...Welcome, everyone. I'm Tiago Fauth. I'm a biotech analyst here at Wells Fargo. We're joined today by AbCellera. We have Andrew. We go way back, so it's a pleasure to have you guys in our conference. Again, I generally like to give you guys some time just for a brief overview, and then we'll talk about some of the more specifics on the drivers. W hat's the two-minute introduction to AbCellera for folks that are not as familiar with the name? Okay, thanks, Tiago, and, yeah, it's a pleasure to be here. Thanks for the invitation. Just a reminder, I'll maybe make some forward-looking statements, and, please check our SEC documents for the full list of, disclosures and risks. Yeah, so a quick introduction to AbCellera. It's a company based in, Vancouver, really focused on therapeutic antibody discovery. Started in 2012, and the original thesis of the company was to rebuild, antibody discovery and development with modern technologies to, find best-in-class therapeutics, therapeutic antibodies, recognizing that a lot has changed in, the technology available to discover antibodies from natural immune systems from the 1970s, when hybridoma came out. So the original thesis of the company was to invest in technology and put together all of the world-leading technologies in either screening technology, protein chemistry, immunizations, you know, sequencing, high-throughput expression, high-throughput microscopy, to go from target identification all the way to a drug product to be able to start your testing. And from doing that, we took that technology and platform originally to the market in a partnership model, where customers, pharma customers, or biotech companies would come to us with their target, ask us to do discovery in exchange for upfront fees, as well as a royalty position on the molecules that we would discover. We evolved that model to co-ownership positions and eventually to internal pipeline that we've been developing over the years. And that would be a kind of basic introduction. Yeah, that's absolutely fair. And I guess one of the main questions we used to get on the name, again, antibody discovery, everyone has an engine, everyone has their secret sauce, so can you talk more about what's specifically unique about your platform? And the underlying question is always gonna be: How do we know that you guys are actually developing better antibodies than what's currently out there, right? Yeah, it's a really fair question, Tiago, and I think in the origins of the company, the initial technology that kind of gave us the foot in the door was around the single B-cell screening technology. R eally, 80% or 90% of the investment since those days have been upstream and downstream of that technology, in the a thousand things that need to go right in order to develop good therapeutic antibodies. And we've had a number of great validation that we are doing something really special and unique, really from the quality of the partners that we've attracted. We have probably one of our most celebrated partnerships would be with Eli Lilly. We did a large transaction or a large deal with them back in 2020. They're extremely well established and competent drug development and antibody development group. They come to us typically for very difficult targets. Similarly, with Regeneron, with AbbVie, Gilead, Novartis, these are all quite a large group that have really validated that we are doing something quite special. Including with Lilly and with Regeneron, in the recent past, both of those companies have renewed their agreements and asked for additional slots, and we find that's really validating, and we could talk about the bits of technology along the way that we've implemented, but the really... The thing of real consideration is, you know, are we successful at finding a molecule that looks like a drug, an antibody that looks like a drug? And if we can, especially those that have eluded the best of the best in antibody discovery for years, and if we can, then the market will know we've got the technology right. Whether we've used computation, machine learning, or great, great humanized rodent platforms, you know, we will. We, the assumption will be, we've got the technology right if we can find the molecule and the drug. Some examples of that is, and where we are turning that technology, are in the difficult target space. So the MHC peptide, GPCR, ion channel class of targets, where we have had some success at finding antibodies against those difficult targets. And in addition, in CD3, used for T-cell engagers, where we've had published some great data at SITC and at AACR on the capabilities of our CD3 platform to engage and activate tumor killing in T-cells without triggering the regular cytokine release that's associated and has been a real challenge in advancing some of those T-cell therapies. So those are extremely difficult antibody problems that we have been successful in showing real scientific data of the molecules that we've produced or discovered, that solve some of those problems. Perfect. Let's talk about some of those pieces of value, the store of value that you have right now. So firstly, you do have a book of business and some legacy programs that have been partnered. The business model back then was, again, relatively smaller upfront fees relative to, let's say, a CRO or some more of the legacy technologies, but you get to keep a royalty claim, right? So what's the size of that portfolio right now, in terms of number of programs? I know you have a few programs in clinic. A few of them have royalties associated to them, or some don't. How should we think about the value of that royalty portfolio right now? Yeah, so we've negotiated well over 100 program or contracts with for programs with customers, with downstream royalties, downstream milestones and royalties associated with them. We actually have published some great data and stats about the size and, you know, diversity of that portfolio in our annual statements in our 10-K. Of those programs that we've negotiated or contracts we've negotiated, we've started, let's say, about 90 or so with royalty positions. We've handed back a good number of those to our partners, over 60. We do know that some of them are not being pursued in development, as you would expect. There's some attrition. Yeah. But we are aware of close to forty that are