Adaptive Biotechnologies had a heck of a first day as a public company.
Shares of the Seattle-based biotech, which makes technology to diagnose and treat diseases by reading the immune system, rose more than 100 percent on Thursday in the second-biggest first-day IPO spikes of 2019. Adaptive’s stock closed out the day at $40.30 per share, compared with the $20 IPO price. Shares continued climbing in after-hours trading.
Only Beyond Meat had a better first-day performance, closing up 163 percent the day after its IPO last month. In third place is Alzheimer’s drugmaker Cortexyme, which rose 93.5 percent, according to data from Renaissance Capital, a manager of IPO-focused ETFs.
Adaptive wasn’t the only standout IPO on Thursday. BridgeBio Pharma, another biotech company, closed up 62 percent in the first day of trading following its IPO.
Adaptive’s performance also marks a major victory for the company’s largest shareholders going into the IPO, including Viking Global Entities with a 36 percent stake and Matrix Capital Management at 16.4 percent, according to public filings. Co-founder Chad Robins owned 6.3 percent of the company. Adaptive raised $300 million in its IPO of 15 million shares.
Microsoft, which is partnering with Adaptive on an AI-powered blood test, saw its $45 million investment in the company almost quadruple, according to CNBC.
While Adaptive is not yet profitable — the company lost $46.4 million last year — it presented investors with a promising opportunity. “Unlike most biotechs, Adaptive has a commercial product. In fact, this might be considered a diagnostics company with a biotech unit,” said Matthew Kennedy, senior IPO market strategist at Renaissance Capital. Adaptive reported revenue of $55.6 million last year.
? Founded in 2009, @AdaptiveBiotech is decoding the adaptive immune system to diagnose, monitor and help enable the treatment of diseases to improve patients' lives.
? Thank you for ringing the Nasdaq Opening Bell with us! ?
#RewriteTomorrow #Got2Adapt $ADPT pic.twitter.com/OS9kW92nNF— Nasdaq (@Nasdaq) June 27, 2019
Kennedy also said that investors were likely impressed with the company’s large deals with Microsoft and Genentech.
Through a partnership with Microsoft, Adaptive aims to use AI to diagnose multiple diseases from a single blood test. Chad Robins told CNBC Thursday that he expects to have a product on the market to diagnose disease in 2021. Microsoft is investing heavily in healthcare-related projects.
Adaptive’s deal with Genentech will use the company’s technology to develop personalized cancer therapies. Adaptive could receive up to $1.8 billion if certain milestones are met, as well as royalties on potential sales.
Brothers Harlan and Chad Robins co-founded the company in 2009, leveraging technology that Harlan developed at the Fred Hutchinson Cancer Research Center. Chad led the business as CEO and and helped raised $400 million from private investors prior to the IPO.
The brothers have come a long way since Harlan first pitched Chad with the idea.
As Chad Robins recalled on a panel discussion last year, “When [Harlan] called me up in 2009 and said, ‘Hey I want to start a business, I’ve figured out how to sequence T-cells at a high throughput,’ I was like, ‘Yes, I’m in!’ and then I went to Wikipedia and I’m like, ‘What the hell is he talking about?’ I don’t know the difference between a T-cell receptor and a T-bone steak.”
At its current share price, Adaptive is valued at more than $4 billion. The company competes against other biotech firms such as Thermo Fisher Scientific, ArcherDX, 10X Genomics, and others.
Adaptive is the first Seattle-area company to go public since tax automation software maker Avalara had its IPO in June 2018. Smartsheet, DocuSign, and nLight were the other Washington state companies that had an IPO last year. The last local biotech company in the region to go public was PhaseRX in May 2016; the company filed for bankruptcy less than two years later.
