We can go ahead and get started. So welcome, everyone. My name is Allison Bratzel, one of the senior biotech analysts here at Piper Sandler. And it's my pleasure to introduce AbCellera. So joining us today, we have Martin Hogan, VP of Strategic Finance. And so to go over the format here, we will ask Martin just for a quick intro of the company, and then jump into Q&A.
And it's we want this to be participative, so if anyone wants to raise their hand and ask something, feel free, and we can get your questions asked. So Martin, you want to just give us kind of a high-level overview, you know, where AbCellera has been, you know, what you got going on in 2024?
Absolutely. So first of all, Allison, thank you very much for hosting us today. A great pleasure to be here and to join your excellent conference. Before I launch straight into it, I will be making forward-looking statements, right? They're covered by the Private Securities Litigation Reform Act. Please do look at our SEC filings for additional risk factors.
So when you think about AbCellera, you know, in a nutshell, what we have always set out to do is to discover and develop therapeutic antibodies. And the early insight that is sort of the foundation of the company is to say, if you want to succeed and create a valuable company in this space, you really need to develop drugs that are actually helping patients. And there are, you know, two ways to do that impactfully.
The one is you have insight into novel target biology and can find a way to attack that, and that's the path that we have chosen, is you invest in technology that allows you to successfully pursue targets that are well-known, well-validated, but where technology is the barrier to developing successful drugs. We made those investments. The company was founded over 10 years ago, and since then, we've invested well over $500 million into teams, technology, infrastructure, processes, data setups, behind what we do. And we're now routinely cracking those targets in the antibody space.
And we're doing that in a combination of strategic partnerships, where the partner has a unique, valuable target insight and maybe some additional capabilities, as well as increasing the visibility with our own internal programs, where the industry probably knows the targets that we're working on in the ion channel GPCR space, for example, or with T-cell engagers, but where technology really has been limiting and where our investments are now paying off, and you're seeing those programs advancing.
The first two just announced, advancing towards the clinic, right? And the result is we're building a portfolio of stakes in our partner-led programs through royalties, but also through co-ownership stakes, and of course, through wholly owned programs, you know.
To round it off, I think it's fair to say we've got a long-term strategy to capitalize on the position that we're in, and we've got ample liquidity to fund that strategy.
Well, that was a great intro, and it kind of cues up one of my first sort of high-level questions here. And I know this is something that you and I have talked a lot about as I picked up coverage. And that is just: how do you best convey the value of AbCellera, you know, the engine, the platform, to investors?
You know, I think each quarter you provide metrics on things like partner program starts. But, you know, just wondering... I guess, I wonder how well that translates into the downstream value now that you're increasingly focused on, you know, quality over quantity of partnerships and the internal programs. So just any thoughts there would be helpful.
Yeah, it's a really great question, Allison, and it's, you know, it's something where we sympathize with investors, where, you know, visibility can be somewhat limited into the earlier things that we do. I think the key really is to start with ultimately, you create value when you're developing drugs, right? So really, what we're looking for when we're talking about value is a way to paint a picture of how we're doing on developing drugs.
And increasingly, you know, we would argue the way that you can start looking at AbCellera there is through the molecules that actually get into the clinic, and rather than anything else. Right? It's when molecules reach the clinic that both we and our partners are, you know, bound to disclose what we've been working on. We're now...
You know, we've recently seen molecules reach that point, and we're, you know, confident that in 2024, our partners will advance additional molecules to that point. And you can then really see, you know, what is it that we've been working on?
How is that tracking with respect to potentially helping patients and becoming commercialized drugs, where we then stand to earn, you know, in the long term, the absolute bulk of the cash flows the company is going to generate. It's also nice that at that point, you get the confluence of both the programs we've worked on with partners, as well as the internal programs as they show up side by side. So I think increasingly that is where we will want to have the conversation.
You know, the program starts that we've disclosed in the past, they are a somewhat useful lead indicator, but particularly in the, you know, in current market environments, it's unclear, you know, what the time delay is and, you know, ultimately what the correlation is.
Mm-hmm.
So I think the focus on, you know, what do we have on path to become a drug and, you know, generate either royalties or cash flows from a co-ownership or out-licensing position.
Okay, excellent. And something you just brought up, and I think has really been brought to the forefront of late, is really, I think, a shift, or a growing emphasis on the AbCellera-led programs. And it did seem, you know, at least on the, you know, the last earnings call, a bit of a shift in tone that you're more open to advancing internal programs further through the clinic to reach a greater, you know, value inflection point before partnering. So I guess, you know, is that, is that accurate?
