Adaptive Biotechnologies is planning to separate its drug discovery and diagnostics businesses, outlining its intent to evaluate “strategic and structural alternatives” for the medicine wing of the company.
Seattle-based Adaptive assessed how to maximize the value of the two businesses in 2024. At that time, management decided to run the units internally while increasing their independence from each other. Since then, the unit that provides minimal residual disease tests has grown, with revenues hitting $212 million last year, while the medicine business has continued to build out its platform.
Now, Adaptive has decided a split is best based on its belief that the medicine unit may more effectively realize the value of its assets outside of the diagnostic commercial model.
The company will focus on the profitable diagnostics business and explore alternatives for the medicine unit, it said in a June 16 release.
The exploration of alternatives is at an early stage, with the company aiming to pick its preferred path to separation by the end of the year. Adaptive is looking for the best way to support the medicine unit’s growth strategy, capital needs and value creation opportunities outside of the company.
Separating could support increased investment in the medicine unit. Adaptive has limited cash burn at the unit to between $15 million and $20 million a year, pitching the spending to diagnostic investors as a low-cost option on a potentially significant opportunity. Another owner could tolerate higher near-term losses in the pursuit of lucrative paydays down the line.
The medicine unit is built on a repository of 6 million functional T-cell receptor (TCR)-antigen pairs and data on more than 10,000 patients. Adaptive uses the platform to discover pathogenic TCRs and their antigens.
Genentech dealt a blow to the businesses in August when it axed a deal worth more than $2 billion in potential milestones. But Adaptive bounced back in December, landing a partnership with Pfizer worth up to $890 million in milestones.
