Good morning. Welcome, everybody. My name is Scott Schoenhaus. I'm the healthcare technology analyst at KeyBanc. I have the privilege of hosting Andrew Booth, CFO of AbCellera, one of our tech-enabled drug discovery players we launched coverage of in December. You know, I think what sets AbCellera apart from its peers is that it has a proven proof of concept. They developed the monoclonal antibodies during COVID. And their technology is proven. So I guess, Andrew, why don't you just introduce yourself, a little bit about AbCellera, and then we'll go right into the fireside chat, if that works.
That sounds great, Scott. Thanks a lot for having me here. As Scott mentioned, my name is Andrew Booth, the CFO at AbCellera. And before I jump in, I want to just remind everyone that the chat may contain some forward-looking statements, pursuant to the Safe Harbor provisions of the Securities Litigation Reform Act. So, any such statements are based on our best estimates at this time. Yeah, so I can, where would you like me to start, actually, Scott? Do you want to just have an overview of?
Yeah, let's maybe just an overview of your platform, how it's kind of differentiated in the marketplace. You know, maybe some of your past therapeutic success with therapies. You know, you're obviously focused on biologics and larger molecules. Yeah, so why don't we just focus on your platform?
Yeah, so, happy to do that. So, the company started out of the lab of our Founding CEO, Dr. Carl Hansen, who had a background originally in microfluidics and had a lab at UBC. And so he and a number of grad students started AbCellera with the aim of rebuilding kind of the front end of drug discovery, related specifically to antibodies, noting that the vast majority of antibodies have been discovered on technology that from the 1970s in hybridoma. And a lot has changed since the 1970s, in terms of our understanding of biology and technology. And could we rebuild the front end of drug discovery to get on a different technology curve, to find some antibodies, the antibodies that had eluded some of the best of the best discovery partners out there, that could make good drugs and address unmet medical need?
So, the company has been around for about 12 years, and we've spent north of $500 million building that capability. So it is building the best technologies in an integrated engine for finding therapeutic antibodies against difficult targets and difficult-to-drug targets, as well as finding best-in-class antibodies. So what are some of those places where we see that we differentiate ourselves? It's really in finding, particularly, let's say, complex membrane protein targets, so ion channel and GPCR, or other targets that have eluded some of the best CD3 targets for T-cell engagers, for example. And this has been validated, just to your point, of some of the successes we've had with, I think, a nice list of partnerships that we've built over the period of time.
What we've done in the past is we started when we invested all of this capital and technology into building this differentiated drug discovery engine. We started by providing access to that engine to pharma or partners who would pick a target. We would do the discovery and hand back molecules that could then be developed as drugs. We would not do it on a fee-for-service basis. We would get paid some upfront, and you see that in our P&L, is our revenue. But really, the lion's share of the economics are through the participation in the downstream of these molecules, through milestones and royalty positions. We've since, you know, negotiated close to 200 agreements, the vast majority of which can contain the downstream participation.
We've started a good number of those, and they've been with great partners who themselves are very capable antibody discovery teams, with Lilly, AbbVie, Regeneron, Incyte, recently, and just in the last week or so, Biogen, just to name a few of the pharma companies we've worked with in the past. Probably one of the most celebrated of those partnerships is, of course, the deal we had with Eli Lilly and the response we had during COVID, where Eli Lilly ended up commercializing a few antibody therapies against COVID. Bamlanivimab and bebtelovimab were commercialized by them, and those were molecules that we had discovered here at AbCellera, really validating in our eyes then probably one of the most competitive drug development projects ever.
We were the first one to market, and we were also the only one to develop a second-generation antibody that was effective against some of the variants that were emerging as the pandemic grew. That was a great validation of the power of our investments in the technology, and I think also a great validation of the business model we've chosen, where we did have a royalty attached with a royalty position on those molecules. It put us in the enviable capital position we have today, of about $800 million in cash on our balance sheet, another $200+ million in committed funds from the Government of Canada and the Government of British Columbia, to continue investing in our capabilities, and building a biotech company up here in Canada.
Great. Yeah, maybe let's follow up there. Let's talk about the buildout of your manufacturing capabilities up in Canada. What will this allow you to do once it's complete?
Yeah, so we have built this capability. At the beginning, it started from, you know, like target to lead panel of antibodies, and then down to development candidates, and then down to exactly the development candidate. Then the extension here is through cell line development, process development, and ultimately CMC manufacturing. The way we look at, you know, develop a drug development, you've got your insight into biology or your ideation saying, "Hey, if I can find a molecule that attaches to this target or like binds to this target and has certain functional properties, maybe that could be a drug." Those are your requirements. That's where product development starts. It ends with a vial of drug that can then go into testing.
