All right, I think we're gonna get started. Welcome back to another session at TD Cowen's 46th Annual Health Care Conference. It's great to see everybody. I'm Brendan Smith, one of the tools DX analysts here at TD, and I am joined on stage today by the Senior Director of Strategic Finance and IR from AbCellera, Martin Hogan. Martin, it's good to see you.
Thank you very much. Thanks so much for having us.
Great. I know we got a lot of topics to cover, a lot of questions to kind of sift through, but by any means, if anybody in the audience has questions throughout, feel free to kinda flag me or you can send me an email at brandon.smith@tdsecurities.com and we can work them into conversation too. Maybe Martin, let's kind of just first level set, the AbCellera of March 2026, right? The platform's kind of evolved through a few different iterations over its lifespan, but how do you now kind of see the relative value of the company given kind of its transition to more of a, of a biotech-like entity? Help us kind of contextualize, you know, the research fees core franchise in the context of where we are today.
Absolutely. I'm super happy to talk about that. I will make some forward-looking statements. Please do look at our SEC filings and risk factors. With that out of the way, when you look at AbCellera today, really what you're looking at is a company that spent the past 13-odd years investing cumulatively something like $1 billion to build out an end-to-end capability to discover and develop, and now also manufacture as drug product, antibody-based therapeutics. Specifically, in areas that are very difficult to find antibodies against. Complex membrane protein targets, ion channels, GPCRs, T-cell engagers, multispecifics. Really, from the beginning, a company built to push the edge of what's possible in antibody discovery and development.
At the start line, that was, you know, that was a technology capability that has then sort of crystallized with upstream, downstream, parallel abilities around it, and honed really in the fire of having run over 100 drug discovery programs for some of the top players in the industry who often came to us with the most difficult problems that they had and which we solved successfully, as you rightly said, for fees and stakes in the downstream success. The most valuable thing, as, you know, as excited as we are about the value of that emerging milestone, and particularly royalty portfolio in the long run, by far the most valuable thing that came out of that was the capability of the team and the platform to pursue those targets.
We're finding that the most valuable application of that capability really is against targets that we can identify ourselves and pursue with internal programs. As we're sitting here, AbCellera 2026 is a company that has really matured with an incredible platform to move into its own programs and, you know, really into later stage clinical development with our first program having entered phase II and reading out later in the year.
It's perfect segue now. Let's maybe talk about 635, right? This is ABCL635, kind of lead compound here. You mentioned we have some phase 1/2 data expected, I think, in Q3 of this year. Maybe before we get into expectations for the readout itself, kind of help us level set this mechanism specifically for 635 and why you see it as especially differentiated for, you know, VMS, hot flashes, relative to kind of the unmet need and some of the other drugs that are out there.
Absolutely. Yeah. The ABCL635 is definitely worth our time talking about as our lead program. When you look at the lead indication, and I'll say it's the lead indication, is hot flashes or vasomotor symptoms, VMS, associated with menopause. In the United States, there are about 12 million women suffering from moderate to severe symptoms, where, you know, that's defined as hot flashes so bad that you need to stop what you're doing at the moment to get through the hot flash. Pretty severe interruption to the lives of women. About 12 million experiencing that. About half of them, and, you know, I'd say only half so far, seeking treatment, where the first-line treatment and the best treatment, if it works for you, is arguably menopause hormone therapy, right?
Where I think the awareness that this is an excellent treatment is growing, and we are, you know, we're welcoming that. Unfortunately, about 12% of women are contraindicated for MHT, and about 8% of women go on the therapy and then find that they can't tolerate it. You're left with, you know, one in five women who really is looking for a non-hormonal alternative because the hormones don't work for them. Into that space launched Astellas, with their small molecule NK3R inhibitor and Bayer with their dual NK3R, NK1R inhibitor, also small molecules. We still see that there's a significant unmet medical need, you know, even past that because in the case of both of those molecules, there are certain safety and tolerability issues, if you will.
That sort of gave rise to our target product profile in this space, where what we're looking for is an antibody that has a very clean safety and tolerability profile partly because it's an antibody and partly because it is specific to only engaging NK3R. In addition, we're looking for a more convenient dosing regime. Instead of a daily oral, having done a market research study with women, we find that roughly half of all women would prefer a monthly auto-injection given the same safety and efficacy profile as a daily oral. As we just discussed, we're looking for a better profile on that count. Interestingly, the subpopulation of that survey that was auto-injector experienced had a 70% preference for auto-injectors.
