UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 | --- | --- | --- | |---------------------------|-----------|-------------------------------------------------------| | | | | | | Trading | | | Title of each class | Symbol(s) | Name of each exchange on which registered | FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF T ...

Financial Data and Key Metrics Changes - The company ended Q2 2022 with over $1 billion in cash, cash equivalents, and marketable securities, indicating a strong liquidity position [6][41] - Revenue for the quarter was $46 million, driven largely by $33 million in royalties from COVID antibody shipments [32] - The net loss for Q2 2022 was approximately $7 million, compared to a loss of $2 million in Q2 2021, resulting in a loss of $0.02 per share [39] Business Line Data and Key Metrics Changes - The company started four new programs in Q2 2022, bringing the cumulative total to 88 program starts, with a 19% increase in programs under contract compared to Q2 2021 [26][27] - Six molecules are currently in the clinic, with a U.S. government purchase order for 150,000 doses of bebtelovimab received and partially fulfilled by Eli Lilly [30][31] Market Data and Key Metrics Changes - The company expects continued strength in research fees and anticipates the majority of total 2022 revenue to be derived from royalties on COVID antibodies [34][35] - The new commercial sales arrangement by Eli Lilly is expected to result in additional royalties for the company as usage normalizes [35] Company Strategy and Development Direction - The long-term strategy focuses on building a competitive advantage in antibody product creation and leveraging technology to drive drug development efficiency [12][9] - The company aims to attract top-tier talent and expand its operations and capabilities, benefiting from industry rationalization and consolidation [8][7] Management's Comments on Operating Environment and Future Outlook - Management believes the current market environment presents a strong tailwind for the business, despite challenges faced by competitors [6] - There is no indication of a slowdown in development from partners, as high-quality firms are expected to continue moving their programs forward [92][93] Other Important Information - The company has signed new deals with premier venture capital firms to unlock breakthrough science, allowing early-stage companies to start discovery immediately [15] - The company is focused on technology development efforts that could lead to valuable assets, with a strategy to partner these assets for clinical and commercial development [23][64] Q&A Session Summary Question: Can you provide more context on the first adventurous deal and its potential for replication? - Management sees a huge opportunity in using investments in technology along with a partnering business model to allow the best ideas to compete effectively [45][46] Question: What is the next step for the COVID antibody royalties? - The transition from government purchase orders to direct sales by Eli Lilly is viewed positively, simplifying the supply chain [52][53] Question: What are the short-term plans for the over $1 billion in cash? - The company plans to invest heavily in capability building and vertical integration, with a focus on R&D and sales and marketing [54][55] Question: How broad are the pre-partner programs across different therapeutic categories? - The focus is on technology development to solve significant problems, with potential for multiple therapeutic opportunities [60][62] Question: What is the exposure to small biotech companies in the contract portfolio? - Approximately 60% to 75% of programs under contract are with biotech companies, reflecting a broad distribution across the sector [71][72]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number: 001-39781 AbCellera Biologics Inc. (Exact Name of Registrant as Specified in its Charter) British Columbia Not App ...

AbCellera Biologics Inc. (NASDAQ:ABCL) Q1 2022 Results Conference Call May 10, 2022 5:00 PM ET Company Participants Tryn Stimart - Chief Legal and Compliance Officer Dr. Carl Hansen - President and Chief Executive Officer Andrew Booth - Chief Financial Officer Conference Call Participants Tiago Fauth - Credit Suisse Puneet Souda - SVB Securities Stephen Willey - Stifel Gary Nachman - BMO Capital Markets Do Kim - Piper Sandler Antonia Borovina - Bloom Burton Operator Good afternoon and welcome to AbCellera F ...