That's where we believe technology can really make a difference, and differentiated technology, and integrated technology can make a difference both in quality and definitely in time and flexibility and speed. So we have taken some co-funding from the Government of Canada to build out those last pieces. So the process development, cell line development, and CMC manufacturing to provide us with those end-to-end capabilities that we can then use on our own pipeline of products, the pipe the products that we have a 50/50 ownership position with our partners, or even in the development work that we've done with partners, where we have a royalty position. I think that having those capabilities, especially in the like geopolitical landscape at the moment, where there's going to be a tightening of the supply of biologics manufacturing, is going to be very strategic.
I think it's very strategic to integrate, for the flexibility that we have. And then given these geopolitical headwinds that the market may face, I think it will play to our strengths that we have our own capabilities there for our own development candidates, as well as those of some of our partners.
Yeah, that's a great point. It makes total sense. Andrew, I'm going to just read these questions that are coming in on our virtual platform, from investors, because they're asking directly about the manufacturing capability. So it makes sense to ask now. It says, "What is the monetization of the manufacturing capability? Is it cash flow neutral, negative, or positive?
I think when you look at the programs that we are advancing on our own, so in our own internal pipeline, versus outsourcing those products, I think that it's a wash if that's the only things that are done within the facility, or nearly a wash. And then, of course, we're going to be manufacturing for some of our co-development partners, and then beyond there, and then potentially with the larger portfolio. It doesn't actually take very many. And we are not trying to become a CDMO. This is very important, where we're just selling off excess capacity. Right? We actually want the flexibility. We're not trying to run it at kind of full capacity.
and you don't need, at least on a cash flow basis, so and certainly in the first few years, it's going to be easy to get to, or relatively easy to get to kind of cash flow break even in the first few years. And we'll be at only a fraction of the capacity. So, and then, of course, as the volume of activity in the facility ramps up, it will, you know,
Very cash. Yeah.
Yeah, it will be a good investment on its own. We have the conviction that it'll be a good investment on its own, but even more so that it will provide us flexibility, integration, speed, and time on the programs themselves. So any one program that gets to the market or gets to the clinic, you know, six months earlier or a year earlier than what otherwise would pay for the entire show. So it's based on the commercial value of that molecule. And we're doing it for the integration, the control, and, you know, the quality we believe we can get of these molecules and getting them to the clinic.
Yeah, yeah, makes sense. And for everything you mentioned about the geopolitical risk side of it, having it in control and your own destiny is important. So I want to move to partnerships. You know, your strategy around partnerships has kind of shifted over the last quarter year, however you want to call it. What is your strategy with partnerships? You know, I always tend to think of it's now more kind of quality over quantity, and realize and really going after partnerships where you can provide value and you think that the, you know, the end objective is worth pursuing. So maybe touch upon that, Andrew.
Yeah, I'd say, for us internally here, it doesn't feel like any sort of a sudden shift. I think, for a number of years, we've been saying, "Hey, yes, yes, we do have this portfolio of royalty positions." But you have to you can't diversify your way out of garbage. You know, that each one of, yes, you get great comfort in the numbers that are there. But really, it's about what are the individual programs that you're working on? You have to diligence them. You have to know that you like the science, you like the developability, you like the commercial opportunity. And you like the differentiation that you think you can get. And so you have to spend that attention on each and every one of the programs.
And we have been saying for years, we're focusing on the quality and not just the numbers that are going through there. The way we have originally, when we just had the technology and the capability, we provide access to this platform in exchange for some fees and definitely a royalty position that we have the portfolio that then moved to, as we got in a better capital position ourselves, co-ownership and co-development, where we've done that with a number of different partners. Most recently with Prelude, where they bring a great conjugation technology and degrader technology for making antibody-drug conjugates. And then, the last step, of course, is developing our own pipeline really focused on this difficult target space.
So the ion channel GPCR, the multi-pass multi-pass membrane protein targets, I think there, we have the capability to, to generate perhaps more assets than we will have the management bandwidth and the capital to pursue. So having a strategic partners and relationships that we've developed in sort of the partnership business is going to be important for then licensing those molecules off and actually getting them in the hands of the right party to actually advance them quickly through the clinic and then get them to patients. So to us, it seems like, that that all fits together nicely, and, and as a part of the strategy.
We see, of course, as we've had more capital and as we've had more abilities, especially in the multi-pass membrane protein target space, to be able to advance our own pipeline, it seems like a natural evolution of the business.
That makes sense. In a follow-up, there's a question here on the portal. Is there any ongoing interactions with new partners, big, mid, or small pharma?
