Welcome, everybody. My name is Scott Schoenhaus. I'm the Healthcare Technology Analyst at KeyBanc. I have the pleasure to have Martin Hogan, Director of Strategic Finance and Investor Relations. Martin, you wear many hats. Thank you for joining us here today for our fireside chat. I guess let's kick off. Maybe introduce yourself, Martin, your role at the company, and a little bit about AbCellera for anyone that's new to your story that's on this fireside.
Absolutely. Scott, thanks for hosting us today. I really appreciate the chance to have this conversation with you today. I'm Martin Hogan. Like I said, I lead Strategic Finance and Investor Relations, so responsible for our long-term planning, supporting strategic decisions in a number of areas of the business, and also have the pleasure of connecting with our investors. I've been with the company for about five years with a background in life sciences and other industries, strategy, corporate finance. Maybe before we launch into sort of a high-level perspective on AbCellera, I'll be making some forward-looking statements. They're subject to the usual caveats, and I direct you to our SEC filings for a full list of risks involved with investing in AbCellera. AbCellera really is in a unique position.
We spent the past over 12 years building a company focused on therapeutic antibody discovery and development, built and exercised that capability in well over 100 drug discovery programs, initially many for partners, and then increasingly in co-development, and lately with a strong focus on internal programs. What makes that effort unique is really that we have integrated from the very front end of drug discovery now all the way through manufacturing to come online at the end of this year, and then starting this year into clinical trials on a very broad basis and in an entirely therapeutic area-agnostic fashion.
The ability to find antibodies against the very most difficult targets, complex membrane protein targets, ion channels, GPCRs, and really to have demonstrated that ability with some internal programs, but also for some of the world's largest, best-known, most sophisticated drug developers, the likes of Lilly, Regeneron, Novartis, to just name a few. We are now finding ourselves in a position where, having built that capability, having put it to excellent use with partners on almost 100 programs where we have downstream participation in the ultimate success of the molecule, we have in parallel advanced our best ideas in an internal pipeline, and that is increasingly moving into the spotlight with our first two IND equivalent filings here in Canada, CTAs, coming up this quarter or next quarter, I should say. We are not quite past March 31st yet.
Great. I'll steer the conversation with some fireside chat, but the investors, if you want, you can post your questions through the portal here, and I'll be able to see them on my end and read them to Martin. Feel free to post questions on the board. Martin, I guess you provided your 4 Q update a couple of weeks ago. You're on track to file CTAs, which for American investors are IND equivalents in Canada. You have two internal programs, the ABCL 575 and ABCL 635, that you are on track to file for second quarter, right? Maybe let's talk about 575. It has the potential to be the best-in-class drug, agnostic atopic dermatitis. What's the competitive landscape of the molecules in this area, OX40 ligand, and how are you differentiated here?
Yeah, that's a great question. Let's start with 575. I'll say at the start that we're probably even more excited about the other program going into the clinic, 635, but we are excited about 575. 575 is a bit atypical in the way that it ended up in our pipeline. Normally, we choose programs in our pipeline that have a very clear potential for differentiation against other treatments for an indication. In this case, we are one of several drugs targeting the OX40, OX40 ligand pathway that is implicated in a wide range of autoimmune conditions, atopic dermatitis certainly being a large one. The program came to us originally as a co-development effort with EQRx. Once EQRx was acquired by Revolution Medicines, the program effectively reverted to us, and we're now leading the development ourselves.
EQRx had a strategy to pursue fast follower molecules with a particular commercial model, which is not what we usually do. This molecule and this idea is really promising just because the opportunity is so large and the molecule that we discovered is so attractive. Being a fast follower, you might ask, who is it following? It is really following Sanofi's Amlitelimab , which in atopic dermatitis is now in Phase III trials and in Phase II trials across a wide range of other autoimmune conditions. We believe the mechanism of targeting the OX40, OX40 ligand pathway has potential to really make a difference to patients suffering from those conditions, including and maybe particularly those who are not showing sufficient response on IL-4, IL-13 targeting drugs like Dupixent, for example. It is a large opportunity overall in atopic dermatitis alone, certainly across the other indications.
