Good morning. Thank you for standing by. Welcome to ImmunoPrecise Antibodies' second quarter fiscal year 2023 earnings conference call. Also on the call with us today are Jennifer Bath, Chief Executive Officer, Brad McConn, Chief Financial Officer, Ilse Roodink, Chief Scientific Officer, and Barry Duplantis, Vice President of Client Relations. Before we get started, remember, some statements we make today may be considered forward-looking statements for the purposes of applicable United States and Canadian securities laws. IPA cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Additional information about these risks and uncertainties is included in our SEC filings. IPA undertakes no obligation to update these forward-looking statements except as required by law. On today's call, non-GAAP financial measures may be used to help investors and analysts understand IPA's business performance.
We refer current and potential investors to the Forward-Looking Information section of its management's discussion and analysis issued today at www.sedar.com and on EDGAR at www.sec.gov. With that, I'll turn the call over to Dr. Bath.
Thank you, Dennis. Good morning, everyone. I'm glad that you were able to join us today. We're excited to share with you IPA's second quarter updates and our progress toward achieving our strategic goals for the fiscal year, including the steady growth of our revenue, driven by our expanding client relations team, as well as milestone achievements with our in silico platforms from our newest subsidiary, BioStrand. With several goals in mind, the company recently announced its voluntary delisting from the TSX Venture. These goals include creating a central market for its common shares on the Nasdaq, enhancing long-term liquidity and shareholder value, lowering administrative and legal costs, saving time, and harmonizing reporting requirements. Finally, we believe that delisting from this exchange makes it easier to reach institutional investors who are prohibited by compliance from investing in such exchanges.
IPA is considering a shift in its corporate offices as a complement to its recent delisting from the TSX Venture. While the exact potential location has not yet been selected for shareholder approval at a future special meeting of shareholders, some of the key location characteristics being considered include a U.S. location with access to high-performing workforce with relatively low average wages, a region with expanding technology-based businesses that is complemented by numerous business incentives and easy access to government officials, highly competitive cost of business operations, and a highly educated workforce. This quarter, we look forward to keeping you informed of any developments relating to this particular update. As we approach the end of this calendar year, we are focusing on accelerated revenue growth and sales integration of our in silico capabilities.
This year, we're also reflecting on market conditions and our historical performance as we strive to maximize shareholder value in 2023. This graph compares IPA's year-to-date share price change to that of independently selected competitors, as reported by Nasdaq with these figures as of Tuesday, December 13th. While we have maintained shareholder value in a difficult market, especially as compared to our peers, we are far from satisfied. With regard to shareholder value and corporate growth, we have set immense goals. We are committed to working tirelessly until those are executed. We are not intimidated by the current market conditions. Rather energized and inspired by the opportunity to significantly outperform them. Elaborating on our most recent press release, the emergence of Meta's ESMFold2, and DeepMind's AlphaFold AI-driven predictive platforms recently opened the door to the world of structures and their impact on drug discovery.
Irrespective of their precision, these platforms provided us with a novel visual representation of sequences and their uniqueness. Having fully integrated these two platforms into our end-to-end in silico discovery workflow, we have saved an appreciable amount of development time and cost. The timing of these platforms was fortuitous, having recently launched our structural HIP, which will help explore formal and explicit biologically relevant and hidden knowledge drawing upon our HIP technology, which can not only connect sequence to structure and function, but also link those sequences to structure and structure to many types of textual information, such as scientific papers and also medical records. These multi-omic, multi-structural capabilities are unparalleled and have the potential to greatly speed up drug discovery.
From a commercial perspective, we started integrating BioStrand's cutting-edge AI technology into our global fee-for-service offerings this quarter, creating unique in silico capabilities to expand our platforms for next-generation antibody discovery and development. These in silico services show quick turnaround times that result in faster revenue recognition, excellent profit margins, and a competitive edge, thanks to our unmatched data outputs. One of the examples in the new in silico offerings is the recent client access to our in silico immunogenicity screening service, which enables clients to quickly and affordably predict which lead candidates may be immunogenic when administered to patients. It offers insights into which patients, specifically based on their genetic background, are most likely to experience an adverse event and determine which lead candidates are most likely to be safe in the majority of the population.
In order to prevent unfavorable side effects, this information may also help drug sponsors decide which patient population should be selected in a clinical or commercial context for a particular therapy. This and other new AI services have not only been launched, but have also been chosen by select clients as extensions to their current programs, and will soon be available for all to view on our updated website. With that, I will turn the call over to our Vice President of Client Relations, Dr. Barry Duplantis.
