AbCellera Biologics Inc.

Good afternoon and thank you and welcome to Abcelera's second quarter 2023 business update conference call. My name is Jason and I will be the facilitator for the audio portion of today's interactive broadcast. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star 1 on your cell phone keypad. At this time, I'd like to turn the call over to Trinh Staymart, Abcelera's chief legal and compliance officer.

Thank you. Good afternoon and welcome to Abcelera's second quarter 2023 business update. We are pleased to have you with us today as we 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 today are Dr. Carl Hansen, Abcelera's chief executive officer and president, and Andrew Booth, Abcelera's Chief Financial Officer. The webcast portion of this call contains a slide presentation that we will refer to during the call. If you are following along on the phone and wish to access the slide portion of this presentation, you may do so on the investor relations section of our website. For those of you who have access to the streaming portion of the webcast, please be aware that there may be a delay and that you will not be able to post 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 certain 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 Dr. Carl Hansen.

Thanks, Trinh. In preparation for today's call, I was reflecting on conversations that we've had with investors over the past few years. In the best of cases, we've had the opportunity to build deep relationships and a clear understanding of what we're doing as a company as well as trust in our ability to execute. In newer relationships, we often get questions from investors that are related to the antibody discovery space and how our company or our platform or strategy differs from competitors. Accordingly, I thought I would start today by sharing some perspectives on the different markets and business strategies that are associated with antibody therapies. First, antibody discovery is not one thing. It is a collection of hundreds of different steps, each contributing to the goal of finding a best-in-class therapy that meets all the needs for a therapeutic program. Some examples of these activities include reagent generation, immunization, screening, sequencing, DNA synthesis, molecular engineering, expression, purification, functional testing, affinity maturation, immunogenicity assessment, physical characterization, liability assessment, and much, much more. It's a long list. The point is, that antibody discovery cannot be reduced to a single technology. It can't be built overnight, and it takes many years of investment and hard work to assemble and integrate the people, facilities, technologies, know-how, and relationships that are needed to bring drugs efficiently from the idea stage to clinical testing. The better these capabilities, the greater the speed, the efficiency, and the likelihood of success. This is what we've been building over the past decade. When antibody discovery is successful, it results in a small number of antibody sequences, typically a development candidate and a few backups, that are ready to advance into cell line development and IND enabling studies, and then into clinical testing. Given the difficulty and complexity of this endeavor, there are many different types of businesses that are associated with antibody discovery. For example, some companies focus on selling instruments that offer point solutions to one or more of the steps in the process. Their end market is the sale of instruments and consumables to biotech, pharma, and contract research organizations, and they make their money by capturing a margin on the sales. Accordingly, their goal is to sell as many instruments and devices as possible with little emphasis on and no participation in the success of each program. There are other businesses that focus on providing research services that address one or more specific stages in the antibody discovery process. Here, the end market is the sale of outsourced R&D for biotech and pharmaceutical companies, and work is typically done on a fee-for-service basis. Again, this means that their goal is to work on as many programs as possible while maximizing margins, and that they have no participation in, and again, little emphasis on the success of each program. By contrast, Abcelera is in the business of discovering new therapeutics that actually reach patients in need around the world. We do not run the business to maximize deal volume. We structure deals to maximize value associated with the success of each program, and we are selective about who we work with and what we work on. Ultimately, in every program, we do whatever is required to make the program successful. Although we generate near-term revenue associated with research fees, This is not our end market. Our end market