AbCellera Biologics(ABCL) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for AbCellera Biologics Inc., including the Balance Sheets, Statements of Income (Loss) and Comprehensive Income (Loss), Statements of Stockholders' Equity, and Statements of Cash Flows, along with detailed notes explaining the company's operations, accounting policies, and specific financial line items for the periods ended March 31, 2021 and December 31, 2020 Condensed Consolidated Balance Sheets Provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Assets/Liabilities & Equity | Dec 31, 2020 (in thousands) | Mar 31, 2021 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Assets | | | | Cash and cash equivalents | $594,116 | $685,795 | | Total current assets | $813,325 | $907,982 | | Total long-term assets | $192,211 | $220,541 | | Total assets | $1,005,536 | $1,128,523 | | Liabilities | | | | Total current liabilities | $103,490 | $88,395 | | Total long-term liabilities | $71,538 | $83,004 | | Total liabilities | $175,028 | $171,399 | | Shareholders' Equity | | | | Total shareholders' equity | $830,508 | $957,124 | | Total liabilities and shareholders' equity | $1,005,536 | $1,128,523 | Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Details the company's revenues, expenses, and net earnings or loss over specific periods | Income Statement Item | Three months ended Mar 31, 2020 (in thousands) | Three months ended Mar 31, 2021 (in thousands) | | :-------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total Revenue | $4,657 | $202,741 | | Total Operating Expenses | $6,779 | $44,667 | | Income (loss) from operations | $(2,122) | $158,074 | | Net earnings (loss) | $(2,093) | $117,221 | | Basic EPS | $(0.01) | $0.43 | | Diluted EPS | $(0.01) | $0.37 | Condensed Consolidated Statements of Stockholders' Equity Outlines changes in the company's equity accounts, including common shares and accumulated earnings | Equity Item (in thousands) | Dec 31, 2020 | Mar 31, 2021 | | :------------------------- | :----------- | :----------- | | Common Shares Amount | $710,387 | $711,139 | | Additional Paid-in Capital | $5,919 | $14,562 | | Accumulated Earnings | $114,202 | $231,423 | | Total Shareholders' Equity | $830,508 | $957,124 | - Net earnings for the three months ended March 31, 2021, contributed $117,221 thousand to accumulated earnings[12] Condensed Consolidated Statements of Cash Flows Summarizes the cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three months ended Mar 31, 2020 (in thousands) | Three months ended Mar 31, 2021 (in thousands) | | :----------------- | :--------------------------------------------- | :--------------------------------------------- | | Operating activities | $(764) | $109,545 | | Investing activities | $(5,583) | $(15,839) | | Financing activities | $87,738 | $(1,543) | | Increase in cash and cash equivalents | $81,391 | $91,679 | | Cash and cash equivalents, end of period | $88,944 | $685,795 | Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Nature of operations Describes the company's core business, mission, and strategic approach to drug discovery - AbCellera Biologics Inc. aims to transform antibody-based therapy discovery using a full-stack, AI-powered drug discovery platform, partnering with drug developers rather than advancing its own clinical pipeline[18] 2. Basis of presentation Explains the accounting principles and standards used in preparing the interim financial statements - The interim condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim financial information, reflecting normal recurring adjustments, with all amounts expressed in thousands of U.S. dollars[19][20][21] 3. Significant accounting policies Highlights key accounting policies and management's estimates and assumptions for financial reporting - Management uses estimates and assumptions for financial reporting, particularly in revenue recognition, recoverability of tax credits, contingent consideration, and stock-based compensation, while implementing business continuity plans to mitigate COVID-19 impacts[22][23] 4. Net Earnings (Loss) per share Presents the basic and diluted earnings per share calculations and related share counts | EPS Metric | Three months ended Mar 31, 2020 | Three months ended Mar 31, 2021 | | :--------- | :------------------------------ | :------------------------------ | | Basic EPS | $(0.01) | $0.43 | | Diluted EPS | $(0.01) | $0.37 | | Basic Weighted-average common shares outstanding | 151,859,924 | 269,697,212 | | Diluted Weighted-average common shares outstanding | 151,859,924 | 320,282,747 | - Potentially dilutive securities were excluded from diluted net loss per share for Q1 2020 due to their anti-dilutive