Non-refundable upfront fees and funding for related research and development services are generally considered fixed consideration, while milestone payments are identified as variable consideration.
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. 76 We expect sales and marketing expenses to increase in the short term.
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 sales and marketing expenses to increase in the short term.
Impairment of Long-Lived Assets Expenses Impairment of long-lived assets expenses include our impairment charges for certain leased office and laboratory space, related long-lived assets (including leasehold improvements and laboratory equipment) and long-lived assets associated with our halted software enhancements.
Impairment of Long-Lived Assets Expenses Impairment of long-lived assets expenses include our impairment charges for certain leased space, related long-lived assets (including leasehold improvements and laboratory equipment) and long-lived assets associated with our halted software enhancements.
We expect cost of revenue to increase in absolute dollars in the long term as we grow our sample testing volume, but the cost per sample to decrease over the long term due to the efficiencies we may gain as assay volume increases from improved utilization of our laboratory capacity, automation and other value engineering initiatives.
We expect cost of revenue to moderately increase in the short term and to increase in absolute dollars in the long term as we grow our sample testing volume, but the cost per sample to decrease over the long term due to the efficiencies we may gain as assay volume increases from improved utilization of our laboratory capacity, automation and other value engineering initiatives.
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, 2024.
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, 2025.
OrbiMed will be entitled to 100% of the Revenue Interest Payments until it has received the Return Cap, unless full repayment of the amount of the Return Cap has not been made by September 12, 2032, in which case the Return Cap shall be increased to 175% of the Cumulative Purchaser Payments.
OrbiMed will be entitled to 100% of the Revenue Interest Payments until it has received the Return Cap, unless full repayment of the amount of the Return Cap has not been made by September 12, 2032, in which case the Return Cap shall be increased to 175% of the Purchaser Payment.
Accordingly, management applied a full valuation allowance against net deferred tax assets as of December 31, 2024. Critical Accounting Policies and Estimates We have prepared the consolidated financial statements in accordance with GAAP.
Accordingly, management applied a full valuation allowance against net deferred tax assets as of December 31, 2025. Critical Accounting Policies and Estimates We have prepared the consolidated financial statements in accordance with GAAP.
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 the consolidated financial statements and related notes and the other financial information appearing elsewhere in this Annual Report on Form 10-K, as well as the other financial information we file with the Securities and Exchange Commission ( “ SEC ” ) from time to time.
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 the consolidated financial statements and related notes and the other financial information appearing elsewhere in this Annual Report on Form 10-K, as well as the other financial information we file with the SEC from time to time.
For our collaboration with Genentech, we estimate the extent of progress using a proportional performance model that uses an input method based on costs incurred relative to the total estimated costs of research and development efforts to pursue both the Shared Products and Personalized Product pathways.
For our former collaboration with Genentech, we estimated the extent of progress using a proportional performance model that used an input method based on costs incurred relative to the total estimated costs of research and development efforts to pursue both the Shared Products and Personalized Product pathways.
If OrbiMed has not received Revenue Interest Payments in the aggregate equal to or greater than the Cumulative Purchaser Payments on or prior to September 12, 2028, the revenue interest rate shall be increased to a rate which, if applied retroactively to our cumulative Revenue Base, would have resulted in Revenue Interest Payments equal to the sum of all Cumulative Purchaser Payments.
If OrbiMed has not received Revenue Interest Payments in the aggregate equal to or greater than the Purchaser Payment on or prior to September 12, 2028, the revenue interest rate shall be increased to a rate which, if applied retroactively to our cumulative Revenue Base, would have resulted in Revenue Interest Payments equal to the Purchaser Payment.
These decreases were partially offset by a $1.7 million increase in third-party billing service fees.
These decreases were partially offset by a $1.7 million increase in legal fees and a $1.7 million increase in third-party billing service fees.
These estimates are based on our internal estimates and development timeframes, which are subject to revision based on the potential outcomes for both product pathways, decisions made by Genentech, regulatory feedback or other factors not currently known.
These estimates were based on our internal estimates and development timeframes, which were subject to revision based on the potential outcomes for both product pathways, decisions made by Genentech, regulatory feedback or other factors not then-known.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 may be found in Part II, Item 7 under the caption “ Management's Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 may be found in Part II, Item 7 under the caption “ Management's Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 3, 2025.
We have funded our operations to date principally from the sale of convertible preferred stock and common stock, including the sale of common stock in our initial public offering and follow-on offering, and, to a lesser extent, revenue and proceeds from the Purchase Agreement.
We have funded our operations to date principally from the sale of convertible preferred stock and common stock, including the sale of common stock in our initial public offering and follow-on offering, revenue and the proceeds received from the Purchase Agreement.
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.
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 and an increase in revenue generated from clinical customers, which may result in more billings in arrears as opposed to upfront payments.
If our available cash, cash equivalents and marketable securities balances and anticipated cash 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.
If our available cash, cash equivalents and marketable securities balances and anticipated cash flows are insufficient to satisfy our liquidity requirements, we may 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.
