Business Updates - The company has completed its transition into a clinical-stage biotech and is on track to complete key priorities[4] - Phase 1 clinical trials for ABCL635 (for vasomotor symptoms) were initiated in June 2025[4, 5, 6] - Phase 1 clinical trials for ABCL575 (immunology & inflammation) were initiated in July 2025[4, 7] - ABCL688, a development candidate for autoimmunity, has been nominated for CTA-enabling studies[4, 14] Financials - The company has approximately $750 million in available liquidity to execute its strategy[4, 17] - The company has approximately $580 million in total cash, cash equivalents, and marketable securities[18, 28] - The company has approximately $170 million in total available government funding[16] - Q2 2025 revenue was $39.2 million, a decrease of $1.7 million compared to $40.9 million in Q2 2024[23] - Q2 2025 net loss was $34.7 million, equivalent to ($0.12) per share[25, 26] - Q2 2025 Research and Development expenses were $19.0 million, a decrease of $1.2 million compared to $20.2 million in Q2 2024[23]

Part I. Financial Information [Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) The unaudited condensed consolidated financial statements for the period ended June 30, 2025, show an increase in total assets to **$1.40 billion** and total liabilities to **$395.0 million**, with a net loss of **$34.7 million** for Q2 2025 and **$80.3 million** for the six months ended June 30, 2025, while cash flows from operations remained negative but improved Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | **Total cash, cash equivalents, and marketable securities** | $625,614 | $553,078 | | **Total current assets** | $751,370 | $742,145 | | **Total assets** | $1,360,553 | $1,402,061 | | **Total current liabilities** | $76,612 | $67,023 | | **Total liabilities** | $304,469 | $394,985 | | **Total shareholders' equity** | $1,056,084 | $1,007,076 | Condensed Consolidated Statements of Loss Highlights (in thousands, except per share data) | Metric | Q2 2024 | Q2 2025 | YTD 2024 | YTD 2025 | | :--- | :--- | :--- | :--- | :--- | | **Total revenue** | $7,323 | $17,084 | $17,277 | $21,320 | | **Loss from operations** | $(93,454) | $(49,585) | $(148,348) | $(112,246) | | **Net loss** | $(36,930) | $(34,727) | $(77,540) | $(80,348) | | **Net loss per share (basic & diluted)** | $(0.13) | $(0.12) | $(0.26) | $(0.27) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six months ended June 30, 2024 | Six months ended June 30, 2025 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(71,674) | $(43,958) | | **Net cash provided by (used in) investing activities** | $82,008 | $(23,876) | | **Net cash provided by financing activities** | $5,482 | $2,595 | | **Net increase (decrease) in cash** | $14,992 | $(63,888) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a **133% YoY increase** in Q2 revenue to **$17.1 million**, driven by licensing revenue, while operating expenses decreased primarily due to a large impairment charge in the prior year, and the company advanced its internal pipeline, submitting Clinical Trial Applications for ABCL635 and ABCL575, expecting to initiate Phase 1 trials in H2 2025, with key business metrics showing growth in partner-initiated programs and molecules in the clinic, and management believes its liquidity of **$553.1 million** is sufficient for at least the next 36 months [Overview and Recent Developments](index=19&type=section&id=Overview%20and%20Recent%20Developments) AbCellera is focused on discovering and developing antibody-based medicines, advancing its internal pipeline and partnering with other companies, achieving a key milestone in Q2 2025 by submitting Clinical Trial Applications (CTAs) for two therapies, ABCL635 (for menopause symptoms) and ABCL575 (for atopic dermatitis), receiving No Objection Letters from Health Canada, with Phase 1 trials for both expected to begin in H2 2025, and a third program, ABCL688 for autoimmunity, advanced into IND/CTA-enabling studies - Submitted Clinical Trial Applications (CTAs) for ABCL635 (vasomotor symptoms in menopause) and ABCL575 (atopic dermatitis) and received No Objection Letters from Health Canada in May 2025[71](index=71&type=chunk) - Phase 1 clinical trials for both ABCL635 and ABCL575 are anticipated to start in Canada during the second half of 2025[71](index=71&type=chunk)[72](index=72&type=chunk) - A third internal program, ABCL688 for an undisclosed autoimmunity indication, advanced into IND/CTA-enabling studies in Q2 2025, with a submission anticipated in 2026[73](index=73&type=chunk) [Key Business Metrics](index=24&type=section&id=Key%20Business%20Metrics) The company tracks key metrics