effect[27][28][29] 5. Other current assets Details the composition of the company's other current assets, including tax credits and prepaid expenses | Other Current Assets (in thousands) | Dec 31, 2020 | Mar 31, 2021 | | :---------------------------------- | :----------- | :----------- | | Tax and investment tax credit receivable | $489 | $249 | | Prepaid expenses | $4,073 | $4,287 | | Materials and supplies | $1,408 | $1,209 | | Total other current assets | $5,970 | $5,745 | 6. Property and equipment, net Provides a breakdown of the company's property and equipment, net of accumulated depreciation | Property and Equipment, Net (in thousands) | Dec 31, 2020 | Mar 31, 2021 | | :----------------------------------------- | :----------- | :----------- | | Property and equipment | $23,509 | $40,903 | | Less accumulated depreciation | $(5,586) | $(6,285) | | Property and equipment, net | $17,923 | $34,618 | - Depreciation expense on property and equipment increased from $0.4 million in Q1 2020 to $0.8 million in Q1 2021[32] 7. Intangible assets Details the company's intangible assets, including licenses, technology, and IPR&D, along with amortization schedules | Intangible Assets (in thousands) | Gross Carrying Amount (Mar 31, 2021) | Accumulated Amortization (Mar 31, 2021) | Net Book Value (Mar 31, 2021) | | :------------------------------- | :----------------------------------- | :-------------------------------------- | :---------------------------- | | License | $35,873 | $4,125 | $31,748 | | Technology | $41,400 | $860 | $40,540 | | IPR&D | $40,400 | $- | $40,400 | | Total | $117,673 | $4,985 | $112,688 | | Year | Estimated Amortization Expense (in thousands) | | :--- | :-------------------------------------------- | | 2021 | $9,860 | | 2022 | $9,860 | | 2023 | $9,834 | | 2024 | $3,476 | | 2025 | $3,476 | | Total | $36,506 | 8. Investments in and loans to equity accounted investees Describes the company's investments in joint ventures for future headquarters and related loan commitments - The Company has two joint ventures (Dayhu JV and Beedie JV) for future office and laboratory headquarters, with an equity investment in Dayhu JV of $19.3 million and $11.7 million contributed to Beedie JV as of March 31, 2021[35] - A loan commitment of up to CAD$82.7 million ($61.5 million) was made to Dayhu JV, with an outstanding balance of $1.2 million at March 31, 2021[36] 9. Accounts payable and other liabilities Outlines the various components of current liabilities, including accounts payable and lease obligations | Accounts Payable and Other Liabilities (in thousands) | Dec 31, 2020 | Mar 31, 2021 | | :---------------------------------------------------- | :----------- | :----------- | | Accounts payable and accrued liabilities | $7,130 | $3,585 | | Liability for in-licensing agreement | $5,000 | $4,545 | | Operating lease liability | $675 | $1,533 | | Liability classified options | $4,270 | $474 | | Government remittances payable | $1,988 | $1,207 | | Current portion of deferred grant funding | $942 | $1,943 | | Current portion of long-term debt | $190 | $- | | Total accounts payable and other liabilities | $20,195 | $13,287 | 10. Shareholders' equity Details changes in shareholders' equity, including stock option plans and stock-based compensation - In March 2021, $5.2 million was reclassified from liability to equity due to the conversion of employee stock option exercise prices from Canadian to U.S. dollars[39] - As of March 31, 2021, 20,075,196 shares were available for issuance under the 2020 Share Option and Incentive Plan, while the 2020 Employee Share Purchase Plan (ESPP) reserved 2,700,000 shares but had not commenced[40][41] Stock Options (Pre-IPO Plan) | Stock Options (Pre-IPO Plan) | Dec 31, 2020 | Mar 31, 2021 | | :--------------------------- | :----------- | :----------- | | Outstanding Shares | 53,204,810 | 51,735,690 | | Weighted-Average Exercise Price | $0.71 | $0.72 | | Options exercisable | N/A | 25,038,995 | Stock Options (2020 Plan) | Stock Options (2020 Plan) | Dec 31, 2020 | Mar 31, 2021 | | :------------------------ | :----------- | :----------- | | Outstanding Shares | 1,260,840 | 1,581,296 | | Weighted-Average Exercise Price | $20.00 | $26.50 | | Options exercisable | N/A | - | Restricted Share Units (RSUs) (2020 Plan) | Restricted Share Units (RSUs) (2020 Plan) | Dec 31, 2020 | Mar 31, 2021 | | :---------------------------------------- | :----------- | :----------- | | Outstanding Shares | - | 184,508 | | Weighted-Average Grant Date Fair Value | - | $52.02 | Stock-based Compensation Expense (in thousands) | Stock-based Compensation Expense (in thousands) | Three months ended Mar 31, 2020 | Three months ended