Company: ADPT
Filing Date: 2025-03-03
Form Type: 10-K
Source: 0000950170-25-030913
Chunk: 251

Company: Adaptive Biotechnologies Corp
Filing Date: 2025-03-03
Form: 10-K
Item: Item 8
Chunk 251
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We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter 

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

89

    Genentech Agreement

    Description of the Matter
    As more fully described in Note 3 of the consolidated financial statements, the Genentech Agreement revenue is estimated to be recognized over a period of nine to ten years from the effective date. The non-refundable consideration of $310.0 million is recognized using a proportional performance model through an input method based on costs incurred relative to the total estimated costs of research and development efforts. For the year ended December 31, 2024, total revenue recognized was $13.5 million and the related deferred revenue at December 31, 2024 totaled $41.3 million. Auditing management’s estimate of the total expected research and development costs at completion is complex and requires judgment as a result of the uncertainties of the ultimate development and commercialization decisions, which are controlled by Genentech.

    How We Addressed the Matter in Our Audit
    We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to evaluate the likely path of future development based on significant decisions made by Genentech communicated through the joint committees and any resulting impacts on the total costs of research and development