to evaluate its business, including the cumulative number of partner-initiated programs with downstream participation and the number of molecules in the clinic, with partner-initiated programs growing **10% YoY to 102** and molecules in the clinic increasing **29% YoY to 18** as of June 30, 2025 Cumulative Key Business Metrics Comparison | Metric | June 30, 2024 | June 30, 2025 | Change % | | :--- | :--- | :--- | :--- | | **Partner-initiated program starts with downstreams** | 93 | 102 | 10% | | **Molecules in the clinic** | 14 | 18 | 29% | - As of June 30, 2025, there are **18 molecules in the clinic**, including two AbCellera-led programs (ABCL635 and ABCL575) with authorized clinical trials[84](index=84&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) For Q2 2025, total revenue increased **133% YoY to $17.1 million**, mainly due to a **$10.1 million increase** in licensing revenue, while research and development expenses decreased slightly by **4% to $39.2 million**, and general and administrative expenses decreased by **6% to $19.0 million**, with a significant factor in the reduced loss from operations being the **$31.1 million decrease** in depreciation, amortization, and impairment, as Q2 2024 included a **$32.0 million impairment charge** Revenue Comparison (in thousands) | Revenue Category | Q2 2024 | Q2 2025 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research fees | $5,453 | $6,639 | $1,186 | 22% | | Licensing revenue | $370 | $10,445 | $10,075 | 2723% | | Milestone payments | $1,500 | $– | $(1,500) | (100)% | | **Total revenue** | **$7,323** | **$17,084** | **$9,761** | **133%** | - Depreciation, amortization, and impairment expense decreased by **$31.1 million (85%)** in Q2 2025 compared to Q2 2024, primarily due to a **$32.0 million impairment charge** related to IPR&D from the TetraGenetics acquisition recognized in 2024[96](index=96&type=chunk) - Other income decreased by **$30.2 million** in Q2 2025 compared to Q2 2024, mainly because the prior-year period included a **$32.4 million non-cash fair value gain** from adjusting contingent consideration related to the TetraGenetics impairment[99](index=99&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, AbCellera had **$553.1 million** in cash, cash equivalents, and marketable securities, a decrease of **$72.5 million** from year-end 2024, driven by cash used in operations, R&D activities, and investments in its corporate headquarters and manufacturing facility, with management believing existing liquidity is sufficient to meet capital needs for at least the next 36 months without requiring additional external funding - The company holds **$553.1 million** in cash, cash equivalents, and marketable securities as of June 30, 2025[102](index=102&type=chunk) - The company is on track to complete its final large platform investments in its clinical manufacturing facility and corporate headquarters in 2025, which is expected to significantly reduce investing cash flows going forward[104](index=104&type=chunk) - Management believes current liquidity is sufficient to meet working capital and capital expenditure needs for at least the next **36 months**[104](index=104&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that its exposure to market risk has not materially changed from the disclosures provided in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes in the company's exposure to market risk since the end of the 2024 fiscal year[111](index=111&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, and the company is in the process of implementing a new enterprise resource planning (ERP) system, which has led to modifications in certain internal controls over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[112](index=112&type=chunk) - The company is implementing a new ERP system, which has resulted in modifications to certain existing internal controls over financial reporting. The implementation is ongoing[113](index=113&type=chunk)[114](index=114&type=chunk) Part II. Other Information [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company provides updates on its ongoing legal matters, including a patent infringement litigation against Bruker Cellular Analysis with a jury trial scheduled for January 2026, a related appeal where the CAFC affirmed the validity of all claims of AbCellera's '408 Patent, and a separate case involving the estate of John Schrader where the company is seeking dismissal of certain affiliates for lack of jurisdiction and believes the claim is meritless - A jury trial for the patent infringement litigation against Bruker Cellular Analysis is scheduled for January 2026[116](index=116&type=chunk) - In