Mar 31, 2021 | | :---------------------------------------------- | :------------------------------ | :------------------------------ | | Research and development | $616 | $3,158 | | General and administrative | $608 | $1,316 | | Sales and marketing | $13 | $953 | | Total | $1,237 | $5,427 | 11. Revenue Explains the sources of revenue, including deferred revenue, licensing agreements, and milestone payments Deferred Revenue (in thousands) | Deferred Revenue (in thousands) | Dec 31, 2019 | Mar 31, 2020 | Dec 31, 2020 | Mar 31, 2021 | | :------------------------------ | :----------- | :----------- | :----------- | :----------- | | Deferred revenue | $(5,544) | $(28,983) | $(26,230) | $(32,375) | - The Company recognized $1.3 million of revenue from deferred revenue in Q1 2021, down from $1.4 million in Q1 2020[51] - An agreement with Eli Lilly in March 2020 for discovery research and licensing, including bamlanivimab, resulted in an initial upfront payment of $26.7 million, with $9.4 million expected to be recognized in the next 12 months[51][52] - For Q1 2021, the Company recognized $20.3 million from license revenue related to the Trianni platform[53] 12. Financial instruments Discusses the company's financial instruments, fair value hierarchy, and contingent consideration - The Company categorizes financial assets and liabilities into a three-level fair value hierarchy, with carrying values of cash, receivables, payables, and bank indebtedness approximating fair values due to short-term maturity[53][54] - Long-term debt's fair value is classified as Level 2, estimated by discounting future principal and interest, while contingent consideration payable is recorded at fair value and adjusted recurringly, categorized as Level 3 inputs[55] Contingent Consideration (in thousands) | Contingent Consideration (in thousands) | Liability at beginning of period | Increase (decrease) in fair value | Liability at end of the period | | :-------------------------------------- | :------------------------------- | :-------------------------------- | :----------------------------- | | Three months ended March 31, 2021 | $22,559 | $581 | $23,140 | 13. Commitments and contingencies Outlines the company's contractual obligations, potential litigation, and future lease commitments - The Company expenses litigation costs as incurred and has no contingency reserves, but may be obligated to make research, development, regulatory milestone, and royalty payments to strategic partners[58] - During Q1 2021, the Company expensed $20.0 million related to royalty obligations, included in current liabilities[59] - New lease agreements for office and laboratory space in Sydney, Australia, and Vancouver, Canada, represent significant future lease payments, with a lease liability of $13.9 million recognized for the Sydney lease in Q1 2021[59][60] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2021, compared to the same period in 2020, covering forward-looking statements, the impact of COVID-19, business overview, recent developments, key factors affecting performance, business metrics, components of operations, detailed results, liquidity, and critical accounting policies CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Warns readers about the inherent uncertainties and risks associated with future-oriented statements in the report - The report contains forward-looking statements about future plans, objectives, goals, strategies, revenue, performance, and capital needs, identifiable by terms like 'believe,' 'anticipate,' 'plan,' 'expect,' 'intend,' 'estimate,' 'project,' 'may,' 'will,' 'should,' 'would,' 'could,' 'can,' and similar expressions[63] - Key forward-looking statements include expectations regarding market acceptance, competition, business growth, GMP facility completion, intellectual property, personnel retention, financing, stock price volatility, COVID-19 impact, remediation of material weaknesses, PFIC status, Trianni acquisition benefits, IPO proceeds use, market trends, and government regulation[63] - Actual results may differ materially from forward-looking statements due to competitive and rapidly changing environments, and the company does not assume an obligation to update these statements unless required by law[64][66] Impact of COVID-19 Discusses the company's measures and operational continuity in response to the COVID-19 pandemic - The Company implemented comprehensive COVID-19 policies, including remote work for administrative staff, physical distancing, PPE, and facility access restrictions, to protect employees and maintain business continuity[70][71] - Laboratory and research activities have not been halted due to the pandemic, and