Thank you, Jennifer. This quarter, IPA grew its sales team in key geographic areas. I'm pleased to report that a new director of client relations started with us shortly before the end of Q2. This new addition is covering CRO service sales in the San Francisco and Pacific Northwest region, and brings with her years of experience serving clients from past antibody service sales and project management roles. In addition, IPA has received a signed commitment from an East Coast-based senior director of client relations set to join the team in early calendar year 2023. This individual has an impressive background in antibody discovery, while also possessing first-hand knowledge of client needs and expectations. The San Francisco and Boston regional markets have always offered significant market potential for IPA. We look forward to the impact that these two key hires can bring IPA in the future.
Last quarter, we spoke of a significant increase in Q over Q sales orders. Those sales orders have helped drive a 9.8% increase in revenue of Q2 over last year. They've also yielded record quarters at both IPA Canada and the Utrecht sites. The Canadian site also posted a single monthly revenue record reporting over CAD 844,000 in October, and we're optimistic for continued growth with strong revenue trends continuing through November. These results are primarily driven by a continued and growing interest in IPA's memory B-cell selection workflows, particularly IPA's Rabbit B-cell platform, while the Utrecht site is beginning to take advantage of their increased capacity following a seamless move to their new facility, which Jennifer will expand on later. We've also recently announced that IPA's BioStrand subsidiary has signed a research collaboration and license agreement with the clinical stage biocompany BriaCell.
The research collaboration is based on BioStrand's ability to develop clinically relevant antibodies using its multifaceted in silico HYFT-based platform. Due to the unique nature of BioStrand's therapeutic discovery potential, we're happy to announce this is the first non-fee-for-service-based discovery program run by a service-based IPA subsidiary. While the fee-for-service models have served IPA's traditional wet lab services very well, the fiscal benefits of using an in silico discovery workflow, asset ownership retention until certain contractual requirements have been met, and the potential back-end value of the program make for an incredibly attractive business model available to BioStrand's technology. Lastly, we'd like to turn our attention to the growing market of Wnt proteins, where IPA Europe's Utrecht campus is occupying a rapidly growing niche with an exclusive product arrangement and IP protection.
An organoid is an in vitro three-dimensional replica of an organ that has been scaled down and simplified to display accurate microanatomy, and they are increasingly valuable model systems for human biology. Wnt surrogate is a protein that is required as an organoid growth factor. IPA has seen an uptick with our Wnt surrogate production and sales at our Utrecht site, which is consistent with our views that the organoids market is rapidly growing and demand for growth factors continues to increase. According to Evisions research reports, the global organoids market is valued at over $2 billion in 2021 and is predicted to reach well over $12 billion by 2030 at a CAGR of 21.58% during that time frame. With UPE's move to the new accelerator building, the company is well equipped to meet the rapidly growing demand.
I will now turn the quarterly updates over to Dr. Ilse Roodink for IPA's Chief Scientific Officer.
Yeah. Thank you, Barry, and good morning, all. As recently announced, IPA's subsidiary, Talem Therapeutics, entered into a strategic collaboration with Ligand Pharmaceuticals' new subsidiary, OmniAb, expanding the ongoing relationship by further developing three antibody programs with validated immuno-oncology targets. Under this agreement, Talem will lead the progression to clinically suitable molecules by combining the expertise with IPA's LENSai and in silico technology to advance out-licensing and commercialization of these three human antibody therapeutics. OmniAb and Talem will share certain research costs of each program and are eligible to receive shared downstream economics upon potential out-licensing or commercialization of each program. We believe that the application of our in silico analysis has the potential to greatly enhance the quality and value of these programs as it does for any discovery, preclinical, or clinical program.
During our last earnings call, we announced the maintained efficacy of PolyTope, Talem's first generation four antibody combination therapy against the SARS-CoV-2 variants BA.5 and BA.2.75. We are very delighted that NIAID has agreed to include our product in their regular neutralization screenings of clinical and authorized antibody therapies towards emerging variants. This demonstrates NIAID's recognition of the exceptional resilience of PolyTope in maintaining effectiveness against variants to date. We have also had ongoing conversations with NIAID on clinical trial support through mechanisms facilitated by NIAID.
We are pushing for the first patient doses of PolyTope in the spring of calendar year 2023. Accordingly have engaged a global clinical trial CRO named Accelsiors to support us with clinical development of PolyTope. CELSIUS was selected based on their experience and constructive interactions, as well as the results of an independent audit at IPA's request. CELSIUS is involved in the finalization of the study protocol to evaluate the performance of PolyTope in humans and will prepare other documents required, such as manuals, patient information, and patient-informed consent. CELSIUS will, on behalf of us, be responsible for clinical site monitoring, regulatory safety and data management, and logistical aspects transferring the drug product and clinical samples. To date, we are pleased to state that the production of the final drug substance having completed and the filing of the drug product and placebo are in the final stage.
