Q3 2021 Abcellera Biologics Inc Earnings Call

Good day and thank you for spending by welcome to the seller Q3 2021 earnings results in business update conference call. At this time, all participants are and then listen only mode.

<unk> presentation, there will be a question and answer session to ask a question during that session you will need to press far one on your telephone if you require any further assistance. Please press <unk> and now I would like to hand, the conference will be to your <unk> speaker today, <unk> <unk> Chief legal officer. Thank you. Please go ahead.

Thank you good afternoon, everyone and welcome to accelerate its third quarter of 2021 business update we.

We are pleased to have you with us today, well, we will discuss the results announced in a press release issued after the market closed today. So that you can find in our Investor Relations website.

With me on the call her Doctor Karl Hansen, <unk>, Chief Executive Officer, and President and Andrew Boot accelerates 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. They do so on the Investor Relations section of our website.

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His 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 R. M. C. C filings for risk factors that could impact our future performance or presentation in SEC filings are available on our Investor Relations website.

Note that all dollars referred to on our call today are U S dollars now I am please turn the call over to Carl Vinson.

Thank you and thank you everyone for joining us today.

It's my pleasure to provide an update for the third quarter of 2021.

We continue to focus on our long term business objective and remains strong progress executing across the organization.

We closed the quarter nearly $800 million in liquidity, including over 70 $750 million in cash cash in Brentwood, and marketable securities and over $40 million, an account and accrued receivables.

In addition to a strong financial position, we posted strong growth across key business metrics, including 17, new programs under contract bring your total number of programs to 155.

Nine new program start, bringing our total number of start to 69.

And one new molecule that has entered the clinic, bringing our total number of molecules and the clinic to five.

First the frame the results from this quarter is important to stress our strategy and how we believe this will drive long term value for patients for our partners and for our shareholders.

There are no shortcuts and building the truly great company.

We're focused on building something of substance.

That really endured.

I think that hasn't existed before.

We are building a vertically integrated technology staff that covers all step in preclinical antibody discovery and development.

What makes us different is that we're replacing the legacy approaches and have their roots in the 19 eighties with an interlocking chain of modern technology, including Microfluidic genomics single cell analysis protein engineering competition on methods and artificial intelligence.

These technologies are held together by software engineering Hyperscale beta sites that provide and that we believe will continue to provide increasing gain efficiency and scalability across our workflow.

Along with our investments in infrastructure and high performance Workforces, We believe our technology allows us to respond to any discovery challenge across the industry and to deliver candidates more quickly and higher probability of success.

We believe that we have already established best in world capability across this critical part of the drug development workflow.

And we continue to expand our technology now forward integrating with investment in translational science, CMC and G&P manufacturing.

We expect these capabilities to be in place and the first half of 2024.

This will allow us to go from a drug target to delivering the DNA sequence of lead antibody the data needed to support an investigational new drug application filing and address substance that support clinical testing in phase one and phase II.

By putting all these capabilities together, we believe we can help our partners bring drugs to patients faster and with greater probability of success.

In the long run our bold vision is to be recognized as the industry's premier drug discovery engine to have built a platform with capacity to deliver these antibodies for over 100, plus discovery programs per year.

And to be supporting dozens of these through iron filings each year.

All of it done in half the time that it currently takes.

Building on our technology foundation or business generate multiple sources of value for shareholders. These.

These include upfront payments protect assets research payments for executing on programs licensing fees and milestones and royalties associated with clinical and commercial success of the molecule that we discovered.

This year, we have expanded our deal structures to add new ways to capture value, including taking equity stake and building in the option to invest and deepened our participation in molecule that have come from our platform.

Through this business model, we are building a large any diversified portfolio of steaks and the next generation of antibody based therapies.

By picking great partners by leveraging technology advantages and by working broadly across different indications that modality. We believe we can generate long term value and superior returns, but at the same time not assuming the binary risk that is normally associated with drug development.

