ADPT

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How ADPT rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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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.
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.
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 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.
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.
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.
In our immune medicine business, our focus on immune-repertoire sequencing, target antigen discovery, data licensing and TCR-antigen prediction models faces significant challenges in the identification, validation, development and adoption of products and services.
If we are unable to discover novel targets for our collaborators or demonstrate the value in our datasets and models, we may not succeed in developing, offering and commercializing new products and services and growing our immune medicine business.
We are seeking to leverage our immune medicine platform to develop a pipeline of future disease-specific research and diagnostic products.
For example, we continually expand our immunomics database and TCR-antigen binding with a view toward advancing target antigen discovery to enable our collaborators to develop therapeutics.
For example, we have purchased and rely on the Illumina NextSeq System and the NovaSeq X Plus System.
Illumina supplies us with reagents that have been designed for use solely with these sequencers and Illumina is the sole provider of maintenance and repair services for the Illumina NextSeq System and the NovaSeq X Plus System.
Such errors may interfere with our collaborators’ clinical studies or result in adverse safety or efficacy profiles for their products in development.
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.
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.
Moreover, as our collaboration activities under the Microsoft Agreement have concluded, we may be less successful in pursuing these opportunities in the future.
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.
We have entered into agreements under which our collaborators have provided, and may in the future provide, funding and other resources for developing and potentially commercializing our products and services.
For example, we recently entered into two non-exclusive immune receptor data agreements with Pfizer, pursuant to which we will use our immune medicine platform and T-cell biology capabilities to identify disease-causing TCRs as potential therapeutic targets in RA, and Pfizer has sole control over clinical development and commercialization of any products developed under the agreements.
We are pursuing potential drug discovery and development opportunities with pharmaceutical companies to develop and commercialize therapeutic products that leverage our immune medicine platform.
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.
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; • product candidates may have undesirable side effects which could lead to serious adverse events, or other unexpected characteristics.
As of December 31, 2025, we had 624 full-time employees.
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.
Moreover, our competitors may succeed in developing clinical diagnostics that circumvent our intellectual property rights.
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.
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.
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.
Aside from this achievement, we have limited experience in obtaining regulatory clearance, authorization or approval in international markets.
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.
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.
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.
Accordingly, management applied a full valuation allowance against net deferred tax assets as of December 31, 2025.
We could also be potentially exposed to claims relating to therapeutic failures of products developed and commercialized by our collaborators.
The use of AI and machine learning is increasingly being embedded in standard business processes, including in the life sciences and healthcare industries.
We use AI and machine learning to assist in a range of business contexts, such as to enhance our operations, technology, prediction models, and internal workflows.
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.
The insurance coverage and reimbursement status of newly approved products, in a new category of diagnostics, is uncertain.
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.

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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.
For the year ended December 31, 2024, 2023 and 2022, we incurred a net loss of $159.6 million, $225.3 million and $200.4 million, respectively.
As of December 31, 2024, we had an accumulated deficit of $1.3 billion.
We have funded our operations to date principally from the sale of convertible preferred stock and common stock, including the sale of common stock in our initial public offering and follow-on offering, and, to a lesser extent, revenue as well as transactions pursuant to the Purchase Agreement.
We expect to continue to incur significant expenses and operating losses as we continue to invest in the development of products and services utilizing our immune medicine platform to support the validation of additional clinical therapeutic and diagnostic products and services.
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 • our ability to use our net operating loss (“NOL”) carryforwards to offset future taxable income.
Our strategy is to leverage our immune medicine platform to discover, develop and potentially commercialize additional therapeutic and diagnostic products and services for various disease states.
In our immune medicine business, our focus on target antigen discovery and development of therapeutic products, including antibodies and cellular therapies, faces significant challenges in the identification, validation, development, clinical testing and marketing approval of new products.
If we or our collaborators are unable to discover novel targets and develop transformative immune-based therapies, we may not succeed in commercializing new therapeutic products.
We are seeking to leverage our immune medicine platform to develop a pipeline of future disease-specific research, therapeutic and diagnostic products.