is the sale of antibody therapeutics. This is a much larger market that was estimated to generate annual sales of $250 billion in 2022 and is projected to reach well over $400 billion by 2030. We believe that our success in this market requires a high degree of technical differentiation, discipline in selecting the partners and programs we work on, and patient execution of our strategy. Our strategy is to build a technological advantage in our antibody discovery engine and to use this engine to assemble a large and diversified portfolio of economic positions in programs that are ultimately developed and commercialized as medicines by our partners. In line with this strategy, a large portion of our time and capital is directed towards building the engine. This is our competitive moat and it is the foundation for all of our business initiatives. In tangible terms, our engine includes a high performance team, a suite of proprietary technologies, know-how, and data assets, over 600,000 square feet of state-of-the-art lab and office facilities that are either online or under construction, and integrated software systems, processes, and workflows that bring it all together. Over the past quarter, forward integration remained a major focus of our platform development, recruiting, and infrastructure projects. This effort includes building capabilities in translational science, process development, and manufacturing that we expect to be complete by 2025. The functional goal of our engine is to provide a full solution from program concept to IMD filing. As a result, we also need to build regulatory and clinical development capabilities. These efforts are well underway. Equally important to establishing our core capabilities and perhaps the most challenging is complex coordination of our workflows and technologies. This effort includes building data systems, software, and processes that are fully integrated with all experimental capabilities. We believe this type of integration is unique and that it provides a durable competitive advantage for our business. It is integration that will allow us to do antibody discovery and development at greater speed, scale, and precision than has previously been possible. We will achieve this through the continuous testing and improvement that can only come through advancing multiple programs from concept to the clinic. This quarter, we made a significant announcement with the governments of Canada and British Columbia to advance this objective. As part of an eight-year project worth $519 million, we secured $222 million in non-diluted financing from the governments of Canada and British Columbia. This project directly supports our strategic plan on three main axes, completing the build of our facilities, establishing and validating fully integrated capabilities to take programs from concept to the clinic, and supporting the development of up to 17 pre-partnered programs up to and through Phase 1 clinical trials. The impact of this new non-dilutive funding on our business includes a stronger liquidity position that will allow us to aggressively execute our strategy with a high level of capital efficiency, a stronger engine that allows us to offer highly differentiated end-to-end capabilities to select partners, and a strengthened portfolio through the advancement of multiple wholly-owned pre-partnered programs from initiation all the way to Phase I clinical trials. In particular, this new government funding will allow us to advance more pre-partnered programs, including those arising from our technology development efforts in two strategic areas, T-cell engagers and ion channels and GPCRs. We believe success in these programs will drive value in multiple dimensions of the business. First, they provide a forcing function for platform development and improvement, including the establishment of integrated manufacturing capabilities. Second, bringing programs to a value inflection point will create high value out licensing opportunities that bring cash flow forward and allow us to capture a greater share of downstream value. And third, demonstration of our ability to succeed on targets and problems that are widely viewed as intractable will attract additional and higher-value partner-initiated programs. As I said earlier, through this work, we will build capabilities in translational science, regulatory affairs, and clinical development. I'm pleased to share that Jeff Nickell, most recently at Biomarin, will be leading this effort as our head of pre-partnered programs. Jeff brings deep expertise in building and leading teams and has brought multiple new medicines through to approval. I'm excited to be working with Jeff and to have him on board and we'd like to warmly welcome him to the Accelerate team. And with that, I'll hand over to Andrew to discuss our financials.