May 2025, the U.S. Court of Appeals for the Federal Circuit (CAFC) confirmed that all claims of AbCellera's '408 Patent are valid, rejecting Bruker's appeal[117](index=117&type=chunk) - In the Schrader v. Hansen et al. case, the company is seeking to dismiss certain affiliates from the matter and believes the plaintiff's claim is meritless[118](index=118&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) This section details numerous risks that could materially affect the company's business, financial condition, and results of operations, including a history of losses and potential inability to achieve profitability, reliance on partners for the successful development and commercialization of discovered antibodies, uncertainty in drug development, competition, and the need to protect intellectual property, along with risks related to financial market volatility, dependence on key personnel, cybersecurity threats, and regulatory changes - The company has incurred losses, including in 2025, and may not generate sufficient revenue to achieve profitability, as its success depends on developing and monetizing a therapeutic[120](index=120&type=chunk)[121](index=121&type=chunk) - The company's business is highly reliant on partners successfully developing and commercializing antibodies discovered by AbCellera, as the majority of potential value is in future milestone and royalty payments[83](index=83&type=chunk)[138](index=138&type=chunk) - The company faces risks related to its ability to obtain and maintain sufficient intellectual property protection for its technology, which is critical to its competitive advantage[300](index=300&type=chunk)[301](index=301&type=chunk) - The market price of the company's common shares may be volatile, and sales of a substantial number of shares could cause the price to fall[377](index=377&type=chunk)[405](index=405&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=88&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - None[415](index=415&type=chunk) [Other Information](index=88&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, no directors or officers adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No director or officer adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[416](index=416&type=chunk) [Exhibits](index=89&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents - The report includes standard exhibits such as CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and XBRL data files[419](index=419&type=chunk)

[Q2 2025 Business and Financial Highlights](index=1&type=section&id=Q2%202025%20Business%20and%20Financial%20Highlights) AbCellera's Q2 2025 highlights include significant clinical pipeline advancements and strong financial performance with doubled revenue [Business & Operational Summary](index=1&type=section&id=Business%20%26%20Operational%20Summary) AbCellera transitioned to a clinical-stage biotechnology company in Q2 2025, initiating Phase 1 trials for two programs and advancing a third, while expanding its discovery pipeline - AbCellera has transitioned into a **clinical-stage biotechnology company** with the initiation of **Phase 1 studies** for ABCL635 and ABCL575[2](index=2&type=chunk) - A third internal program, ABCL688, targeting autoimmunity, has advanced into **IND/CTA-enabling studies**[2](index=2&type=chunk)[3](index=3&type=chunk) [Key Business Metrics](index=2&type=section&id=Key%20Business%20Metrics) The company achieved strong year-over-year growth in key operational metrics, including partner-initiated programs and molecules advanced into the clinic Cumulative Business Metrics Growth (YoY) | Cumulative Metrics | June 30, 2024 | June 30, 2025 | Change % | | :--- | :--- | :--- | :--- | | Partner-initiated program starts with downstreams | 93 | 102 | 10% | | Molecules in the clinic | 14 | 18 | 29% | [Clinical Pipeline Updates](index=2&type=section&id=Clinical%20Pipeline%20Updates) The company initiated Phase 1 trials for ABCL635 and ABCL575, advancing its clinical pipeline with anticipated data in mid-2026 for ABCL635 - **ABCL635 (Endocrinology/Women's Health):** Dosing has begun in a Phase 1 trial for treating moderate-to-severe vasomotor symptoms Initial safety and efficacy data is expected in mid-2026[7](index=7&type=chunk) - **ABCL575 (Immunology and Inflammation):** A Phase 1 trial has been initiated for treating moderate-to-severe atopic dermatitis The antibody is designed for a potential dosing interval of once every 6 months[7](index=7&type=chunk) [Q2 2025 Financial Performance](index=1&type=section&id=Q2%202025%20Financial%20Performance) In Q2 2025, AbCellera's revenue more than doubled to $17.1 