For example, we continually expand our immunomics database and TCR-antigen binding with a view toward advancing target antigen discovery to leverage in developing therapies such as prophylactic or therapeutic antibodies.
In addition, we are developing certain therapeutic product candidates under our collaboration agreement with Genentech by leveraging our platform to identify TCRs that can be engineered into personalized cellular therapeutic products.
We are also attempting to leverage our immune medicine platform to discover and develop potential therapeutic antibodies in autoimmune indications.
This effort was informed by our previous investment in discovering, making and testing antibodies for the treatment of COVID-19.
Our antibody discovery and development efforts in autoimmunity are early, and we continue to evolve and mature our programs.
As we generate and analyze data on our antibody discovery work and programs, we may find that our initial hypotheses regarding any disease state are not supported by a larger data set or further analysis.
If we are unable to demonstrate compelling data regarding the effectiveness of our antibody discovery and development capabilities, we may incur substantial costs but not be able to commercialize any related product.
Therapeutic product development is expensive, may take years to complete and can have uncertain outcomes.
For example, we have purchased and rely on the Illumina NextSeq System and plan to rely in the future on the NovaSeq X system.
Illumina supplies us with reagents that have been designed for use solely with this sequencer and Illumina is the sole provider of maintenance and repair services for the Illumina NextSeq System.
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.
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.
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.
Moreover, as our collaboration activities under the Microsoft Agreement are winding down, we may be less successful in pursuing these opportunities.
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.
In December 2018, we entered into the Genentech Agreement with the goal to develop and commercialize cancer antigen-specific and neoantigen directed TCR-based cell therapies for the treatment of a broad range of tumor types.
Under the terms of the Genentech Agreement, we received an upfront payment of $300.0 million in February 2019 and a $10.0 million milestone payment in May 2023, and we may be eligible to receive up to approximately $1.8 billion in additional payments over time upon achievement of specified development, regulatory and commercial milestones.
In addition, we are eligible to receive royalty payments on sales of products that Genentech commercializes under the agreement.
We may not be successful in achieving these milestones, and products that Genentech develops under the Genentech Agreement may not be commercialized in the timeframe we expect, may not achieve significant sales, or may not be commercialized at all.
We are exposed to numerous risks associated with the Genentech Agreement, including Genentech having sole control over the clinical development and commercialization of any products developed under the Genentech Agreement.
For instance, in 2021, Genentech suspended development of a first product candidate against a shared cancer antigen target in response to recently published data specific to that target, following which Genentech selected to advance a second product candidate.
The Genentech Agreement also prevents us from developing or commercializing TCR-based cellular therapies in the field of oncology on our own or with any third party.
Our collaboration involves risks that are different from the risks associated with independently advancing therapeutic candidates and related operations, including that Genentech may: • have or develop economic or business interests that are inconsistent with ours; • take actions contrary to our instructions, requests, policies or objectives; • take actions that reduce our return on investment for this collaboration; • fail to distinguish itself from biosimilar competition; or • take actions that harm our reputation or restrict our ability to run our business.
Genentech’s degree of control of the collaboration, clinical development and commercialization efforts may impact the payment amounts that we receive under the Genentech Agreement.
For example, Genentech may suspend development of product candidates or decide not to pursue commercialization of product candidates at all, or it may agree to pay royalties to third parties or adopt a pricing model that reduces the amount of royalties we might otherwise expect.
It is also possible that effective cell therapies will not be developed under the Genentech Agreement or, if developed, approved by the FDA or comparable regulatory authorities outside of the U.S.
Genentech may also terminate the Genentech Agreement at its convenience, at any time and without cause.
We may not be able to perform our research, development and commercialization related obligations under the Genentech Agreement, including performing TCR screening activities for product candidates being developed and commercialized under the Genentech Agreement.
For example, in the event Genentech commercializes a under this agreement, as the volume of product sales grows, we will likely need to continue to increase our workflow capacity and general process improvements, and expand our internal quality assurance program to support TCR screening on a larger scale within expected turnaround times.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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