progressing in the hands of our partners towards the clinic, and as you point out, a number have hit the clinic, and we do publish that on a regular and quarterly basis. The evolution of that portfolio of where we have a downstream position in those molecules, and there's some fourteen molecules that have hit the clinic, and that will continue to mature over the coming years. Got it. And again, one of the challenges when talking about valuations is, again, a lot of these programs are preclinical, but some of those sort of pushbacks, like, Hey, are these guys getting harder than average targets? So is the probability of success across a little lower, a little higher? How should I think about peak opportunity? So how do you think is a fair way to look at that portfolio right now from a valuation perspective? Again, hard to put hard numbers right now, but at least a framework for that. Yeah, I mean, we and I think there are models out there that look at this, I think quite effectively. In terms of are we getting what kind of value are we getting, and where do investors struggle to understand the value of that portfolio? Well, today, I haven't mentioned yet, we are in a we're in an enviable liquidity position, actually. I would say we have some $700 million in cash, and actually our market cap is not much greater than that. We have some committed capital and available financing from the Government of Canada, that brings our available liquidity to close to $900 million. And, as far as we can tell, people really struggle with assigning any value to that royalty portfolio because they can't see... They want to do analysis on individual programs, and the details of those programs are the confidential information of our customers. So, it's difficult for us to disclose, and we just need to wait until those molecules hit the clinic. It's one of the reasons why we have made an effort to go into co-development or even our own internal pipeline, where we're free to discuss a little bit more about the nature of those programs. We have a couple that are at development candidate stage and are progressing through to IND, where we expect to file the IND next year. And I think that's when those INDs and we are able to talk more freely about both of those programs. It's gonna be a lot easier for analysts to wrap their head around those programs, especially knowing that there's quite a good pipeline behind them of other molecules that are typically in this class of difficult targets, of ion channels and GPCRs, which again will be quite validating in terms of the capabilities of the platform. Fair enough. And just to round that out, along with the royalty portfolio, you do have some co-ownership and some equity claims in a couple of companies. Again, it seems like it's gonna be on a case-by-case basis. I don't know what's the trend, if it's towards more of that versus just developing more internal, your internal pipeline. How, like, how are you thinking about that? I kind of alluded to this earlier, that the evolution of the company was you have this capability, you provide access to it for a fee plus a royalty position. It evolved to co-development, where we've had a number of co-development partnerships, where the partner will bring some unique technology, and we will manage to negotiate a 50% ownership position and the right to continue to invest alongside to maintain that 50% ownership position. And I'll give you a recent example of that is, like, Prelude, who has a great degrader technology for antibody-drug conjugate to a degrader. That's a great example of where we didn't have the linker technology or the degrader technology. They were able to come. They didn't have the antibody discovery, and we're able to, you know, co-develop molecules together, and that has evolved into the wholly owned platform as well. So that's kind of how that evolution has happened. That makes sense. And let's talk a little bit more about the internal pipeline then, because, again, some targets are able to talk more, like there's a different amount of disclosure to have around each one of the programs, so let's kind of leave it at that. So the six thirty-five, that's for endocrinology, correct? Metabolic and endocrine condition. Metabolic. Yeah. Yes. But not weight loss. Just to be, just to be clear. Good. Yeah. So yeah, can you talk about just the general application? Why do you guys think that that's a promising molecule? Again, I know you cannot get into the specifics, but what makes you think that that could be a drug that is worth developing over time? Yeah, so the, this is an example of a molecule we've developed against this difficult target space, so ion channel and GPCR class targets. We are on track for an IND in Q2 of 2025. And at that time, we'll be able to disclose more about this. It's a condition in metabolic and endocrine, where we believe the addressable market is north of $2 billion. And it is a place where the target biology has been validated by small molecules, but where there have been off-target toxicity issues related to those small molecules, which we believe have limited dosing and therefore even limited the efficacy. So that's a kind of a caricature of where an antibody might make a good drug, and we have what we believe to be a great molecule that we've been advancing towards IND, and then it's also a molecule. So not only do we like the science, we like the commercial opportunity, our ability for differentiation, but it also has a very clear development path. So those are reasons why we're quite excited about that molecule and really excited that in Q2 of next year, we'll be able to discuss more of exactly what the path, the target is and what the market size is. At that point in time, like, I think it might be difficult for you to answer that now, but what would you be willing to up until what point of development would you be willing to commit right now? Is this, is that something that over time you should, you're gonna spin off? Is it something you're gonna develop internally? I know it's gonna be kind of on a case-by-case basis, but overall, how to think about that strategy? Yeah, it's a great question. I think we'll follow the data, so we'll look. We have the capital and the conviction to take this through a phase one, and we'll take a look at that phase one data and decide what is the best