We believe that we've got a compelling differentiation, potential in our profile here, both on safety tolerability as well as on convenience. While we're on convenience, maybe worth adding, both of the small molecules come with liver enzyme monitoring. You can look at that, of course, from the perspective of safety and maybe, you know, degree of worry for the patient, but it is also an additional burden on the prescribing physicians having to, you know, make sure the patient goes through the baseline monitoring and then the follow-ups. On that count alone, we believe we've got a really, really good profile. That, of course, is in a space that is still very much growing.
Great. That really helps level set the conversation on 635. I know in your earnings call last week, you also mentioned some encouraging early data that you observed in the phase I portion of the study. What can you kinda tell us about some of those green shoots and ultimately how they're informing your approach to the phase II now?
Absolutely. We are in a phase I/II study, and you know, we're well, well down the phase I portion of that study. Of course, we're looking for safety, and so far, you know, what we know about safety is looking as clean as we had expected. The other piece, you know, besides, of course, the very exciting news that our modeling on PK seemed to be spot on. We're seeing data in humans that matched exactly our expectations. I think the really exciting part that we're getting out of this is a biomarker reading that tells us that we are engaging the target in humans the way both that the Veozah molecule did with respect to the biomarker, as well as what we've seen in non-human primates, right?
It's a, you know, it's a, it's a proxy. It does tell us we're getting engagement on the target that we're hitting. It doesn't retire all the risk to the development yet. That, you know, really is up to the phase II study. We're now sitting here at a point where the drug is doing what we expected it to do as far as we can tell in phase I.
Okay. All right. Great. Now maybe looking ahead to the Q3 readout itself, what should we expect from the data in terms of, you know, patient numbers, doses tested? You mentioned kind of a sub-Q formulation at some point, and really kind of the clinical endpoint. Help us just kind of level set what realistically we can expect in Q3.
Yes. In phase I, we did a SAD/MAD portion, which allowed us to, with confidence, pick a dose for the phase II portion. In the phase II, we have 80 patients. These participants are women who are experiencing moderate to severe hot flashes. It is a triple-blinded randomized placebo-controlled trial with, I think a ratio of about two to one in terms of drug and placebo-receiving participants. The You know, besides obviously delivering additional comfort on safety, the key thing here is that the study is powered to deliver an efficacy signal, right? The target product profile on efficacy, which we haven't touched on yet, is to get efficacy that is at least on par with what we're seeing from the small molecules.
If we, you know, if we see that, and the, and the phase II readout, again, probably sometime after Labor Day, is designed to, you know, is designed and powered, to deliver that proof point. If we do see that, then we will feel pretty comfortable, that we have a drug on our hands.
Yeah. Okay. Got it. It sounds like comparable efficacy, at least potentially differentiated dosing and superior efficacy is kind of the ideal product profile that we're really looking for out of phase II.
Superior efficacy would of course be ideal.
Sure.
There's no question about it. Our expectation and our baseline is that we get comparable efficacy. Both those drugs in terms of the small molecules, they both do work and make a, you know, make a very meaningful difference for women. If we get the same efficacy but with a better safety profile and preferred dosing, that's our target product profile, and we feel very comfortable that we've got a potential winner.
Okay. I know also on the Q4 call, you mentioned plans to potentially expand 635 into a few adjacent oncology indications. Help us maybe just walk us through kind of the logic from a mechanistic standpoint and what next steps from here will kind of be included in that strategic rollout going forward.
Absolutely. Mechanistically, what the drug is doing is it is binding to the NK3R receptor on KNDy neurons. In, you know, in healthy, young men and women, those KNDy neurons get, they get, if you will, activated and stimulated by neurokinins or NKB, and down-regulated by binding sex hormones. In the case of women LH, for example, and in the case of men testosterone, you sort of have a scale that's imbalanced with weights on both sides. What happens in menopause, of course, is that estrogen goes away and the scale sort of tips towards the overactivation side with neurokinin.
