Great. Thank you everyone for attending our Virtual Healthcare Forum. I'm Scott Schoenhaus, a Healthcare Tech Analyst here at KeyBanc. Wrapping it up for today, last fireside chat, Martin Hogan, who's the Senior Director of Strategic Finance and Investor Relations at AbCellera. Martin, we've probably a lot of new investors to your story, and there's a lot of heightened interest and new interest on, you know, tech-enabled drug discovery. Maybe give a brief background on AbCellera and its platform, where you guys have been over the last several years and where you are today.
Absolutely. Well, first of all, Scott, thanks so much for hosting us. Pleasure to be at your forum again. I will be making some forward-looking statements, so please consult our SEC filings for risk factors and other notes around that. Yes, we've been on a really exciting journey that now stretches for about 13 years, where for the first, you know, easily for the first decade, we made significant technology investments, building out capabilities to go from target nomination to now manufacturing drug product for antibody-based therapeutics, with a very heavy focus initially around several core technologies where we would say the, you know, what allowed us to get going on this journey was technological differentiation in drug discovery.
The investments that we've made since then and the experience that we've built in over a hundred drug discovery programs have allowed us to build an integrated capability that is capable of pursuing the most difficult targets that one might hope to reach with an antibody-based therapeutic. Now is yielding not just downstream stakes and programs that we have run in the past for partners, but yielding a pipeline of internal programs that, you know, not that long ago advanced the first drug into the phase II portion of its trial, effectively making us an integrated, you know, mid to late stage biotech company.
Great. I wanna talk about your pipeline. You have multiple molecules in the IND-enabling or early clinical stages. Maybe can you expand on how you plan on allocating resources among these assets, either to further develop them or not to?
Yeah, absolutely. There's you know there are two interesting angles here, and maybe I'll start with the first one, which is how do we choose, how do we prioritize target ideas and programs in our pipeline. Really, we're applying four criteria to each idea and program. The first one is, do we understand the science and is the science significantly de-risked. Right. By that we mean, do we believe, do we have conviction that really the challenge that is left to be solved is finding the antibody or the antibody-based construct that if you find it and it engages the target the way that you want it, that you're very likely to get the downstream therapeutic effect that you're going after, right.
Avoiding, if you will, a lot of biology risk where you're, you know, trying to figure out whether something is or isn't going to work. We try to stay away from that and go after targets where that is largely de-risked and it is, you know, it's never completely, but to a good degree down to a technological challenge, which we feel we're in a good position to address. That's number one. Number two is, of course, there a significant unmet medical need for patients, and is there a commensurate commercial opportunity? Are payers prepared to cover the drugs adequately that we might develop?
The third one is, do we have a competitive advantage, like a clear opportunity to differentiate with our drug, in among the other therapies that are looking to help patients suffering from the same condition, right? That can be competition in class, it can be competition outside the class. It, you know, it's a question not just of existing therapies, but also ones that are upcoming, right? This is another way of saying, with our drugs, we are looking for opportunities to be first in class, you know, for treating them and to maintain that advantage for a while.
Finally, the fourth question is, do we have a good development path for our drug, if, when we find a candidate that allows us with our capabilities and resources to take that drug forward through clinical trials to a point where it can be significantly de-risked, on our own resources, where we can then take it forward ourselves or where we could partner it. Do we know what the clinical trials need to look like? Can we afford them? Do we have the capabilities to run them? And ideally, do they allow us to de-risk or fail, if fail we must, early on, you know, in a phase I, II or in a phase II-a rather than having to run a very expensive phase III trial only to find out that something isn't going to work, right?
Those are the four criteria, and that's how we choose what we let enter our pipeline and, you know, what we advance and invest behind or maybe deprioritize. What that has led us to, you know, is most importantly our lead program, which I'm sure we'll talk about, ABCL635, scores really highly on all those four criteria and has started its de-risking phase II trial at the end of last year. We're looking to read that out at the end of the third quarter this year. You know, that program is designed to tell us at that point whether we're very likely to have our first internally developed drug on our hands or not, right?
