Hey, everyone. Thanks so much for joining us. I'm really pleased to be joined by Carl Hansen, CEO of AbCellera. Thanks so much.
Pleasure to be here, Andrea. Thanks for having me.
Yeah. So maybe for people who may not be as familiar with the AbCellera story, maybe we can start with a brief overview of your company, your business thesis, and how you fit into the drug development ecosystem.
Sure. Happy to do that. So AbCellera is a biotech company focused on antibody therapeutics. We've had a bit of an unconventional start to the business. So most biotech companies would start off directly trying to find drugs. We began much more from a technology perspective. So, you know, in this business, in the long run, you will win or lose, depending on whether or not you can deliver new drugs to patients. And in order to move the needle on that, I think there's really only two ways to do it. So one way is that you come up with new insights into biology, new targets. The other way is that you can go after known biology with better tools, so solve problems that were not solved before or come at existing well-validated targets with new modalities.
So we have chosen the second, and that has entailed what is now about 12 years of building an integrated technology platform that can go from a concept to the beginning of clinical development. We, you know, after 12 years, we're on the very, very last stages of completing that with the manufacturing facility. Through that path, our business model has begun in a partnership model working with biotech and pharma companies. We've worked on about 100 drug discovery programs, and have proven that the platform can solve problems that others have struggled with. In the last two years, that's evolved into co-development models where we have a 50/50 ownership stake. Most recently, we have started to turn that technology onto our own programs and have our first two programs that will reach the clinic next year.
So, a very exciting time for the company where we've got a platform that is fully built, I believe, best in the industry at the front end. We have about $1 billion in liquidity, and we are making a transition into being a clinical-stage biotech company.
You might be best known, at least a couple of years ago, for your work with the COVID antibody.
Yes.
Remind us how that maybe de-risked your platform, your approach, and, you know, how you think about antibody discovery.
Sure. So, you know, for so to go back a bit, you know, coming up to 2020, we had an ongoing partnership with the Department of Defense, with DARPA, that was focused on pandemic response. So in 2020, we had already engaged with a variety of groups in immunology—pardon me, in virology—and deployed the platform, and in record time, I think about three months from initiation to the start of clinical development, we were able to bring the first monoclonal antibody against COVID into the clinic. We did that with our partner, Eli Lilly, and then subsequently followed it up with a second drug, bebtelovimab. So bamlanivimab first, then bebtelovimab. That was, of course, a very unusual situation.
It was a chance for us to prove that the platform was real, that it worked, and that we were able to partner effectively to bring medicines forward that ultimately reached over 2 million people in the U.S. The other thing that did, of course, was bring in substantial revenue. So I think through our royalty position with Lilly, we brought in about $1 billion through 2020, you know, 2021, 2022. And that capital has positioned us uniquely to complete building the platform and now to make a move into developing our own platform, our own pipeline. Pardon me.
Maybe provide a little bit more detail here. When you talk about building out your platform, building out this R&D engine, what exactly does that entail?
Sure. So, the concept, or the strategy has been to invest in the integration and invention of technologies that start at concept and go all the way through to the beginning of clinical development. I'd characterize that as the creation step of drugs. So roughly in drug development, you have an ideation step where you're trying to figure out what should I do, what's the concept. You then need to create the drug, the invention and manufacturing. And then the third step, of course, is the clinical testing. So we have invested in a series of technologies to create therapeutics. That includes some proprietary methods. It includes, you know, a single-cell screening platform that is now best in the world that allows for a deep search in natural immune systems. It includes biochemical techniques, immunization methods, transgenic animals.
And then all of that is integrated with state-of-the-art techniques that are not proprietary, with automation, with computation, and of course, with investments in infrastructure. So, facilities for R&D and most recently, investments in manufacturing in Vancouver.
You referenced this move from partnered programs, co-development programs, now wholly owned, ones that you're internally developing yourself. Remind us the rationale behind this transition and this strategic shift for AbCellera.