What the drug does is it blocks the receptor and sort of removes that signal, and it's back in balance. In the oncology indications, both, for example, in breast cancer as well as in prostate cancer. In the case of prostate cancer, androgen deprivation therapy, endocrine therapy for breast cancer, you are removing the hormone signal to the KNDy neurons, right? Like, that's what those, you know, that's what those therapies need to do to deal with the cancer. So you have the same problem that you have in menopause, right? Where the dampening signal to the thermoregulatory core is missing.
Mechanistically, the drug works exactly the same in dealing the same underlying condition of being, you know, of having imbalanced signaling to the KNDy neurons, due to a lack of the sex hormones.
Gotcha. Okay. Help us now kind of think about the timeline for 635. We have the phase II data readout in Q3. What's kind of the timing plan for, you know, if things look good in phase II, you know, when do you think you could potentially start a pivotal? What's kinda the plan to initiate some of these oncology indications?
Absolutely. Maybe start with the oncology indications. I think once we get the readout from the phase II, and if it's positive, then we will move quickly into a phase II trial on the cancer-associated, or cancer treatment-associated VMS trials. We would move, you know, at maximum speed, of course, into a registrational trial for the menopausal VMS indication. The good thing is we don't need to reinvent the wheel on the phase III trial design. Both the Bayer and the Lilly's drug have, you know, have demonstrated, you know, what is required to receive approval. You know, we'll be very much following in those footsteps, incorporating, you know, any learnings, you know, that there may be.
In terms of timing, you know, you could, you could imagine that we'll be, you know, racing in 2027 to make that happen. You know, the trials are not very long, but it, you know, I think we'll see the detailed plans. We'll see the detailed plans when we get there. Overall, you know, part of the reason why we chose NK3R as a target to go after and this indication to go after as we try to do for other programs in our internal pipeline, is that, you know, that as long as you've got the right molecule, the development path is clear. It has the potential for early de-risking, right? When you think about we moved into patients, I think in the, you know, around the middle of last year.
In just over a year, we'll have gone through, you know, full phase I, II trials and readouts. The phase III trial also, you know, is expected to be on the manageable and maybe quicker side than the average trial.
Gotcha. Okay. I imagine some of the answer to my next question will kinda come from based on what the phase II data looks like.
Mm-hmm.
Is the plan now if all looks fine or as expected in phase II, that you would carry just a SubQ dose into a phase III? Would you potentially do an IV and a SubQ dose?
The target product profile has always been to say we want, like we're really aiming for an SubQ auto-injector pen, right? From the convenience angle, that's kind of what we're looking for. That will certainly be the goal for menopausal VMS. You know, whether that's the same or whether an adjustment is needed in the oncology treatment-related indications, I think remains to be seen.
Okay. All right. Great. Now maybe let's pivot to 575. Let's talk a little bit about it. It is, you know, notably competitive space here for the OX40L inhibitor 575. Help us kind of situate what the AbCellera kind of strategy is for this one now kind of, and what's really ultimately driving your approach to this drug, just in the context of, you know, with competition from Sanofi and Regeneron.
Absolutely. I should probably start by saying, this is our second molecule in the clinic. It is off strategy for us, right? It meets, you know, three out of four criteria that we have for internal programs very nicely. We understand the science, it really is a question of finding the right antibody. We have the capability to develop and de-risk early, there is still a large unmet medical need and commercial opportunity out there. There isn't significant potential for differentiation, right? It was launched as a fast follower to amlitelimab in, you know, at the time, collaboration with EQRx. You know, importantly, don't read from that program through into how we are selecting other programs, where we're very much keeping an eye on differentiation.
In this case, we still see, I think as Sanofi does, targeting OX40 ligand as a very promising approach in autoimmunity, or immune conditions as in AD and beyond. I think that profile hasn't changed. Overall, the amlitelimab has proven to be a, you know, proven to be a surprisingly safe drug considering that, you know, in a way it is an immunosuppressant. So surprisingly safe drug, much better profile than, you know, some of the other things you'd see in the post-Dupixent setting like JAK inhibitors, for example. And we're still encouraged by the data that we're seeing, right? Efficacy that, you know, doesn't seem to be tailing off yet at 26 weeks. You know, a really clean safety profile.
In terms of differentiation, there is still some room for our molecule to achieve prolonged dosing schedule, right? Where, you know, we don't know yet. Like, our expectation is that amlitelimab will get approved. you know, we'll see either with a monthly or a quarterly dosing schedule, and based on the half-life extension of our molecule and the data we've seen so far, we should be able to achieve one better. you know, quarterly if it's monthly or semi-annual if it's quarterly.