There are other players, Amlitelimab most notably. When you look across the landscape, there are also OX40 targeting drugs, the other end, if you will, of that pathway. I think in the OX40 ligand targeting space, I think the other notable one that just had an interim Phase I readout is Apogee's 990. It is a busy space, but with presumably room for many successful drugs alone, potentially, and also potentially in combination. It is quite conceivable that targeting the disease mechanism in multiple ways, including through the OX40, OX40 ligand pathway, may be the best way forward. We are certainly well positioned to do that. In terms of differentiation, there are really two things that stand out about AbCellera 575. The one is it has truly excellent biophysical properties. In terms of manufacturability, administration, all those things are looking very promising.
The second is it has really good preclinical studies demonstrated PD, PK, and half-life, which may translate into a longer, less frequent dosing schedule than Amlitelimab , although that ultimately will be proven out in the clinic.
That's super helpful, Martin. Let me move to ABCL 635. Let's talk about the therapeutic area. Let's talk about the total addressable market, maybe when you plan to disclose the exact target and report Phase I clinical readouts.
Yeah, great question. 635, maybe let me start by saying, how do we think about internal programs and frankly, co-development programs too? Really, we're looking at four criteria. The first one is, is the science clear and promising? If we can find an antibody that hits our target in the right way, is there a high likelihood that it is going to have a meaningfully positive impact on the indication that we're targeting? The second question is, do we have the potential here to actually differentiate from existing and upcoming treatments for that disease? Of course, the question of, is this a large unmet medical need and translating into a large commercial opportunity? Finally, what is the development path?
Can we reasonably quickly, without putting too much capital or capacity really at risk, demonstrate that we have to ourselves and to potential partners that we have a drug candidate that could become a meaningful drug in the marketplace? In the case of 635, we really have a drug candidate that is hitting well on all four criteria, where the science is very clear. We know the target is, although we can't be specific on it yet, and we'll talk about that in a second, the target is a complex membrane protein, so an ion channel or a GPCR. It has been successfully targeted with small molecules. Those small molecules, by engaging the target, have demonstrated clear clinical benefit. We know that the science is going to work. The second question here is, is this a significant unmet opportunity? We believe it is.
We estimate that the total addressable market is $2 billion or more in annual sales in the United States alone. We do believe that we've got a clear path to differentiation. This program is much more on strategy in that it would be the first ever biologic to hit this target. The only other competition out there at the moment is in the form of small molecules. Those small molecules, as many small molecules, do have undesirable side effects, for one, and require effectively daily taking of a pill, whereas our treatment being an antibody is expected not to have any of the side effects. We're expecting a very clean safety profile and would presumably come in the form of a once-monthly injection, which we understand many patients would prefer.
I think finally, what is so exciting about this program is that there are clear markers that we expect to be able to see in our phase I trial, where a reasonably quick phase I trial should tell us not just that the drug is safe, if indeed it is, but also should give us a clear indication on whether it is on track to be efficacious. Overall, really, really exciting program, fully on strategy for us. You mentioned the CTA filing next quarter, in the second quarter. It is a reasonably quick trial. We are hoping to dose patients not long after the filing and expect to be able to read out in the first half of 2026 already.
Perfect. Thank you for all of that. That's really helpful. Let's talk about your programs in discovery. I think you have a portfolio of 20 programs. You're reducing your co-development activity. Let's talk about that strategy, Martin, that's developed over the last several years. Maybe deep dive on that strategy.
Yeah, absolutely. I'll step back a bit further. The foundation of the company really is to have built this therapeutic area agnostic capability to discover antibodies that are either best in class, but more importantly, have the potential to be first in class. We made that capability initially available to partners, which made sense because years ago, there was a lot to learn about how to really develop antibody-based drugs. With those learnings under our belt, the question then became, what is the most valuable way to deploy that capability? What we have seen is that earning downstream stakes in partners' programs has attractive economics. Sort of the number of times you can do that and have conviction that the partner is actually going to take the molecule forward successfully is limited.