million compared to $7.3 million in Q2 2024, narrowing its net loss and maintaining robust liquidity Q2 2025 Financial Highlights vs. Q2 2024 (in millions USD) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $17.1 | $7.3 | +134% | | R&D Expenses | $39.2 | $40.9 | -4.2% | | Net Loss | $(34.7) | $(36.9) | +6.0% | | Net Loss Per Share | $(0.12) | $(0.13) | +7.7% | - The company is well-capitalized with total available liquidity of approximately **$753 million**, comprising **$580 million** in cash and marketable securities and **$173 million** in available non-dilutive government funding[2](index=2&type=chunk)[8](index=8&type=chunk) [Condensed Consolidated Statements of Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss) For the three months ended June 30, 2025, total revenue surged to $17.1 million, driven by a significant increase in licensing revenue, resulting in a net loss of $34.7 million Q2 2025 Statement of Loss (in thousands USD) | Line Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--- | :--- | :--- | | **Total revenue** | **$17,084** | **$7,323** | | Research fees | $6,639 | $5,453 | | Licensing revenue | $10,445 | $370 | | **Total operating expenses** | **$66,669** | **$100,777** | | Research and development | $39,213 | $40,927 | | Depreciation, amortization, and impairment | $5,470 | $36,522 | | **Loss from operations** | **$(49,585)** | **$(93,454)** | | **Net loss** | **$(34,727)** | **$(36,930)** | | **Net loss per share (basic & diluted)** | **$(0.12)** | **$(0.13)** | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, AbCellera's total assets increased to $1.40 billion, with total cash, cash equivalents, and marketable securities at $553.1 million, and total shareholders' equity at $1.01 billion Balance Sheet Summary (in thousands USD) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | **$742,145** | **$751,370** | | Cash, cash equivalents, and marketable securities | $553,078 | $625,614 | | **Total assets** | **$1,402,061** | **$1,360,553** | | **Total current liabilities** | **$67,023** | **$76,612** | | **Total liabilities** | **$394,985** | **$304,469** | | **Total shareholders' equity** | **$1,007,076** | **$1,056,084** | [Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities improved to $44.0 million, while net cash used in investing activities shifted to $23.9 million, resulting in a $63.9 million decrease in cash and cash equivalents Cash Flow Summary - Six Months Ended June 30 (in thousands USD) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(43,958) | $(71,674) | | Net cash provided by (used in) investing activities | $(23,876) | $82,008 | | Net cash provided by financing activities | $2,595 | $5,482 | | **Decrease in cash and cash equivalents** | **$(63,888)** | **$14,992** | [Other Information](index=3&type=section&id=Other%20Information) This section provides definitions for key business metrics, outlines forward-looking statement disclaimers, and details conference call access information [Definition of Key Business Metrics](index=3&type=section&id=Definition%20of%20Key%20Business%20Metrics) This section defines key business metrics, including partner-initiated programs and molecules in the clinic, which indicate potential for future revenue from milestones and royalties - **Partner-initiated program starts with downstreams:** This metric indicates the potential for near-term payments and long-term revenue from milestone fees and royalties[12](index=12&type=chunk) - **Molecules in the clinic:** This metric signals near- and mid-term potential revenue from milestone fees and long-term potential from royalty payments[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains the standard "safe harbor" provision, cautioning that the press release includes forward-looking statements based on management's current beliefs and assumptions - The press release contains **forward-looking statements** under the **safe harbor provisions** of the Private Securities Litigation Reform Act of 1995[14](index=14&type=chunk) - These statements involve **risks and uncertainties**, and readers are cautioned that they are based on current projections and may not prove to be accurate[16](index=16&type=chunk) [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) AbCellera scheduled a conference call and live webcast to discuss the Q2 2025 financial results and business updates for 2:00 p.m. Pacific Time on the day of the earnings release - A **conference call and live webcast** were scheduled for 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss the results[9](index=9&type=chunk)