the company continues to adapt measures based on local health authority directives[71] Overview Provides a general description of AbCellera's business, mission, and strategic approach to antibody discovery - AbCellera's mission is to improve health through technological advancement at the interface of computation, engineering, and biology, aiming to be the centralized operating system for next-generation antibody discovery[72] - The company's AI-powered drug discovery platform identifies antibodies for therapeutic development, increasing speed and success probability, partnering with drug developers rather than developing its own clinical pipeline[73] - As of March 31, 2021, AbCellera had 119 discovery programs with 29 partners, including a notable collaboration with Eli Lilly that led to the co-development of bamlanivimab for COVID-19, advancing to clinical testing within 90 days[73][74] - Partnership agreements include near-term payments for technology access, research, and IP rights, and downstream payments from clinical/commercial milestones and royalties on net sales (single-digit to low-double digit range)[76] Financial Metrics (in thousands) | Metric | Three months ended Mar 31, 2020 (in thousands) | Three months ended Mar 31, 2021 (in thousands) | | :----- | :--------------------------------------------- | :--------------------------------------------- | | Revenue | $4,657 | $202,741 | | Sales and marketing expenses | $500 | $2,600 | | Research and development expenses | $4,100 | $12,400 | | General and administrative expenses | $1,700 | $6,400 | - For Q1 2021, $178.5 million in milestone and royalty revenue came exclusively from the Lilly partnership, and the company is significantly increasing investment in business development and marketing[77][78] - The company expects significant increases in expenses due to investments in R&D, marketing, operational expansion (including manufacturing), potential acquisitions, IP protection, and public company operating costs[80] Key Financial Metrics (in thousands) | Financial Metric | Mar 31, 2020 (in thousands) | Mar 31, 2021 (in thousands) | | :--------------- | :-------------------------- | :-------------------------- | | Net earnings (loss) | $(2,100) | $117,200 | | Accumulated earnings | N/A | $231,400 | | Cash and cash equivalents | N/A | $685,800 | Recent Developments Highlights significant events and milestones achieved by the company in recent periods - March 2020: Entered discovery partnership with Eli Lilly for antibody research, including bamlanivimab for COVID-19, which advanced to Phase 3 clinical trials by July 2020[82] - December 2020: Completed IPO on Nasdaq, selling 27,772,500 common shares at $20.00/share, raising $522.8 million net proceeds, with convertible preferred shares and notes converting to common shares[83] - February 2021: Bamlanivimab (alone or with etesevimab) received FDA Emergency Use Authorization (EUA) for mild-to-moderate COVID-19 in high-risk patients, and Ester Falconer, Ph.D. was appointed CTO[84][85] - March 2021: Expanded collaboration with Gilead Sciences, Inc. for multi-year, multi-target antibody discovery and access to Trianni Mouse® technology, and EMA's CHMP issued a positive scientific opinion for bamlanivimab[87] - March 2021: Lilly reported Phase 3 clinical trial results showing bamlanivimab and etesevimab together reduced COVID-19 hospitalizations and deaths by 87%[88] - April 2021: Entered a joint venture (Beedie JV) for new office and lab facilities in Vancouver, while Lilly requested FDA revoke EUA for bamlanivimab monotherapy due to evolving variants, but maintained EUA for combination therapy[89] - April 2021: Entered multi-target collaboration with Empirico Inc. to identify drug targets and discover therapeutic antibodies[90] - May 2021: A second antibody from the Lilly collaboration, LY-CoV1404, entered clinical trials for mild-to-moderate COVID-19[91] Key Factors Affecting Our Results of Operations and Future Performance Identifies the primary drivers and challenges influencing the company's financial outcomes and strategic direction - Future revenue growth depends on securing additional multi-year, multi-target programs from new and existing partners, supported by investments in sales, marketing, and R&D[93] - The vast majority of potential value from contracts comes from future milestone payments and royalties, making business highly reliant on partners successfully developing and commercializing discovered antibodies[94][95] - Delays by partners in selecting targets and agreeing on statements of work can impact revenue recognition, as most research fees depend on antibody delivery[96] - Maintaining a leading position