20 years ago, scientists for Celera Genomics and the Human Genome Project sequenced the human genome. To accomplish this task, 30,000 genes were sequenced. It was a very big deal, and it opened the door to a new wave of biotech gene therapies.
Fast forward to today, Seattle-based company Adaptive Biotechnologies (NASDAQ: ADPT) is sequencing the human immune system. This is far more difficult than mapping the human genome. Forget 30,000 — your immune system houses 100 million genes. And on top of that, the company is mapping more than 30 billion immune receptors. (Adaptive has data rights to 20 billion of those receptors.)
All of this genetic sequencing requires massive amounts of computational power, artificial intelligence (AI), and machine learning. And that’s where Microsoft (NASDAQ: MSFT) comes in.
Image source: Getty Images.
Adaptive and Microsoft join forces
In 2017, Microsoft and Adaptive signed a collaboration agreement. The companies are uniting to create a universal blood test that will allow doctors to read your immune system and find out what diseases your body is fighting. If you have cancer, for instance, your body is aware of the threat and your immune system is fighting the cancer cells. The idea is to have a blood test that allows doctors to hack into a person’s immune system and find out what it knows. This will enable doctors to diagnose diseases early before symptoms develop. This early diagnosis would enable doctors to prescribe medicines that boost the immune system and cure the disease.
Adaptive calls this technology immunoSEQ Dx. Once Adaptive has mapped the immune characteristics of several diseases, it will be possible to look at an individual’s immune system and determine what, if any, diseases the person’s immune system is currently fighting. The idea is that your doctor can take a blood sample and screen for infectious diseases, autoimmune disorders, and cancer. CEO Chad Robins is forecasting the arrival of the universal blood test in six to eight years.
As part of the collaboration agreement, Microsoft invested $45 million in the biotech start-up. At a recent price of $30 a share, Microsoft’s investment in Adaptive is now worth about $135 million. But Microsoft is doing more than just providing financing and equipment to Adaptive — the software giant has also provided people. A joint team of about 50 employees built the AI from scratch. Co-founders Chad and Harlan Robins led the team from Adaptive; Jonathan Carlson, senior director of immunomics at Microsoft, and Desney Tan, the general manager of Microsoft Healthcare, headed up the software side. Speaking at a Geekwire summit, Tan said, “We really integrated ourselves as a single team. We’ve got offices in each other’s facilities.”
Not just an R&D lab
While the immunoSEQ Dx project with Microsoft might be the most exciting work Adaptive is doing, it’s several years away. In the meantime, the AI engine is already producing diagnostic kits for the market. Using Adaptive’s clonoSEQ technology, doctors can now test for minimal residual disease (MRD) in blood cancers. The Food and Drug Administration has already cleared clonoSEQ for a blood cancer called multiple myeloma and acute lymphoblastic leukemia. The company is submitting clonoSEQ to the FDA for chronic lymphoblastic leukemia as well.
Adaptive is also using immunoSEQ to create a diagnostic kit for research labs and biotech companies. According to Adaptive, more than 2,000 academic researchers are now using its technology. More than 125 biotech companies are using immunoSEQ, and this technology has facilitated 480 clinical trials. These revenue streams brought in $26 million in the third quarter, up 52% year over year. The company is estimating $85 million in revenues for the full year.
Adaptive also received $300 million in cash from Genentech, a subsidiary of Roche (OTC: RHHBY), last year. Genentech wants to use Adaptive’s technology as the foundation of a new treatment paradigm for cancer. The idea is to tailor an individualized treatment for each patient based on what’s discovered via the patient’s immune system. The Roche deal could be worth over $2 billion to Adaptive if certain commercial milestones are hit. The alliance with Microsoft and the massive Genentech deal are a real validation of the underlying science.
In 2020, Adaptive plans to submit the first immunoSEQ diagnostic kits to the FDA for review. While the “universal blood test” is several years away, Adaptive will add indications one at a time. The company is starting with Lyme disease, celiac disease, and ovarian cancer.
As Tan said, “These guys are going to change the world, and we’re thrilled to be a part of it.”
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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Taylor Carmichael owns shares of Adaptive Biotechnologies. The Motley Fool owns shares of and recommends Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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