Oh, absolutely, all the time. So we have a business development team, and you see it in our sales and marketing expense every quarter and every year that we've invested in building up the partnerships. That includes new partners and stronger alliance management that we have within the team. Just in this last year, from our alliance management efforts, we renewed a deal with Regeneron, so a highly capable group, you know, arguably some of the experts in the field at antibody discovery. And we have a very strong partnership with them. That's from our alliance management efforts. And in this past year, actually, even just last week, or the week before, we announced a deal we did with Biogen, their new partner. And in the fourth quarter, we had four new partners, I believe, join with us. So we still have that ongoing effort.
Great. I want to shift to your internal pipeline now, if you don't mind, Andrew. Can you talk about the potential for your T-cell engager platform, your expectations for maybe a partnership in this category?
Mm-hmm, absolutely. So we invested a couple of years ago. We decided to turn our capabilities towards finding a library panel of CD3 antibodies, recognizing that this was one of the challenges in developing a good T-cell engager therapeutics. We have presented at AACR and at SITC over the last couple of years a number of presentations, just kind of showing our progress in that we had intended to do, and we had advertised as such to do a platform validating deal on our T-cell engager platform in 2023. It was the only one of the goals for the year that we didn't hit. And we think we're just on it. It was just because of timing. So we still have conviction in the platform. We're still continuing to invest in the platform.
We will be presenting at AACR, and we had a press release recently about that. You'll be seeing some more data there. We have continuing discussions with partners on the T-cell engager platform. We're, I think, we see this really as a platform. Platform is a word that gets thrown around a lot in our industry. What we mean here is we think we have differentiation. We think that, and we think it is scalable. We can partner off multiple times, different CD3 antibodies or use multiple times with different tumor targeting antibodies in order to find to optimize killing and lower cytokine release, and toxicity related toxicity. The data that we're going to show at AACR this year is actually quite remarkable in that regard.
So, that may be sufficient to get that original deal or that first deal done on this platform. But I think we've definitely captured the attention of many people who are developing T-cell engagers.
Great. You know, you mentioned about your difficult target classes you're trying to unlock, including GPCRs, ion channels. Maybe talk about the internal R&D investments you've made over the last five years pursuing these difficult targets.
Yeah, so five years is about the right timeframe. That's about when we started. And we have an R&D team and development team down in Sydney, Australia, that is really focused on these complex membrane protein targets. We've also [seen] the integration of that team and the Vancouver team, up in Vancouver, Canada, is where the lion's share of our R&D team is. I think [we] have made incredible progress at cracking these difficult targets that are in the ion channel, GPCR. I would also say the MHC peptide area, also another area notoriously difficult to find antibodies. That's an area where we think we've cracked that we can repeatedly and systematically find great functional antibodies against MHC peptide targets. GPCR and ion channels are ones where we continue to make these investments.
We did make a purchase of a couple of technologies along over the last five years. And I will point out that our internal pipeline candidate ABCL635, we have advertised that it is against one of these difficult class targets. So we're making significant progress here. And our goal is to continue to find these. And they are, as you can imagine, generally speaking, the class of targets that the big well-enabled partners come to us to try and work on. So we have reason to believe that we'll be successful here in, and the first ones are likely going that we'll be able to show data on will likely be the ones in our internal pipeline where we own and control the data.
Here's a question for you on your internal pipeline. What excites you the most, Andrew?
Yeah, I think this molecule, 635. So of the two that we've disclosed, there's a number behind it, which we're also very excited about. And we do have a target to bring at least one of these molecules in the pipeline to development candidate in 2024. And so hopefully we'll be able to talk about those more. But of the two we've already disclosed, ABCL635, which is, as I mentioned, in this difficult target space, in a condition for metabolic and endocrine diseases. We haven't disclosed what the target is. We don't think it's strategic to do so until we are required to do so, which will be at IND or when we dose the first patient, whenever the latest possible date is that will be in early or the first half of 2025 is what we're expecting.
That molecule, it's a pathway well validated by small molecules, but with some safety and toxicity issues. That's a caricature of where an antibody might make a good drug in order to, you know, not have the safety issues. And we do see as well it's in an area where dose was limited because of safety. And so we could have there could be quite a lot of efficacy still on the table if you were not limited by safety in terms of your dosing regimen. So very excited about that has the potential to be, you know, $2 billion in peak sales, I think is what we've said. And also is very developable. So, could be a relatively quick development path, still taken a good number of years towards the end of the decade.
But, we're really excited about that. That said, OX40 ligand, which is the other molecule that's in the development candidate stage that we've disclosed. So this is ABCL575, where we have disclosed the target. It's a molecule that came to us from the collaboration with EQRx, not normally a fast follower, not normally something we would have chosen, but EQRx had called the target. And due to a transaction or the sale of EQRx to Revolution Medicines, that molecule essentially reverted to us, or we took control of it. Just recently, Sanofi, this is following Sanofi's OX40 ligand molecule, which they're moving through the clinic, originally at atopic dermatitis. But it's a very interesting pathway, which could be a giant class of drugs. To our knowledge, we're the second behind the Sanofi asset.
