Perfect. I'm Thiago Fauci, I'm a biotech analyst here at Wells Fargo. We're joined today by AbCellera Biologics. I have Andrew for our fireside chat. We're going to run through the company. We've known each other since the IPO, basically. Yeah, good to see you again. A lot has changed. I guess it would be helpful to just level set some of those changes and overview on the company, different business models, a lot of different factors here. Let's talk about outlining the past and then let's look into the future. Okay, great. I'm happy to do that. Yeah. Great to see you again, Thiago. Thanks for the invitation. AbCellera Biologics, as you know, we were founded in Vancouver out of the University of British Columbia, the work of our founder and CEO, Dr. Carl Hansen, and his lab in reinvesting in technologies that kind of get us to a new technology platform or new technology curve for discovering therapeutic antibodies from natural immune response. We took that technology and capabilities, which started with single B-cell screening, and then resulted in a lot of investment upstream and downstream of that to really have best-in-world capabilities for finding therapeutic antibodies. We took that technology to the market with a partnership model, providing access for the discovery of therapeutic antibodies in exchange for a fee and a royalty position. Over the course of, let's say, eight or so years, eight or ten years, developed a nice portfolio of about 100 or so royalty positions or over 100 royalty positions in a broad spectrum of therapeutic antibodies across a number of different disease indications. We then, as you know, were the discovery engine behind Eli Lilly's COVID antibodies. That also proved in arguably the most competitive drug development project ever that was done in a very compressed time frame, where we brought two therapeutic antibodies to the market under Eli Lilly and proved out the business model of deferring economics for a royalty position and also went public at that time. That's when we first met. At the time, that story was still very much in a partnership model. Through the IPO and also through our success with the COVID molecules, added significantly to our balance sheet. We turned our attention not only to the technology investment and the integration to go from target all the way to clinic with our own CMC and GMP capabilities for producing biologics, also with the help of the Government of Canada. We not only invested in that, but then started investing in our own programs through co-development with partners and then purely on our own steam, developing our own pipeline. In the last few years, the attention and the investment of the company, while we still do some strategic partnerships with larger companies, think Eli Lilly and AbbVie and others that we've had on our list that provide great validation, we really have turned our attention to what was co-development and now in our internal pipeline. Certainly in the recent past year, there was a transition period there as we advanced those molecules to the clinic. In the last three to six months, we've brought the first two of our own therapeutic antibodies to the clinic, ABCL635 and ABCL575, which we'll talk about, which are the first of a portfolio that we're advancing. That really is where the attention is now. That's why you're mentioning this kind of shift towards our internal programs from a broad-based, kind of broad access technology platform. No. The story for the longest time was around building a sustainable technology stack that was differentiated at scale. As you're pivoting towards more internal programs and developing some of those candidates, how have those investments translated into the actual productivity? We're kind of talking a little bit about that off stage, bringing the discussion onto the stage. Yeah, I think first and foremost, it's the work we did right from the beginning in investing in technology to get on a new technology curve to find difficult to find antibodies that have eluded others. In this, where we have, and we have talked about this for years, the focus there typically is on these difficult targets, complex membrane protein targets, ion channels, GPCRs, or other antibodies where there's a real novelty in our ability to discover antibodies that are suitable for the use. This sometimes is also in MHC peptides or difficult to find antibodies that activate and can manipulate T cells, which is a very difficult problem. One that I think we've made headway on, we have a partnership with AbbVie where we continue that work. Also, in some work we have with antibody degrader conjugates, which is a partnership that we announced some years ago with Prelude. These are places where we think our technology puts us in an advantageous position to find an antibody with the properties that are necessary in order to develop a good drug and therapeutic. The first of those that we see is ABCL635. It's a GPCR target for treatment of hot flashes in postmenopausal women and is what you can expect for the types of therapeutics that we have that we're going to be bringing forward. You expect them to be in this difficult target space where we would say it's difficult for others, if not impossible for all of them, but difficult for others to replicate. In a world where we're seeing a lot of kind of me too antibodies, I think this will be quite a differentiation for us in the therapeutic candidates that we bring forward. No, that makes sense. Perhaps just one final question on that transition and that lifecycle. Historically, you were focused on bringing programs up to preclinical stage and then some co-development that has shifted over time. What sort of capabilities do you have to build out either infrastructure and even know-how now that you're actually running at least early-stage clinical trials yourself? There is always some skepticism when you're transitioning from your core capabilities, how seamless that has been. Yeah, actually, I would say we've gone through that transition and