Many biotech startups are in a costly race to discover the next billion-dollar drug, but Seattle-based Adaptive Biotechnologies is taking a different approach to making money. If biotech is in the midst of a gold rush, says president and CEO Chad Robins, Adaptive is making the picks, shovels and other tools to help others uncover that gold. Adaptive, which received $105 million earlier this year — an unusually large amount for a small startup — sells diagnostic and monitoring tools that biotech researchers use to identify and develop new drug compounds. Adaptive’s products also allow health care providers to better assess a patient’s prognosis and develop appropriate treatment plans.
Adaptive began in 2009 as a spinoff of the Fred Hutchinson Cancer Research Center. Harlan Robins, a computational biologist, sat down for lunch with two colleagues, Chris Carlson, a molecular biologist, and Edus Warren, a clinical immunologist. The three soon understood that Harlan Robins’ expertise with new high-throughput genomic sequencing technology could help researchers understand a patient’s immune response on a molecular level. Their work then drew interest from colleagues, and the researchers received a flood of requests for their services for sequencing immune systems. They quickly realized the technology had to be commercialized if it was to have an impact.
Harlan Robins called his brother, Chad, who has a Wharton M.B.A. and a background in finance and operations, to help raise the initial capital and run the business. Chad Robins first pursued high-net-worth investors, raising $4.5 million in a first round of financing and $5.8 million in the second round. He then went straight to hedge funds, making the unusual choice to bypass the venture capital community. By then, he says, the business already had a great deal of validation. “As much as you know the science is real,” says Robins, “you have to know that there’s a commercialization track. We convinced people that we could do that and that we were going to work harder than anyone else. Failing was not an option.”
That approach paid a strong return when Viking Global Investors came up with the $105 million in Series C and D financing.
Adaptive formed at a critical time when advances in several fields made its technology not only possible, but also widely applicable. The hardware piece came from San Diego-based Illumina, a leader in high-throughput genomic sequencing, which is also known as next-generation sequencing. Illumina’s sequencing technology, which has evolved rapidly since it acquired Solexa in 2007, can process massive amounts of data in a short time and allows researchers to analyze large numbers of samples in a single run. The technology is highly scalable and can be modified to target regions of interest.
Adaptive focused on the immune system, which Chad Robins calls the final frontier. X-ray and MRI technology have allowed scientists to see inside most of the human body, but for many years, the immune system remained a mystery. Sequencing technology enables researchers to understand how the immune system works and also experiment with immunotherapy, which induces, enhances or suppresses an immune response in order to better treat disease. “The technology can contribute to making more accurate and personal decisions based on a patient’s immune system,” he explains.
Recent advances in immunotherapy meant that Adaptive was perfectly positioned in a growing market. Cancer immunotherapy was named the 2013 breakthrough of the year by the American Association for the Advancement of Science, and treatments developed in the past several years are serving as a springboard for startups like Juno Therapeutics, another Fred Hutch spinoff, which began business earlier this year with $120 million in funding. Cancer is difficult to treat because it often fools the immune system, evading detection or producing substances that dampen the immune response. Chemotherapy and radiation are effective but don’t differentiate between diseased and healthy cells. Immunotherapy, by contrast, promises a more targeted approach.
There are several levels of defense in a healthy immune system, but researchers are most focused on specialized lymphocytes called T cells and B cells that circulate in the body looking for invaders. These cells can mount an evolving defense, creating antibodies that are programmed to interfere with a particular foreign molecule, or antigen, and forming memory cells that will initiate the same response should the threat return.
Adaptive’s first product, immunoSEQ, offers researchers a snapshot of a patient’s T-cell receptors, the specialized portion of a T cell that recognizes antigens. Researchers previously were able to see only about 30,000 receptors, but the immunoSEQ assay identifies between 10 million and 15 million.
When researchers purchase the immunoSEQ service, they send samples to Adaptive’s lab and receive the data via an elaborate cloud-based data visualization system capable of storing, analyzing and sharing the test results. “We were looking at these mounds of data that had never been seen before,” Chad Robins says, “and we needed to create the language of the field.”
Adaptive is currently the largest repository for this type of data and is working with Seattle-based Tableau Software on upgrades to help visualize the information. It is also close to rolling out immunoSEQ kits, which will be available for users who want to perform the assay in their own labs. Adaptive has more than 350 academic customers and references to immunoSEQ appear in about one published research paper every other week, Robins says.
The second product in the Adaptive portfolio, clonoSEQ, is designed to monitor minimal residual disease (MRD) in blood cancers like leukemia and lymphoma. In order to provide the best treatment, doctors need to know how many abnormal cells are left after a round of chemotherapy, and monitor their presence and growth in relation to healthy cells. The Adaptive test performs better in studies than flow cytometry, the standard assessment in the United States, and may be able to pick up residual disease from a blood sample rather than a bone marrow sample, saving on cost and sparing patients stress and pain.
Adaptive is continuing to develop new products, too. QuanTILfy, which has been tested in ovarian cancer patients, counts the number of immune cells in solid tumors and may be able to help predict patient survival and develop personalized treatment plans. The company is also growing. It will hire 60 employees in the next nine months — doubling its workforce — and is knocking down walls in its space on Eastlake Avenue to make room for more labs. The floor space will eventually quadruple, Robins says.
Adaptive has partnerships with more than 25 biotech and pharmaceutical companies. “We fought very hard to be viewed not only as a vendor but as a discovery partner,” Robins says.
Although Chad Robins moved from Chicago to take the CEO position and raised much of the Series A funding outside Seattle, he says the company has no plans to move, partly because of Adaptive’s strong ties to Fred Hutch. “Seattle has some of the best science in the world right now,” he notes. However, he has gone out of state to fill some positions, which points to one factor preventing Seattle from achieving the status of biotech hubs like Boston and San Diego: a lack of seasoned biotech entrepreneurs. Many firms have come and gone, but few have stayed strong, with Seattle Genetics the notable exception. “Our goal,” he says, “is to be the next anchor tenant in Seattle.”
No wise CEO will rule out acquisition, and Robins, who has gone from a man with zero biotech experience to the head of a business pioneering new technology, won’t rule it out, either. Adaptive has a lot of options, he says, but it will only consider a sale if it increases shareholder value and promises to expedite the rate at which Adaptive’s technology can help patients.
“There’s truly a double bottom line,” Robins asserts. “We can all do well financially, but the ultimate goal is to improve patient care.”