This slide summarizes our path and ongoing task towards regulatory submission for clinical trial approval. With the continual mutation of SARS-CoV-2 resulting in highly politicized drop out of authorized therapies, there is a growing need and interest for more sustainable and broadly efficacious product. This unmet need has been recognized by health and regulatory authorities as well. The FDA and EMA organized a joint workshop that takes place today. IPA was invited along with a handful of leading pharmaceutical companies who previously have lost regulatory support to join an additional working group leading up to the final workshop.
The aim of the working group is to identify alternative strategies to expedite testing of effective antibody therapies targeting new SARS-CoV-2 variants to align our shared perspectives regarding possible regulatory relaxations for clinical development and to prepare a joint presentation to the EMA and FDA at the workshop. Building on our lead with the readiness of our drug product while others are back in the development phase, as well as the very favorable earning potential of infectious diseases, disease assets in general, puts Talem in a good position for partnering and out licensing discussions for PolyTope, in particular with human safety data on the horizon. From an intellectual property perspective, we are pleased to share that we have received very promising feedback from the examiner regarding our U.S. national patent for PolyTope and expect that its granting is close.
As discussed during the last quarterly update, Talem has combined lead candidates from two oncology programs into a bispecific therapy to create a potential best-in-class TrkB T cell engager that has now been proven to recruit and activate T cells in vitro. Of interest, it was noted that T cell activation by our bispecific candidates differs from that of a chosen benchmark, commercial benchmark. We believe that these differentiating properties open avenues to develop safer and potentially more effective oncology therapies and underscore the first and best-in-class potential of these candidates. We have filed professional patents for each of these programs, including TrkB T cell engagers. Having established priority dates for these programs allows us to create more visibility for these assets publicly, greatly benefiting our ongoing partnership discussions. With this, I would like to turn the call over to Jennifer to discuss updates on our facilities.
Great. Thank you, Ilse. As a result of meticulous relocation planning, IPA's Utrecht team executed an extremely smooth transition to the new accelerator facility in October and quickly ramped up production to seamlessly serve clients. Floor space has doubled, and new equipment and staff additions are in place to support the increase in production capacity afforded by this move. The new facility will also allow the Utrecht team to add new services, including the expansion of offered biophysical characterization assays. In fact, even in this short period of time since the expansion, we have witnessed an appreciable revenue gain from the new facility offerings, as will be highlighted next by Brad McConn.
Thank you, Jennifer, Good morning, everyone. I will provide an overview of our financial results for the second quarter, before touching on our financial position as of the end of the period. As a reminder, all numbers I reference are in Canadian dollars unless otherwise noted. Before we dive into commentary on the financial results, I briefly want to touch on a change that we made to the organization of operating expenses on our comprehensive income statement. We've updated the classification of our expenses to be organized by function as opposed to our previous presentation by nature. The four functions you'll see this quarter and moving forward are research and development, sales and marketing, general and administrative, and amortization of intangible assets.
I want to touch specifically on the research and development function and note that it includes compensation expense related to research, including share-based compensation, research supplies and materials, service contracts for research projects, and allocated depreciation. We feel this organization provides increased visibility into the cost structure of the company and much improved comparability to our publicly listed peers. Turning to the financial results, IPA recorded total revenue of $5.2 million during the second quarter, a 9.8% increase from $4.7 million during the second quarter of fiscal 2022. Barry previously mentioned record quarters at both Victoria and Utrecht, and both achieved greater than 20% revenue growth compared to Q2 of last year. Gross profit for the quarter totaled $2.8 million, an increase of 7.9% compared to the same period last year.
Gross profit margin of 54% is a slight decrease from 55% in fiscal 2022. Our increased cost of sales is primarily attributable to increased salaries and benefits and lab supplies allocated to projects to support our increased revenue, along with some small effect of inflation on the cost of supplies. Moving to our operating expenses, research and development costs increased to $4.6 million from $3 million during the same period last year. The majority of research and development costs relate to the clinical manufacturing of the PolyTope antibody combination therapy, which totaled $3.7 million during the quarter. Other notable expenses include $0.3 million in compensation expense and $0.1 million in depreciation allocated to R&D.