Okay. Got it. Got it. Still on track for kind of the next data update there by year-end 2026.
Data update. Exactly. Data update by year-end. You know, that's then also sort of the point to which we are looking to take the molecule, at least for now, right? We believe that this is going to be a large exciting space with, you know, likely a good number of molecules, still potential to be best in class, you know, like in all respects except for, you know, enhanced dosing regime. There will likely be many drugs. We'd, you know, we also see this space as being one that really requires a lot of experience, capacity, muscle firepower in terms of going after the full potential of a drug like this. That is, you know, that will be beyond our capabilities.
Others are better positioned to do that, and we're expecting that they are, based on the discussions we've had so far, keen to, you know, see us check the boxes with the phase I data, before potentially partnering out the molecule, you know, to somebody who really is a better owner.
Yeah. Okay. You are kind of in these preliminary discussions with some folks who are kind of keeping an eye on that year-end data readout, potentially checking the box and then revisiting a partnership, out licensing, what have you, maybe early next year. Yeah. Okay.
Possibly. Yeah.
Got it. Okay. All right. Maybe moving to the deeper pipeline a little bit. Because you also have a few other assets you're also progressing here. What can you kinda tell us about the target indication, kind of just approach for ABCL688 and ABCL386, and really just kind of about the unveiling strategy for each kind of additional pipeline asset now, as they approach phase I studies?
Absolutely. Both of those have the potential to, both have the potential to be first in class. I think with 688, there, you know, there likely is going to be some antibody-based competition. Let's see. Both are in indications that are hugely exciting. We're not revealing the details, but 688 is in an autoimmune condition, and 386 is in an oncology indication. We'd say that both have commercial potential, overall unmet medical need addressing potential that is likely as exciting as 635 is, albeit different.
What we are doing particularly, you know, and you'll, you know, to the frustration of a good number of people who follow us, investors and others, we are playing our cards close to our chest, particularly, where we're in this space where, you know, and I told you, we're looking for making sure that we're in a space where we've got real differentiation potential. We want to keep that quiet and, you know, keep the competition sort of off the trail, you know, for as long as possible. The plan here is, at the moment, you know, that we would that we would unveil the target and the indication around the time of initiating clinical trials.
All right. Are you able to tell us, at least within the autoimmunity indication, is this something like, you know, we've seen some other companies when they're moving into autoimmunity, kind of try to build out this, like, pipeline-in-a-product type of approach where it's a mechanism?
Mm-hmm.
whether it's FcRn or something else that's applicable broadly to a few different indications, is this something like that or a little bit more targeted specific for one indication that you had in mind?
Without going, without going too far, As you rightly point out, I think in autoimmunity, many of the mechanisms work in, you know, work in more than or manifest in more than one indication and that's the case here too. You know, which of those we pursue, how and when, I think is still part of strategy formulation for us.
Okay. Got it. All right. Now maybe kind of contextualize the run rate now. We've got Maybe zooming out, we've talked about some specific programs. We've talked about upcoming catalysts for you guys. We've got Q3 readout with ABCL635, potential expansion to a pivotal study, oncology indications next year, it sounds like. Readout in AD by end of this year with ABCL575. Updates into phase I for the third and fourth asset too. What's kinda now the expected cadence as you're building out the pipeline, not just this year, but really over the next kinda two-three years? What's kind of guiding your strategy in terms of where you're looking, right?
With the platform capabilities, it sounds like you have some options in terms of building these antibodies, but what's kind of the North Star as you're building out more of a biotech pipeline?
Yeah, great question. You know, this is exciting. It's easy to lose sort of sight of the forest for the trees, right? When you fast-forward a little bit, we're set to designate our, you know, our fifth development candidate later this year, looking to move that quickly into and through IND-enabling studies so that, you know, when we sit here again, in, you know, in a couple years' time, there's a reasonable chance anyway that we'll have five programs in the clinic, you know, of which one or two might be in late-stage, registrational trials already, right?
This is, you know. It's a really exciting time when you consider that, you know, if we had said here a year ago, we would have still firmly been a preclinical company, right? We are advancing a pipeline that is indication agnostic, behind that of over 20 programs in various stages of discovery and early preclinical development, with, you know, candidates for downstage development to be nominated subsequently. When you look at how we choose them, it is those four strategy criteria.