We've got, you know, ABCL575, which we can also talk about, a program also in a phase I trial reading out in Q4. A little bit less on the differentiation. We can talk more about that if you like. The programs behind it, two in IND-enabling activities, and then about 20 in earlier stages, generally score high on all those four criteria.
Great. Now let's dive into these assets and these molecules in your pipeline. Let's start with ABCL635, the first-in-class non-hormonal treatment for hot flashes. You just talked about an expected phase II readout in the third quarter here. Maybe talk about what you saw in phase I that gave you the confidence to go to phase II, and what we should be looking for in this upcoming readout.
Absolutely. Let's maybe start with what is the target product profile here for this drug. Like you said, it is a non-hormonal treatment for vasomotor symptoms. First indication is associated with menopause. Effectively what the drug does is it rebalances the signaling to the thermoregulatory core of the body that comes sort of out of whack when women go through menopause because of the drop in hormones specifically estrogen. That's what the drug does. The profile, you know, so far for women who you know are either contraindicated or can't tolerate the first-line treatment, which is a really good treatment when you can get it, which is menopausal hormone therapy.
If you're ineligible or you can't tolerate it, until, you know, just over a year ago, you were kind of left without any good options for treating your moderate to severe hot flashes, which frankly, are a debilitating condition, right? Like, they're defined as you need to stop what you're doing to work your way through the hot flash. Important unmet need. In the past year and a half, two small molecules, have entered the market that do a good job at, like a reasonably good job at reducing both the frequency and the severity of those hot flashes. In terms of our target product profile, we are looking to do at least as well, you know, and expecting to do as well in terms of reducing frequency and severity, which is a major improvement, for women suffering that condition.
However, those small molecules have some side effects, so safety and tolerability challenges that ideally you would avoid, right? Both of them have liver toxicities to different degrees. That's not a great trade-off. One of them also induces somnolence, sleepiness, drowsiness. You know, you can only really take it at night. And that's, you know, that's not really something you want to have. That's an off-target effect. By virtue of being an antibody, we are looking to avoid both of those things, right? The target is not expressed in the liver, and the antibody isn't degraded in the liver, so the expectation is that we're clean on all liver signals.
Because we're specifically hitting our target NK3R, and not NK1R, which is known to be associated with sleepiness, drowsiness, we should also be clean there. The profile here is comparable efficacy with a significantly better clean, effectively safety and tolerability profile, and with greater convenience, right? Greater convenience by being a monthly-
Injectable, yeah.
Auto-injectable-
Yeah
Versus a daily oral, as is the case for the other two treatments. Also greater convenience for prescribing physicians and for patients by not requiring the patient to go on.
Refill
Liver signal. Refills, exactly.
Yeah.
A liver signal, a test.
Oh, I see. Yeah.
You need baseline liver testing before you go on the therapy, and then you need to go again once you're on the therapy. We're looking to avoid that too. That's our target product profile. You know, phase I, we're still blinded to the results. But what we do know is that there's been nothing on the safety side that would give us any concern. You know, everything we know so far is fully consistent on the safety tolerability side. We also know that what we do know about the pharmacodynamics, so the half-life is consistent with an ability to deliver this drug to patients as a once-a-month single auto-injector, right?
The interesting thing that remains to be seen, obviously we want to see the full data on this. The key thing to be seen is whether indeed we are getting the efficacy that we're looking for, and the phase II part of the study is designed to give us a clear signal whether we are on track to get at least comparable efficacy to the small molecules.
Makes perfect sense. I think, Martin, you guys have mentioned that ABCL635 could potentially go past menopausal hot flashes. Maybe talk more broadly about how you the applications for this molecule.
Yeah. Excellent. Thanks for asking that, Scott. Indeed, we're actually quite excited about the additional potential beyond menopause-associated hot flashes. Again, those hot flashes arise when in women, estrogen levels drop, and in men, when testosterone levels drop. That happens for women in menopause, and it happens for men and women when they undergo certain cancer therapies. For women, in particular, breast cancer, and for men, in particular, prostate cancer, where you effectively have hormone suppression, right? Androgen deprivation therapy, for example. When as part of the cancer treatment, the production of those hormones is suppressed, you get the onset of the hot flashes, and the mechanism is effectively the same as in menopause-associated hot flashes.