Andrew. Thanks, Carl. First, let me highlight progress made on our key business metrics and the second quarter of 2023. This quarter, we started work on five new discovery programs, taking us to a cumulative total of 106 partnered program starts. As a reminder, the number of starts in any given quarter will be irregular. Over the trailing 12 months, we have started work on 18 partner initiated programs. We signed no new programs under contract in the quarter and ended the second quarter of 2023 with 177 programs under contract with 41 unique partners. As we have stated in the past, we continue to do more work and add more value per program. We focus on and emphasize the quality of the programs that we work on rather than their absolute number. As we mentioned on the last call, The numbers included in our key business metrics do not include pre-partnered programs from our internal technology development efforts. We see evidence of the differentiation of our engine and the value it creates when it attracts partnerships from the most innovative and best established drug developers in the industry. Additional evidence that we're creating value is when our programs reach patients through clinical trials. And in Q2 2023, we continue to report nine molecules in the clinic. And we view this growing list of molecules in the clinic as specific examples of our near and mid-term potential revenue from downstream milestone fees and long-term royalty payments. Turning to revenue, revenue in the quarter was approximately $10 million, almost entirely driven by research fees relating to work on partner-initiated discovery programs. This compares to approximately $13 million in Q2 of 2022. The decrease is primarily due to a shift away from work on higher upfront free programs such as our contract with DARPA on pandemic response. On the broader portfolio of programs, we actively worked on approximately 20 programs in the quarter and had an approximately 10% year-over-year increase in revenue from the underlying work of this portfolio. This quarter's revenues also included some small amounts related to licensing fees, and there were no new milestone payments in the quarter. Turning to operating expenses, Our research and development expenses for the second quarter were approximately $36 million, representing in a roughly $10 million increase over the same period of the previous year. This increase reflects the continued growth in program execution and platform development. In sales and marketing, expenses for the quarter were approximately $4 million compared to $3 million in Q2 of 2022. This increase reflects the continued investments in our business development activities. And finally, in general and administration expenses, we had approximately $16 million of expense compared to approximately $14 million in Q2 of 2022. This modest increase reflects some operating leverage that we continue to see in our G&A investments, which we make to support the overall growing business. Looking at earnings, we are reporting a net loss of roughly $31 million. This compares to a net loss of approximately $7 million in Q2 of 2022. The increased loss reflects our continued investments in the business and the absence of royalty revenues that were present in Q2 2022. In terms of earnings per share, the quarter's results to work out to a loss of 11 cents per share on a basic and diluted basis. Looking at cash flows, operating activities for the first six months of 2023 used roughly $24 million. In the absence of regular royalty revenues, we would expect our quarterly operating cash flow to be irregular and often negative as we continue to invest in the growth and capabilities of the company. As a part of our treasury strategy, we have over $615 million invested in short-term marketable securities. Our investment activities for the first six months of the year include approximately $106 million net increase in these holdings as a part of our overall cash management strategy. All other investment activities amounted to approximately $78 million, including $42 million invested in property, plant, and equipment, and $37 million in long-term investments. Investments in property and equipment are of course driven in large part by our ongoing work to establish CMC and GMP manufacturing capabilities. Altogether, we finished the quarter with over $820 million of cash, cash equivalents, and marketable securities. We have historically been successful at raising non-dilutive sources of capital. And as Carl mentioned, this quarter we announced an over $220 million funding commitment from the governments of Canada and British Columbia. As a reminder, our continuing GMP facility build-out is also separately co-funded by the government of Canada's Strategic Innovation Fund. This available capital does not show up on our balance sheet. And for this reason, our non-dilutive government funding should be taken into account when evaluating our overall liquidity position. With over $820 million on the balance sheet in cash and equivalents, plus the recently announced $220 million of government funding added to the previously secured funding, we have well over $1 billion in total available liquidity. This is far more than our liquidity position from one year ago when we reported our Q2 of 2022 financials. With respect to our operating expenditures, our capital needs are very manageable and we remain in a strong liquidity position that allows us to fully execute on our strategy with excellent visibility and runway. We continue to believe that we have sufficient liquidity to fund well beyond the next three years of investment and growth.