This section generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
This section generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
We regularly review our expectations of the extent of progress, including whether any variable consideration is no longer constrained, and, if any changes in estimates are made, we recognize revenue using the cumulative catch-up method. For agreements where we provide our clonoSEQ report to ordering physicians, we have identified one performance obligation: the delivery of a clonoSEQ report.
We regularly reviewed our expectations of the extent of progress, including whether any variable consideration was no longer constrained, and, if any changes in estimates were made, we recognized revenue using the cumulative catch-up method. For agreements where we provide our clonoSEQ report to ordering physicians, we have identified one performance obligation: the delivery of a clonoSEQ report.
Contractual Obligations Our contractual obligations as of December 31, 2024 include operating lease obligations of $107.6 million, which reflects the minimum commitments for our office and laboratory spaces in Seattle, Washington and South San Francisco, California and our warehouse lease in Bothell, Washington.
Contractual Obligations Our contractual obligations as of December 31, 2025 include operating lease obligations of $93.5 million, which reflects the minimum commitments for our office and laboratory spaces in Seattle, Washington and South San Francisco, California and our warehouse lease in Bothell, Washington.
For our clinical customers, we primarily derive revenue from 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 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.
As we fulfill our obligations under these agreements, we perform the following steps to determine the amount of revenue to be recognized: (1) identify the contract or contracts; (2) determine whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (3) measure the transaction price, including the constraint on variable consideration; (4) allocate the transaction price to the performance obligations based on estimated selling prices; and (5) recognize revenue when (or as) we satisfy each performance obligation.
As we fulfill our obligations under these agreements, we perform the following steps to determine the amount of revenue to be recognized: (1) identify the contract or contracts; (2) determine whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (3) measure the transaction price, including the constraint on variable consideration; (4) allocate the transaction price to the performance obligations based on estimated selling prices; and (5) recognize revenue when (or as) we satisfy each performance obligation. 79 A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606 .
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.
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.
In addition, Adjusted EBITDA, including segment Adjusted EBITDA, may not be comparable to similarly titled measures used by other companies in our industry or across different industries. 81 The following is a reconciliation of net loss attributable to Adaptive Biotechnologies Corporation, the most directly comparable GAAP financial measure, to Adjusted EBITDA for the periods presented (in thousands): Year Ended December 31, 2024 2023 2022 Net loss attributable to Adaptive Biotechnologies Corporation $ (159,492 ) $ (225,250 ) $ (200,191 ) Interest and other income, net (14,534 ) (15,531 ) (4,056 ) Interest expense (1) 11,580 13,800 4,238 Depreciation and amortization expense 19,256 22,231 20,920 Impairment of long-lived assets (2) 7,205 25,429 — Restructuring expense (3) 2,004 — 2,023 Share-based compensation expense (4) 53,610 62,908 55,477 Adjusted EBITDA $ (80,371 ) $ (116,413 ) $ (121,589 ) (1) Represents costs associated with our revenue interest liability and noncash interest costs associated with the amortization of the related deferred issuance costs.
In addition, Adjusted EBITDA, including segment Adjusted EBITDA, may not be comparable to similarly titled measures used by other companies in our industry or across different industries. 76 The following is a reconciliation of net loss attributable to Adaptive Biotechnologies Corporation, the most directly comparable GAAP financial measure, to Adjusted EBITDA for the periods presented (in thousands): Year Ended December 31, 2025 2024 2023 Net loss attributable to Adaptive Biotechnologies Corporation $ (59,499 ) $ (159,492 ) $ (225,250 ) Interest and other income, net (9,444 ) (14,534 ) (15,531 ) Interest expense (1) 11,778 11,580 13,800 Depreciation and amortization expense 17,833 19,256 22,231 Impairment of long-lived assets (2) — 7,205 25,429 Restructuring expense (3) — 2,004 — Share-based compensation expense (4) 51,483 53,610 62,908 Adjusted EBITDA $ 12,151 $ (80,371 ) $ (116,413 ) (1) Represents costs associated with our revenue interest liability and noncash interest costs associated with the amortization of the related deferred issuance costs.
We base our estimates on historical experience and other relevant assumptions that we believe to be reasonable under the circumstances.
We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and other relevant assumptions that we believe to be reasonable under the circumstances.
If impairment exists, the carrying value of the allocated goodwill is reduced to fair value through an impairment charge recorded in the consolidated statements of operations.
If impairment exists, the carrying value of the allocated goodwill is reduced to fair value through an impairment charge recorded in the consolidated statements of operations. To date, we have not recognized any impairment of goodwill.
Interest and Other Income, Net Year Ended December 31, Change (in thousands, except percentages) 2024 2023 $ % Interest and other income, net $ 14,534 $ 15,531 $ (997 ) (6)% The $1.0 million decrease in interest and other income, net was primarily attributable to a decrease in net interest income and investment amortization driven by decreased holdings of and interest rates pertaining to our cash, cash equivalents and marketable securities.
Interest and Other Income, Net Year Ended December 31, Change (in thousands, except percentages) 2025 2024 $ % Interest and other income, net $ 9,444 $ 14,534 $ (5,090 ) (35)% The $5.1 million decrease in interest and other income, net was primarily attributable to a decrease in net interest income and investment amortization driven by decreased holdings of and interest rates pertaining to our cash, cash equivalents and marketable securities.