thing to do for the program at that point in time. It is, if we're at IND in the second quarter of next year, patient recruitment would happen in the following quarter, and then you'd expect data sometime in twenty twenty-six, and we'll be able to make that decision based on that data of what is next. If it does turn out that... right now, I think the option is open for us to continue the development. If it does turn out that we'd like to create a company, as you mentioned, we've done that before. We've done that with Abdera. We were a co-founder of that company in a antibody radioisotope, where we have an equity position in addition to economics on the molecules. We've done it with Invetx, where we were a co-founder. That was in a company in animal health, where we had an equity position. They've just recently sold to Dechra in order to advance those programs. And earlier this year, we also did a company creation deal with ArrowMark and Viking, where they've come to us with targets, with the idea to spin out companies. So we also have that mechanism available to us. Got it. Your other internal program will give a little bit more detail on the targets. It's five seven five. So again, can you just give us the quick rundown on that program? Yeah, this one is a bit different. There's a bit of history on this one. So this and it's not in that typical sweet spot where we were looking for difficult targets. So this one came. This program originated from a co-development arrangement with EQRx, where at the time, their model was to be a fast follower. The molecule they were following is now known as amlitelimab by Sanofi, targeting OX40 ligand, with the initial indication being atopic dermatitis. This looks to be a very interesting pathway. And then what happened with EQRx is they had some funding issues of their own, and they were eventually sold to Revolution Medicines, and this molecule reverted into our control. It is a very promising molecule, and by that time, Sanofi had some positive readouts on the effect of amlitelimab, which they purchased from Kymab. And it looks as though this OX40 ligand pathway is very interesting in inflammation conditions, starting with atopic dermatitis, but it has implications in a lot of other inflammatory diseases, asthma, COPD, MS, potentially ulcerative colitis. And actually, the data that they have produced has been excellent. And I think we have some conviction that this is gonna be a very large class of drugs, and there certainly is a lot of interest. We're not the only ones with an OX40 ligand, but we do believe we have an opportunity for differentiation because of the half-life of the molecule, which may allow us to have less frequent dosing, but that will really be played out in the clinic. So we are moving that molecule forward to IND in Q2 of twenty twenty-five, and then we'll move it into phase one. But really, this is an example of a molecule where most likely, we will outlicense that molecule to someone who can run a proper molecule on phase two. I& I, multi, yeah. Yeah, I know something about I&I, but it is a class of drug that we're quite excited about and looks from the results of amlitelimab to have a great response in patients. And I think it will be. And we've had a lot of questions about that drug, so that target class seems to really be picking up some interest in the market. Oh, fair enough. And again, one of the datasets that you produce, a couple of years ago, actually, you started to put out some data, was the T-cell engager platform, right? So initial feedback from at least specialists was pretty positive, but I guess just overall, the market got super excited, and then it kind of tempered down with some initial clinical experience. So can you give us a rundown on your T-cell engager platform and what you have in terms of portfolio, how can that play out? Yeah, I think if you go to AACR, to SITC, you'll see that there's a lot of excitement in oncology about radioisotope conjugates, about ADCs, and about T-cells. And we have a play in actually each of those. And in T-cells specifically, I think the market is convinced that T-cells are going to play a role in fighting cancer. And specifically, there are definite challenges in getting into solid tumors. And in recruiting T-cells, the crux of the problem appears to be not only activating, but limiting the cytokine release. And so we looked at that and said, "Hey, this is a problem with a scarcity of CD3 antibodies that are out there in the market, and we could turn our capabilities of discovering antibodies to that problem in order to develop a large panel of well-characterized CD3s." Thinking that you could optimize the pairing of a CD3 and a tumor-targeting antigen or antibody, sorry, to optimize the killing. Now, while that did turn out to be true, we also found, and we published this most recently at AACR, a family of antibodies that engaged and activated the tumor killing, but with extremely low cytokine release in the in vivo, sorry, in vitro studies that we gave, and we've published the data on that. I think that's very attractive and shows a lot of promise, but as you mentioned, there have been some, you know, struggles in advancing T-cell therapies in general, and so everyone is looking for more and more validation before making other bets. And what we've done there, because we have conviction in that platform, is we are advancing some assets. We announced three in oncology, two of them disclosed targets that were in our posters and papers, against PSMA and against B7-H4. The third one, we haven't disclosed the target, but we have also initiated a program in autoimmunity around with CD3 and CD19 for the ablation of B cells. So those three... Those four programs, we are advancing to development candidate to get the in vivo data, as well as eventually bring them through PK tox, non-human primate to IND. In order to validate that broader platform, not only the assets, but also the broader platform of how we're engaging T-cells in order to recruit the immune system to fight cancer or in autoimmunity. So we'll be advancing those programs over the course of the next year or so, and we'll continue to publish data to show the validation that we think people are looking for. Got it. And I probably have touched on this before, but how should we think about your current capabilities from end to end? Like, when do you start drug discovery, and where can you actually deliver something to either a partner or like... 