And with that, we'll be happy to take your questions.

If you would like to ask a question, please press star followed by 1 on your telephone keypad. If for any reason you'd like to remove that question, please press star followed by 2. Again, to ask a question, it is star 1. Our first question is from Andrea Tan with Goldman Sachs. Your line is now open.

Hi, everyone. Thanks for taking our questions. Carl, maybe one for you. First, thanks for the thoughts on how you're differentiated from others in the antibody discovery business. I wanted to ask you though on AI, as there's obviously been a lot of focus here and excitement in the area, particularly around how it can be leveraged to disrupt the drug discovery and development process. Would love to hear your perspectives here on where this technology stands today, how you're using it specifically in your platform and your thoughts on where it goes from here. Thanks so much.

Thanks, Andrea. I appreciate the question. You know, certainly there's a lot of buzz out there and we have a lot of conversations with investors who are trying to understand what is real in the AI space and what is not. First, you know, one perspective is that what has happened recently is that there have been some big breakthroughs in AI associated with technologies that everyone can see and understand, most obviously ChatGPT. I think the naive assumption then is that AI has reached a tipping point where it can solve any problem. And people are racing to find where is AI going to make the biggest difference in other sectors, including antibody discovery. So I've actually had people come to me and ask, you know, what does ChatGBT mean for your business? You know, the short answer is it means nothing for antibody discovery. The conclusion is that in order, if you have huge data sets and you have the ability to quickly refine models, We have examples now in AlphaFold and ChatGPT that AI can create some big lifts and some surprising power in doing prediction. In the antibody space, there's been a lot of talk about generative AI. And there's a couple dimensions of this that I think people should think about more carefully. So the first is how you set up the problem. And very often the problem is set up as I've got a target and I'm going to use a machine learning algorithm in order to try to design an antibody that binds on a specific part of the structure. So if you set it up that way, the first thing that you're doing is you're making an assumption that you know where you want to bind on the target to get a good drug. And generally, that is not true. So one of the biggest things you need to learn in drug discovery is which part of the target is best to engage with the antibody. So if you start by picking the spot, you've eliminated a huge number of solutions that could get you to a better therapeutic. The second part is that today, our view is that we are very far away from being able to de novo generate an antibody that would have the right properties for development and that could actually recognize that part of the target. There have been some examples of doing that, but typically they start where you already have an antibody that binds on location, or you've built a model where you have many, many examples of antibody antigen interfaces And if that's the case, then you've actually already solved the problem before you've begun. So it's not a real problem that moves things forward. Now, on the flip side, there are some really powerful applications of artificial intelligence and machine learning that can be applied across drug discovery. In our particular space, they fall into two categories. And the first one is in using machine learning models and artificial intelligence to very quickly analyze complex data sets and extract actionable information. So we use this in a variety of steps in data acquisition, and that allows us to accelerate, to scale, to increase efficiency and to increase precision of the initial experimental steps. The next piece that is exciting and where we see a huge opportunity, in fact, I believe we have an opportunity in this space that is bigger than anything else that I've seen in the antibody discovery universe, is if you start with many different antibodies and solutions, which we can generate, You can use machine learning and artificial intelligence methods to better design variants that allow you to more quickly optimize and refine antibodies. That's work that's in progress, and we think that's a very exciting way to accelerate and improve the process of antibody discovery. Now, the final thing I'll say is that this is a long road, so we think we've got a huge opportunity. In order to win in this, what you need is experimental capabilities to generate the data, You need to have done the hard work on the software systems to organize and create the relationship between the different data sets. And then you need the ability to quickly do the experiments and build the models and iterate so you can finally refine those. So that's effort that's underway, and we think it's got a big future. But we're also cautious that currently there's probably more expectation then the science is really ready to deliver, at least in some applications of artificial intelligence.

Great. Thanks so much. Our next question is from Antonia Borvina with Bloomberg.

Your line is now open.

Good afternoon. Thanks for taking my question. My first one is regarding the acquisition of EQRX, which is one of your co-development partners. So just wondering, is there a path forward for those programs that you were co-developing with them? And are any of the EQRX programs included in the six co-development programs that you started to date?

Great question. Carl here, I'll take that one. So we have started. three co-development programs with EQRX. Those programs, our understanding is they will not be developed by revolution, but those programs, the way that that deal is structured, Abcelera has a 50% ownership or an option to have a 50% ownership in each of these. Those programs are exciting, and we're currently talking to EQRX about what will be the fate of those programs, if they'll be spun out into a different company or if they'll be returned to us. Either way, we would either maintain our option or our percent ownership, or we would have full control of those programs moving forward. And so either way, I think that there's a path forward, and I don't expect that the transaction that's happening is likely to slow down the development of those. All of this is very new, of course, and we are talking to the EQRX team to see what is the best path for those.

Okay, great. And I just have one additional question, and it's regarding your CD3 panel. So, you've generated some pretty compelling data in mouse models, but just wondering if you could provide a rough timeframe for when we could see additional data, including in non-human primates. And also, do you believe these studies are necessary to sign, you know, a blue chip partnership?

Okay, I'm happy to take that one.