Is that what you're trying to convey? And can you help us understand just how that strategy has evolved or could evolve as your internal capabilities grow? And then can you relate that back to the restructuring you announced earlier this week?
Yeah. Thanks, Allison. Excellent. Let me give that a shot, and do follow up, you know, where I might miss something. I think when you think about internal programs, really you need to think about, you know, why and where from. And what we have done from the start of the company was to invest into those capabilities that allow us to go after, again, well-validated, but, you know, if you will, undrug, hence undruggable, targets.
And we're doing that in complex membrane proteins, and T-cell engagement, quite visibly. Now, we've been working on those platforms for many years, right? Like, the work on complex membrane proteins started well over five years ago as a specific effort.
But of course, you need to build those capabilities before you even know that they work, you know, and then you need to validate, make sure that they work, and only then will the programs emerge. So really what you're seeing is the strategy playing out, the business sort of naturally reaching the point where the internal efforts become visible and valuable, if you will.
So it's not, it's not so much a shift as something that has always been going on, but it just wasn't so visible externally, if you will. I think the focus on quality is definitely true, and that goes both for internal programs as well as for partnerships. We really want to make sure we work on programs where we have high conviction that they can turn into drugs that help patients, right?
That's ultimately where value lies for patients, for investors, in AbCellera, for our partners. And so in that context, we're also choosing partners through a lens of, you know, are they bringing something to the table that looks like it's a great idea for a drug?
Are they contributing, capabilities or insights that we do not have, that jointly allow us to, to turn that idea, into a molecule when combined with our capabilities? And, you know, similarly, on the internal program side, are we going after the targets that clearly make sense, where we've got a really good shot? You know, you touched on, you touched on, you know, our announcement yesterday.
When you're thinking about that journey, you really want to make sure you've made the right investments in the platform, and that you are in a position to then capitalize on those investments, right? We're now publicly committed to advancing, you know, at the pace of, you know, about two programs per year into IND-enabling studies from those platforms.
We just announced our first two, you know, forming the first two assets in the pipeline, 575 and 635, which I'm sure we'll touch on in our conversation. But we already have the next ones lined up that we're expecting to move into IND-enabling studies next year.
Now, when you're looking to do that, and when you have a platform that can routinely and at scale generate those kind of assets, you also need to have a long-term plan that allows you to execute on that with confidence.
And so we're always making sure we're running the business as efficiently as we can, and I think it's in that light that you should interpret yesterday's yesterday's announcement of a about 10% reduction in our workforce to really align our capabilities in a lean fashion with what we need for success on strategic partnerships and internal programs.
Importantly, also, you know, as part of that long-term plan, we've secured, we've secured non-dilutive funding from the governments of Canada and British Columbia, explicitly to help us build out those downstream capabilities, CMC and GMP manufacturing, and to take up to 17 programs through phase 1 clinical trials, right?
So we're well supported there. And then, of course, we've got over $800 million in direct liquidity. And, you may rightly say that seems like a lot. But then again, remember, it's a long-term plan, and we want to be able to execute with confidence, always in a position to take what is the most valuable course of action, throughout the next years, without having to worry about liquidity in the process.
Okay, excellent. Yeah, I think we'll shift now to the two internal programs you alluded to earlier. And I want to start with 635. I do have a bunch of questions on the OX40L asset. But before getting to those, I don't want to, you know, give 635 short shrift.
So I think, you know, we don't know too much about this. I think you've described it as a first-in-class molecule against a non-disclosed GPCR or ion channel target, and we do know it's for metabolic or endocrine endocrine conditions. And that's kind of all we know, you know, for competitive reasons. So can you...
I know you can't say too much, but can you help us understand, you know, what we can expect to learn about this asset, if anything, between now and IND filing? And to the extent you can, you know, any, any color on why this asset or target specifically was selected as an AbCellera-led program, you know, to advance first in IND-enabling studies would be helpful.
Yeah, absolutely. And thank you very much for going to 635 first. It is indeed the asset that we're most excited about in terms of the ones that, you know, are at all visible to you, if not, you know, overall. Like you said, it does come from our GPCR ion channel platform. It's one of the, you know, it's one of the first to make it that far.
Another one from that platform is in Regeneron's hands, which we might also touch on. So very excited that this platform is now bearing assets that are on their way to, you know, to help patients. Why did we select it? We selected it because the target is very well validated with small molecules.
So it is exactly in those class of targets where you'd say, "If only you could find an antibody against that, you'd have a significant leg up over a small molecule, or small molecules that have, you know, that have undesirable side effects," if you will.