You know, as they keep producing great results, I think that is going to speak volumes for the class of, for this class of therapies. And, there's a lot of unmet medical need here, not only in atopic dermatitis, but in asthma, in ulcerative colitis, and all sorts of other inflammatory diseases. So easy to get excited about that one, too.
Yep. I guess my last question, for you, Andrew, is, can you talk about your relationship with the governments of Canada and British Columbia, the funding you've received from these entities, and how they are approaching not only, you know, AbCellera, but the sort of biotech industry in Canada for, you know, American investors here?
Yeah, absolutely. So we've had the benefit of working with the government of Canada, actually for a long history within AbCellera. So there were some, as Carl and the team started the company at a UBC, there was all sorts of non-dilutive funding that was possible to get in grants, etc. And in 2020, during COVID, we managed to participate or partner with the government of Canada on our CMC, our vertical integration and CMC and GMP manufacturing. So, of course, it was heightened awareness of the need for local assets or domestic assets in biotech. The CMC and GMP manufacturing facility is in fact co-funded by the government of Canada. So they're covering 50% of the cost. And you can see that flow through our financial statements. That was a funding worth about $125 million at the time.
Then, we followed on from that, just last year in 2023, with another project through the Strategic Innovation Fund with the Federal Government of Canada, this time in partnership with the Government of British Columbia, to build out more infrastructure in our Vancouver facilities, as well as advance up to 17 drug discovery programs from target all the way to the end of phase 1. So we have about 45 cents on the dollar are funded by in a combination of the Government of Canada and the Government of British Columbia in that effort. And so this is for ABCL635, ABCL575. We are actually able to move these through to the end of phase 1 in a very capital efficient way, because we're only funding 55 cents on the dollar of those.
The reason you might ask, you might say, hey, that's a great, that sounds like a great deal, non-dilutive funding, and it brings our available liquidity, excuse me, to well over $1 billion when you add it to the close to $800 million we have on the balance sheet. Through these combinations of funding arrangements with the first, Government of Canada funding, and the second, Government of Canada and Government of British Columbia funding, it's well over $200 million. It brings our available liquidity to over $1 billion, to pursue exactly what we want to pursue. You might say, hey, why did the Government of Canada and the Government of British Columbia do these? Well, in Canada, we don't have the funding arrangements like with BARDA, for example. Canada is the only country in the G7 without a major pharma company.
The Canadian government and the British Columbia government have identified that they want to help build anchor companies here in Canada and can provide good funding to encourage that. That is available. There's a fund of several billion dollars available federally for advancing biotech and life sciences companies in Canada. And I think, you know, that this is a win-win scenario in our mind, where that's exactly what we would like to do with AbCellera as well. So it was kind of an appropriate source of funding to advance our mission.
Great. We do have one follow-up question. I guess this will be the last question for you, Andrew, on your internal pipeline. How far are you willing to take programs in-house?
Yeah, it's a great question. I think it depends on the program. So I'll give an example like an OX40 ligand that we've talked about. This is potentially a giant indication. You could see a multi-armed trial in a phase 2 being done. This is probably not. We're not the best, you know, sponsor to advance something like OX40 ligand forward. So I think we'd be looking for partners. But there may be other indications where we actually do have a credible angle on being a good sponsor for that trial through phase 2 and phase 3. So at the moment, we haven't made any such commitment. I mean, we are committed to take things through to the end of phase 1. We even have a very attractive funding in order to do so.
If the program looks promising, and if it looks like we would be a good sponsor for that program, in order to move it quickly through to patients, I mean, we will not hesitate to take that next step. But that's not a commitment we've needed to make thus far. But also, not depending on how much it costs, and again, what the development path is, maybe we would take the next step. But again, we haven't made any such commitments thus far. We'll just take it one program at a time. What we do know is on the front end and the discovery, we have the capability. Well, last year we brought two development candidates forward. This year we're going to bring at least one development candidate forward. Those original two will develop into two INDs next year.
Then you can expect us to be on that kind of pace going forward, because we do have this capability at the front end to feed a pipeline. We won't have the capital to pursue all of those through certainly later stage clinical trials. So partnering is going to be an important part of the strategy for AbCellera, and finding the right sponsor for those programs is going to be critical.
Great. Well, Andrew, thank you again so much for participating at our conference. Investors, if you have any questions or want to connect more with Andrew and AbCellera's team, don't hesitate to reach out to me directly and email me. I'd love to connect you guys to Andrew and his team. Thanks again, Andrew.
Yeah, thank you, Scott. Thanks for picking up the coverage and helping to tell the story.
My pleasure. Bye, everyone.
Bye.