So with respect to the TCE programs, as you said, we've done terrific work and have laid, I think, a very impressive foundation in the science for the platform that is focused on being able to generate next-generation TCEs. So that includes what is now, we believe, the largest and best characterized and, in our view, the highest quality panel of anti-CD3 antibodies. as well as the OrthoMAP platform to combine those and the functional assays to quickly bring them together with tumor-associated antigen binders to make therapeutics. On the basis of that work, as mentioned before, we have initiated five TCE programs on a variety of different tumor-associated antigens. Two of those were announced previously and presented. That was the MAEJ4 work and the PSMA work. At the same time, we have been engaging with a variety of players, I would say probably, you know, certainly a large portion, if not the majority of the blue chip companies that are actively interested in this space. The feedback has been first that this space remains a very high interest. So that's a very positive signal. And that the science and the caliber of the platform that has been developed is world class. I've had at least a couple conversations where it was characterized as the best that has been seen in the industry. So those are conversations that are going well. In order to bring that to a deal that would be of the value that we expect and intend to get on this platform, I think it probably will require more work. And the work I don't think is in generating primate data, but rather in proving that the diversity of CD3 and the quality of the science at the back end can be used to generate assets that have the profile that appears to be superior to what is being developed using other technologies. So that work is underway. That's associated with our TCE programs. And we are intending to present that at one or more major scientific conferences in the next few months, hopefully this year.

Great. Thanks a lot. Our next question is from Steven Ma with Cowan.

Your line is now open.

Great. Thanks for taking the questions. You know, I appreciate giving guidance for 2022 and that milestones were zero in the quarter. But, you know, how should we think about milestones this year? I'm asking because one of your peers indicated that their milestone expectations were being pushed back. Can you give us a sense of what you're seeing in terms of milestones potentially being pushed back at Absolera? I appreciate you guys don't have a ton of color either with your partner programs.

Yeah, hey, Steve, it's Andrew here. Thanks for asking the question. Yeah, as you know, we don't provide the short-term guidance in the business, including on the milestones. I think it's very difficult for us to predict, and we don't have that kind of visibility, as you alluded to, And that has been consistent in the past where upon the achievement, usually of the start of a phase one or submission of an IND, we as well are just notified without a lot of advanced warning. But we don't have any reason to believe why we would be on a different trajectory than we have said in the past with the same kind of frequency we've seen in the past.

Okay, that's helpful, Keller. With regards to the new partner ads and new program starts, are you seeing any slowing there? You know, if I'm doing my math right, you had five new program starts in the second quarter. You know, can you provide us any color? Is that what you expected? And then also of these five new starts, can you give us some color as to what type of partners behind those new program starts? Are they emerging biotechs, established biotechs or pharma or all across the board? Thanks.

Yeah, so five is, you know, we have reported five previously, it's, you know, probably roughly our run rate that you saw in the previous year. And as we mentioned, over the last 12 months, we've had about 18. So it's, you know, roughly in line with that. And what we would expect in terms of the makeup of the partners behind them, it's a mix, a mix of Partners we've signed with multi-target deals who are calling their program, and then it normally takes some time before we actually register those programs as a start. And then, you know, contracts that we've signed maybe more recently, and so more recent deals in the past. Two of the more recent deals we've signed, of course, one was with AbbVie in the latter half of last year, and then with RQBio earlier this year. So it's roughly a similar mix as it has been in the past. I don't think we've noticed any particular shift one way or the other between different customer types.

Okay, that's helpful, Keller. And then if I could sneak one last one in real quick. Berkeley Lights litigation, I know the USPTO denied Berkeley Lights rehearing requests on your patents. Does that mean it's put to bed or can they still appeal? Thanks so much for the questions.

This is Carl here. So I believe there has been an appeal, but at this point, we have successfully defended the patents. So we have validation that the patents are in place and valid, and we are looking to move forward with the litigation. Beyond that, I would pass it off to Trinh on our legal counsel.

Our next question is with Stefan Willie with Stifel. Your line is now open.

Yeah, good afternoon. Thanks for taking the question. I guess maybe just to follow up on the last question. And I know that you guys have kind of prioritized, you know, some of the more wholly owned pre partner programs, you're doing more work, you're adding more value to each program. But I guess when I just look at the last, you know, six months or so, you know, there's, I think three incremental programs under contract, as was said before, five incremental partner program starts, and then one incremental discovery partner over the last couple of quarters. So I guess, when we think about the the base business in terms of how the partner programs look over the last six months? How should we think about extrapolating that out to the next six or 12? Thanks.