Yeah. So that's a, that's a great question. You know, it's, it seems like a strategic shift, but if you had asked us at the company, you know, back in the early days, say 2014, what is the long-term path for AbCellera, it would be to become a global biotech, which of course includes developing clinical assets. The question is, when do you start that and how do you roll that out so that you stay in, you stay, you know, you measure the effort with the capabilities of the company at the time. So in the early days, we were focused on platform build. That platform build was greatly assisted by a partnership model. So we have worked with, you know, some of the best companies in the industry that has helped to validate the technology.
It's also helped to get good at discovery and to start to learn what the big problems were. As we got, you know, as we brought the company up to scale, we began to look for opportunities for co-development. And then that has naturally progressed into some of our programs that we're moving forward ourselves. So, it's a natural evolution for a platform company to go there. I think what's really exciting about AbCellera is that we have managed through the business model, and through some good fortune through COVID, and how the IPO went down, to get to a point where we have a fully built platform that we believe can reproducibly develop first-in-class and best-in-class assets. And we have built that, and have capital now to deploy that on building our own pipeline.
All of that is complementary to a partnership business that has put in place a portfolio of passive stakes and programs that are being developed by partners.
Maybe, maybe just really quickly on those, those partnered programs, to the extent that you are able to share.
Yeah.
How has that been going? And when you've, you know, you've come out and you've talked about an attrition rate, how does that compare to industry standards?
Yeah. So on the last call, we updated the attrition rate. So the attrition rate is defined as we start programs. Our work typically has been to go from the concept through to a lead panel or a development candidate and hand back towards our partners. At that point in the discovery partnership business, we are hands-off, and it's up to our partners to do the preclinical work, the IND enabling studies, and ultimately bring those forward to the clinic. So it is the case that not all of those that you hand off, even if the molecules meet specification, not all of those are going to go into clinical development.
And there will be attrition for various reasons. There are attrition for, you know, portfolio prioritization. Sometimes it's the biology. If it's working on a new target, it doesn't work in the preclinical model.
So we have, you know, seen roughly to date 40% or so. And, you know, it's difficult to, given that people don't report on preclinical success rates. In our view, anything between 25% and let's say a third would be great. And if you start to do the math on that, you see that there's substantial value that has been created in that portfolio, that will mature into cash flows over time.
Okay. Maybe we can dig into your internal pipeline to the extent that we can. 575, I think you've spoken about a little backstory here. This asset had previously been one that was under co-development with EQRx. Maybe what is the extent of the work that was done during that partnership?
Sure. So, we had a collaboration with EQRx that started in 2021. EQRx was pursuing a model of following drugs that were in the clinic in late-stage clinical development. And so it was chasing molecules where there was really well-established biology and where there was a large market opportunity. EQRx ultimately was acquired by Revolution Medicines. And in the acquisition, Revolution, which is focused on oncology, was not taking those molecules forward. So there were three programs that we had started. And of the three, there was one that we are very bullish on, which is the OX40 ligand program. And that is mostly because, you know, OX40 ligand is a class that we think is going to be huge. The lead indication is atopic dermatitis, which is itself, you know, a very rapidly growing space.
But OX40L has potential across a wide range of different autoimmune conditions. So we have taken that internally. In November, we announced that we'd be taking it towards clinical development. It is still on track to be in the clinic early next year. And, you know, our objective now is to continue to push that forward, and we believe that it's got potential to be a best-in-class molecule, and has potential for differentiation in dosing. So it's being designed as a non-depleting, half-life extended OX40L antagonist that is designed for three-month dosing.
Maybe for those who may not be as familiar, why is OX40 ligand? Why is targeting that more attractive than other approaches in atopic derm?