over the history of the company or transitions like that remarkably well. I mean, when we first met, we were doing really just early-stage discovery and handing off lead panel. A big investment we decided to make was in later-stage discovery down to protein engineering and then also into CMC and GMP manufacturing. We made those investments and needed to hire talented people to fill out the talent with and also make the infrastructure investment. We are near the end of that journey of building the integrated capabilities to go from target all the way to drug substance and into the clinic with our own internal capabilities up in Vancouver, some with the help of the Government of Canada to make those GMP investments. That required a big skill set in GMP quality, etc., CMC. We feel really good about our capabilities. We are about to finish that investment roughly on time and on budget from where we started in 2020, about nine months behind. That was through a pandemic. It's actually quite a good showing, we would say, and maybe 10% above the original budget from 2020. We will do our first runs in the GMP manufacturing facility by the end of this year, engineering runs and the first clinical batches in 2026. That required a big skill set to come on board. As you pointed out, meanwhile, we had our first candidates coming through and we needed to build up the team for clinical development and clinical and regulatory development for our own submissions. We've managed to hire in good people for that and build out a clinical and regulatory team. I think there was really some skepticism out there in the market that, yes, we said we were going to do that. Would we actually be able to get those drugs manufactured, the clinical trial authorization submitted? We've taken our first two forward in Canada through a CTA, which is the Canadian equivalent of an IND. We had boldly said, I think in 2023, that we would have our first two clinical trial CTAs done in Q2 of 2025. There was some, I think, some skepticism as to whether we would actually be able to bring the expertise on board, bring the regulatory expertise on board and submit those CTAs. However, we did that in Q2. Two CTA submissions within two weeks of each other, and then going on to establish sites, recruit patients, and dose those patients, which have both happened for both of those clinical trials, for both CTAs, both for ABCL575 and for ABCL635 in the summer of this year. I think being able to deliver on that and execute was well appreciated by the market in the second quarter and into the third quarter here, because it showed quite strong execution, being able to bring on the talent and the expertise and deliver on that. Yeah, no, fair enough. Let's talk about the programs then. We can start with 635. Can you talk a little bit about the target, the biology, the market, and I have some more specific questions, but in broad strokes, what are you hoping to accomplish with this drug candidate? Yeah, so this is a GPCR target called NK3R, Neurokinin 3 Receptor, where the drug here and the target market or patients are postmenopausal women experiencing hot flashes, moderate to severe hot flashes. It is quite a large unmet medical need. In the U.S. alone, there are about 40 million women of menopausal age, of which about 30% are experiencing at any one point in time moderate to severe hot flashes. That's a patient population, about 12 million. Really, the leading treatment for this is MHT, Menopausal Hormone Therapy, previously called hormone replacement therapy, which is an excellent treatment. However, about 20% of women are either contraindicated for MHT because of risk of breast cancer risk factors or don't tolerate it well, so have to terminate MHT. That's a population of still about 2.4 million women that are looking for options for non-hormonal treatment of hot flashes. There are a couple of small molecules that have come, one from Astellas called Veozah and one from Bayer called Linquade, that have gone after this market and are trying to provide non-hormonal options for the treatment of hot flashes in VMS. We would say the Astellas molecule Veozah does have a boxed warning for liver toxicity, but they are doing a good job at building up the market and the awareness of options. Linquade has just recently been approved in the U.K. UK, right? Yeah, the FDA has requested some more information from Bayer, and comments from the Bayer CEO seem to indicate that would be set for approval in the United States sometime later this year. We don't know why there has been the delay there. I think those are both going to be great options for non-hormonal treatment of VMS. The Bayer molecule targets both NK3R and NK1R. We do know that a side effect, I hesitate to say side effect, because there is drowsiness or somnolence. They, of course, are showing that as a feature because largely women who are suffering from VMS have issues with sleep. They're recommending to take the pill in the evening in order to help with sleep. Still, we think that we're actually rooting for their success, for both of them, to build the awareness of non-hormonal options for VMS. We do think that an option of an antibody as a subcutaneous injectable delivered once monthly rather than a daily oral will be appreciated by women. Actually, we did a survey where more than 50% of women would prefer a monthly injectable over a daily oral. We also remain to see if there is any efficacy that was left on the table from either the liver toxicity that was related to the Astellas molecule. The two molecules show similar efficacy in terms of the reduction of frequency and severity of hot flashes. There is risk still with our own program, of course. The big issue here is in target engagement. That is a risk we believe we'll be able to retire in the phase I from both biomarker data as well as the opportunity in our phase one trial design to recruit women patients, women who are suffering from moderate to severe VMS as a part of a proof of concept study as healthy volunteers in our