Adaptive Biotechnologies Corporation
Author: Waleed M. Tariq
- Adaptive Biotechnologies’ patented technology gives it a market-leading advantage.
- The company’s stock price has dropped by over two-thirds in the last year.
- Low pricing, robust balance sheet, and expected growth make the stock a buy.
- Adaptive biotech’s technology could offer it an edge in diagnostics. Products target $54 billion industry.
- ADPT stock is positive due to the company’s tech edge and in-place agreements.
- ADPT’s 471 filed patents, most of which are in effect, provide it a competitive edge, according to SEC filings.
- Investing in SG&A and R&D for future sales reduces net income.
- Universities, government agencies, and private and public research institutions compete with Adaptive.
- Adaptive’s local competitor, Juno Therapeutics, has openly recognized that its technology is a crucial window into understanding reactions and non-reactions to medications (to drugs).
- A competitive advantage cited in an ADPT SEC filing is the company’s 471 pending patents, the majority of which are already in use.
- Adaptive’s 2021 revenue increased 57% YoY. Sequencing sales climbed 90% and Development revenues grew 32%. Despite strong revenue growth, SG&A and R&D costs have reduced its bottom line.
- CapEx to sales ratio of above 40% shows where the company is directing its resources.
- ADPT expects to invest heavily on sales support in 2022.The company’s income statement is indeed expected to improve in the upcoming quarters, but it will not turn a profit.
- ADPT and Genentech struck an agreement to develop, produce, and market neoantigen-directed T-cell treatments in December 2018.
- The firm screens and identifies T-Cell Receptors (TCR) that target certain neoantigens. Genentech handles clinical, regulatory, and marketing.
Risks & Challenges
- Investors expect biotech profits. Regulated. Selling a manufacturer’s product quickly After being designed and approved, biotechnology products may take longer to market. Poor products ruin inventory.
- Investors should support product development. Stocks in the small-cap biotech sector are famously volatile due to lack of liquidity and reliance on positive news and sentiment.
- Even if the stock’s consensus analyst target price is $32 (an upside of 166%), short- and medium-term investors may meet tremendous volatility.