The question then becomes, in which other ways, or maybe even in which better ways can you deploy that capability? The answer here is to really use it against a select number of programs where we can either own the program outright because we knew and had all the capabilities in place to pursue an attractive target, or in the case of co-development, to work with a partner who's bringing to the table capabilities or insights that we don't possess ourselves. The shift here really is to become a drug developer, so at the moment preclinical and soon to be clinical stage biotech company, and to do that on opportunities that leverage our capabilities in a way that gives us a competitive advantage. This is mostly in the space of difficult or very difficult targets.
Whether we do that with a partner or not, particularly in the co-development space, depends on whether there is a partner that is bringing something to the table that we do not possess ourselves. Good examples of where that is the case. Recently, I think at the beginning of 2024, we entered into a co-development partnership with Prelude. Prelude has excellent capabilities in degradation of cells and in linker technology to link those degraders to antibodies. Those are capabilities that we did not have. Conversely, Prelude had no capability in discovering and developing antibodies. This is a great example for the kind of situation where it makes perfect sense for us to enter into a co-development agreement where we jointly own and drive the program 50-50, if you will.
Another example where this was not exactly structured the same way, but we were a founding partner in Abdera , Abdera developing radioisotope conjugate antibodies effectively, where we have no capability in radionucleotides or in the chelator and linker technologies, whereas Abdera does. Abdera, conversely, relied on us to deliver the antibodies that make those therapeutics work. Those are examples where now and going forward, co-development will make sense.
In other areas, where really we're looking where there's a clear opportunity to pursue a target that meets our four criteria that we discussed earlier, and we have the capabilities in-house, the most valuable way to deploy our capabilities is just to start those programs under our own steam, bring forward development candidates, typically take them into a Phase I study, and then depending on what that development path looks like, what potential partner interest looks like, either take them further or license them to somebody who is, frankly, a better owner of the molecule owing either to their therapeutic area expertise, to their balance sheet, or to their ability to run multiple Phase II trials in parallel, as may well be the case for AbCellera 575.
Thank you, Martin. I want to shift over to your manufacturing capabilities. Many people may not realize that you, or maybe they do, that you are about to complete. Have you completed the manufacturing capabilities yet, Martin?
Yeah, good question. In terms of manufacturing capabilities, the building exterior is complete. Machinery, I think equipment is arriving every day. Very importantly, the team is in place, and we're expecting to have most of the CapEx investments related to this completed in the first half of this year and for the facility to come online and start manufacturing a first batch by the end of this year. The big strategic rationale here was to say, one, when you rely on CROs or CDMOs, I guess in this case, you are somewhat constrained by their schedule. The incremental cost to try out a second molecule as backup to your first is really quite high on the one hand.
On the other hand, sort of an insight that said, we've been quite good at systematically capturing data from our efforts and learning either sort of in a traditional sense of know-how or in a data-driven machine learning kind of way from our efforts to do drug development at previous stages. There may also be significant insights to be gained from the information that arises out of carrying out the CMC and the manufacturing activities ourselves. Two reasons here. One, greater flexibility. Two, greater opportunity for learning how to develop truly optimal drugs that also behave well in manufacturing. We're seeing this play out. The initial investment in the facility was quite significant, but we did have the support from the governments of Canada and British Columbia, who together funded roughly half of that investment, which made it feasible for us.
In terms of operating the facility, we're now at a point where even if we have only around about two programs that go through the facility per year, we're breaking even on a cash basis compared to leveraging a CDMO. All the same while gaining significant flexibility where we can afford to say, hey, let's advance two candidates in parallel or at least have one ready as backup that we could spin up quickly if the need arose to not have to wait in line for your initial slot, also where if there were a delay in the program, you wouldn't lose your slot. You'd just lose whatever time is there for the delay, and thus giving us, and also particularly co-development partners, a reliable standby capacity to quickly move into manufacturing and from there then into the clinic.