Company Overview - AbCellera Biologics Inc. (ABCL) shares increased by 15% to close at $5.15, with notable trading volume exceeding typical levels. The stock has gained 31.4% over the past four weeks [1][2]. Pipeline Development - The price surge is linked to growing investor optimism regarding the company's pipeline candidate, ABCL635, which is a first-in-class antibody for treating vasomotor symptoms (hot flashes) related to menopause. A phase I study for ABCL635 is expected to commence in the second half of 2025 [2]. Financial Performance Expectations - The company is projected to report a quarterly loss of $0.16 per share, reflecting a year-over-year decline of 23.1%. Revenue is anticipated to be $9.33 million, marking a 27.4% increase from the same quarter last year [3]. - The consensus EPS estimate for the upcoming quarter has been revised 5.9% higher in the last 30 days, indicating a positive trend that may lead to price appreciation [4]. Industry Context - AbCellera operates within the Zacks Medical - Biomedical and Genetics industry. Jazz Pharmaceuticals (JAZZ), a peer in the same sector, experienced a slight decline of 0.2% to $112.65, with a 5% return over the past month [5]. - Jazz's consensus EPS estimate has changed by +4.2% to -$6.12, representing a significant year-over-year decline of 215.5%. Jazz currently holds a Zacks Rank of 4 (Sell) [6].

Summary of AbCellera Biologics (ABCL) FY Conference Call - June 09, 2025 Company Overview - **Company**: AbCellera Biologics (ABCL) - **Transition**: Shifted from a platform company to a clinical-stage biotech with two internally developed agents authorized for clinical trials [3][4] Key Points and Arguments Financial Position - **Liquidity**: Company has approximately $800 million in liquidity, allowing for continued investment in pipeline development [3] Pipeline Development - **Initial Molecules**: Focus on two molecules, ABCL635 and ABCL575, entering clinical trials in Q3 2025 [3] - **Development Projects**: Over 20 development projects, with more than half targeting complex membrane protein targets [4] Target Selection Framework - **Framework Criteria**: Selection based on validated science, large commercial opportunities, differentiation, and clear development paths [5][6] ABCL635 Specifics - **Indication**: Targeting vasomotor symptoms (VMS) related to menopause, specifically hot flashes [8] - **Market Opportunity**: Estimated annual sales potential over $2 billion, with 30% of women experiencing moderate to severe VMS [10] - **Differentiation**: Antibody approach expected to have fewer safety issues compared to small molecules, with a preference for monthly dosing over daily oral administration [20][21] Market Dynamics - **Menopausal Hormone Therapy (MHT)**: Approximately 40 million women in the U.S. are of menopausal age, with 30% experiencing moderate to severe VMS. About 50% seek treatment, but 20% are contraindicated for MHT [25][26][27] - **Commercial Market**: Significant opportunity exists for alternatives to MHT, especially for the 1.2 million women contraindicated for MHT [28] ABCL575 Overview - **Mechanism**: Targets OX40 ligand, which mediates T cell expansion and survival, potentially offering safety advantages over OX40 receptor targeting [35] - **Indication**: Initially exploring atopic dermatitis, a large unmet medical need with existing successful treatments like Dupixent [38] Competitive Landscape - **Dupixent Comparison**: Dupixent generates $8 billion in sales but has limitations in patient response rates, indicating a potential market for alternative therapies like ABCL575 [41] Clinical Trials and Future Plans - **Phase One Trials**: Expected to start dosing in Q3 2025, with initial data anticipated in the first half of 2026 [49][50] - **Partnership Strategy**: ABCL635 is likely to be advanced independently, while ABCL575 may be better suited for partnership due to its broader indication potential [54][60] Legacy Business and Partnerships - **Ongoing Partnerships**: Continued investment in partnerships, including a recent collaboration with AbbVie on T cell engagers [61] - **GMP Facility**: Investment in a GMP facility expected to be operational by the end of the year, supporting clinical trial material production [62] Additional Important Content - **Patient Preferences**: Surveys indicate a preference for injectable treatments over daily oral medications among menopausal women [21][23] - **Market Segmentation**: There is room for both biologics and oral treatments in the market, with patient choice being a significant factor [32] This summary encapsulates the key insights from the conference call, highlighting the strategic direction, market opportunities, and clinical development plans of AbCellera Biologics.

