AbCellera Biologics(US:ABCL)2025-08-07 20:36Part I. Financial Information Financial Statements (Unaudited) 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 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 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 202571 - Phase 1 clinical trials for both ABCL635 and ABCL575 are anticipated to start in Canada during the second half of 20257172 - A third internal program, ABCL688 for an undisclosed autoimmunity indication, advanced into IND/CTA-enabling studies in Q2 2025, with a submission anticipated in 202673 Key Business Metrics 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 trials84 Results of Operations 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 202496 - 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 impairment99 Liquidity and Capital Resources 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, 2025102 - 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 forward104 - Management believes current liquidity is sufficient to meet working capital and capital expenditure needs for at least the next 36 months104 Quantitative and Qualitative Disclosures About Market Risk 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 year111 Controls and Procedures 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, 2025112 - The company is implementing a new ERP system, which has resulted in modifications to certain existing internal controls over financial reporting. The implementation is ongoing113114 Part II. Other Information Legal Proceedings 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 2026116 - 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 appeal117 - 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 meritless118 Risk Factors 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 therapeutic120121 - 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 payments83138 - 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 advantage300301 - 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 fall377405 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None415 Other Information 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, 2025416 Exhibits 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 files419