Given the wider geopolitical environment, we all recall the Biosecure Act. It's also attractive to really have this in North America fully under our control.
Lastly, I really want to touch upon your T-cell engager platform, your TCE. You announced a significant partnership with AbbVie in January. I think that really marks the first sort of catalysts for you guys on this platform. Maybe talk about this platform, what the AbbVie partnership represents, and what you expect going forward for your TCE platform, Martin.
Yeah, gladly. Our TCE platform is the result of one of those efforts where we said, hey, we've got a platform capable of finding antibodies, more better antibodies than certainly most others, maybe than anyone else. About two to three years ago, it became pretty clear that T-cell engagement, so CD3-based T-cell engagement, could be a very effective way of treating cancer. Since then, also, I think it's become clear that it could also be very helpful in treating autoimmune conditions. The whole field was limited by the availability of CD3 engagers. I think something like 80% of all CD3-based T-cell engagers are reusing the same mouse-derived antibody, SP34-2, that was discovered sometime, I think, late in the 1990s, and had the problem, continues to have the problem of really activating T-cells and, in fact, probably overstimulating them, causing cytokine release syndrome.
Where you then struggle with many of the existing CD3 antibodies combined in a T-cell engager to find a therapeutic window where you are effectively knocking down your target, the tumor, without triggering cytokine release syndrome, which in the worst case can be fatal. Against that backdrop, we said, hey, we believe we've got the ability to find many different CD3-engaging antibodies and a scientific hypothesis that if you flexibly pair them with the right tumor-engaging antibody, finding optimal pairs may allow you to achieve efficient tumor cell killing without triggering cytokine release or at least excessive cytokine release.
With those two convictions, we went to work and discover what is definitively the largest, most diverse, best characterized panel of CD3-engaging antibodies out there and developed sort of the methods, the capability to assess many different possible pairings between those antibodies and the antibodies engaging any specific tumor or autoimmune target. We have demonstrated that at successive conferences at AACR and SITC over the years, getting a lot of recognition from attendees, typically flocking around our posters and acknowledging that this is truly unique and possibly a key building block to develop effective T-cell engager-based therapies. What happened in the meanwhile as this was going on was that earlier T-cell engagers struggled, we'd argue many of them probably because they did not have optimal CD3-engaging antibodies as part of the constructs.
The key players in the field became more cautious and were really looking for more validation that our platform could succeed where others failed. I think, as you correctly pointed out, with AbbVie, at the end of or during many conversations with all the large players in the field, AbbVie were the first to sort of build that conviction that indeed with our platform, we had something that could make a significant difference to their T-cell engager-based efforts. We continue to be in conversation with others. This platform really is a platform where we are looking to make the capability available to any significant player in the space who is looking to develop a T-cell engager.
We are looking to make it available to them in whatever mode makes most sense to them, be that just giving them access to the CD3 panel and allowing them to use their own target-engaging antibodies in their own bispecific or multi-specific platform. At the other end of the scale, to partners who just provide sort of the target name and ask us to carry out the work of finding the target-engaging antibodies, the optimal pairing, and doing the bispecific or multi-specific formatting and even taking it through preclinical development and anything in between, really. We did also announce that we have launched a number of internal programs on the back of that platform. Some of those might enter our disclosed preclinical development pipeline at some point. Others may not because they were really more intended to demonstrate the capability of the platform.
Overall, we view the panel and the capabilities around it as a significant asset that has the attention of all the players, all the significant players in the field, and the potential to fuel a good number of T-cell engager-based programs in the future.
Great. We are coming up on time. Thank you so much, Martin, for doing this fireside chat with me. Thank you, investors, for joining us here. If we have any follow-up questions, do not hesitate to email me directly. Thanks again so much, Martin.
It was my pleasure, Scott. Thanks again for having us.