Core Viewpoint - AbCellera Biologics Inc. (ABCL) has received a Zacks Rank 2 (Buy) upgrade due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is primarily based on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2][3]. - The recent upgrade for AbCellera indicates a positive outlook on its earnings, which could positively affect its stock price [4][6]. Impact of Earnings Estimates on Stock Prices - Changes in future earnings potential, reflected in earnings estimate revisions, are strongly correlated with near-term stock price movements, influenced by institutional investors [5]. - Rising earnings estimates and the subsequent rating upgrade suggest an improvement in AbCellera's underlying business, which should lead to higher stock prices [6]. Importance of Earnings Estimate Revisions - Empirical research shows a strong correlation between earnings estimate revisions and stock movements, making tracking these revisions beneficial for investment decisions [7]. - The Zacks Rank system effectively utilizes earnings estimate revisions to classify stocks into five groups, with a strong historical performance of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [8]. Specific Earnings Estimates for AbCellera - For the fiscal year ending December 2025, AbCellera is expected to earn -$0.68 per share, reflecting a change of -23.6% from the previous year [9]. - Over the past three months, the Zacks Consensus Estimate for AbCellera has increased by 5.6%, indicating a positive trend in earnings estimates [9]. Overall Rating System Insights - The Zacks rating system maintains a balanced distribution of 'buy' and 'sell' ratings across its universe of over 4000 stocks, with only the top 20% receiving favorable ratings [10][11]. - The upgrade of AbCellera to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [11].

Core Viewpoint - AbCellera Biologics experienced a significant stock increase of nearly 6% following the announcement of receiving a no objection letter (NOL) from Health Canada for its investigational drug ABCL575, which targets moderate to severe atopic dermatitis [1][2][4]. Group 1: Regulatory Approval - The receipt of the NOL from Health Canada is a crucial milestone for AbCellera, facilitating the advancement of its clinical program [4]. - The company plans to initiate a phase 1 clinical study of ABCL575 in the third calendar quarter of this year, with the drug administered via injection to trial participants [4]. Group 2: Company Overview - AbCellera is actively engaged in over 20 investigational programs across various indications, indicating a robust pipeline [5]. - Despite the positive news, the Canadian market is smaller compared to the U.S., making this development a relatively minor but still significant step for the company [5].