A significant increase or decrease in or changes in timing of forecasted revenue will prospectively impact our interest expense. 77 Statements of Operations Data and Other Financial and Operating Data 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): Year Ended December 31, 2024 2023 2022 Statements of Operations Data: Revenue $ 178,957 $ 170,276 $ 185,308 Operating expenses Cost of revenue 72,080 75,553 57,909 Research and development 102,953 122,117 141,756 Sales and marketing 84,759 88,579 95,603 General and administrative 72,806 83,934 88,527 Amortization of intangible assets 1,703 1,699 1,699 Impairment of long-lived assets 7,205 25,429 — Total operating expenses 341,506 397,311 385,494 Loss from operations (162,549 ) (227,035 ) (200,186 ) Interest and other income, net 14,534 15,531 4,056 Interest expense (11,580 ) (13,800 ) (4,238 ) Net loss (159,595 ) (225,304 ) (200,368 ) Add: Net loss attributable to noncontrolling interest 103 54 177 Net loss attributable to Adaptive Biotechnologies Corporation $ (159,492 ) $ (225,250 ) $ (200,191 ) Net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted $ (1.08 ) $ (1.56 ) $ (1.40 ) Weighted-average shares used in computing net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted 147,101,648 144,383,294 142,515,917 Other Financial and Operating Data: Adjusted EBITDA (1) $ (80,371 ) $ (116,413 ) $ (121,589 ) (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, depreciation and amortization expense, impairment costs for long-lived assets, restructuring expense and share-based compensation expense.
A significant increase or decrease in or changes in timing of forecasted revenue will prospectively impact our interest expense. 72 Statements of Operations Data and Other Financial and Operating Data 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): Year Ended December 31, 2025 2024 2023 Statements of Operations Data: Revenue $ 276,976 $ 178,957 $ 170,276 Operating expenses Cost of revenue 71,359 72,080 75,553 Research and development 93,769 102,953 122,117 Sales and marketing 94,571 84,759 88,579 General and administrative 72,701 72,806 83,934 Amortization of intangible assets 1,699 1,703 1,699 Impairment of long-lived assets — 7,205 25,429 Total operating expenses 334,099 341,506 397,311 Loss from operations (57,123 ) (162,549 ) (227,035 ) Interest and other income, net 9,444 14,534 15,531 Interest expense (11,778 ) (11,580 ) (13,800 ) Net loss (59,457 ) (159,595 ) (225,304 ) Add: Net (income) loss attributable to noncontrolling interest (42 ) 103 54 Net loss attributable to Adaptive Biotechnologies Corporation $ (59,499 ) $ (159,492 ) $ (225,250 ) Net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted $ (0.39 ) $ (1.08 ) $ (1.56 ) Weighted-average shares used in computing net loss per share attributable to Adaptive Biotechnologies Corporation common shareholders, basic and diluted 151,721,939 147,101,648 144,383,294 Other Financial and Operating Data: Adjusted EBITDA (1) $ 12,151 $ (80,371 ) $ (116,413 ) (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, depreciation and amortization expense, impairment costs for long-lived assets, restructuring expense and share-based compensation expense.
Our preparation of these 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 consolidated financial statements, as well as revenue and expense recorded during the reporting periods. We evaluate our estimates and judgments on an ongoing basis.
Our preparation of these consolidated financial statements requires us 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 consolidated financial statements, as well as the reported amounts of revenues and expenses recorded during the periods presented.
We utilize the income approach to measure fair value, which requires management to make estimates regarding cash flow projections and discount rates. The extent to which the asset's or asset group's carrying amount exceeds its fair value represents the impairment cost to be recognized.
If the carrying amount is found to be unrecoverable, we then assess the asset's or asset group's fair value. We utilize the income approach to measure fair value, which requires management to make estimates regarding cash flow projections and discount rates.
This additional capital may not be available on reasonable terms, or at all. 82 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.
This additional capital may not be available on reasonable terms, or at all. 77 We plan to utilize the existing cash, cash equivalents and marketable securities on hand primarily to fund our commercial and assay development initiatives associated with clonoSEQ, our continued research and development initiatives related to mapping TCRs to antigens and the advancement of our target discovery capabilities.
Impairment losses, if incurred, are classified within the consolidated statements of operations in accordance with the use of the asset or asset group, if not separately stated within its own financial statement line item.
The extent to which the asset's or asset group's carrying amount exceeds its fair value represents the impairment cost to be recognized. Impairment losses, if incurred, are classified within the consolidated statements of operations in accordance with the use of the asset or asset group, if not separately stated within its own financial statement line item.
To date, we have not recognized any impairment of goodwill. 86 Recoverability and Impairment of Long-Lived Assets We review long-lived assets for impairment annually or whenever events or circumstances indicate the carrying amount of an asset or asset group may not be recoverable.
Recoverability and Impairment of Long-Lived Assets We review long-lived assets for impairment annually or whenever events or circumstances indicate the carrying amount of an asset or asset group may not be recoverable. To test for recoverability, we compare the carrying amount of the asset or asset group to projected future net undiscounted cash flows.