phase I. You get that signal of a potential efficacy early on in the development cycle. Exactly. That's a key criteria of what we're looking for when we select any target, that we like the science. Here, the science has been validated by the small molecules. We see an opportunity for differentiation with a small molecule versus small molecules with a monthly injectable. We see a huge unmet medical need and commercial opportunity, as well as a clear development path. For not that much capital, we'll be able to de-risk this asset in our phase 1 trial. When we validate target engagement both through the biomarkers that we will measure in phase one, as well as being able to recruit and get proof of concept early in the phase I, that readout will happen sometime in mid-2026. Got it. I was looking at some of the consensus estimates for Bayer and Astellas, high hundreds of millions of dollars, tribal bidding for both drugs, right? Still early in a launch, but relatively high expectations for what's a new market, I guess, quote unquote. Where the TAM is even bigger, depending on how it plays out commercially. Yeah. We would think that just for those contraindicated or women who can't tolerate hormone replacement therapy, there's a $2 billion addressable market here for non-hormonal options to treat VMS. That's an attractive opportunity for us, and we think we have a good position. Actually, some have even said it's excellent that Bayer and Astellas will go first and help build the market awareness. We can come in hopefully with another non-hormonal option. We'll see if there's a better efficacy, but also favorable delivery for the treatment. Potential safety, which again, we're going to see soon. That makes sense. The underlying biological rationale and the target engagement threshold that you think you need to de-risk, can you talk a little bit more about that? Liver toxicities can be generally associated with small molecules depending on how the metabolism works. You have a monoclonal antibody, so a different modality. You're hitting just one of the two receptors relative to the Bayer molecule. If you were to kind of piece it apart, those differentiating factors, what would those be? Yeah, I think it's on the safety profile specifically. The Bayer molecule did not see any liver toxicity as far as we could tell, which leads us to believe that it's not an on-target toxicity issue. As you say, the antibodies are not going to get metabolized in the liver. We think it would be a much better safety profile. We think very favorably with regards to that. With regards to the signaling pathway we're looking at here, these are the KNDy neurons in the hypothalamus that are targeted. The NK3R receptor sits in a part of the brain, the infundibular nucleus, which means that antibodies in the bloodstream, it's outside of the blood-brain barrier, should be able to engage effectively this target, which then sends signals behind the blood-brain barrier to the thermoregulatory area of the brain that will regulate these hot flashes. That's one of the reasons why we believe that, and we do see in our non-human primate models that we're able to effectively engage the target. We're most interested in human models for that. That's why we say that this target engagement is the risk that is yet to be retired. We do believe there's strong rationale, biological rationale as to why we'll be able to engage this target and also a strong rationale, as I talked about, to not have the side effects. Got it. No, perfect. Talking a little bit more about the phase I design, again, it seems like the single ascending dose portion is 30. You can have menopausal women and healthy males. For multi-ascending dose, you're going to enroll a more relevant patient population. Can you just kind of unpack some of those? Yeah, so we have about 40 patients enrolled, both men and women, in the safety study. The reason for the men is the strongest biomarker here is testosterone. If we treat men and reduce testosterone levels, it's a very strong signal that there is target engagement. That is one of the reasons that men are included in the study. We have a multiple ascending dose in about 16- 20 women, both with and without VMS. We have a proof of concept study with about 80 postmenopausal women experiencing hot flashes, and we will be able to see some proof of concept data and validate the efficacy hypothesis. That is basically how the study is designed, both for the 40 male and female participants and in the single ascending dose in order to get the biomarker data, the multiple ascending dose with a smaller cohort of patients, and 80 patients in this proof of concept study that will be postmenopausal women with hot flashes. We will expect to read out in the middle part of 2026. Once we clear that, assuming everything tracks, you achieve the degree of target engagement you're looking for. Again, the safety is going to be relatively de-risked, probably early to say, but you have a couple of comps on the development path going forward. Rough timelines or sample size, what would that look like? Yeah, I think, as you say, the development path is pretty clear because we follow the trial design that both Astellas and Bayer have used for their own molecules. I'd say, depending on the proof of concept study and the results of it, we'll see if there's a way to accelerate that development path, especially as it's well-trodden by both Bayer and Astellas. It's still a phase II, phase III, multi-year trial. We're into 2030 for, if that's what you're trying to get, what would we aspire? You have a very well-established precedent here. The playbook is pretty well established, and by that point in time, the commercial opportunity will also be more evident and the potential differentiation, so on and so forth. Exactly. If I see the two biggest inflection points in the way we think about capital allocation for this program, they are going to be de-risking the target engagement. That's the one where we're going to do that in our phase I design. The