Financial Data and Key Metrics Changes - The company reported revenue of approximately $4 million for Q1 2025, a decrease from $10 million in the same quarter of 2024, primarily due to a shift in focus towards internal and co-development programs [22][23] - The net loss for the quarter was roughly $46 million, compared to a loss of around $41 million in Q1 2024, resulting in a loss of CAD0.15 per share [24][25] - The company ended the quarter with approximately $630 million in cash and equivalents, along with $180 million in available committed government funding, totaling about $810 million in liquidity [21][27] Business Line Data and Key Metrics Changes - The company maintained a cumulative total of 16 molecules that have reached the clinic, with no new molecules advancing in the quarter [22] - The company initiated work on one partner-initiated program, bringing the cumulative total to 97 programs with downstream participation [21] Market Data and Key Metrics Changes - The market opportunity for ABCL635, targeting vasomotor symptoms associated with menopause, is estimated to exceed $2 billion in annual sales, with approximately 30% of women experiencing moderate to severe symptoms [9][10] Company Strategy and Development Direction - The company is focused on advancing its lead programs, ABCL635 and ABCL575, into clinical trials, with plans to complete the CTA process for both programs [18][19] - The company aims to transition from a platform company to a clinical-stage biotech, with over 20 internal and co-development programs in the pipeline [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the biology and differentiation of ABCL635, highlighting the unmet medical need for non-hormonal treatments for vasomotor symptoms [18] - The company plans to start Phase I studies for ABCL635 in Q3 2025, with key readouts expected in mid-2026 [18] Other Important Information - The company is investing in building clinical manufacturing capabilities, expected to be operational by the end of 2025 [27] - The company has received commitments for funding from the Government of Canada's Strategic Innovation Fund and the Government of British Columbia, which will support its GMP facility and internal pipeline advancement [27] Q&A Session Summary Question: What do you expect this asset needs to see in terms of Phase one data to capture a competitive edge? - Management indicated that they will look for safety data and important biomarker data, which will provide early signs of target engagement and efficacy [30][31] Question: What should we expect to see from the upcoming ABCL575 preclinical data? - Management stated that the preclinical data will include early animal work and PK analysis, with expectations for a superior dosing regimen [35] Question: Given the risk around translatability of NKTR engagement, is there a precedent that gives confidence? - Management noted preclinical data from nonhuman primates provides optimism, but emphasized caution in drug development [37][38] Question: How are you thinking about the next development candidates? - Management is looking for high conviction biology with large unmet medical needs and compelling differentiation, likely focusing on GPCR or ion channel targets [40][41] Question: Can you provide context on the pause of Novorok molecules in the clinic? - Management believes the pause is related to fundraising efforts by Novorok, which is common in the current environment [57] Question: Is there consideration for U.S.-based manufacturing redundancies? - Management confirmed that their current manufacturing facility in Canada supports their clinical trials, and they have not yet considered U.S.-based manufacturing [58][59]

Clinical Development Programs - ABCL635 Phase 1 clinical trials are expected to initiate in Q3 2025[9, 36] - ABCL575 Phase 1 clinical trials are expected to initiate in Q3 2025[4, 36] - ABCL635 is a potential first-in-class antibody for the non-hormonal treatment of vasomotor symptoms (hot flashes)[6] - Phase 1 Readout safety & early efficacy of ABCL635 is anticipated in the first half of 2026[11, 34] Financial Status - The company has approximately $810 million in available liquidity to execute on its strategy[5, 44] - The company has approximately $630 million in total cash, cash equivalents, and marketable securities[45] - The company has approximately $180 million in total available government funding[43] - Q1 2025 revenue was $42.5 million, an increase of $3.2 million compared to $39.3 million in Q1 2024[50] - Q1 2025 net loss was $46 million, equivalent to ($0.15) per share[52] Market Opportunity - Approximately 40 million women are of menopausal age in the US[11, 15] - Approximately 30% of women experience moderate-to-severe VMS[11, 15]