We expect our MRD revenue to increase in the long term as we continue to increase our MRD clinical testing volume through enhanced penetration in our existing covered patient populations, expand into new patient populations and optimize payor coverage.
The customer is solely responsible for any subsequent development costs following the conclusion of the research plan. We expect our MRD revenue to increase in both the short term and long term as we continue to increase our MRD clinical testing volume through enhanced penetration in our existing covered patient populations, expand into new patient populations and optimize payor coverage.
Additionally, pursuant to the Purchase Agreement, the Purchasers have a right to receive Revenue Interests from us based on the Applicable Payment Percentage of the Revenue Base. If only the First Payment has been made, the Applicable Payment Percentage shall be five percent of the quarterly Revenue Base.
Additionally, pursuant to the Purchase Agreement, the Purchasers have a right to receive Revenue Interests from us based on the Applicable Payment Percentage of the Revenue Base. The Applicable Payment Percentage shall be five percent of the quarterly Revenue Base. Revenue Interest Payments shall be made quarterly within 45 days following the end of each fiscal quarter.
Net loss attributable to Adaptive Biotechnologies Corporation was $159.5 million and $225.3 million for the year ended December 31, 2024 and 2023, respectively.
We recognized revenue of $277.0 million and $179.0 million for the year ended December 31, 2025 and 2024, respectively. Net loss attributable to Adaptive Biotechnologies Corporation was $59.5 million and $159.5 million for the year ended December 31, 2025 and 2024, respectively.
We have not historically tracked research and development expenses by specific product candidates. The costs to support the Genentech Agreement are a component of our research and development 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.
The costs to support the Genentech Agreement were a component of our research and development 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 revenue.
Certain of our MRD revenue arrangements with biopharmaceutical customers include cash consideration from the achievement of regulatory milestones of the respective biopharmaceutical customers’ therapeutics.
Certain of our MRD revenue arrangements with biopharmaceutical customers include cash consideration from the achievement of regulatory milestones of the respective biopharmaceutical customers’ therapeutics. Such revenue is constrained from recognition until it becomes probable that such milestone will be achieved.
A significant increase or decrease in or changes in timing of forecasted revenue will prospectively impact our interest expense and the time period for repayment. As of December 31, 2024, a hypothetical ten percent increase in forecasted quarterly revenue would not result in a material change in projected annual interest expense.
A significant increase or decrease in or changes in timing of forecasted revenue will prospectively impact our interest expense and the time period for repayment.
Liquidity and Capital Resources We have incurred losses since inception and have incurred negative cash flows from operations since inception through the year ended December 31, 2018, and again in the years ended December 31, 2020 through December 31, 2024. As of December 31, 2024, we had an accumulated deficit of $1.3 billion.
Liquidity and Capital Resources We have incurred losses since inception, apart from the three month period ended September 30, 2025, and have incurred negative cash flows from operations since inception through the year ended December 31, 2018, and again in the years ended December 31, 2020 through December 31, 2025.
Research and Development Year Ended December 31, Change Percent of Revenue (in thousands, except percentages) 2024 2023 $ % 2024 2023 Research and development $ 102,953 $ 122,117 $ (19,164 ) (16)% 58 % 72 % The following table presents disaggregated research and development expenses by cost classification for the periods presented: Year Ended December 31, (in thousands) 2024 2023 Change Research and development materials and allocated production laboratory expenses $ 15,844 $ 20,243 $ (4,399 ) Personnel expenses 62,742 74,385 (11,643 ) Allocable facilities and information technology expenses 10,839 11,617 (778 ) Software and cloud services expenses 4,908 3,394 1,514 Depreciation and other expenses 8,620 12,478 (3,858 ) Total $ 102,953 $ 122,117 $ (19,164 ) The $19.2 million decrease in research and development expenses was primarily attributable to an $11.6 million decrease in personnel costs and a $4.4 million decrease in laboratory materials and allocated production laboratory expenses, which was driven primarily by decreased investments in drug discovery efforts, including collaboration efforts with Genentech, and decreased investments in TCR-antigen binding development activities, partially offset by an increase in investments related to the MRD business.
Research and Development Year Ended December 31, Change Percent of Revenue (in thousands, except percentages) 2025 2024 $ % 2025 2024 Research and development $ 93,769 $ 102,953 $ (9,184 ) (9)% 34 % 58 % The following table presents disaggregated research and development expenses by cost classification for the periods presented: Year Ended December 31, (in thousands) 2025 2024 Change Research and development materials and allocated production laboratory expenses $ 12,767 $ 15,844 $ (3,077 ) Personnel expenses 56,944 62,742 (5,798 ) Allocable facilities and information technology expenses 7,317 10,839 (3,522 ) Software and cloud services expenses 6,786 4,908 1,878 Depreciation and other expenses 9,955 8,620 1,335 Total $ 93,769 $ 102,953 $ (9,184 ) The $9.2 million decrease in research and development expenses was primarily attributable to a $5.8 million decrease in personnel costs, a $3.5 million decrease in allocable facility expenses and a $3.1 million decrease in laboratory materials and allocated production laboratory expenses, which was driven primarily by decreased investments in drug discovery efforts.