Therefore, there's good reason to believe, and in fact, one of the small molecules at least is already in clinical trials to prove this out. There's very good reason to believe that if the drug works in menopause-associated hot flashes, it is likely to work in hot flashes associated with those cancer treatments as well. You know, here too, those hot flashes are a major unmet medical need. You know, we know from men undergoing prostate cancer treatments that one of the side effects that is most disconcerting is the hot flashes that come along with it.
Let's switch over to ABCL575. You entered that one into phase I last year, expected to have a readout by the end of this year. Maybe talk about what early data it's shown so far and maybe, you know, maybe more of the therapeutic area. Talk about if in case investors are new to ABCL575, what it addresses.
Yeah. Excellent. You know, we talked about the four criteria under which we evaluate programs. ABCL575 scores highly on three of them in terms of de-risking, unmet medical need, clear development path. It doesn't do so well with respect to differentiation. That is because it was started not as one of our internal programs but as a co-development program where explicitly the goal was with the partner to fast follow amlitelimab from Sanofi, so an OX40 ligand blocking antibody that acts quite upstream in an immune cascade that is involved with many significant conditions. First and foremost, probably atopic dermatitis but not limited to that where amlitelimab, for example, has also shown very promising clinical efficacy in certain types of asthma.
There's a long list of additional indications that are involved. The phase II data from Sanofi's amlitelimab looked very promising. On the back of those, with a partner, we had launched that program with a goal of ideally coming up with a drug that was comparable in terms of efficacy and safety, if not identical, but maybe differentiated on a longer dosing profile, right? The data that we had pre-clinically and what we, you know, so far know from the, again, still blinded ongoing phase I trial is consistent with that profile, right?
You know, we have no reason to believe that we're not going to hit those targets of same efficacy, you know, equivalent safety, and certainly longer half-life that may translate, hopefully will translate into an extended dosing interval, again, for the convenience of patients and physicians. Having said that, because it's a fast follower, really the fate of that molecule will depend on the fate of the class, right? If Sanofi's amlitelimab receives approval at the end of this year, as is expected, you know, that will be positive, and then it's a question of how will the drug actually be used? What is it being approved for?
We're very much with that drug hitched to the fate of the class. Also, the development in these conditions, including atopic dermatitis, is complex, is expensive, really benefits from prior experience and a strong balance sheet to explore full potential. May also benefit from being tested in the clinic in combination with other treatments, you know, where combined you can get a faster onset to efficacy. For those reasons, we believe that we're not the best positioned to take that program forward, if forward it will go. Our goal here is read out the Phase I, carry out the additional activities that really make it a Phase II-ready asset, and, you know, we've been talking to potential partners for a while yet.
Players in the industry know that if they want to have an OX40, OX40L targeting drug in their portfolio, we likely have, if not the best, certainly a very good candidate, for that. Those indications are broad enough, large enough that, you know, if the class is successful, there's probably room for multiple blockbusters, so ours could still be among them. Beyond wrapping up the ongoing trial, and getting it phase II ready and finding a partner for it. It is, you know, it's certainly not, what we're worried about at the moment. We're really excited about the programs behind it though, which, you know, again, were chosen because they scored highly on those four criteria.
We've shared the names, if you will, of two of them, ABCL386 and ABCL688, both of them with the potential to be first in class. ABCL688 might face some in-class competition, but we're still feeling like we've got a super good molecule in a. You know, both in areas of large unmet medical need, ABCL688 in autoimmunity and ABCL386 as our first asset in oncology. We're playing that a bit close to our chest. We're looking to file INDs or Canadian equivalents early next year, probably the first half next year. Either then or when we start our phase I trials also next year, we'd be sharing more about those
programs.
I think an underappreciated part of your story, or maybe just an unknown part of your story for investors, is your manufacturing capabilities that you've built out in the Vancouver area. Can you talk about that and how it allows you flexibility? You know, ordinarily, you'd have to find a time slot, and so maybe talk about the process of how you're able to develop a drug and then manufacture it. I think it's a big differentiation obviously in your story.