requires continuous R&D investments to enhance the technology stack, including computation, protein engineering, immunization technologies, and cell line selection, and strategic technology acquisitions[97] - Scaling operations to execute discovery programs requires significant capital and time investments in new headquarters, a small-scale manufacturing plant, R&D, and hiring, which will increase operating expenses[98] Key Business Metrics Presents quantitative measures used to evaluate the company's operational performance and strategic progress | Metric | Mar 31, 2020 | Mar 31, 2021 | Change % | | :-------------------------- | :----------- | :----------- | :------- | | Number of discovery partners | 24 | 29 | 21% | | Programs under contract, cumulative | 73 | 119 | 63% | | Program starts, cumulative | 47 | 54 | 15% | | Programs in the clinic | - | 1 | N/M | - Number of discovery partners indicates technology competitiveness and market penetration, and opportunities for repeat business[100] - Programs under contract reflect commercial success, technological competitiveness, and potential for future milestone and royalty revenue[101] - Program starts indicate operational capacity, partner project initiation, and near-term research fee potential, as well as long-term downstream revenue opportunities[102][103] - Programs in the clinic signify near- and mid-term potential revenue from milestone fees and long-term royalty payments[103] Components of Results of Operations Explains the various revenue and expense categories that constitute the company's financial performance - Revenue comprises research fees (technology access, discovery research), licensing revenue (Trianni™ platform), development milestones, and royalty payments from commercial products, expected to increase but fluctuate due to timing of contracts, milestones, and partner decisions[104][105] - Operating expenses include royalty fees (contractual payments to strategic partners), research and development (salaries, supplies, facilities for discovery and platform development), sales and marketing (commercial team costs, marketing, travel), general and administrative (executive, finance, legal, HR, public company costs), and depreciation and amortization[106][107][109][110][111] - Other (Income) Expense includes interest income/expense and foreign exchange gains/losses, while Grants and Incentives cover cost recovery for approved projects and tax credits, recognized over the benefit period of related expenditures[112] Results of operations Analyzes the company's financial performance by comparing key income statement items across reporting periods | Income Statement Item | Three months ended Mar 31, 2020 (in thousands) | Three months ended Mar 31, 2021 (in thousands) | Change Amount (in thousands) | Change % | | :-------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------- | :------- | | Total Revenue | $4,657 | $202,741 | $198,084 | 4253% | | Total Operating Expenses | $6,779 | $44,667 | $37,888 | 559% | | Income (loss) from operations | $(2,122) | $158,074 | $160,196 | N/A | | Net earnings (loss) | $(2,093) | $117,221 | $119,314 | N/A | | Basic EPS | $(0.01) | $0.43 | N/A | N/A | | Diluted EPS | $(0.01) | $0.37 | N/A | N/A | - Total revenue increased by $198.1 million (4253%) due to a $7.0 million milestone payment and $171.5 million in royalty revenue from bamlanivimab sales by Lilly, and $20.3 million in licensing revenue from the Trianni platform, while research fees decreased by $0.7 million (-14%) due to a reduction in the DARPA COVID-19 antibody discovery program[116] - Royalty fees were $20.0 million in Q1 2021, directly attributable to royalty revenues from bamlanivimab sales[117] - Research and development expenses increased by $8.2 million (200%) due to increased compensation ($5.9 million) from headcount growth and higher research materials, facilities, supplies, and services ($2.3 million)[118] - Sales and marketing expenses increased by $2.1 million (490%) due to increased compensation ($1.1 million) from headcount and a $0.8 million donation to Surrey Hospital, with travel expenses lower due to COVID-19 restrictions[120] - General and administrative expenses increased by $4.8 million (289%) due to increased headcount and compensation ($1.4 million), legal and corporate matters as a public company ($2.2 million), and higher director/office insurance and general office expenses ($1.0 million)[121] - Depreciation and amortization expenses increased by $2.7 million (476%), primarily from amortization of acquired intangible assets ($2.5 million) and depreciation of equipment and facilities ($0.3 million)[122] - Other (income) expense decreased by $1.3 million (-126%), shifting from a $1.0 million expense in Q1 2020 (including foreign exchange loss) to a $0.3 million income in Q1 2021 (including a $1.1 million gain on fair value adjustments and a $0.5 million foreign exchange loss)[123] - Grants and incentives increased by $2.1 million (206%) due to higher research and development expenditures eligible for the SIF project[125] Liquidity and Capital Resources Assesses the company's ability to meet its short-term and long-term financial obligations and fund its operations - As of March 31, 2021, the Company had $685.8 million in cash and cash equivalents, an increase of $91.7 million since December 31, 2020, primarily from Q1 2021 operating cash flow[126] - The Company expects existing cash and anticipated operating cash flows to be sufficient for working capital and capital expenditure needs for at least the next 24 months, despite planned significant investments in R&D, business development, marketing, and infrastructure[127] Cash Flows Analyzes the sources and uses of cash from operating, investing, and financing activities | Cash Flow Activity (in thousands) | Three months ended Mar 31, 2020 | Three months ended Mar 31, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Operating activities | $(764) | $109,545 | | Investing activities | $(5,583) | $(15,839) | | Financing activities | $87,738 | $(1,543) | | Net increase in cash and cash equivalents | $81,391 | $92,163 | - Net cash provided by operating activities increased significantly from a $0.8 million use in Q1 2020 to a $109.5 million provision in Q1 2021, driven by increased royalty and licensing revenue, milestone payments, and new contracts[130] - Net cash used in investing activities increased from $5.6 million in Q1 2020 (intangible asset purchase) to $15.8 million in Q1 2021 (investment in real estate, facilities, and equipment)[131] - Net cash provided by financing activities was $87.7 million in Q1 2020 (Series A2 financing proceeds), shifting to a $1.5 million use in Q1 2021 (repayment of long-term debt)[132] Critical Accounting Policies and Significant Judgements and Estimates Reviews the accounting policies that require significant management judgment and the use of estimates - No significant changes to critical accounting policies or estimates occurred during Q1 2021, except for the inclusion of license revenue[133] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to various market risks, including concentration of credit risk, interest rate risk, and foreign currency risk, and how these risks are managed Concentration of Credit Risk Discusses the company's exposure to credit risk from its partners and financial institutions - In Q1 2020, three partners accounted for 51%, 12%, and 11% of research fees revenue, while in Q1 2021, three partners accounted for 36%, 24%, and 20% of research fees revenue[134] - For Q1 2021, the partnership with Eli Lilly accounted for $173.8 million in clinical milestone and royalty revenues, representing a significant concentration, though the loss of other individual partners is not expected to have a material adverse effect[134] Interest Rate Risk Analyzes the potential impact of interest rate fluctuations on the company's financial performance - As of March 31, 2021, the Company held $685.8 million in cash and cash equivalents, primarily in bank accounts and term deposits, and a 10% change in market interest rates is not expected to materially affect financial condition or results of operations due to near-record low rates[135] Foreign Currency Risk Examines the company's exposure to risks arising from fluctuations in foreign exchange rates - The Company is exposed to foreign currency risk from exchange rate fluctuations between the U.S. dollar, Canadian dollar, and Australian dollar, as it earns revenue in USD and incurs expenses in CAD, USD, and AUD[136] - The reporting currency is USD, and the majority of cash is held in USD; the Company has not entered into hedging arrangements but will reassess its approach as international operations grow[136] Item 4. Controls and Procedures This section addresses the effectiveness of the company's disclosure controls and procedures and internal control over financial reporting, including the ongoing remediation efforts for identified material weaknesses Evaluation of Disclosure Controls and Procedures Assesses the effectiveness of the company's controls designed to ensure timely and accurate financial reporting - As of March 31, 2021, the CEO and CFO concluded that disclosure controls were not effective due to a material weakness in internal control over financial reporting, as disclosed in the 2020 Annual Report on Form 10-K[138] - Despite