Sales and marketing expense totaled $0.8 million during the quarter, an increase of $0.2 million compared to fiscal 2022. This increase is attributable to additional advertising expenses, compensation expense, and consulting costs. General and administrative expense was $4.3 million during the period, compared to $3.1 million in fiscal 2022. Salaries and benefits increased $0.4 million, and management fees $0.3 million, primarily due to the addition of staff at BioStrand and some routine pay increases. Office and general expenses allocated to G&A increased $0.1 million. Consulting fees increased $0.6 million. Lastly, share-based compensation decreased $0.4 million year-over-year. Finally, amortization of intangible assets increased $0.4 million due to intangibles that we recorded for the acquisition of BioStrand.
Other income totaled $0.3 million during the second quarter of fiscal 2023, compared to a loss of $0.1 million during the same period last year. The largest variance to note is an increase in unrealized foreign exchange gain of $0.4 million compared to the second quarter of fiscal 2022. All told, IPA recorded a net loss of $7.4 million during the second quarter of fiscal 2023, compared to a net loss of $5 million during the same period last year. As previously highlighted, the major drivers of the increase in net loss include increased investment in research and development activities and increased G&A costs.
Moving to the balance sheet, IPA held cash of $15.1 million as of October 31, 2022, compared to $30 million as of April 30, 2022. Cash expenditures totaled $5 million during the three months ended October 31st, 2022, a reduction from $10.6 million in expenditure during Q1 of fiscal 2023. The cash used in investing activities includes $0.8 million in the purchase of equipment and $0.7 million for the first deferred payment for the acquisition of BioStrand. Cash from financing activities includes an outflow of $0.6 million from lease payments, offset by inflows of $0.6 million from the issuance of shares due to option exercises. With that, I'll turn the call back over to Dennis for the Q&A session.
Thank you very much. If you would like to ask a question, simply press star, then the number one on your telephone keypad. Once again, to ask a question, please press star followed by the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question will come from the line of RK with H.C. Wainwright. Please go ahead.
Thank you. Good morning, Jennifer and team. Thanks for taking questions and congratulations on a very successful quarter. In terms of... I have a few questions. I'll just go one by one. In terms of the revenue trajectory, which we are seeing, it certainly is moving in the right direction, and it's very encouraging. In terms of, you know, the resources that you are adding in Europe, you know, to offer increased quantity and also quality of services, what are your expectations in terms of the growth in the project revenue from these additions? You know, what percent growth in project revenue would make you and the team comfortable, especially going into fiscal year 2024 and beyond?
Thank you for your question, RK. So with regard to specifically the growth and added space we've taken on in Europe and then also with regard to the additional company in Europe, I can touch on that from a couple of different perspectives here. The first one I'll start with is the expansion of our space in Utrecht, where the majority of the expanded space is actually ROI-generating space. And we're looking for a couple of areas there, where we have specifically focused on for increased revenue, not only ability to take on more programs, because that site has been at maximum capacity for probably about half of the previous fiscal year
In addition to that, to be able to take on certain types of programs that we've had to decline historically because of needed additional footprint to be able to house some of the equipment that we now have purchased since the move. Some of those include extremely high throughput, small scale protein production from some of the large pharmaceutical companies in that region who have a very particular need for that and have inquired specifically about us filling that need. The other one is exactly the opposite. It's extremely large scale manufacturing in which we have received numerous requests over the most recent months here to produce bulk proteins for outsourcing to a large company is interested in reselling those products for us. We're looking forward to the continued growth at that site.
It's already, kind of beyond our expectations after just having moved two months ago. We believe that revenue trend will continue there. As Brad stated, it's already 20% year-over-year right now. What would we anticipate or forecast on officially going forward and expect? I would expect that to at least double in size for that particular location with regard to the particular types of activities I just mentioned. With regard to BioStrand, as you know, BioStrand is still pre-revenue company. We anticipate that to change relatively quickly. As mentioned, we have put out these offerings for fee for service work that's just been on a face-to-face, one-to-one offering with clients we're in communication with. It's not something that's been wide scale offered or is available on our website at the moment.
These are wet lab capabilities that are still running fee for service. As I mentioned in the call, they are different than our existing wet lab services in the sense that because they do provide results relatively quickly, depending on the offering, anywhere from 12 hours to three days, as opposed to several months, we obviously anticipate much faster revenue recognition. The profit margins are also significantly higher than our existing profit margins. We definitely anticipate that site to be revenue generating in the near future. What we're really, what we'd really be happy with that site is to see some of the revenue generation, not just from those fee for service programs, but from the de novo in silico programs such as the one that just agreed to with BriaCell.
we are anticipating closing several more of those this year, and so ideally we would see some of those upfront payments rolling in, which range anywhere from $500,000 up to several million dollars, depending on which company would hit those milestone goals.