Sure, Carl. Steve here. Sure, Steve, Carl here. So great question. So first of all, it's been some time ago, I think it was 18 months ago or more, where we signaled and have been consistently signaling that in the partnership business, we are really emphasizing perceived value and quality over quantity of deals. The reason for that, of course, is that our business is in working on programs that actually make it through the gauntlet and become drugs. And so it matters for us how many of the winners we work on, not how many total programs we work on over time. The other thing is that in the business development, we have been looking to build relationships with companies and find opportunities where our technology can really move the needle and where we can do more work. So on both of those fronts, we have been very selective about who we work with, and we have been we have been turning away opportunities where we don't think that the investment of time or capital is warranted as compared to other allocations of that time and capital, which would be on building the platform, advancing technology, or advancing pre-partnered programs. So that has been the way we're in the business. Now, that said, we just had a recent review of the pipeline. I can say that the quality and also even the quantity of deals that are moving forward is as good, if not better, than I've ever seen. It always takes time to close these, but we feel really good about where we are. The other thing that I think is happening, and I've been asked this before, and I feel like we're starting to see a trend, is that there is a macroeconomic factor in play here. And so I think we're seeing that there are fewer companies that are being started. We're seeing that partners that we have worked with in the past are starting to prioritize the programs that they already have. And that's all part of, you know, the cycle moving through and what people are trying to make sure that they're focusing their limited resources on the programs that they have. Now, for us, you know, we're looking to work with the very best companies. They're getting funded. We're looking to work on the highest quality and priority programs within their portfolio. And so I think we're in great shape there. And also, you know, our business allows some of the smaller companies or even bigger companies to execute on more R&D in a way that is very capital efficient as opposed to large upfront fees or having to build the platforms themselves. And so from that perspective, I think, you know, our offering is even more attractive than it has ever been. So, you know, to sum it up, I think there is, you know, there is a macro thing that's happening. We're going to see that. We're running a long-term business, and there's going to be ups and downs. But in terms of where we are applying our resources and our perception of value creation from the work, I don't think that we've ever been better, and we feel like this will turn again. And when it does, then we may shift to doing more deals as we find more things we want to engage with.

Okay, great. That's a very helpful caller. Thanks.

Our next question is from Malcolm Hoffman with BMO. Your line is now open.

Hey, guys. Malcolm Hoffman for Evan Segerman. So I wanted to ask, I know you said you are focusing on the quality of partners rather than the number. I was just curious to see if you could maybe quantify the number of interactions you're having with potential partners that you ultimately don't agree to pursue. Are there significantly more potential partners reaching out that you don't agree to move forward with? Or are most interactions likely to proceed to a partnership? Thanks.

Yeah, I don't think I'd be able to provide, you know, numbers in terms of the funnel. But, you know, the reality is that, you know, we filter out far more opportunities that we seriously engage in. And there's, you know, quite a stringent filter at the very beginning. You know, as a concrete example, And related to the question on, you know, the TCE platform before, we have had, you know, multiple opportunities to create partnerships around access to the CD3 panel and to the biospecifics. And in numerous cases, we've walked away from those because we believe that by taking it further, we can generate more value from that platform than where we are today. You know, and that's the decision that reflects our commitment to make sure we're doing things that drive long-term value and not just trying to do deals to put up numbers in the quarter. That's the way we're going to run the business.

Appreciate it. Thanks, guys.

Our next question is from Punit Soda with SVB. Your line is now open.

I have Michael on for Puneet. Thanks for taking my question. I was wondering if you could get a bit more detail about the macro headwind. We're particularly interested in any color you can provide in China. I'm not sure if you have much interaction there, but I'm curious if you have any thoughts on the sentiment there.

Yeah, hey, thanks. no, we don't have any partnerships at the moment that are in China. And so we don't see any negative headwind from that. I don't know if that sufficiently answers your question.