second is to see how well Bayer and Astellas do at establishing this market and growing this market. Is it going to be a moderate-sized market? How close to this overall $2 billion addressable market can we get to? That is only for women who are contraindicated or have reason to stop menopausal hormone therapy. In the rest of the population, which we said there's 12 million women suffering moderate to severe VMS, there are still over 50% of women who have reservations or are reluctant or hesitant from perceived risk from taking hormone replacement therapy. A big question is how many of them would turn to non-hormonal options if they are aware of them and they're available. Bayer and Astellas are going to do some work at establishing the class of drug and how big exactly is that class going to be. That is going to be something that we're looking out for, absolutely. It would be a big value driver if they're quite successful in that. Got it. No, fantastic. There's more of a unique target from a modality perspective, so on and so forth. Let's move to 575. You did mention that there is a lot of me too antibodies out there. This is targeting a hot target, let's call it, with a couple of other molecules in development. Can you give us the rundown on 575? We'll kind of unpack that discussion on differentiation potential, so on and so forth. Yeah. First of all, a little history. As we talked about the history of the company, I talked about the fact that we went from a partnership model to a co-development model to an internal pipeline model. The OX40 ligand molecule or ABCL575 is a molecule that we started in co-development with EQRx. Their business model was a fast follower model. By definition, this was a molecule that there was already a lead asset out there targeting OX40 ligand. That is Sanofi that has L-enzanitant, a molecule that they purchased from CHIMAB. This OX40-OX40 ligand pathway is very interesting and implicated in INI. Their lead indication is in atopic dermatitis, a market that Sanofi knows very well because they're in partnership with Regeneron and Dupixent. They have been studying it in atopic dermatitis as well as in a host of other inflammatory conditions like asthma, alopecia, or INI indications. It looks like the pathway sits upstream of where Dupixent or IL-4, IL-13 kind of drugs for atopic dermatitis would be in T cell regulation. What we see, and actually we see in the data just recently from Sanofi, is that it has validated the pathway, but it is a very slow-acting pathway. It takes a long period of time in order to get to the efficacy levels versus placebo. Even at six months, they see that still improving. Maybe it would have been nice to see that a little bit more fast acting in terms of the response rate. It's a clean safety signal. We validate this pathway. Right now it would be, based on the data that Sanofi released yesterday, still be positioned as second line to Dupixent, which is the market leader, at least in. Even if that is the case, still probably substantial opportunity. Absolutely. There are 20% of people who discontinue Dupixent because of some of the side effects and the more frequent dosing. It's dosed every two weeks. Sanofi showed equal response in their four-week and 12-week dosing of L-enzanitant, which I think is great news for the class of drug and for this pathway. We got into this development plan or development program through this partnership with EQRx. When EQRx sold their business to Revolution Medicines, essentially this molecule reverted to us. It's not sort of on brand with the very difficult targets. They came to us because we were fast. Their model was a fast follower. We were looking for a best-in-class molecule, which we believe as a monotherapy, our ABCL575 is an excellent molecule and certainly shows the potential and an opportunity on half-life versus L-enzanitant to be even longer acting, which would result in less frequent dosing. Given this recent data, we believed that we could get to six-month dosing. With this recent data from Sanofi, we maintain that position. We do have about two- and- a -half times the half-life of the L-enzanitant molecule, 60 some odd days versus their 20 some odd days. That points to the opportunity to perhaps even have six-month dosing. We'll see that when we get our PK and PD data from our phase I study. We see it as a promising molecule. It is more competitive. There are others who can find OX40 or OX40 ligands. Rocatillumab is out there from Amgen. There are others who have got OX40 or OX40 ligand molecules in their portfolio, either in combination or, but I do believe we're behind L-enzanitant, the leading monotherapy for OX40 ligand. Our contention here is it doesn't cost much capital for us to continue to advance this molecule into phase I Certainly, with our funding from the Government of Canada, we actually have a low cost of capital position to do these trials in Canada. There are the sites, there are the patients, we have activated them, and we will get our clinical data also sometime in 2026. The biggest value inflection point here is really what is the readout from Sanofi going to look like? The readout from yesterday shows promise, but still too early to tell if this, in fact, is going to provide better efficacy than Dupixent. What it has done is validated the pathway. We do maintain that the OX40 ligand is going to be an important pathway in a variety of indications, either as a monotherapy or perhaps in combination with some other drugs. Got it. No, perfectly fair. Great. You also have a couple of more programs. I know we haven't really disclosed as much about some of them, but you have another proprietary program that's supposed to enter clinic in 2026, if I recall correctly. You can correct me on that. Again, we haven't really disclosed the target, but flavor-wise, it feels like this is more like 635 and kind of the AbCellera Biologics playbook going forward. Yeah, like I mentioned, the history, I took some time to mention the history of 575 because it's not really in the playbook of what you would expect to see from us going forward. 