Thank you very much, Jennifer, for that. Just to follow up on your last set of comments.
Mm-hmm.
you know, at a high level, you know, those offerings within that AI-based products are, is basically to kind of test the market and see not only assessing your ability and successful delivery of whatever the objectives are for the client, but also kind of to tweak your product in such a way that, you know, you can offer it to, you know, all the current clients and also for, to prospective clients. For that, for you to get to that level, you know, what is the sort of timeline that you are wanting, you know, within your teams to deliver?
I know it's very difficult to figure out what sort of growth you'll attain there, but, you know, for people like me who kind of think about numbers, you know, how should we think about that? If you can comment a little bit on the timing.
Yeah.
Whatever you can give at least qualitative statements about growth expectations.
Absolutely. With regard to those offerings, which I just mentioned, we actually do include expected timelines in those agreements that have been drafted for those clients. One thing I'd like to point out is with these groups that we have gone out to, specifically, we went to four groups. This is something else that, or four different companies. This is something else that we have not offered on our website or been very public about. With respect to these particular groups, what we offered were four unique packages that we anticipate will become the future standard de novo in silico offerings at BioStrand. With regard to those, we've given very specific timelines for the anticipated output of in silico sequenced products.
Every one of these packages on our early adopter program, as I mentioned, are slightly different. Some of these groups will be required to make an upfront payment as soon as an in silico product is generated, whereas others are based on actual validation of the product being able to do something most commonly a functional test. The anticipated timeline, I would say average that's been given for the in silico work is about four weeks. The anticipated timeline for follow on proof of concept work from the actual product produced from the in silico sequence is four to six weeks. For the majority of programs, we would anticipate that we would see some revenue generation somewhere between eight to 10 weeks after starting a program with these groups.
That first initial payment, unilaterally becomes what we're referring to as the upfront payment to actually be able to receive, the sequence and the product that's been tested.
Perfect. Thank you very much for that.
Mm-hmm.
In terms of, you know, the commentary that we heard today on the organoid business, and how that could be growing, you know, quite rapidly in the R&D, certainly, we've seen enough in the literature. How is that really translating into the Wnt protein sales?
Mm-hmm.
Even though, quarterly, on a quarterly basis, it's certainly growing, but on a yearly basis it seems like it declined a bit. I'm not trying to make a big fuss about it, but I'm just trying to understand, is there some anomaly, you know, between last year and this year?
Mm-hmm
What has changed.
Yeah
What is the expectations for this year and next year?
Yeah, I'm happy to answer that. That's very observant on your part for our product sales year-over-year. A couple of clarifications on that when we break down and look a little bit more closely at our product sales. The Wnt protein is actually our best-selling off-the-shelf product coming from our Utrecht facility. As mentioned by Barry, it is something that we have exclusivity to and IP protection around. The Wnt protein is interesting in the sense that our primary buyers for that protein are ones who are seeking to include that in growth media for these organoids and also large-scale contracts to be able to turn around and actually resell the Wnt protein. That needs to, in those particular cases, be bought in bulk so that they can be sold competitively still on the market.
With regard to any sort of decrease in product sales, that's because when we provide our product sales numbers, we actually do it just on a consolidated basis across all of our sites across the globe. We do have a particular product that historically has had a couple of large product sales out of our site in Oss, in the Netherlands. As of this year, the group that routinely places an order for that particular product has not yet placed an order, even though we still anticipate them to do so because they've been a regular client. The dip is actually not something that pertains directly to the Wnt protein. Going forward, we actually do anticipate that Wnt protein to take over more and more a significant share of the off-the-shelf product.
That's in part because what we're beginning to see is more and more groups wanting to be able to come in and get access to that Wnt protein because of the quality of that protein, the stability of the protein, and the increased activity of that Wnt surrogate protein reported by several different larger technology companies compared to some of the standard Wnt proteins that are otherwise available on the market.
Perfect. Thanks. Thanks for breaking down the product sales. What is there in the process? One final question from me before I step down. In terms of the TALEN, you know, we see, you know, the, it's obviously very encouraging to see TATX-03 able to neutralize even the latest mutant of the virus. How big of a commercial opportunity do you think this is, you know, especially when you would be coming into the market, you know, at least 2 years down the line, if not more?
Right.
With the virus mutating all the time, do you think the structure of your antibody is such that it can capture whatever mutants comes down the pike? That's one question. The other question is on the oncology offerings. Are those more for you to outlicense or are these products more for similar to what you're doing with TATX in the sense, at least based on data and then, you know, go to the market?
Yeah
for outlicense?