Goodwill Goodwill represents the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. We assess goodwill for impairment annually on October 1 and upon any occurrence of triggering events or substantive changes in circumstances that could indicate a potential impairment.
We assess goodwill for impairment annually on October 1 and upon any occurrence of triggering events or substantive changes in circumstances that could indicate a potential impairment.
Cash provided by financing activities during the year ended December 31, 2023 was $2.2 million, which was attributable to proceeds from the exercise of stock options. 84 Net Operating Loss Carryforwards Utilization of our NOL carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 and similar state provisions.
Net Operating Loss Carryforwards Utilization of our NOL carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 and similar state provisions. The annual limitation may result in the expiration of NOL carryforwards and credits before utilization.
The $11.9 million increase in Immune Medicine Adjusted EBITDA deficit was primarily attributable to a $34.1 million reduction in Immune Medicine revenue, which was partially offset by a reduction in operating expenses, excluding those identified as reconciling items between net loss and adjusted EBITDA. The primary driver of the operating expense reduction relates to research and development activities.
The $34.7 million improvement in Immune Medicine Adjusted EBITDA was primarily attributable to a $31.2 million increase in Immune Medicine revenue, which was driven largely by revenue generated due to the termination of the Genentech Agreement, and a reduction in operating expenses, excluding those identified as reconciling items between segment net loss and segment Adjusted EBITDA.
At the end of each subsequent reporting period, we re-evaluate the estimated variable consideration included in the transaction price and any related constraint and, if necessary, adjust our estimate of the overall transaction price. 85 To select the measure of progress, we consider the expectations of the performance period which may be based on customer-dependent estimates of samples or internal estimates of the performance period based on both the customer and our expected development timeframes.
At the end of each subsequent reporting period, we re-evaluate the estimated variable consideration included in the transaction price and any related constraint and, if necessary, adjust our estimate of the overall transaction price.
Cost of Revenue Year Ended December 31, Change Percent of Revenue (in thousands, except percentages) 2024 2023 $ % 2024 2023 Cost of revenue $ 72,080 $ 75,553 $ (3,473 ) (5)% 40 % 44 % The $3.5 million decrease in cost of revenue was primarily attributable to a $10.4 million decrease in overhead costs, which was largely driven by laboratory relocation and consolidation activities.
Cost of Revenue Year Ended December 31, Change Percent of Revenue (in thousands, except percentages) 2025 2024 $ % 2025 2024 Cost of revenue $ 71,359 $ 72,080 $ (721 ) (1)% 26 % 40 % The $0.7 million decrease in cost of revenue was primarily attributable to a $1.2 million decrease in cost of materials due largely to reductions in inventory write-offs and assay costs and a $1.2 million decrease in labor and overhead costs, which was largely driven by consolidation activities.
Sales and Marketing Expenses Sales and marketing expenses 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.
We expect research and development expenses to moderately decrease in the short term and to decrease as a percentage of revenue in the long term, although the percentage may fluctuate from period to period due to the timing and extent of our development and commercialization efforts. 71 Sales and Marketing Expenses Sales and marketing expenses 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.
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.
Terms with biopharmaceutical customers generally include non-refundable payments made in advance of services (“upfront 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.
As of December 31, 2024, we had cash, cash equivalents and marketable securities of $256.0 million. We believe our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements through at least the next 12 months.
We believe our existing cash, cash equivalents and marketable securities 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.
For our research customers, which include biopharmaceutical customers and academic institutions for both our MRD and Adaptive Immunosequencing services, delivery of the 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”), which we record as deferred revenue.
In certain cases, we continue to provide services and incur costs for patients who exceed our number of estimated tests. For our research customers, which include biopharmaceutical customers and academic institutions for both our MRD and Adaptive Immunosequencing services, delivery of the respective test results may include some level of professional support and analysis.
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; (2) our collaboration agreements with Genentech and other biopharmaceutical customers in areas of drug and target discovery; and (3) for years prior to 2023, providing our T-Detect COVID tests to clinical customers.
Our Immune Medicine revenue consists of revenue generated from (1) providing sample testing services for our commercial research product, Adaptive Immunosequencing; (2) data licensing and target discovery services; and (3) our former collaboration with Genentech under the Genentech Agreement. For our clinical customers, we primarily derive revenue from providing our clonoSEQ report to ordering physicians.
General and Administrative Year Ended December 31, Change Percent of Revenue (in thousands, except percentages) 2024 2023 $ % 2024 2023 General and administrative $ 72,806 $ 83,934 $ (11,128 ) (13)% 41 % 49 % The $11.1 million decrease in general and administrative expenses was primarily attributable to a $5.7 million decrease in personnel costs, a $3.0 million decrease in building, facility, overhead and depreciation related expenses largely driven by office space transitions made to support laboratory consolidation activities, a $1.8 million decrease in legal fees, a $1.1 million decrease in insurance costs and a $0.9 million decrease in consultant costs.
General and Administrative Year Ended December 31, Change Percent of Revenue (in thousands, except percentages) 2025 2024 $ % 2025 2024 General and administrative $ 72,701 $ 72,806 $ (105 ) * 26 % 41 % * Decrease is less than 1% The $0.1 million decrease in general and administrative expenses was primarily attributable to a $2.7 million decrease in personnel costs and a $1.1 million decrease in building, facility and depreciation related expenses.
