The coronavirus pandemic will unleash a wave of innovation this decade. Investors are already familiar with some major developments, such as mRNA as a therapeutic modality and at-home diagnostics that have been significantly improved.
Other developments are a little nerdier, but no less important.
For example, Pfizer (PFE) used artificial intelligence and computational modeling to speed the time to develop Paxlovid, an oral antiviral that can reduce the severity of illness in high-risk individuals.
Meanwhile, the emergence of so-called long covid is forcing scientists to dig deeper into immune-system processes, leading to advances in cancer, autoimmune diseases, and more.
The pandemic also helped Adaptive Biotechnologies (ADPT) achieve commercial proof of concept for a diagnostic portfolio called T-Detect.
The first application, in identifying coronavirus infections, has so far been used sparingly by doctors and patients. But Adaptive, Seattle, recently launched a new diagnostic test for Lyme disease.
Can it leverage the experience gained and infrastructure built during the pandemic to accelerate this core piece of its technology platform?
What Does Adaptive Biotechnologies Do?
Your immune system is made up of two parts: innate and adaptive. The innate immune system is present at birth and provides basic recognition of threats. The adaptive immune system builds throughout your life as you encounter new threats, such as a virus, and retains past encounters in memory. It's an impressive and complicated molecular machine.
As its name implies, Adaptive Biotechnologies is building a technology platform to leverage the adaptive immune system to diagnose and treat disease.
A key company effort is translating how genetic sequences that govern the immune system determine the function of antibodies, T-cells, and B-cells. T-Cells and B-Cells are the first line of defense in the adaptive immune system.
This could lead to development of ultra-sensitive diagnostic tests and precision cell therapies.
It's an ambitious approach to medicine. Your immune system contains more than 100 million unique antibodies and can generate over 1 quadrillion (that's one million billion) unique immune receptors.
That's why Adaptive forged a collaboration with Microsoft (MSFT) -- to help crunch the data. The duo leverages the Azure cloud computing platform to build maps of the immune system. They've characterized 58 billion receptors to date, or 0.006% of all possible structures. It's a start.
The Microsoft-Adaptive Partnership
The coronavirus pandemic proved to be the perfect validation for the partnership. Adaptive and the software-and-cloud giant worked together to understand human immune responses to the SARS-CoV-2 virus from 9,000 global patient samples. That effort generated a map of more than 160,000 T-cell receptors that bind to the virus, which led to a unique diagnostic product called T-Detect Covid.
Unlike diagnostic tests that detect antibodies that neutralize the virus, T-Detect Covid is the first and only diagnostic product that identifies T-cells.
Why is that important? Antibody levels decline over time, but that's not very meaningful because protective immunity is driven by B-cells and T-cells. Your body may stop producing neutralizing antibodies but it retains memory of the virus (or the blueprints provided by a vaccine) through T-cells for months or years longer.
Studies demonstrated that T-Detect Covid could determine prior infection in 97% of individuals two months after infection, compared with 77% for the best-performing antibody test. In some patients, it detected prior infection as long as 12 months after infection.
The blood-based test was 100% accurate in determining negative results. More impressive, the T-cell diagnostic is refined to the point that it can distinguish whether a person received immunity from a prior infection or from a vaccine.
The first-of-its-kind covid test wasn't a big commercial success out of the gate, selling about 30,000 units in 2021. But the T-Detect platform will expand well beyond viral infections and into a total market opportunity the company estimates at as much as $18 billion.
Will T-Detect Lyme Hit a Bullseye?
The second and newest product in the T-Detect lineup can be used to diagnose Lyme disease, specifically by detecting T-cells triggered by the bacteria that causes the illness.
The test can accurately diagnose 54% of individuals who develop a characteristic bullseye rash or other non-descript symptoms, compared with only 30% for standard antibody tests.
When used in the first four days after symptoms appear, T-Detect Lyme correctly diagnosed 44% of individuals, compared with 14% for the standard diagnostic. Individuals who are treated sooner have better outcomes.
Adaptive Biotechnologies estimates that in the U.S., 3.4 million tests to diagnose Lyme disease are performed each year. Of those, its market opportunity is some 600,000 patients.
The improvement over standard of care could provide the platform with a commercial and competitive advantage. If the test becomes a part of primary care, it could further cement T-Detect's place in medicine.
The company's next goal is to develop T-Detect products that can distinguish and diagnose five separate autoimmune disorders: Crohn's disease, multiple sclerosis, celiac disease, ulcerative colitis, and rheumatoid arthritis. This is where most of the estimated $18 billion market opportunity resides.
For these diseases, diagnosis options are poor or unavailable, so patients who develop symptoms might not be accurately diagnosed for as long as five years. This situation is ripe for improvement.
Importantly, all T-Detect diagnostics will leverage the same infrastructure, some of which was built for the covid test. The platform has the potential to scale relatively quickly.
The success of the T-Detect portfolio will play a crucial role in determining the success of Adaptive Biotechnologies.
While the business also has blood-cancer diagnostics and drug-discovery partnerships, mass-market diagnostics that address key pain points in early detection represent a unique opportunity to achieve wide profit margins at meaningful scale.
Execution will also be a focus of investors: The company reported an operating loss of $209 million for 2021.
Will T-Detect Covid or T-Detect Lyme alone deliver the company to profitability? No, but gaining meaningful market traction with the first two tests in the lineup will provide more confidence in the ability to eventually get there.