Where we find those opportunities tends to be, and roughly half of our programs are against ion channel and GPCR targets, where we believe we've built out what are likely the world's leading capabilities in terms of pursuing agonists and antagonists to those targets with many important indications, you know, tied to them. The other half of the programs, you know, use some other advanced angle, be that our TCE platform, where we have a few programs in development, like an early development, other multispecifics, you know, or something else where we believe that it really takes the advanced abilities of our platform to bring together an antibody-based solution to a major problem. That's how we're curating them.
We're screening, you know, many ideas, concurrently for adding to that platform. What we're really hoping to do is through the selection, and then through the unveil of the upcoming programs to sort of to prove that we've got a good taste in biology and a good taste in target selection.
Got it. All right. I guess kind of tied into this part of the conversation too, obviously you guys have a new GMP facility, right? That is now online and you started to speak a little bit more to the scalability factor when it comes to this. Obviously pretty well capitalized for effectively a biotech company at this stage of development. I guess how should we think about that GMP facility as it relates to kind of your willingness to go into some of these different areas and how is that kind of impacting your strategy now as you're building out the pipeline?
Yeah, great question. The GMP facility really sort of put the, you know, put the finishing touch onto our platform investments, and still leaves us, as you rightly point out, with $700 million of cash equivalents and committed government funding to pursue the strategy advance add to the pipeline. And that with a run rate that is now that those investments are complete is coming down, you know, to somewhere just north of $100 million, call it $120 million a year. So really good, really good runway and visibility in those investments. What the manufacturing capability allows us to do really is, you know, control our supply chain, which in, you know, the current environment is a pretty significant factor.
It accelerates CMC and manufacturing to a degree, gives us a certain degree of flexibility as well that, you know, that is hard to obtain or expensive with a CDMO. Intriguingly, and I think maybe somewhat underappreciated, it extends patent runway, right? When you are going to a CDMO, you will want to have your patent filed, and that often is, you know, two-four years before you're starting your clinical trials where you need to have it filed in any case.
For the programs that we are manufacturing in-house, we are looking to have an extra two-four years of patent life, when we, you know, throw out, just by virtue of having, you know, not having had to file and disclose the sequence to the CDMO early. That's really the role that it plays. I think we're also expecting with the volume of programs that are coming through the pipeline, that we will get good utilization and probably favorable economics. The real advantage lies in flexibility, speed and that patent, you know, IP protection angle.
Gotcha. Okay. All right. Great. Maybe just in the last minute here, help us think about, you know, if we fast forward five years or so, let's just say the AbCellera of 2030 even, you know, kind of adding 1 or 2 assets into the clinic on average over the next few years, you know, advancing talked about the potential timeline for some of these programs itself. Should we think about AbCellera really as kind of this core biotech in the sense that if you're bringing an asset into phase I, the goal really is to kind of carry it forward yourself?
Is there kind of a balance you're already where you are today, kind of looking to strike between out-licensing certain drugs, given your differentiation on the actual manufacturing platform, where kind of a more mature version of the company would be, whether that's 50/50, 70/30, what that looks like. Is that a core part of the actual strategy as you're building out the plan?
Yeah. One of the things that, you know, I've always really appreciated about the company is the willingness to look at the facts as they are and to understand value robustly and not to get, not to get dogmatic, right?
Right.
I think the same applies here. The AbCellera of 2030, if things go reasonably well, and they don't need to go very well, just reasonably well, we'll have a full clinical pipeline, in late stage, you know, maybe approaching approval and many in behind and still a preclinical pipeline to keep feeding that for a while. There will be some programs where, you know, we will have come across a better owner, like ABCL575, who was willing to pay fair value for the asset, right?
In that case, we would be, you know, open and free to partner the asset because we, you know, we will continue to have a company that can do many things and, you know, and invest, reinvest, whatever, you know, whatever we receive in such a partnering transaction. I think we are very much open and hopefully, some of the partnerships that we built in the earlier stage of the company, you know, we're certainly seeing those conversations carry on, will support sort of some of the trust that is needed in making such a deal work.
Right. I think with that, we are at time. Thank you everybody for listening in. I know we got an action-packed day still left in the back half. Martin, always great to see you. Thanks for joining.
Thank you, Brandon. Absolute pleasure.