Okay. Yeah. Starting first of all with the PolyTope program. I think one of the first things to always cover is the fact that we absolutely don't see SARS-CoV-2 going anywhere, just based on the science and what we know about virus evolution and its ability to continue to adapt. With regard to the relevance of our PolyTope, we actually believe that we're in a better position than we ever could have.
We were so, I think, specific from the beginning in saying we are not going to be the first out there, but our intent is obviously to build something that has sustainable efficacy so that eventually when we predict others will need to go back to the drawing board because they will lose efficacy, that we will retain that efficacy and eventually take a pole position in the market because we never had to go back and reset our timelines and reset, our strategy. Today, and kind of going back, you know, real quick to one of the things that Ilse mentioned, here we are sitting in working groups with these large pharmaceutical companies that did get products out there, that did have commercialized products with emergency, use authorization.
Many of the products that only lasted a couple of months actually in that commercial setting, and then were no longer efficacious due to these mutations. It lost, obviously their regulatory approval, and so had a relatively short time frame with regard to commercial benefits. From our perspective, the probability of our program, of our product staying efficacious and having a much longer term window as in a commercial setting, is probable. The reason why we say that is because we have all of our historical data and based also on the scientific way that we actually constructed PolyTope, it was actually designed to do exactly that.
We are, at this point in time, the only first-generation therapeutic that has retained efficacy for all of all of the variants of concern that have emerged. We've retained that efficacy within a relatively small window of potency. While we've watched all these commercial products dropped off, we have sustained that efficacy, and we have continued to move forward. It's that historical data that gives us the confidence that we're likely to move forward under those same exact conditions because it hasn't mattered whether it's a parental, you know, a virus, variant that continues to pick up mutations, or it's a new virus, backbone, with many more mutations that has been emerging.
Another thing I think for people to keep in mind when they think about the potential sustainability of PolyTope is, it's not just that historical information we rely on, even though we've never had to swap to date any of the products out of that combination therapy to retain efficacy, in part because even if one does reduce in binding or efficacy on its own, we have synergy built into that we have demonstrated. The other antibodies are retaining that efficacy for us. We did build in a backup option should we ever actually reduce significantly in efficacy, which are the backup bins that we've talked about historically are plug-and-play options.
Those plug-and-play options would allow us, should we ever significantly decrease in efficacy, to slide over in one of the regions where we may have decreased in efficacy with an antibody that has been optimized for binding in that particular region, but avoids an epitope that may have been mutated. One of the reasons why we have felt some of our conversations with one of the regulatory authorities involved in the process of giving us feedback and making the final approval for this product that has been so encouraging is that they've actually encouraged us to go ahead and consider trying some of those backup antibodies in a clinical setting, which is actually incredibly encouraging. We have this first line of defense that just hasn't been broken.
We're the only group with that first line of defense that hasn't been broken. We have a second line of defense that we feel quite confident with. This, you know, one more thing to mention with regard to how we constructed that I think is also really important to keep in mind is that, you know, a lot of the new mutations that are occurring are mutations that are cropping up in people who have, you know, reduced or inadequate immunity to the virus. People who might be immunocompromised, people that were not vaccinated, that has already been demonstrated to be one of the areas where we see an increase in these mutations occurring, and then those novel variants of concern beginning to spread.
Another way that we had another reason we had built in to PolyTope, these different safeguards with having synergy, with having Fc function, activity, and also, you know, with the four antibodies in the, in the combination therapy, is under the premise that we may be able to stop a novel variant of concern with new mutations in a patient from continuing to replicate and continuing to spread. It could actually be a novel and efficacious way to actually prevent the spread of new variants of concern and prevent them from emerging in populations, in addition to being able to treat patients prophylactically and therapeutically. That's where our real confidence in this is coming from.
With these working groups also mentioned, it has been clear to us that we really are in a pole position, and the other groups really have had to go back in recent months to redefine and rediscover new molecules. With regard to the oncology programs and your question regarding those, and in particular with our bispecific T-cell engager, we do not anticipate taking those into the clinic. We built these particular programs based on unmet needs in the market, based on really attempting to be best-in-class products in the market. Actually, that particular T-cell engager is probably the hottest asset that we have on our books right now, and it is something that we do intend to out-license and then collect additional downstream milestones and royalties for.
Perfect. Thank you very much, Jennifer, for taking all my questions.
You're so welcome, RK. Thank you for joining.
Your next question is from the line of Michael Freeman with Raymond James. Please go ahead.