Well, atopic dermatitis is relevant. There's obviously been some huge, Dupixent being the obvious one. So far, you know, there are really two pathways that are well-validated for atopic dermatitis. One of them is IL-13. So, IL-13 or IL-4, which is Dupixent. The other one is OX40L. OX40L hits upstream of IL-13, you know, type 2 atopic dermatitis, but also has impact on type 1 and type 3. What is really interesting about OX40L is that in addition to suppressing inflammation and the expansion of the T- cells, and other immune cells that are causing that disease, it also supports T- regs. So it has the potential to create an immune reset, which may translate into longer duration of response or a quasi-remission.
There is, you know, good evidence now that it may be possible to dose quarterly or even less frequently, which in the atopic dermatitis space or other, other indications in autoimmune conditions would be, would be a big deal and a big advantage.
Remind us, maybe remind us how you decided on atopic derm as the first autoimmune indication to go after?
Yeah. Well, it's the obvious one. So it's a large market. Obviously, it's very competitive. Our strategy with this particular program is to create a molecule that is unsurpassed in its properties, and to bring it as quickly as possible into the clinic, and ultimately, you know, to get proof of concept either in our own trials or with a partner. Given the size of the space, so our program, ABCL575, is following amlitelimab, which is being led by Sanofi. Sanofi, I think, has started now six trials in different indications. So we believe that getting the maximum value of this asset is going to require a partner that has the clinical development capability to really go big on this particular asset.
So our objective right now is to move it quickly to the clinic and position it for a handoff to the right partner. You know, in terms of clinical development strategy, making sure you're set up for that handoff without losing time is the most important thing. We believe, based on the pathway and what we know about the molecule, that it's very likely to work. But of course, we're going to look for that proof of concept as well.
Maybe provide an update on where you do stand in terms of development timelines. How soon could you be in the clinic? When will we start to see, you know, some of the exciting data that you've seen?
Sure. So, the program is on track. We have previously indicated that it would be in the clinic next. Cautiously, I, I'd say we're quite confident that it'll be in the clinic early next year. So it's on track for that. Of course, there's still some work to be done. Right now, you know, the main focus is on the CMC manufacturing and making sure we've got the high concentration formulation that supports differentiation in less frequent dosing.
How committed are you? You, you've just mentioned, you know, this may be a clinical program that is better conducted in the hands of a pharma player, someone with larger capacity there. But to what extent is AbCellera able to bring these forward and remind us on the capacity of the funding that you have from the Canadian government to cover these costs?
Sure. So, I think it was last year we announced a collaboration with the governments of Canada and the governments of British Columbia. That collaboration brought in over $200 million that is focused on building capabilities and also bringing more than a dozen proprietary molecules forward into clinical development. So, ABCL575, which is the OX40L asset, and ABCL635, which is our other asset, which will hit the clinic, are the first two of those. So we have been over the last year building the translational preclinical development teams, and we're in a great position to execute the early clinical trials. We're, of course, still investing in that part of the business. But yeah, all on track.
You know, our objective is that, you know, from now to the end of the decade, we'll continue to add high-quality, exciting assets to that pipeline, while at the same time using partnering to source those opportunities through co-development and also to co-fund them.
You touched on 635.
Yes.
Which we have not heard very many details on.
We're keeping that close to our chest right now.
But anything you can share to help?
Sure. So to start, our internal pipeline back in 2019. So, to my point, you know, we always expected that we would go in this direction. It takes some time to bring those assets to the point where they're ready for development. The internal pipeline is being driven by really in three ways, as sources. So the first is work we've been doing in being able to address difficult target classes and in particular, multi-path transmembrane protein targets, ion channels, and GPCRs.
Within that, those set of proteins, there are a large number of well-validated targets, where antibodies could have an advantage, but where discovery of molecules with the right properties have been a challenge. 635 is the first molecule to come out of that effort, and we're excited about what's coming behind it. The other two efforts are in T cell engagers, which is relatively new.
