The coronavirus pandemic has made it clear that, despite all of the cutting-edge technologies in healthcare, there's still much that scientists don't know about how the human immune system works. 

That's partly due to the complexity of biology and partly due to technical gaps. After all, scientists can only study what can be accurately measured -- and the diagnostic tools and sequencing processes required for quality research are still being invented and curated. 

In recent years, the combination of machine learning and novel sequencing technologies has begun to remove those obstacles to knowledge and measurement. One company on the frontier is Adaptive Biotechnologies (NASDAQ:ADPT), which has wasted little time throwing its technology platform at the coronavirus pandemic. The stock has been a little volatile since its initial public offering (IPO) in July 2019, but it still deserves a spot on your watch list. 

A man teaching a kid with a DNA model.

Image source: Getty Images.

What's the adaptive immune system?

It's called the immune system for a reason. It's a complex, dynamic collection of biological defenses. There's the innate immune system, which is present at birth and provides broad protection against foreign substances, called antigens, that enter the body. 

There's also the adaptive immune system, which is trained over a person's life span to create specific defenses to specific antigens. It can create trillions of unique T-cell receptors (TCR) to combat antigens ranging from pollen particles incorrectly labeled a threat to new viruses such as SARS-CoV-2, which causes COVID-19. 

The adaptive immune system remembers previous encounters so it can rapidly respond should antigens enter the body again (this is why vaccines work). But the genetic machinery required to create TCRs for trillions of possible antigens is incredibly complex. That's where Adaptive Biotechnologies comes into play.

A hand placing the last block on a pyramid of blocks, each with a medical industry icon on its face.

Image source: Getty Images.

Creating value from biological complexity

Adaptive Biotechnologies is trying to better understand the complexity of the adaptive immune system through a combination of machine learning, advances in sequencing technologies, and enormous amounts of biological data. Building that knowledge could lead to better research tools, enhanced diagnostic products for patients and doctors, and novel drug candidates. 

But crunching through vast amounts of biological data requires an incredible level of computing prowess. For that, Adaptive Biotechnologies has partnered with Microsoft (NASDAQ:MSFT), which is also a major shareholder. The pair is building tools to map specific TCRs in a patient's blood sample to specific antigens in a database. The goal is to develop clinical diagnostic products for detecting multiple diseases from a single sample, although the TCR-antigen maps and corresponding knowledge can be leveraged across the younger company's technology platform. 

Adaptive Biotechnologies has identified three end markets for its technology platform: life science research, clinical diagnostics, and drug discovery. It has already commercialized two products, including a test authorized by the Food and Drug Administration for detecting minimal residual disease (MRD) in certain types of blood cancers. 

Metric

Life Science Research

Clinical Diagnostics

Drug Discovery

Product or example

immunoSEQ

clonoSEQ 

Drug discovery partnership with Roche subsidiary Genentech 

Application

Used in academia and industry to understand the genomics of the adaptive immune system

Authorized by the FDA for detecting MRD of certain blood cancers 

Engineer cellular therapies to treat cancer

Noteworthy development

Used by over 2,200 researchers and in over 600 clinical trials

Covered by insurance programs representing 175 million individuals; used in over 190 clinical trials

Received $300 million up front; can receive up to $1.8 billion in milestone payments, and royalties on sales

Source: SEC filing, company presentation.

The fast rise of the technology platform might intrigue investors. Adaptive Biotechnologies reported full-year 2019 revenue of $85 million, compared with $55 million in 2018. The business reported an operating loss of $78 million last year, but it also began 2020 with $576 million in cash. In other words, the company is well positioned to invest in growth and to stomach moderate losses. 

Building open data for COVID-19

Adaptive Biotechnologies is also leveraging its technology platform to address the coronavirus pandemic. 

Together with Microsoft, LabCorp, Illumina, and others, the team of companies is trying to better understand how the adaptive immune system responds to SARS-CoV-2. They'll leverage population-level data -- including from individuals who have recovered from COVID-19 -- to build knowledge that could influence future testing protocols, antibody testing (to see which individuals are immune and can safely reenter society), and drug development. All findings will be made freely available. 

The young company has also formed an exclusive partnership with Amgen (NASDAQ:AMGN) to discover therapeutic antibodies in samples taken from recovered COVID-19 patients. The goal is to develop, test, and manufacture treatments to reduce the severity of infection. 

An intriguing biotech at an important time

Adaptive Biotechnologies is developing a technology platform that could have far-reaching applications ranging from basic research to disease detection to developing cellular-medicine drug candidates.

It's an ambitious mission. After all, the adaptive immune system is incredibly complex. But building the required knowledge could expand an important frontier of science, improve patient outcomes for a range of diseases, and build wealth for shareholders with a long-term mindset. This growth stock certainly deserves a spot on your watch list, if not in your portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.