Hi there, Jennifer, Brad, Ilse, and Barry. Thanks so much for taking my questions, and thanks for a really great overview of what's been going on at IPA. I wonder as it relates to the BioStrand offerings and the general sort of in silico offerings that you are rolling out, I wonder if you could provide sort of your high-level thinking on how that offering will be Stage-gated from being sort of a internal development to early adopter phase rollout to being more available to clients broadly. If you could take us through that process and your thinking, that would be great.
Yeah. Yeah, absolutely. You know, as I mentioned a little bit earlier, we started with limiting who we went out to share these opportunities specifically for the de novo in silico programs. We did so based on wanting to offer these early adopter basically pricing, but in return for our ability to collect that information and use that information also in a blinded manner to go out and also show proof of concept of our capability to other companies when we were ready to do so.
What we really wanted to start with was, you know, let's find some of these groups we have very good relationships with already, but we also have insight into what they've been working on for the last, you know, multiple years, what's been their pain point, what's been that program they couldn't be successful with historically with other CROs and with other partner programs, and really demonstrate to them, you know, how we can conquer these challenges that haven't been conquered by more traditional methods.
With those particular groups, we decided to start with the outreach with just those for a particular group and not further specifically, so that we could continue to optimize our algorithms, so that we could adjust if we saw any areas that we felt needed improvement, and so that we could utilize all of the sequence information coming in from those programs to also feed our algorithm as our AI would enable it to continue to collect statistical data and improve. We anticipate that it's probably two to three months before we go out with data. Again, it really depends on how these programs go from a timeline perspective and a quality perspective.
To be able to start using some of that data to go out and share with other groups, probably again for several months on a face-to-face, one-on-one offering with various groups. I would anticipate, and again, you know, there's caveats there that make it difficult to exactly pinpoint, but not until we've had a total of five or six successful programs through there that we would open this up on mass to larger offerings. That being said, the offerings that we've gone out through for right now for these four groups are two smaller biotech and two very large, more like top 10 pharmaceutical companies.
What we anticipate and what's also been indicated by those larger companies is if we were successful with these programs for them, they would likely be interested in taking on larger target deals to use up the capacity that is available at BioStrand with a larger upfront payment. Whether it's more companies or just more programs, well, we'll have to see. The overall timeline for that, if we had to put an estimate on it, is probably around eight months.
Okay. That's extremely helpful, and I'm glad you provided that detail of two small biotechs and two large.
Mm-hmm
Biopharmas, I guess. This is, rolls nicely into my next question. We were glad to see that you were able to publicly announce, like, the name of the partner-
Yeah.
That you're working with and making that for yourself. We, you know, we recognize that you are partnered with a, you know, a high quality group of partners through the, you know, the historical CRO business and your other businesses. Do you expect you will be able to announce the names of partners that you work with in the future? You know, this is helpful to understand the pedigree of groups that are attracted to the offerings you have today.
Yeah, great question. Right now, as a part of the early adopter program, it is actually a requirement that we have written into the four different standard agreement options. Right now, we do have approval from those groups and the three remaining groups that if those agreements go through, we would be able to share their name publicly. There is one time consideration for one of those groups who said, "We are currently working on something that's very important that would suggest that maybe not releasing our name right away would be pertinent." But that timeframe is, possibly one to two months out.
If that deal closes, prior to that particular significant event changing for them, then we would make the announcement without the name and then follow up on the first event with that program with a name. On the contrary, if their personal big event for them occurs prior to signing the agreement, we would be able to announce it. Short answer is, yes, it's been written in. Definitely for the 75%, three of the four, the name will be out there in the initial announcement. For one, it may trail slightly.
Fantastic. Well, we'll watch the newswire to see those names announced. Thank you very much for taking my questions. I'll hang up then.
Thank you.
Your next question will come from the line of Will McHale with Ingalls & Snyder. Please go ahead.
Good morning, Jen and team, and thanks for taking my question. I am delighted to see the progress at BioStrand so far with partnership agreements. I was hoping you could explain what specifically about the technology is resonating the most in discussions and how it might be differentiated from other offerings out there.
Sure. Hi, Will. Great to hear from you. Yeah, I'd be happy to explain that. As I mentioned a minute ago, we had offered these to four different companies, from smaller well-funded biotechs to top 10 pharma, participating in this early adopter program. You know, during, you know, the due diligence process, what really became evident for these companies going into due diligence, especially the larger ones, was, you know, really what was kind of driving their excitement, you know, around these particular programs and why they came to us in general. You know, one of the more common themes here is the potential for LENSai software to analyze and solve these very complex programs that couldn't be achieved with those traditional laboratory settings.