The third is coming from our partnership business, where we are looking for partnerships and have done partnerships in the past, where a partner either brings novel biology that we get excited about, or where the partner has unique technologies where we see synergy. And so we have examples of projects working with companies that do target identification, and some programs that are in the preclinical stage or in discovery stage that are derived from that. And we also have a recent collaboration with Prelude, which is a company doing protein degraders, and we're making ADCs based on that.
Maybe I can ask you one more on 635. I know you're tight-lipped there, but you've previously talked about, you know, an assumption for a $2 billion+ peak sales opportunity there. What underpins that?
Okay. So, 635, what we have disclosed is that this is a target in an indication in metabolic and endocrine disorders. It is a potential first-in-class therapy, and it's one for which we have very compelling primate data that we believe has a high chance of translating into the clinic. The other exciting thing about 635 is that the nature of the program is that we expect to get important proof of concept data in the early trials, and that will read out in early 2026. So we're looking forward to seeing that come together. In terms of the market opportunity, there's a couple of ways to do that. One, you can look at, you know, analysts of related opportunities. The other is to do a bottoms-up analysis.
I would say that either of those conservatively get you to a total market opportunity of $2 billion or more. Of course, we're hoping for more, but we're trying to be conservative.
Do you, when you think about 635, is this a similar scenario as 575 where you would look for a pharma partner to come and step in here, or is this something that you would feel comfortable advancing on your own?
Yeah. At present, this is one that we're excited about. And one of the things we're excited about is that, the development path is pretty clear and one that we think we could handle on our own. So currently, and of course, that could change, the strategy would be to move 635 forward until someone intercepted that with an offer that we couldn't refuse. But, you know, we are fully committed to that program and excited to see the first data coming out.
On your T- cell engager program, which you've mentioned here, you've had a number of data presentations across different medical meetings. Maybe provide a high-level overview of what makes you so excited about your efforts in this space, and how are you thinking about future development of candidates that can come from this platform?
Sure. So, the T- cell engager effort is both a platform effort and a source of programs that we started about 2.5 years ago. So the original thesis was first that we're very excited about the class. I think you're seeing now data coming out, you know, DLL3 looks like step one might hit. Of course, there's the success in blood cancers, and now in autoimmunity. So, T cell engagers is a class where we think there's a huge potential, but where, you know, some of the tools that have been used to develop molecules, in our view have been not up to the task or at least not optimal. And in particular, a large fraction of the T- cell engagers that have been made are derived from the same or a small number of antibodies that target CD3.
So the concept was to apply our platform to generate a much broader panel of anti-CD3 antibodies and then to use that alongside of our discovery engine to make the tumor-engaging arm, but also the bispecific platform that we have, OrthoMab, and then check combinations of tumor binders and CD3 to look for more optimal properties. Over the past few years, we've built up what is now, I think, by far the largest and best characterized, most diverse panel of CD3s, and we have been evaluating those against five different tumor targets and one target in autoimmunity. What we have discovered is that we have identified a relatively small set of families of CD3 where in vitro we can very cleanly separate tumor killing from cytokine release.
One of the challenges with T- cell engagers has been that, while you can get efficacy, you often get cytokine release, which creates toxicity and limits the dose. And so we have shown at least in vitro to date that for many targets, and I suspect we could do it for most, if not all targets, we can create a T- cell engager that gets very potent killing with very, very low cytokine release. Our focus right now is to prove that that translates into in vitro models and then to find, you know, the best of those based on the data to take forward into the clinic.
When we've talked about the T- cell engager platform in the past, we've talked about it in the context of potential BD transactions.
Yeah.
Is that still an avenue that you're willing to explore?
It is. It's absolutely an avenue that we're willing to explore. So we have, you know, our business development team is regularly engaging with many of the companies that are heavily invested in this space. I'd say those interactions are all extremely positive. So the feedback on the science has been terrific. When we started this, I think I would say that I underestimated how far you would need to take this to get to the point of doing a transaction that is the kind of transaction we would like to do, something meaningful. So we're continuing to push that forward. You know, timing on a BD, on a BD deal is always difficult to predict. But in the end, it's going to be driven by the data.