Comparison of the Years Ended December 31, 2024 and 2023 Revenue Year Ended December 31, Change Percent of Revenue (in thousands, except percentages) 2024 2023 $ % 2024 2023 MRD revenue Service revenue $ 133,029 $ 102,739 $ 30,290 29 % Regulatory milestone revenue 12,500 — 12,500 * Total MRD revenue 145,529 102,739 42,790 42 81 % 60 % Immune Medicine revenue Service revenue 19,976 24,959 (4,983 ) (20 ) Collaboration revenue 13,452 42,578 (29,126 ) (68 ) Total Immune Medicine revenue 33,428 67,537 (34,109 ) (51 ) 19 % 40 % Total revenue $ 178,957 $ 170,276 $ 8,681 5 100 % 100 % * Not applicable 78 The $42.8 million increase in MRD revenue was primarily due to a $26.3 million increase in revenue generated from providing clonoSEQ to clinical customers, a $12.5 million increase in revenue recognized upon the achievement of regulatory milestones by certain of our biopharmaceutical customers, and a $5.8 million increase in revenue generated from providing MRD sample testing services to biopharmaceutical customers.
Comparison of the Years Ended December 31, 2025 and 2024 Revenue Year Ended December 31, Change Percent of Revenue (in thousands, except percentages) 2025 2024 $ % 2025 2024 MRD revenue Service revenue $ 192,834 $ 133,029 $ 59,805 45 % Regulatory milestone revenue 19,500 12,500 7,000 56 Total MRD revenue 212,334 145,529 66,805 46 77 % 81 % Immune Medicine revenue Service and licensing revenue 23,360 19,976 3,384 17 Collaboration revenue 41,282 13,452 27,830 207 Total Immune Medicine revenue 64,642 33,428 31,214 93 23 % 19 % Total revenue $ 276,976 $ 178,957 $ 98,019 55 100 % 100 % 73 The $66.8 million increase in MRD revenue was primarily due to a $52.0 million increase in revenue generated from providing clonoSEQ to clinical customers, a $7.0 million increase in revenue recognized upon the achievement of regulatory milestones by certain of our biopharmaceutical customers, a $5.1 million increase in revenue generated from providing MRD sample testing services to biopharmaceutical customers and a $2.4 million increase in revenue generated from providing MRD sample testing services to investigator-led clinical trials.
Our Immune Medicine revenue may fluctuate from period to period due to the timing of expenses incurred, changes in estimates of total anticipated costs related to the Genentech Agreement and other events not within our control, including the recognition of milestones under the Genentech Agreement and the timing of receipt of customer samples from our biopharmaceutical customers.
We expect our Immune Medicine revenue to decrease in the short term given the termination of the Genentech Agreement. Our Immune Medicine revenue may fluctuate from period to period due to the timing of receipt of customer samples from our biopharmaceutical customers and the potential recognition of milestones under our target discovery agreement.
This represents a 17% increase from the previous episode price and the previous implied per test rate under the episode structure. With the use of clonoSEQ, we are transforming how lymphoid cancers are treated by working with providers, pharmaceutical partners and payors.
This expanded coverage is in addition to the existing Medicare episode payment structure for clonoSEQ. With the use of clonoSEQ, we are transforming how lymphoid cancers are treated by working with providers, pharmaceutical partners and payors.
Investing Activities Cash provided by investing activities during the year ended December 31, 2024 was $77.8 million, which was primarily attributable to proceeds from maturities of marketable securities of $325.7 million, partially offset by purchases of marketable securities of $244.3 million and purchases of property and equipment of $3.7 million.
The decrease in net cash provided by investing activities was primarily due to a decrease in proceeds from maturities of marketable securities, partially offset by a reduction in purchases of marketable securities and property and equipment.
Financing Activities Cash provided by financing activities during the year ended December 31, 2024 was $0.2 million, which was attributable to proceeds from the exercise of stock options.
Financing Activities Cash provided by financing activities was $30.4 million as compared to $0.2 million for the year ended December 31, 2025 and 2024, respectively. The increase in cash provided by financing activities was due to an increase in proceeds from the exercise of stock options and proceeds received from Digital Biotechnologies, Inc.'s Series A Preferred Stock financing.
There was also a $3.9 million decrease in depreciation and other expenses, inclusive of a $2.6 million decrease in costs related to collaboration studies primarily related to Immune Medicine, and a $0.8 million decrease in allocable facilities expenses. These decreases were partially offset by a $1.5 million increase in software and cloud services expenses.
These decreases were partially offset by a $1.9 million increase in software and cloud services expenses and a $1.3 million increase in depreciation and other expenses.
Impairment of Long-Lived Assets Year Ended December 31, Change Percent of Revenue (in thousands, except percentages) 2024 2023 $ % 2024 2023 Impairment of long-lived assets $ 7,205 $ 25,429 $ (18,224 ) (72)% 4 % 15 % * Not applicable The $18.2 million decrease in impairment of long-lived assets expenses was primarily due to a $25.4 million decrease in impairment costs related to us vacating certain leased space in Seattle, Washington in October 2023, which was partially offset by a $7.2 million increase in impairment costs resulting from various restructuring activities implemented in 2024.