In addition to that, you know, we saw a number of programs that reflected therapies that these groups have been working on for close to a decade that never had success. A lot of the enthusiasm, which I think is also of note, you know, has been around the concept of the Hyft and the uniqueness of the Hyft and as a distinguished and a differentiator from our competitors. In fact, the two larger pharma companies that we've been working with have gone into a pretty significant due diligence on that and really wanting to understand, you know, how the Hyft really drives that differentiation.
It's garnered quite a bit of excitement around how the, how the Hyft drives the algorithm-based exploration and their potential to be able to identify these relationships that the traditional AI and ML-supported codes being used by other companies don't have. I think that's actually been where quite a bit of the interest and differentiation has come in, is around the uniqueness of the way that we have a real true discovery backing the development of these codes and the fact that for them, you know, that concept of a Hyft and how that Hyft relates to what we understand about evolutionary biology is very tangible and very directly related to their experience in biology. Let's see, Will McHale, I apologize.
I don't know if I answered all of your questions, so please do let me know.
No, that's super helpful. I guess I also wanted to ask, just sort of looking back over the course of 2022, multiple members of the management team have bought stock in the open market and pretty consistently throughout the year. I was curious to just hear from you guys what most excites you about the IPA investment case going forward?
Yeah, absolutely. Yeah, you know that we are really excited. Part of it really is because all along, Will, we have had this really a magnificent vision for IPA. Our strategic goals every fiscal year have been aligned toward that vision. Many of the milestones that we have accomplished in the past couple of years were built specifically toward our vision of fully integrating of being, I'm sorry, a fully integrated digital technology company that's able to solve the most complex personalized medicine challenges, and I think also importantly, on an unprecedented timeline and budget.
You know, for years, we have emphasized the increase in our discovery program throughput, and then accordingly also the optimization of antibody sequence outputs from our lab, standardizing those workflows across all of our locations. We focused on high-throughput NGS or next-generation sequencing capabilities, but more specifically, we built a digital pipeline to mine large multi-species sequences and structures with amplified functional diversity. Another, you know, milestone we had built into that was, you know, we coded algorithms and this is outside of, you know, BioStrand. We coded algorithms to augment our ability to mine and formalize and perform deep sequence analysis while building a repository for all of the data.
Our, our ultimate aim, you know, was to apply this information to the right tool when that tool was identified with the ability to continuously learn from an AI or ML perspective, and then to apply the knowledge gained from these collection processes. That tool is now our LENSai tool that we acquired through BioStrand. Going back more specifically to your question, during the past three to four months, our excitement is definitely palpable in particular amongst the management team because we're starting to see very real-world examples of how we're able to process and interpret these informative models to solve real and complicated life science problems.
Not only do we see our vision now starting to come to fulfillment, but it's also being accomplished on a timeframe that accelerates some of our more lofty ambitions around the de novo in silico discovery and development, which is actually the foundation of the application supported by the BriaCell deal that we've been discussing, and then some other similar discussions. In essence, really, we see strong concrete signs that our vision is rapidly unfolding, that the pieces of the puzzle that we've been strategically constructing over the past couple of years are coming together. The potential that it generates is at the root of our enthusiasm and our excitement.
I think going forward, you know, we're most excited to demonstrate the power of our algorithms to solve these challenges for our partners and then, of course, along with the anticipated revenue generation that could result from these accomplishments.
Great. It seems like the scientific achievements are really on the verge of producing some pretty exciting financial performance as well. Thanks for that. I think everything else I had has been hit on, so I will drop. Thanks.
Okay. Thank you, Will.
At this time, there appear to be no further questions. Dr. Bath, would you like to take over for closing remarks?
Yeah, sure. Thank you. All right. Now, first of all, I wanted to start by just talking a little bit about the fact that we have accomplished, you know, a great deal in developing and integrating these new technologies to drive our commercial potential. We've also been successful in recruiting and assembling a world-class team, which continues to execute on our stated objectives to achieve new heights in terms of our commercial goals. All of this was accomplished also while delivering on our partnerships and signing our first extended revenue potential deal, which is the in silico licensing agreement with BriaCell. We are confident and we remain confident in our capacity to continue acquiring new in silico partners and programs this year, as well as our potential to realize revenue through comparable agreement structures through our Talem Therapeutics subsidiary.
Prior to closing, I would like to recognize and thank our team for their unwavering commitment and remarkable effort so far this year. As you can tell, we are very enthusiastic about the future, and we look forward to communicating with all of you and even meeting some of you next month at JP Morgan. We appreciate your attention. Again, we look forward to speaking with all of you soon.
Thank you all for joining today's call. You may now disconnect.