Financial Performance - Total revenue for Q1 2025 was $4,235,000, a decrease of 57.5% compared to $9,954,000 in Q1 2024[13] - Net loss for Q1 2025 was $45,621,000, compared to a net loss of $40,610,000 in Q1 2024, indicating a 12.4% increase in losses[13] - The company reported a comprehensive loss of $48,241,000 for Q1 2025, compared to a comprehensive loss of $40,706,000 in Q1 2024, representing a 18.5% increase[13] - Operating expenses for Q1 2025 were $66,895,000, up from $64,848,000 in Q1 2024, indicating a rise of 3.2%[79] - Interest income decreased by $2.4 million, or 23%, from $(10.40) million in Q1 2024 to $(8.05) million in Q1 2025, primarily due to lower cash balances and interest yields[93] - The company reported a net loss of $162.9 million for the year ended December 31, 2024, compared to a net loss of $146.4 million for 2023[115] - Accumulated earnings as of December 31, 2024, were $116.9 million, down from $279.8 million in 2023[115] Assets and Liabilities - Total assets decreased from $1,360,553,000 as of December 31, 2024, to $1,344,208,000 as of March 31, 2025, a decline of 1.2%[12] - Total liabilities increased from $304,469,000 to $321,226,000, marking a rise of 5.5%[12] - Shareholders' equity decreased from $1,056,084,000 to $1,022,982,000, a decline of 3.1%[12] - Cash and cash equivalents increased from $156,325,000 at the end of 2024 to $159,266,000 by March 31, 2025, reflecting a growth of 1.2%[12] - Total current assets rose from $751,370,000 to $764,978,000, an increase of 1.8%[12] Research and Development - Research and development expenses increased to $42,496,000 in Q1 2025, up from $39,287,000 in Q1 2024, representing a 5.5% increase[13] - Significant investments are expected in research and development to enhance antibody discovery and development capabilities[75] - The company is focused on developing first-in-class and best-in-class antibody-based medicines for high unmet medical needs[67] - The company has invested significantly in research and development efforts to enhance its technology and platform, but these investments carry inherent risks that may affect operating results[141] - The company has not expensed any amounts related to research and development milestone payments during the three months ended March 31, 2024, or March 31, 2025[51] Government Contributions - The company received a total of CAD $300 million ($222.3 million) in multi-year contributions from the Government of Canada and the Government of British Columbia to develop and manufacture antibody medicines[53] - Government Contribution 1 includes CAD $175.6 million ($125.6 million) for R&D related to COVID-19, with CAD $116.9 million ($88.5 million) repayable based on revenue thresholds[52] - The company has recorded CAD $83.1 million ($60.4 million) in respect of Government Contribution 2 from the Government of Canada as of March 31, 2025[54] - The company has a deferred government contribution of $164.4 million as of March 31, 2025, compared to $157.6 million as of December 31, 2024[57] Clinical Development and Trials - Cumulative total of 16 molecules advanced into the clinic as of March 31, 2025, an increase of 23% from 13 molecules in the previous year[82] - The company plans to start Phase 1 clinical trials in Canada for two AbCellera-led programs in the second half of 2025[73] - The company has initiated a total of 97 partner-initiated programs with downstream participation, reflecting an 8% increase from 90 programs[82] - The company’s ability to generate revenue is dependent on the success of its antibody discovery and development capabilities[129] - The successful development of product candidates is uncertain, with a high failure rate in clinical studies, which could adversely affect business and operating results[177] Market and Regulatory Challenges - The company faces challenges in obtaining adequate reimbursement for its products, which is crucial for market acceptance and revenue generation[192] - The Medicare Modernization Act and the Inflation Reduction Act have introduced pricing pressures and regulatory changes that could impact the pharmaceutical industry[194] - Regulatory approval for product candidates is subject to various factors, including government budget and funding levels, which could delay or prevent timely commercialization[176] - The company may experience delays in patient enrollment for clinical trials, which is critical for timely completion and regulatory approval[168] - Changes in regulatory requirements may necessitate amendments to clinical trial protocols, potentially affecting costs and timelines[162] Liquidity and Future Outlook - The company believes it has sufficient liquidity from existing cash and cash equivalents to meet its working capital needs for at least the next 36 months[123] - Future funding requirements will depend on various factors, including the introduction of new technologies and costs related to litigation[124] - The company anticipates continued losses for the foreseeable future and cannot predict when it may achieve profitability[115] - The company acknowledges that interim, preliminary, or top-line data from clinical trials may change as more patient data become available, which could significantly impact business prospects[173] Miscellaneous - The company is in an ongoing patent infringement litigation against Bruker, with a jury trial scheduled for January 2026[111] - The company has completed the implementation of the consolidated financial accounting module of its new ERP system, which is expected to enhance financial reporting accuracy[107] - The company is currently implementing changes to its internal controls over financial reporting due to the new ERP system[108] - The company does not have any product candidates approved for sale in any jurisdiction, limiting its ability to realize full market potential[186]