'Cause I know you're making some investments that are also help with the Canadian government on the manufacturing. So, like, yeah. So can you give us a rundown on the current capabilities? Absolutely. And it actually, it goes back to the original thesis of AbCellera was to rebuild the front end of antibody drug discovery, starting with, the input being, the insight into biology and your requirements of what are you looking for in a therapeutic antibody. So, and ending at, a vial of drug that could start a clinical trial where testing could begin. Now, our thesis was that's where investments in technology can make an improvement, and we've been investing in the CMC and GMP capabilities. Our first two programs, we've gone to a CDMO in order to do that, 'cause our own internal capabilities are not, ready. But for the next candidates, including, like, those T-cell engagers I mentioned, we would expect our own cell line development and CMC and then GMP activities. Those... That has been a big investment over the last number of years. As you mentioned, co-funded by the Government of Canada. It will be complete next year, we'll be having our first cGMP runs in 2025, and you've been following us long enough to know that even on a large capital project like that, we're largely on track in terms of budget and time, which is impressive, I would say, on the execution, and that is the goal, is to have those integrated capabilities from end to end, to go from target idea to drug product and start clinical testing. We see there's a lot of value in that integration from speed, optionality, as well as collecting the data along the way that can be used to improve the process time and time again. So that has been the strategy, and we are executing according to that plan, which you'll remember we had developed in about 2020, and we are looking forward to having those capabilities online next year. And again, there was a lot of upfront investment in building out the technology stack. How should we think about OpEx going forward, for example, or CapEx? How much operational leverage do you have on this business model? Yeah, it's a great question. So, we've spent from 2019, 2020 to about 2023, really building up the team, bringing on the expertise. We've built that, and we've shifted our attention from building the team to now using it and applying the programs and the people and the teams to the internal programs, for programs for our strategic partners and for ourselves. I'd expect the OpEx to be relatively flat from here, quarter- over- quarter. What we do see is about a, let's say, $25-$30 million a quarter cash usage in the operating cash flow. We see about $20-25 million in the CapEx, but that's largely been related to this big build we've been doing, where we've been funding the entire build off of our balance sheet thus far. Including for our lab office buildings, which we own or have financed, as well as the GMP facility, which we have been financing with our partner, the Canadian government, that has funded 50% of it. So, those investments on the CapEx side will continue at about that rate to $20-25 million a quarter to, let's say, the first quarter in 2025, and then that CapEx build will be largely done. The CapEx will drop off considerably from then. and if you do the quick math on about $30 million a quarter cash usage for those operating expenses or cash flow from operations, it's about $120 million a year, and we have a few quarters left of the CapEx, and we have $700 million in cash, as well as an extra couple hundred million from the Government of Canada. You know, It's those numbers, if you do them, that back up our statements, that we have well over three years of available capital to continue this execution in, in advancing these programs for our strategic partners and for ourselves. Got it. And, and I guess over those three years, you could see inflection points in your royalty portfolio with more drugs coming to clinic from partners, and also you're probably gonna get some data in humans for your first internal programs. Yes, absolutely, and in addition to out-licensing and partnership opportunities, certainly for the OX40 ligand molecule that we talked about in that kind of timeframe, and if you fast-forward those few years, you would imagine expansion of the partnered assets and them reaching the clinic, delivering milestones, and being easier to model to try and understand the value of that royalty portfolio, in addition to advancement of our lead assets, and we would consider or think that we will continue on that pace of a couple of development candidates, there will be fluctuations, of course, and IND packages similar to the two that we're gonna be entering into the clinic next year. Perfect. I'm looking forward to seeing the progress. So- Okay. Any final remarks? But again, it sounds like the market's currently not assigning a ton of value to almost any part of the business, unfortunately, so. I think, just in fairness to, you know, how people look, and it is a difficult business to understand, we're being valued somewhat at the, the cash, little value assigned to the royalty portfolio, to the internal pipeline or the assets and, and capability and engine that we have, but with the feedback we have received from investors is, you know, it's, it's good that we're, we're focusing on internal pipeline. That's where real value is created. We're gonna turn this cash into those drugs, and the market, I think, is waiting to see, to make sure we pick good targets and develop good drugs, and it's very difficult to diligence it without more disclosure on that, and we have our head down executing on that plan. And I think in the coming quarters and certainly year plus, we'll be able to disclose more about what's in that portfolio and how that those lead molecules and the pipeline behind it is developing. And I think we have the strategic partnerships in place in order to have a robust out-licensing activity. OX40 ligand would be the first one that will be in the pipeline, and those are some of the things that are gonna be proven out over the coming years. Perfect. Looks like a natural stopping point. Okay. So I thank you so much for joining us today. Okay. Appreciate it.