The best thing we can do is prove that what we've done in vitro translates in vivo, and then get some molecules forward towards the clinic. So right now, the focus is on the assets, and as we move the assets forward, I'm confident that we'll be able to find opportunities to get more value out of that platform.
What is the level of evidence that you believe would be necessary? You know, you, you just mentioned that you had maybe underestimated what that data set might look like to, to garner that type of, transaction. What is your understanding of it now?
It's hard to say. Part of this is timing, I believe. So, you know, if you had, if we had done this a few years before, I think there was, a lot, a lot of heavy activity in companies trying to get access to platforms, for TCEs. And not all of those efforts and transactions, turned out well. And so I think people have become more circumspect about proving that things work, in vitro and in vivo. And that, that makes sense. I think we're at, at a point now where, you know, data talks and, getting, getting good data in animal models that's compelling, which is difficult in this space, and most importantly, clinical assets is the thing that'll move the needle.
You know, apart from that, you know, I think every group is going to have their own, their own view as to what's needed for their particular discovery engine or their priorities.
What type of, maybe what would be the nature of the deal that you would feel fairly recognizes the value of the platform?
Oh, it's a good question. You know, for us, we are committed to this space. I am more bullish on this space than ever and very excited about the data that we've had in so far. We're a small company. This is one of the sources of our internal assets. So it's not the case that we will be able to fully exploit the value of this platform. So our priority is to find a partner who is committed to, you know, fully exploiting the value of this platform and doing the experiments in the clinic that ultimately need to be done to bring new medicines to patients. So I, I'd say it's much more about, you know, commitment to making drugs on the platform.
With commitment to make drugs, I expect we're going to find, you know, a deal that has the value that is recognized on both sides.
You've touched on the business collaborations that you've announced this year.
Yeah.
Maybe help us understand the genesis of those. What makes you so excited about them, whether it's the Biogen one, the Prelude deal that you've mentioned, any of the others?
Yeah. So, I, I think I touched on this a little bit before. You know, in the, you know, in the early years of AbCellera, partnering was something that we were heavily focused on, and we were doing what I would characterize as high-value partnerships. So, working on programs, handing them off quite early and keeping a passive position through royalties and sort of using partnering and access to our platform as a way to become a royalty aggregator. I think that served us very well. And we, we built up, you know, what I believe is going to be a very valuable portfolio of those passive positions. In recent times, as the company's matured, as we have more capital, as we're bringing forward our own pipeline, we view partnering a little bit differently.
So partnering is really primarily to source and to fund drug development programs that we believe can really move the needle for the company. The other thing it's good for is making relationships and getting close to some of the big companies so that we have, you know, those relationships and partnerships to help us as we move our portfolio forward. So the Biogen deal we're excited about, it's the first time we've worked with Biogen. It's an exciting program on, you know, being able to generate antibodies that can help to cross the blood-brain barrier, which opens a huge opportunity in the CNS. And so that, that's a first interaction and hopefully a relationship that will go well and that we'll be able to build on. The other one that I mentioned earlier is with Prelude.
That's one where Prelude has developed, you know, protein degraders, and in particular, there are SMARCA programs. They bring deep expertise in the small molecules and linkers, as well as some clinical development. And in our collaboration, we are bringing our antibody expertise to make a new class of ADCs. That's, that's a great example of a partnership where it's truly synergistic. There's a 50/50 ownership of the programs, and it allows us to get into a new space and start to build some capabilities in ADCs, which we believe is going to be, you know, one of the pillars of innovation for this field moving forward.
When you think about the current macro environment, and we've been in a downturn for quite a period of time now, how has that influenced your approach in terms of the types of partnerships you've engaged in or the type of work that you've done?