688 is the next one. We announced that at our last earnings call. As I mentioned previously, we've been building a portfolio to bring on the rate of roughly two per year molecules to the clinic. The first two were this year. You would expect us to bring development candidates into IND enabling studies at roughly that pace as a leading indicator of being on track for that. That's where we announced 688 at the last earnings call. We would expect one more to be announced this year. We've held the cards pretty close to our chest as we did with 635 on what the target is and what the indication is, only to say that it does come from our GPCR and ion channel work. This work at finding molecules against complex membrane protein targets. We think similarly to the size of the market opportunity as we did with 635, maybe an addressable market of about $2 billion. We are scheduled to bring that to the clinic in about mid-2026. Sometime in the middle of the year, maybe in Q2, maybe in Q3. We would expect another one to fall behind that, that maybe is towards the later part of the year. We'll announce, should we get to clinical development candidate, we'll announce that when we get there. No, makes sense. Again, based on the intention to bring lead candidates into clinic, and if you are successful with 635, 575, what is the ultimate goal here? Is it to build a fully integrated biotech company? How does that play out into your finance? You mentioned you're well capitalized. Can you talk about runway and kind of the capital allocation strategy going forward? Yeah, depending on clinical success, of course. Absolutely. As you say, we're well capitalized. We have over $500 million in cash and another nearly $200 million of available capital from the funding provided by the Government of Canada and the Government of British Columbia. We're well capitalized for at least the next three years, I think, is the standing comment. As you know, I've been saying that on a rolling basis for the last four years. We've been fortunate, particularly in this market, that we have that capital. We think very carefully about the capital allocation and how we're putting it onto these programs. As we get into phase I for a number of programs, that's not that expensive. We definitely have the capital to sufficiently execute on the phase ones. As we start to get clinical data and we start to manage this portfolio, if we, for example, if we are successful in bringing roughly two to the clinic every year, you fast forward a few years, we have eight molecules that are in the clinic. While we definitely have enough capital to put those through all through phase I, a big question will be if we like them enough to move through phase II and we feel as though we are a good sponsor for taking that molecule through phase two, how are we going to manage that portfolio? That's where I think we look at it in an asset-by-asset basis. With ABCL635 as an example, absolutely, we have the conviction to keep going. With ABCL575, I think really this would be more in a partnership model where we'd be looking for, once we have clinical data and once we have the big external kind of inflection point or catalyst to really understand the value of that molecule, we'd be looking for a partner who would maybe be able to take that forward broadly across INI in a number of indications, which would not be the right path. That's a very different development. That's a very different path. We're not the right sponsor for moving that program forward towards patients the way it could add value. We would look for a partnership opportunity there. Similarly, we would use our partnering ability as a way to manage that portfolio to put those molecules in the right hands, and as a part of that, generate capital through upfronts and then participation in the backend so that we can continue to advance our own proprietary portfolio. Got it. That would be kind of how we think about managing the capital over that period of time. Oh, I know the partner programs and the royalty portfolio is not the bigger driver of the story right now, but I think we have to at least address it. In terms of active programs, are you still signing some of those programs selectively? I know eventually that's not going to be the focus here, but what is some potential upside and how does that impact your current business model, cash burn, so on and so forth? Yeah, it's a great question. We do have that portfolio of royalty positions and molecules that are advancing towards the clinic. I think you've done the modeling, I've done the modeling, I'm convinced that that's a valuable thing, but it's very difficult to convince others. I think until there's a specific molecule advanced by a partner that they see as a giant opportunity and is phase II, phase III. We continue to monitor the 16 or 18 programs, I think it is now, that we've worked on that are in clinical trials or have been in clinical trials. We have milestones relating to that. We will continue to do some partnership deals. Earlier this year, we announced a deal on T-cell engagers with AbbVie. We look for partners that bring something that we don't have and that can benefit from the work we do in discovery, the unique work we believe we do in discovery of therapeutic antibodies. We'll continue to do that where we see the partnership opportunities. We still have a great partnership with Eli Lilly, with Novartis, and with others. That will continue to be part of the business model. Also, establishing those relationships and getting them familiar with our work is important in the partnering activity of these clinical assets where we have clinical data. You would even say that's a very valuable part of having those relationships to have those discussions with partnering activities in the portfolio management we do with the clinical assets. Got it. Perfect. I can probably leave it at that just in time. Okay. I appreciate the time. Okay, thank you. Thank you so much.