Impairment of Long-Lived Assets Year Ended December 31, Change Percent of Revenue (in thousands, except percentages) 2025 2024 $ % 2025 2024 Impairment of long-lived assets $ — $ 7,205 $ (7,205 ) (100)% 0 % 4 % The $7.2 million decrease in impairment of long-lived assets expenses was attributable to the impairment of certain long-lived assets and our decision to vacate certain leased space as a result of various restructuring activities in 2024.
Such revenue is constrained from recognition until it becomes probable that such milestone will be achieved. 75 Under certain agreements with our biopharmaceutical customers who seek access to our platform to support their therapeutic development activities, revenues are generated from research and development support services that we provide.
Under certain agreements with our biopharmaceutical customers who seek access to our platform to support their therapeutic development activities, revenues are generated from research and development support services that we provide or have developed. These agreements have included non-refundable upfront payments. Revenue recognized from these activities include revenue recognized from the former Genentech Agreement and a data licensing agreement.
Interest Expense Year Ended December 31, Change (in thousands, except percentages) 2024 2023 $ % Interest expense $ (11,580 ) $ (13,800 ) $ 2,220 (16)% The $2.2 million decrease in interest expense was attributable to a change in our assumptions regarding the timeframe in which our Purchase Agreement will be fully repaid. 80 Segment Adjusted EBITDA Year Ended December 31, Change (in thousands, except percentages) 2024 2023 $ % MRD Adjusted EBITDA (1) $ (41,223 ) $ (88,844 ) $ 47,621 (54)% Immune Medicine Adjusted EBITDA (1) (26,005 ) (14,128 ) (11,877 ) 84 (1) Adjusted EBITDA is a non-GAAP financial measure.
Interest Expense Year Ended December 31, Change (in thousands, except percentages) 2025 2024 $ % Interest expense $ (11,778 ) $ (11,580 ) $ (198 ) 2 % The $0.2 million increase in interest expense was attributable to a change in our assumptions regarding the timeframe in which our Purchase Agreement will be fully repaid.
We have funded our operations to date principally from the sale of convertible preferred stock and common stock, and, to a lesser extent, revenue and proceeds from the Purchase Agreement. Pursuant to the Purchase Agreement entered into in September 2022, we received net cash proceeds of $124.4 million, after deducting issuance costs.
As of December 31, 2025, we had an accumulated deficit of $1.4 billion. We have funded our operations to date principally from the sale of convertible preferred stock and common stock, revenue and the proceeds received from the Purchase Agreement.
See “Adjusted EBITDA” below for an explanation of how it is calculated and used by management. Adjusted EBITDA related to our unallocated corporate category is included in the calculation of consolidated Adjusted EBITDA but not shown above in the breakout of segment Adjusted EBITDA.
See “Adjusted EBITDA” below for an explanation of how it is calculated and used by management.
Sales and Marketing Year Ended December 31, Change Percent of Revenue (in thousands, except percentages) 2024 2023 $ % 2024 2023 Sales and marketing $ 84,759 $ 88,579 $ (3,820 ) (4)% 47 % 52 % 79 The $3.8 million decrease in sales and marketing expenses was primarily attributable to a $4.1 million decrease in personnel costs and a $2.0 million decrease in marketing expenses, which was largely driven by reduced clonoSEQ marketing activities, followed by reduced research and corporate marketing activities.
Sales and Marketing Year Ended December 31, Change Percent of Revenue (in thousands, except percentages) 2025 2024 $ % 2025 2024 Sales and marketing $ 94,571 $ 84,759 $ 9,812 12 % 34 % 47 % 74 The $9.8 million increase in sales and marketing expenses was primarily attributable to a $6.7 million increase in personnel costs, a $1.7 million increase in consulting costs, a $1.4 million increase in computer and software expenses, a $0.7 million increase in allocated facility and overhead expenses and a $0.6 million increase in travel and customer event related expenses.
The $47.6 million reduction in MRD Adjusted EBITDA deficit was primarily attributable to a $42.8 million increase in MRD revenue and a reduction in operating expenses, excluding those identified as reconciling items between net loss and adjusted EBITDA. The primary driver of the operating expense reduction relates to general and administrative activities.
Adjusted EBITDA related to our unallocated category is included in the calculation of consolidated Adjusted EBITDA but not shown above in the breakout of segment Adjusted EBITDA. 75 The $56.4 million improvement in MRD Adjusted EBITDA was primarily attributable to a $66.8 million increase in MRD revenue, partially offset by an increase in operating expenses, excluding those identified as reconciling items between segment net loss and segment Adjusted EBITDA.
These increases were partially offset by a $1.6 million decrease in revenue generated from providing MRD sample testing services to investigator-led clinical trials. Our clonoSEQ test volume increased by 35% to 76,105 tests delivered in the year ended December 31, 2024 from 56,496 tests delivered in the year ended December 31, 2023.
Our clonoSEQ test volume increased by 39% to 105,587 tests delivered in the year ended December 31, 2025 from 76,105 tests delivered in the year ended December 31, 2024.