Yeah, thanks. You know, thanks for bringing that up, Scott. We're super happy that we were in the position that allowed us to make the investment and build out our own clinical manufacturing capability. That frankly, as far as we know, is largely unheard of. You do not generally find biotech companies that can manufacture their own drug product. The only reason we were able to do it was, well, one, having built conviction that it was a good idea, in principle, but two, also getting the support from the governments of Canada and British Columbia to make that investment. We probably could not have afforded that on our own. In fact, we very likely would not have made that investment without the additional support.
Having made the investment and having completed the standing up of that team, the building out and qualifying of that facility, we are now manufacturing antibodies in that facility. As you rightly pointed out, there is a speed advantage. You know, you're cutting out a bit of time by not having to negotiate with a CDMO and do the external technology transfer. That's a nice advantage. With the number of programs that we're looking to bring forward, we may also get an efficiency advantage in terms of certainly lower marginal cost per batch. But the real advantage is twofold. One is, like you point out, flexibility, right?
Flexibility means that, if you are manufacturing an antibody and there's a hiccup, you can just immediately pivot, remediate the hiccup, and move forward straight away. Whereas with a CDMO, if there's a hiccup and you need to pause, you then need to wait for the next available slot before you can restart, losing valuable time in the process. The other flexibility piece here is you can do things at risk because your marginal cost is low. You can do things in parallel, right? You would not, as a general rule, advance more than one antibody candidate into CMC activities if you were doing that with a CDMO. Internally, if you say, "Hey, here are two. They, you know, they both look promising.
It's not clear which one is better," now you can do this, and you increase your chances of finding the best possible molecule to do your clinical trials with. That flexibility we're already finding is hugely beneficial in terms of making sure that you can quickly get the best possible molecule to be the one that you start clinical trials with. Another benefit that wasn't on everybody's radar, I'd say, and that we're happy to talk about is when you're going with a CDMO, you really need to have filed your patent for the sequence that you're transferring before you send that sequence to the CDMO, right? That is particularly true when you're sending it to China, but it is true in general. You need to have your patent filed.
Then you're looking at something like 2+ years from that moment before you actually start your clinical trial, right? By keeping the sequence in-house, we effectively gain an extra 2+ years of patent protection because we now do not need to file our patents until we actually start clinical trials. That, you know, as you know, could have, on a successful drug, a major economic benefit.
Yeah, that is super interesting, and I definitely that's very underappreciated, Martin. I guess as we're wrapping up here, my last question, maybe focus on the balance sheet. How much cash and equivalents, and maybe talk about the Canadian funding that allows you know, additional capacity here. Yeah.
Yeah, absolutely. We are sitting at the end of last year, so a few months ago, so wouldn't have changed much, on about $700 million in cash equivalents, marketable securities, and committed government funding. When you look at our, you know, operating cash burn, having completed our investments in the facility and in the platform largely last year, we're probably somewhere around $120-$130 million in cash, operating cash usage per year. That includes preclinical studies and, to a degree, phase I studies as well. Well capitalized to carry out advancing this pipeline through the clinic, into the clinic for several years to come. I think officially we say for, you know, that's enough for 3+ years of moving this strategy forward at full steam.
The funding from the governments of Canada and British Columbia really is there to, in a win-win fashion, make sure that we as a Canadian biotech company, as an anchor company in Vancouver, British Columbia, can build out a domestic capability to discover and develop drugs. It is fully in line with our strategy and supports explicitly also up to 17 programs through phase I clinical trials, right? That capital is not just theoretically available for us, it is there to do exactly the things that we're looking to do under our strategy. Right. Now having said that, the
You know, if we succeed, you know, not beyond our wildest dreams, but if we succeed as in our, you know, firm hopes, and we successfully advance programs into pivotal trials, you know, we may be creating an opportunity to, you know, to invite additional investors on board on the back of, you know, positive data. In principle, we're very well capitalized to, you know, to move forward without, you know, without needing to deprioritize activities that we know are inherently high value.
Great. We'll wrap it up there. Thank you so much, Martin, for participating in this fireside chat.
Thank you so much, Scott. It was a pleasure to be here.