And we also chose it because the path to understanding whether the molecule works, so the modeling around the disease is very clear. The clinical development path is also straightforward, with an expectation that both in with 635 and 575 as well, there's the chance of getting early efficacy readout. So it's, you know, it's a really nice target paired with a highly potent antibody that just looks really good.
You know, it's our first shot at really demonstrating that beyond the ability to discover excellent antibodies, we also have the growing capability to routinely turn those into drugs.
Okay, excellent. So yeah, now I guess we'll shift to 575. You know, diving into the OX40 ligand targeting asset. Can you first just help us understand the background for this program, and then also what you see as you know, the key points of differentiation? I know we've been emphasizing it targets the ligand, and then it's non-depleting. So, you know, why are those characteristics differentiating? And just what else gives you confidence that this could be a best-in-class asset?
Mm-hmm. Yeah, great question. And we are, you know, as excited as we are about 635, 575 is an excellent program. And we came to it through our collaboration with EQRx, that we had started back in 2021. We had worked on this target. We'd agreed with EQRx to work on this target because we were also, as they were, excited about the target biology.
And we had expected to develop this jointly. But then, of course, when EQRx was acquired by Revolution Medicines, we managed to take control of the asset. And we had, you know, deep conviction, which I'll get into in a second. And so we decided to move it forward as part of our internal pipeline. So that's really how we came by the asset.
So what, what excites us about it? I think the, I think the one is the, you know, the, in general, targeting the OX40, OX40 ligand pathway is sort of an upstream way of tackling a whole range, of, you know, of, of autoimmunity, if you will. Reactions that go, you know, as the lead indication, atopic dermatitis, but that go beyond with possible applications in things like asthma, COPD, and there's a, you know, there's a range of others, ulcerative colitis, to, to name one more.
The nice thing about, targeting, you know, targeting OX40 ligand versus OX40, which amlitelimab, the, you know, the lead molecule that arguably we're following, is doing is, like you said, it is non-depleting, so it, it doesn't bind.
The OX40 is expressed on the T cells, and the hypothesis is that when you're, when you're targeting the T cells, you're depleting them, which may be the cause of the, you know, of the adverse events that we're, that we're seeing in the, in the OX40, targeting trials out there.
Again, amlitelimab as OX40 ligand targeting, so far through phase 2, seems to have a really clean safety profile. Now, in terms of points of differentiation, we had a, you know, we had a...
As our platform generally does, we had developed a very large panel of antibodies to choose from, so we were able to choose 575 from that panel and selected it for potency, for PK and for half-life, and the combination of that makes us believe that we may be able to achieve less frequent dosing, as a, you know, as a significant, or at least as a meaningful advantage over, over other molecules in the space, combined with a clean safety profile.
Maybe to add on top, and this is, you know, this is a, this is always something that, that's one of those factors often forgotten when you're thinking about, is this molecule a good drug? It looks like it's got a very nice developability and manufacturability profile.
So maybe building on kind of what you just said on, on how you've developed the kind of panel of, of OX40 ligand targeting molecules, I, I think you've, you've kind of said, yeah, that you could have a couple of best-in-class or differentiated, you know, molecules against the target.
So could you help us understand, is there a strategy here in terms of taking more than one forward or, you know, partnering one or, or maybe following a disease-specific approach? You know, maybe 575 is best suited for atopic derm, something would be... else would be better suited for the IBD indications or something. Just help us understand, how to think about that and optionality you have there.
Yeah. So the current sense, but it is early days. The current sense is that, it really is about finding, the molecule that does the best job at targeting OX40 ligand. So our current belief is, there's a good chance that 575 is the one molecule that can then be used to, to treat a range of, of conditions. You know, we'll, we'll advance it through a first phase one trial, and we will then, you know, we'll, we'll then see, where we stand and what looks like, the most valuable path of action.
I think it's reasonable to think that we're prepared to advance that molecule further alone, but certainly we will then also be open to considering opportunities for partnering, particularly as we're, you know, as we're looking to broaden sort of the scope of applicable therapeutic areas.
Okay. And then just thinking about, you know, catalysts, and timelines. I know, we know 575 is in IND-enabling studies, plans for IND submission in 2025. So what other updates or, you know, additional information, I guess, can we be expecting between now and 2025? And then, you know, also just what gives you confidence that that IND timeline, you know, is reasonable and that AbCellera is equipped to run, you know, the phase 1 proof-of-concept trial?
Yeah. So on, I think on 575, there's a reasonable chance that we'll be in a position to release some additional preclinical data before we actually get into phase 1 trials. You know, it's as we're talking about it today, it's clear that we're working on it.
