AbCellera Biologics Inc.

Good afternoon and welcome to Absolaris second quarter 2021 financial results conference call. My name is Mel and I will facilitate the audio portion of today's interactive broadcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on a telephone keypad. And please be advised that this conference is being recorded. At this time, I would like to turn the call over to Mr. Trine Steinmark, Abceleras' Chief Legal Officer and Chief Compliance Officer. Sir, please go ahead.

Thank you. Good afternoon, everyone, and welcome to Abceleras' second quarter 2021 business update. We are pleased to have you with us today where we will discuss the results announced in our press release issued after the market closed today, which you can find on our investor relations website. With me on the call are Dr. Carl Hansen, Excelleris Chief Executive Officer and President, and Andrew Booth, Excelleris Chief Financial Officer. The webcast portion of this call contains a slide presentation that we will refer to during the call. Those of you following along on the phone who wish to access the slide portion of this presentation may do so on the investor relations section of our website. For those who have accessed the streaming portion of the webcast, please note that there may be a delay and that you will not be able to pose questions via the web. This presentation may contain forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements are based on management's current expectations and are subject to certain risks and uncertainties. Please review our SEC filings for risk factors that could impact our future performance. Our presentation and SEC filings are available on our investor relations website. Note that all dollars referred to during our call today are U.S. dollars. Now I am pleased to turn the call over to our CEO, Carl Hansen.