Financial Performance - Total revenue for the three months ended March 31, 2022, was $316,581,000, representing a 56% increase from $202,741,000 in the same period of 2021[13] - Royalty revenue surged to $307,017,000 in Q1 2022, up from $171,496,000 in Q1 2021, marking an increase of 79%[13] - Net earnings for Q1 2022 were $168,573,000, up from $117,221,000 in Q1 2021, indicating a growth of 44%[13] - Revenue increased from $202.7 million in Q1 2021 to $316.6 million in Q1 2022, representing a growth of 56%[74] - Net income for the three months ended March 31, 2022, was $168,573, compared to $117,221 for the same period in 2021, representing a 43.7% increase[17] Expenses - Total operating expenses rose to $91,631,000 in Q1 2022, compared to $44,667,000 in Q1 2021, reflecting a 105% increase[13] - Research and development expenses rose from $12.4 million in Q1 2021 to $26.4 million in Q1 2022, an increase of 113%[75] - General and administrative expenses increased from $6.4 million in Q1 2021 to $14.3 million in Q1 2022, a rise of 124%[75] - Stock-based compensation expense increased from $5,427 million for the three months ended March 31, 2021, to $12,291 million for the same period in 2022, reflecting a growth of approximately 126%[42] Cash and Assets - Cash and cash equivalents increased from $476,142,000 on December 31, 2021, to $545,718,000 on March 31, 2022, a rise of 15%[11] - Total assets grew from $1,318,569,000 on December 31, 2021, to $1,592,289,000 on March 31, 2022, an increase of 20%[11] - Cash, cash equivalents, and marketable securities totaled $786.1 million as of March 31, 2022[77] Shareholder Information - Total shareholders' equity increased from $1,025,733,000 on December 31, 2021, to $1,207,507,000 on March 31, 2022, reflecting an 18% growth[11] - The company reported a basic net earnings per share of $0.59 for Q1 2022, compared to $0.43 for Q1 2021, representing a 37% increase[13] Research and Development - The company continues to invest significantly in R&D and expects expenses to increase substantially due to ongoing activities[75] - The company aims to become the centralized operating system for next-generation antibody discovery, leveraging its AI-powered platform to enhance therapeutic antibody discovery[19] - The company has invested significantly in research and development to enhance its antibody discovery platform, which may affect operating results if returns are lower than expected[150] Partnerships and Collaborations - The company had 158 discovery programs under contract with 36 partners as of March 31, 2022[70] - The partnership with Eli Lilly has produced two antibodies, bamlanivimab and bebtelovimab, both of which received Emergency Use Authorizations (EUAs) from the FDA[160] - The company must maintain and expand partnerships to ensure the success of its antibody discovery programs, which are critical for revenue generation[132] Regulatory and Compliance Risks - The company is subject to industry-wide FDA and regulatory risks, which could materially harm its business if there is a reduction in the number of new drug applications approved[141] - The company is subject to the FCPA and other anti-corruption laws, with potential violations leading to significant legal and operational consequences[201] - The company faces risks related to data security and compliance with regulations like HIPAA and CCPA, which could lead to significant penalties and reputational damage[171] Future Outlook - The company anticipates significant increases in operating expenses due to investments in research and development, marketing, and infrastructure expansion[116] - The company expects to recognize approximately $5.3 million in revenue in the next 12 months related to milestone payments from a collaboration with Eli Lilly[46] - The company may need to raise additional capital to fund operations and expansion, with existing cash expected to meet needs for at least the next 36 months[124] Market and Competition - The company faces significant competition in the life sciences technology market, with competitors like Berkeley Lights and 10X Genomics providing similar technologies[154] - The company must adapt to rapid technological changes and respond to competitors' new products to remain competitive[165] Operational Challenges - The company is currently facing challenges in obtaining director and officer liability insurance, which may lead to higher costs and reduced coverage, impacting the ability to attract qualified board members[196] - The ongoing COVID-19 pandemic may exacerbate challenges in integration and operational efficiency following recent acquisitions[209]

Financial Data and Key Metrics Changes - Abcellera reported a revenue of $375 million for 2021, with $327 million coming from royalties on bamlanivimab shipments, $8 million from milestone fees, and $21 million from licensing fees [56][65] - The company ended 2021 with over $720 million in cash, cash equivalents, and marketable securities, a 22% increase from December 2020 [68] - Earnings for 2021 were over $153 million, translating to earnings per share of $0.56 on a basic basis and $0.48 on a diluted basis [65] Business Line Data and Key Metrics Changes - In 2021, Abcellera started 26 new drug discovery programs, bringing the total number of program starts to 78 [53][56] - The company ended the year with 156 programs under contract, a 51% increase compared to 2020 [53][56] - Four new molecules entered the clinic in 2021, bringing the total to five [53][56] Market Data and Key Metrics Changes - The antibody therapeutics market is estimated at $170 billion and is expected to grow to over $350 billion by 2030, with a historical compound annual growth rate of over 10% [10][11] - Oncology represents just over half of Abcellera's 65 human health programs, indicating a strong focus on this growth area [20] Company Strategy and Development Direction - Abcellera aims to become the technology leader in early drug development, covering activities from target discovery to clinical testing [11][13] - The company is focusing on strategic partnerships for deeper participation in discovered molecules, moving towards a model that emphasizes program starts over contracts [17][18] - Investments in forward integration are planned to enhance capabilities in translational science and manufacturing, with a GMP facility expected to be operational by 2024 [96][98] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to find high-value work and expects strong growth in program starts throughout 2022 [75][88] - The company views COVID-19 royalties as a non-dilutive funding source to support investments in capacity and platform capabilities [61][62] - Management acknowledged the high-risk nature of drug development and emphasized the importance of a diversified portfolio to mitigate risks [29][30] Other Important Information - The company has made substantial progress in enhancing technologies for antibody discovery, including the integration of the TetraGenetics platform [50] - Abcellera's COVID-19 program with Eli Lilly has generated significant royalties, demonstrating the value of its business model [26][27] Q&A Session Summary Question: What is the expected pace of new program starts in 2022? - Management indicated that the pace of new program starts is expected to increase, driven by improved efficiency and capacity [75][76] Question: Will the company prioritize technology acquisitions given current market conditions? - Management confirmed that they are in a strong liquidity position and will remain opportunistic regarding technology acquisitions [79][80] Question: What does the pipeline look like for higher-value partnerships? - Management stated that they are in discussions with multiple companies and are being selective in partnerships to maximize value [91][92] Question: How much work remains for forward integration? - Management indicated that forward integration is a continuous evolution, with a focus on building capabilities for IND filing by 2024 [96][98] Question: Will the company be able to raise typical royalty rates? - Management clarified that 5% is not the limit for royalty rates, with many recent deals exceeding this threshold [118]