So there's you know, there's a good chance that we'll feel good about releasing additional data even beforehand. Otherwise, it'll be the entry into the trial. On 635, chances are we'll continue to play you know, the cards close to our chest until we're into phase 1. You know, what gives you confidence?
We've now spent, you know, a good number of years, really building out the capability to do those last steps of drug development all the way to get to doses that can go into patients, and we've been standing up the capabilities to run phase one trials. I think for both of those molecules, the phase one trials are reasonably straightforward.
Mm.
I think, you know, as a general point, you know, and, and we might touch on T-cell engagers, these are straightforward indications and trials and, and patient recruitment. You know, it is not, you know, it is not the case that, you know, we're looking to run a complex phase one oncology trial, which is the type of thing that, you know, we'd probably be more reluctant to do.
So as you think about, you know, molecules coming from our internal efforts in general, we'll always be looking for what does this specific program call for? What are the operational challenges, the clinical challenges? What is the optimal point, sort of to acknowledge that, you know, a partner is offering full value, and to, you know, and to partner a molecule-
Mm.
On these two, we're, you know, we're committed to taking them through phase one trials and further, if that made sense.
Yeah, that's great. And then maybe just one more on the internal programs before I do want to get to one question on a recent partnership. But I think you said earlier the plan is to advance two internal programs a year-
Mm-hmm.
to IND-enabling studies. Can you just help us understand the communication strategy as more of these assets, you know, enter IND-enabling studies? Is this gonna be like a 635 situation, or are we gonna get some more, you know, descriptive background, like with 575 or the TCE platform?
Yes. So thanks for, thanks for calling it out, Allison. We are, you know, indeed committed to advancing molecules at the rate of about two per year into IND-enabling studies. Our intent is to, you know, share with you a pipeline update on a quarterly basis, which would include an indication of any molecules where we, you know, have made, have made that commitment, so that you can see that pipeline building out. The strategy about information sharing is really going to be molecule specific. I think broadly, you can think of two categories of molecules.
One, where it makes sense for us to start generating interest from potential partners, like we did on the T-cell engager platform, in general, and the programs we're running, all that, although they're not yet at IND-enabling stage, where we, you know, would go to scientific conferences and generally share information.
And then there's going to be another category of programs, where for competitive reasons, so as not to, you know, encourage a competitor to try, if you will, we... But where we have deep conviction that we're on the right path, that we would stay, you know, reasonably quiet as we are doing with six three five.
Okay, excellent. Then we're almost on time, out of time here, but I do want to ask, on one partnership in particular, and that's your Regeneron partnership. Where, you know, you recently announced another expansion, to, I think, another four targets, and also announced that they'd exercise rights to advance, candidates from two completed discovery programs, including one against a GPCR target.
So, that just stands out to me as an endorsement of the value of the AbCellera program. But, can you just explain the background here? You know, why is this doubling down from Regeneron important, and just what does it say about the value of the AbCellera,
... Absolutely. Yeah, we're super happy with our partnership with Regeneron, which, you know, for us, certainly, is strategic. The origin of that partnership was when we signed our first agreement in 2020 with a, you know, skeptical team, I think it's fair to say, at Regeneron. Where Regeneron effectively had this targeted GPCR target as their first target that their team had been working on for quite some time and couldn't crack.
They, you know, again, as is the business model, they were convinced that this was an important target, but they lacked the technical ability, and gave us a shot at it, if you will. And we had, at that point, developed the technical ability and solved the problem for them.
You know, Regeneron being a, you know, being a large, well aware player of targets in this space, had a whole list of other targets like that that we've been working on. Like you said, we've completed the first two programs. We've started the next two, and so Regeneron effectively was out of slots, and so we managed to double the commitment to eight.
And it's a, you know, it's a great example of a partnership where Regeneron brings target insight that we, you know, wouldn't have. Regeneron brings an exceptionally incredible ability to develop the antibodies that we deliver back to them, and so that, that's the makings of a strong strategic partnership.
Like you said, it's a great validation of the underlying hypothesis that what we're doing is to develop antibodies against targets that make a lot of sense, but that are technically limited. That's where we're making our investments, again, in strategic partnerships, you know, with, with the likes of Regeneron or Lilly, in co-development or, you know, in those cases where we're taking meaningful royalty stakes in the, in the drugs that we help discover, and increasingly through our internal platform. Again, well-funded to do that and, you know, with, with lots of programs in the, you know, in early stages to, you know, to feed that ambition.
Excellent. Well, we are out of time, but I think that was a great, great overview of, you know, the strategy and the kind of what to expect down the line. So thanks for coming to the conference.