See Note 19, Segment Information of the accompanying notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information regarding our segments and the assumptions used to allocate shared expenses. Components of Results of Operations Revenue We derive revenue by providing diagnostic and research services in our MRD and Immune Medicine business areas.
Components of Results of Operations Revenue We derive revenue by providing diagnostic and research services in our MRD and Immune Medicine business areas.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. For our biopharmaceutical customers, our performance obligations may include sequencing services and services associated with regulatory submission and approval processes.
For our biopharmaceutical customers, our performance obligations may include sequencing services and services associated with regulatory submission and approval processes.
There was also a $0.8 million decrease in travel and customer event related expenses. These decreases were partially offset by a $2.1 million increase in computer and software expenses and a $1.1 million increase in allocated facility and overhead expenses.
These decreases were partially offset by a $1.6 million increase in shipping and handling and royalty expenses.
We are applying AI and machine learning models to map at scale TCR sequences to the diseases they bind to enable our drug discovery efforts. Also in our drug discovery programs, we use our proprietary capabilities to discover new drug targets and leverage our validated TCR and BCR discovery approaches to discover and develop TCR or antibody therapeutic assets.
Our capabilities enable us to offer an expanding suite of solutions including: immune receptor sequencing, licensing of our proprietary data, TCR-antigen prediction models and our target discovery capabilities. We are applying AI and machine learning models to map at scale TCR sequences to the diseases they bind to enable commercial offerings and our own product research initiatives.
These changes were partially offset by a $5.4 million decrease in inventory and a $0.7 million increase in accounts payable and accrued liabilities.
These increases were partially offset by a $1.5 million decrease in marketing expenses, driven largely by reduced clonoSEQ and corporate marketing activities.
Removed
In an effort to enable easier test ordering, we have worked to integrate the clonoSEQ clinical diagnostic test via Epic's comprehensive EMR system into the records systems of numerous accounts, and continue to make more progress.
Added
This represents a 17% increase from the previous episode price and the previous implied per test rate under the episode structure. In April 2025, Palmetto GBA expanded coverage of clonoSEQ to include single time point testing to monitor for recurrence in patients with a history of MCL.
Removed
Immune Medicine leverages our proprietary ability to sequence, map, pair and characterize TCRs and BCRs at scale to drive opportunities in cancer and autoimmune disorders. Our immunosequencing technology, which includes our Adaptive Immunosequencing research product, serves as the research and development engine driving our immune medicine platform and generates revenue from biopharmaceutical and academic customers.
Added
In an effort to enable easier test ordering, we have integrated our clonoSEQ test into electronic medical record systems, including Epic's Aura and Flatiron's OncoEMR, of numerous accounts. Immune Medicine leverages our proprietary ability to sequence, map, pair and characterize TCRs and BCRs at scale to drive opportunities in cancer and autoimmune disorders.
Removed
Our drug discovery efforts include the Genentech Agreement under which we support Genentech in the development of cancer antigen-directed TCR-based cancer cell therapies for the treatment of patients with solid tumors. We recognized revenue of $179.0 million and $170.3 million for the year ended December 31, 2024 and 2023, respectively.
Added
As of December 31, 2025 and 2024, we had cash, cash equivalents and marketable securities of $240.2 million and $256.0 million, respectively. These balances include $13.1 million and $0.3 million of cash held by Digital Biotechnologies, Inc., respectively. 69 Termination of the Genentech Agreement On August 13, 2025, our worldwide collaboration and license agreement with Genentech, Inc.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2023, we had short-term marketable securities of $281.3 million, held in U.S. government treasury and agency securities, commercial paper and corporate bonds. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of interest rates in the U.S.
Biggest changeAs of December 31, 2024, we had short-term and long-term marketable securities of $208.0 million, held in U.S. government treasury securities, corporate bonds and commercial paper. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of interest rates in the U.S.
Such losses would only be realized if we sold the investments prior to maturity. We do not enter into investments for trading purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. 87
Such losses would only be realized if we sold the investments prior to maturity. We do not enter into investments for trading purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. 81
As of December 31, 2024, a hypothetical 100 basis point increase in interest rates would have resulted in a $1.0 million decline in fair value of our available-for-sale securities, as compared to a $1.2 million decline as of December 31, 2023. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur.
As of December 31, 2025, a hypothetical 100 basis point increase in interest rates would have resulted in a $0.9 million decline in fair value of our available-for-sale securities, as compared to a $1.0 million decline as of December 31, 2024. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur.
As of December 31, 2024 and 2023, we had cash and cash equivalents of $47.9 million and $65.1 million, respectively, held primarily in cash deposits and money market funds. As of December 31, 2024, we had short-term and long-term marketable securities of $208.0 million, held in U.S. government treasury securities, corporate bonds and commercial paper.
As of December 31, 2025 and 2024, we had cash and cash equivalents of $70.5 million and $47.9 million, respectively, held primarily in cash deposits and money market funds. As of December 31, 2025, we had short-term and long-term marketable securities of $169.7 million, held in U.S. government treasury and agency securities, corporate bonds and commercial paper.

Other ADPT 10-K year-over-year comparisons