Thank you, Trinh, and thank you to everyone for joining us today. It's my pleasure to provide an update of the second quarter of 2021 in which we continue to execute on our long-term strategy for growth. First, we closed the quarter with nearly $800 million in cash and over $60 million in accounts receivable and accrued accounts receivable. In addition to our strong liquidity position, we maintained our forward momentum, showing strong growth in our core business across key performance indicators, including 19 new programs under contract, bringing our total number of programs to 138, six new program starts, bringing the total number of starts to 60, and three new molecules that have entered into the clinic bring the total number of molecules in the clinic to four. Two of those molecules are from our COVID-19 program with Eli Lilly, which continues to be both a proof point for our technology capabilities and business model, and a source of non-diluted funding. Unfortunately, and despite vaccine rollout, we are seeing a strong uptick in COVID-19 cases globally, with well over 100,000 cases reported daily in the U.S. alone. Our first COVID-19 therapeutic antibody is bamlanivimab. Bamlanivimab administered together with edesivimab was paused in June because at the time, the beta and gamma variants, which are resistant to this combination, were prevalent in the U.S. Today, the most prevalent variant, both in the U.S. and globally, is the delta variant. Preclinical data demonstrate that faminimumab and edesivumab administered together retain neutralization activity against the Delta variant, as well as other variants currently in circulation in many countries. I note that there is an existing supply of faminimumab and edesivumab that we believe could be used effectively to help patients today, both in the U.S. and around the world. Our second therapeutic antibody for COVID-19, 14-04, which is now known as beptalivimab, is currently in phase two clinical testing with Eli Lilly. Preclinical results posted to a preprint server in June demonstrate that beptalivimab is an exceptionally potent antibody that binds to a highly conserved region of the spike protein. The data also show that Deptilivimab is effective against all variants of concern and of interest, including the alpha, beta, gamma, epsilon, iota, kappa, and delta variants. Deptilivimab is being evaluated alone and in the three-way combination together with Bamlanivimab and Edesivimab. As indicated in our last quarterly call, we expect top-line data from these trials this summer. We look forward to clinical results from Eli Lilly on the use of beptalizumab and believe it has strong potential to be an effective tool in the long-term fight against COVID-19. As previously noted on earnings calls, our work in COVID-19 represents only one program in our portfolio. In total, we have 138 programs under contract with 33 different partners. These programs span nearly every indication for therapeutic antibodies and associated modalities are used. Of the 138 programs in our portfolio, we know the therapeutic areas for 95 of them, with the remainder attributable to slots into which targets have yet to be elected. These programs target indications in oncology, pain, neurodegeneration, infectious disease, autoimmune disease, allergic inflammation, ophthalmology, women's health, cardiovascular disease, and metabolic disorders. Beyond therapeutic areas, our portfolio includes a range of different target types. About 28% of the targets our partners have selected fall into the difficult or challenging area, and they will be considered intractable using legacy technologies. These include multi-pass transmembrane protein targets, high homology targets, peptide MHC complex targets, and others. In pursuing therapies against their targets, our partners are looking to leverage the next generation of antibody modalities. Each of these brings its own specific and demanding requirements, making diversity and data analytics critical. Today, we're working with our partners on programs that cover the full range of target modalities, including IgGs, IgMs, and IgAs, bispecific antibodies, leveraging our proprietary OrthoMAPS technology, single-chain antibodies, CAR-T cell therapies, radioisotope conjugates, and CNS-delivered antibodies. The value our capabilities provide to partners is reflected in our deal structures, which include downstream participation that directly increases with the challenge of finding the right antibody for the target. While the majority of our programs with downstream participation are with partners that are publicly listed companies, mostly in the large-cap and mid-cap bracket, we also work selectively with much earlier stage ventures. Most of these programs are with companies considered biotech. But for a significant number of programs, we are working with a range of global pharma partners. During this work, we aim to create long-term shareholder value, building a large and diversified portfolio of royalty and other downstream positions in the next generation of antibody-based therapies. And we are seeing that our portfolio captures strong diversification across therapeutic areas, modalities, and partner types. Within the total portfolio, we have started work on 60 programs. Currently, once we deliver candidates and the associated data packages to our partners, they take on the late-stage preclinical development that ultimately leads to an IMD application. This process typically takes two to four years, depending on the program and depending on the experience and resources of our partners. As briefly discussed, we plan to greatly accelerate the timeline to IND application down to one year through forward integration, adding CMC and GMP manufacturing capabilities to our tech stack. This quarter, we secured a site for our new 130,000 square foot antibody manufacturing facility. When complete, this facility will allow us to provide our partners with a full and integrated solution that goes from target right through to IND submission. Turning to business development, Our pipeline continues to be strong, showing strong demand for our partnership business and adding more deals with different types of companies. Of the 35 programs under contract that were added in the first half of this year, all programs include downstream participation, typically achieved through clinical development milestones, commercial development milestones, and royalties. Over the past year, the general trend has been increasing royalty positions, reflecting additional technology capabilities, an expanded scope of work, and our recognized leading position in the market. This also encompasses partnerships with equity or equity-like positions as a way for us to capture yet more value. What I'm excited about this quarter is that we announced two new deals, one with Tachyon and one with EQRX, that represent a further amplification of our business model. through which we have the option to invest in the subsequent stages of preclinical, clinical, and commercial development for a greater share of the assets. We believe that these deal structures have the potential to create more long-term value for our shareholders, providing the option to deepen our position in select programs and, in turn, yielding economics similar to an internal pipeline while still staying true to our business model of being a technology enabler for the industry. Today, our approaches to capture downstream value can generally be grouped in three broad categories. First, royalties and milestones, where milestone payments are earned at various points of clinical and commercial progress, and royalties that are typically, but not exclusively, in the low to mid single-digit range. Second, discovery partnerships with equity or equity-like participation, which has been a feature within the last year of deals that include Invitex, Avdera, and Angios. And third, deals that include an option to invest, as mentioned, which are similar to those we've announced with partners Tachyon and EQRX. Within our portfolio of 138 programs under contract, we have an equity or equity-like position in about two dozen programs, and we have almost a dozen programs where we have the option to invest in the molecules we discover. In the future, we may expand our deal types further as we explore new ways to capture the value of our partnership model. To lead our BD efforts and the expansion of our commercial team, we recently welcomed industry veteran Neil Berkley as Chief Business Officer. Neil brings more than 20 years of strategic planning and corporate and business development expertise across a wide range of transactions and therapeutic indications. We are excited to have him join our leadership team. Before handing off to Andrew to discuss the financial results, I'd like to re-emphasize how our efforts today support our long-term vision for making drug discovery faster, more efficient, and more cost-effective. First, we believe our technology can solve discovery problems and unlock new opportunities for therapeutic antibody development, and that this will be a source of continued growth in the industry. Second, our strategy emphasizes technology integration at scale. This is not just day-to-day art technologies and IP, but also the assembly of a world-class team of scientists, data systems, facilities, equipment, and processes into a high-performing whole that is a critical advantage to achieving compounding returns and to creating a long-term competitive advantage. Third, we are leveraging vertical integration as a central theme to accelerate and also to have control over the entire preclinical process. And fourth, we're continuing to invest in technological differentiation to broaden our reach across the industry. Examples of this include our bi-specific and humanized rodent technologies, as well as internal efforts that we believe, in time, will unlock high-value target spaces that are currently out of reach. In the long run, our goal is to replace the legacy technologies of today and the traditional models of doing business, and to help the industry continue its growth and become more efficient. We believe that we have already established a world-leading technology position, which we are now bringing to the market at scale, and that we have created a new technology curve that will lead to continual improvement, not just now, but for decades to come. And with that, I'll turn it over to Andrew Booth, our CFO, to provide an overview of our second quarter 2021 financials. Thanks, Carl.