Yeah, no, no, that makes sense, exposure. And then a quick question regarding the new facility you're building out with the Canadian government. So you mentioned that as part of that build out, you'll be taking some pre-partner programs to phase one. I'm just curious if taking out, if doing clinical development all the way to phase one, if that's something that's going to be purely for pre-partners or if that's going to be extended out to like co-development or your partner programs?

Yeah, great question. So, the funding that we have with this overall project that Carl had mentioned in his prepared remarks involves taking a certain number of programs from Target all the way through to the clinic and including a phase one. But our GMP manufacturing facility is not exclusively going to be used for just those pre-partnered programs. It may also be available and we expect it to be used for co-development programs and even in some cases for partner-initiated or straight partnership deals.

Yeah, thank you very much.

Our next question is from Gaurav Goparaju with Venerenberg. Your line is now open.

Hey, guys. How's it going? Just two questions for me. You know, broadly speaking, how should we think about your current capacity or bandwidth for pre-partnered program starts and discovery in addition to partner program starts prior to the facility expansion?

Hey, Gaurav. Carl here. Sorry, I'm not sure I quite understood the question. Could you maybe rephrase?

So, you know, ultimately, basically, you know, yeah, just capacity constraints, you know, that's something you're thinking about when strategically, you know, considering, you know, getting into a new program start, just trying to think if you actually have the physical bandwidth, you know, to let's say, you know, have 12 active program starts, for example, as you do right now.

Oh, yeah, sure. So, you know, first, like at any given time, we may have anywhere from a dozen to 25 active programs in flight at various stages. So, you know, we certainly have that capacity in place. And in fact, you know, we have never been in a position where we've entered a partnership or closed a deal or had a partner call a program where we were capacity limited and weren't able to execute on that. So we scale up You know, we pull levers to make sure that capacity is available to always be able to execute. Now, you know, at any given size, and we've built a lot of efficiency and a lot of capabilities, you know, over the last couple years, there is some, you know, overall capacity of work and resources that can be allocated. And what we're doing is making sure that we're bringing that to bear on the most valuable ideas that are out there, as well as on the platform development. So there's an opportunity to throttle up and down on partner-initiated and pre-partnered programs, depending on how we see the mix at a given time.

Yeah, Gaurav, if I could just add to that, you know, we continue to also see in our R&D expenses about a third of the R&D expenditures are on program execution for our partners and about two-thirds still on platform development, including the work on pre-partnered programs. And as you've noted, over the number of years, we can have continued to invest and execute on our plan to build out the capacity and build out the scale of the company. I mean, over the last few years, we've grown from about 150 employees to now over 600 employees, recruiting top talent in the CMC and GMP to complete that vertical integration right through to be able to produce drug product and building out all of this lab space and lab and office space. So it's a significant investment and we pride ourselves on the execution there, bringing us to executing on dozens of different programs over that period of time. And all of that while increasing our available liquidity and capital that we have is I think really speaks to the strong execution. And as Carl mentioned, we have never been in a position where a partner has called a program, and we have not been able to initiate that program, you know, with some speed.

Got it. That was helpful. And then a quick follow-up. You know, are there any updates on development regarding the third generation COVID-19 antibody that you guys had mentioned in the past? Is that work being put on ice, or should we expect updates from this program in the near future?

Great question. We haven't talked about that for a while. You know, we are still actively engaged with Lilly, you know, I believe we have molecules in hand, that would be an effective solution. And, you know, at least by my understanding, are, you know, toe to toe, if not, if not superior to other ones that I've seen out in the space. The big question right now is about, you know, the path in clinical development. And right now, there's not certainty on that. So If it happens, we're ready to step up. I believe that's also true of our partners at Lilly, and we view it right now as, you know, upside on the business. Yeah.

Great. Cheers, guys. Thanks.

Once again, if you'd like to ask a question, it is star 1 on your telephone keypad.

There are no more questions, so I'll pass the call back over to the management team for closing remarks.

Thanks, everyone, for joining us today. We remain excited about Upsala's future and are excited about the progress that's being made, and we look forward to speaking with you on future calls.

That concludes the conference call. Thank you for your participation. You may now disconnect your lines.