the material weakness, management performed additional analyses and procedures, concluding that the condensed consolidated financial statements fairly present the financial position, results of operations, and cash flows in conformity with GAAP[138] Changes in Internal Control over Financial Reporting Reports any changes in the company's internal control over financial reporting during the period - No material changes in internal control over financial reporting occurred during the period covered by this report, other than the ongoing remediation efforts for the material weakness[139] Ongoing Remediation of Material Weakness in Internal Control over Financial Reporting Details the company's efforts to address and resolve identified deficiencies in its internal control system - The material weakness in internal control over financial reporting has not been fully remediated as of March 31, 2021, due to insufficient time to assess design, implement, and assess operating effectiveness of related controls[140] - Management continues to evaluate and improve disclosure controls and internal control over financial reporting, with expected remediation completion by the end of the fiscal year 2021[140] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section states that there have been no material changes to the legal proceedings previously reported in the company's Form 10-K - No material changes to legal proceedings have occurred since the Form 10-K filed on March 30, 2021[142] Item 1A. Risk Factors This section highlights that there have been no material changes to the risk factors previously disclosed, except for an expanded discussion on the significant fluctuations and unpredictability of quarterly and annual operating results - No material changes to risk factors from the 2020 Annual Report on Form 10-K, except for an expanded discussion on the significant fluctuations and unpredictability of quarterly and annual operating results[143] - Operating results can fluctuate due to demand for the platform, R&D investment timing, program starts/completions, platform reliability, new technologies, acquisition expenditures, patent litigation costs, competition, natural disasters (like COVID-19), strategic partnerships, accounting changes, and general economic conditions[143] - The company's revenue, particularly milestone and royalty revenues, is highly dependent on partners' success in developing and commercializing antibodies, and the accelerated pace of bamlanivimab development due to the COVID-19 pandemic is not assured for future product candidates[144] - Regulatory decisions, such as the FDA's revocation of EUA for bamlanivimab monotherapy, can adversely impact future payments, and there is no assurance of continued or expanded licensing revenue from the Trianni platform[144][145] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section confirms no unregistered sales of equity securities during the quarter and details the use of proceeds from the company's initial public offering (IPO) - There were no unregistered sales of the Company's equity securities during the three months ended March 31, 2021[146] - The Company completed its IPO on December 15, 2020, selling 27,772,500 common shares at $20.00 per share, generating aggregate net proceeds of $522.8 million[147][148] - There has been no material change in the planned use of the net proceeds from the IPO as described in the final prospectus[148] Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the reporting period - Not applicable[149] Item 4. Mine Safety Disclosures This item is not applicable to the company for the reporting period - Not applicable[149] Item 5. Other Information This item indicates that there is no other information to report for the period - None[149] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including articles of the registrant, investor rights agreements, specimen common share certificates, descriptions of securities, and certifications from principal executive and financial officers - Exhibits include Articles of the Registrant, Amended and Restated Investors Rights Agreement, Form of Specimen Common Share Certificate, Description of Securities, and Certifications of Principal Executive and Financial Officers (31.1, 31.2, 32.1, 32.2)[151] - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) and the Cover Page Interactive Data File are also filed[152] Signatures This section contains the duly authorized signatures of the Chief Executive Officer and Chief Financial Officer, certifying the filing of the report - The report is signed by Carl L.G. Hansen, Ph.D., Chief Executive Officer, and Andrew Booth, Chief Financial Officer, on May 14, 2021[154]