That's a good question. So, probably the biggest impact is that, you know, if you are running a high-volume business in partnering, which we were, you know, in when we first became a public company, you know, the number, the activity in the space, the number of programs getting started, the number of new companies that are being formed, is an important source of deal flow. As you know, the market has turned south, there's a lot fewer companies being formed. The companies that are out there are doubling down on the programs they already have. So I think all of that is a headwind for a strictly partnering business. You know, that headwind is one of the reasons that we shifted, more abruptly or sooner than I would have anticipated, to focusing on the internal pipeline.
The other, the other reason was that, you know, we had the capital and some of the internal programs move forward to the point where they were ready to go into the clinic. And so the two of those things came together. You know, so I, I'd say that, that probably is the biggest impact. You know, where we are today, we don't need to raise money. We're looking for a few really solid partnerships that can really move the needle for the company. And we're focused on, you know, moving our own programs forward and, and proving that the platform can reproducibly generate exciting assets and building that pipeline from now to the end of the decade.
So, we're in a fortunate situation, but we're always hopeful that the markets turn around. I think it's not good for anyone, to be, to be in this situation for too long.
Maybe in the last couple of minutes that we have here, one of the things that came up at our lunch panel today was just this interest in AI and the incorporation of how that is used across a number of different companies.
In 2 minutes?
In a number of different spaces. It's almost 3 minutes.
Okay.
Would love to hear your thoughts on that and how AbCellera is leveraging that.
Oh, that's a big question. We have been heavily investing in the generation of data in data science and in computational methods for years, right? So, that is not a new direction for us, and we see that as a very important part of the platform. We are using artificial intelligence in a few ways. One way is to allow us to process and extract meaningful information from very large data sets, in ways that would not be possible with, you know, conventional, you know, coded heuristics. So, that's about collecting more data and getting information out of it. We are also using artificial intelligence and machine learning methods as one of the tools that we use for engineering and optimizing antibodies. We think that's very synergistic alongside experimental techniques, and other, you know, structure-based methods.
So, the punchline there is that, you know, artificial intelligence has a real impact in our work, and we think it is an important thing to pay attention to. I have been, you know, a little bit skeptical of what I see as a hype cycle in AI at the same time. So, you know, it feels to me like when all you hear about is AI, that probably you're hiding, you know, something else about the business that's missing. And in this business, it's not about how you do things. It doesn't matter if you did it with AI. It matters that you actually, you know, generate a molecule that gets to the clinic and ultimately succeeds. And to the extent that these techniques allow us to do that more effectively, they're going to be very important.
but the timeline on which that happens, and, you know, the business models that will support that and win is a very interesting question, for which I have some opinions, but I think we've only got maybe 40 seconds left, so I'll stop there.
Got it. Well, maybe I can ask you, where do you think AI and machine learning will have the most impact in the drug development? And we can.
On what timeframe?
Over the next 5 years and then over the next 10 years.
So over the next five years, it's already having an impact on the early discovery and design of molecules, as well as, as I said, you know, crunching through huge amounts of data. A very interesting application of AI is also in being able to identify new targets. You know, having access to the right data sets is the critical limiting step there, and that's something that'll play out over time. If you'd ask me about, so like, maybe since we're just about finished, I'll leave it at this. You know, AI is going to be extremely important in a great number of different fields. Drug discovery is absolutely one of them. In the long run, I think it will be embedded and incorporated to a variety of, in a variety of different techniques, in the same way that computers are.
The ultimate impact is going to depend not just on, you know, having computations. It's going to be about having the data sets on which you build those and then the auxiliary capabilities that are needed for drug development. So to have AI to discover a molecule but not having the experimental techniques to make it, to test it, to do the clinical development, to do manufacturing, is not a good position to be in because AI is going to become progressively accessible, and important, but not a great moat for a company. I think what it really comes down to is, you know, can you, effectively ask the question, use AI to find the drugs and then bring those drugs to patients at the end?
Great. Well, with that, Carl, thank you so much for joining us. Thanks, everyone.
Thank you.