Today, we have built a portfolio of 155 programs under contract and 131 of these have downstream participation.

We're working on indications this fan oncology pain, nearly generation infected disease auto immune disease allergic inflammation, ophthalmology women's health and cardiovascular disease.

Through our programs, we deliver antibody can be developed for the full range of therapeutic modality. This includes igt's icm's and iga's by specific antibody single chain antibodies khaki cell therapies radioisotope conjugate in DNS delivered anybody.

Finally, the power of our platform has attracted partnership across the spectrum of drug development Company. This includes the most enabled companies like Lilly Gilead and Regeneron.

Fast moving biotech such as <unk>.

Ali and IGN and also innovative emerging biotech such as empirical ngo's and calculate.

We continue to see strong and accelerated demand across our partnership business.

And the third quarter, we added another 17, new programs under contract over the first nine months of the year. We have now added 52 programs under contract as compared to 34, there were added over the same period in 2020.

While the number of programs under contract will vary from quarter to quarter. We have now built up a robust book of work that we expect will translate into a steadily growing rhythm of annual program start which is when the work on each program actually begin.

We will increasingly be focusing on program starts with a primary metric and building our portfolio and also as a reflection of our growing capacity to execute and.

In the third quarter, we started nine programs, bringing our total program starts to 69.

This quarter. We also added two new multi target partnerships that bring important and unique dimensions to our growing portfolio of programs, including opening up new geographic market and pioneering new therapeutic modality are.

Our most recent partnership which is with Everest medicines represent our first engagement with a company focused on developing drugs in Asia.

Everest as of late stage clinical development company, whose leadership has a proven track record in the rapid development and commercialization innovative therapeutics.

This partnership is already off to a great start and has the potential to bring multiple molecule into the clinic with accelerated timelines.

We look forward to working with them on 10 targets across multiple indications starting first with oncology.

We're also excited about a new collaboration with Moderna to advance their portfolio of RNA based medicine.

This partnership will address six different targets.

Over the past year, the massive impact of earning vaccine has solidified earn a as an important and prove it modality.

Beside a vaccine there are many other opportunities for RNA based medicines, including antibodies.

Through our collaboration with Moderna, where Perry had colors discovery engine that modernity industry, leading our new platform to pioneer a new way of delivering antibodies.

We use our platform to find therapeutic antibodies and provide moderna with the data package that includes the DNA sequence that encodes these antibodies.

But <unk> will then use their technology to deliberately sequences to the patient in the form of an RNA molecule. So that the patient's own body can make the antibody and combat the disease.

This is bypasses the conventional manufacturing process that is used to mix standard antibiotics.

In addition to having the potential to significantly accelerating the path towards clinical development RNA delivery also provide opportunities you can't device in ways that would be difficult or impractical with convention in conventional manufacturing methods.

This is yet. Another example seller can work through partnerships to unlock innovation and accelerate the development of new types of antibody based medicines.

It also highlights the importance of continued investment in our platform to open up new opportunities in drug development.

An opportunity of particularly high value in the space of GBC or an iron channel proteins.

These targets played key roles in cellular function and include many well validated targets for a Broadway range of indications steady cancer inflammation pain obesity fibrosis and more.

While these drug targets are widely regarded as a large an untapped opportunity for therapeutic antibodies, they have proven largely intractable and using existing technologies.

For context more than 50% of approved small molecule drugs are against GPC are the nine channel in many instances small molecule development has been hampered by poor specificity and off target toxicity, something antibiotics are ideally suited to remedy.

Despite this recognize opportunity and despite intense work across the industry. There are only two improved antibodies against Gv's yard and to date no antibodies against I'm channel have even made it into clinical development.

There are many challenges in tackling these target and we have an overarching technology development program to systematically address each of them. One of the most important is that many of these targets are extremely difficult to produce which is the first step in discovery.

In September we acquired Tetra genetics, a Boston based company that solve the production challenge and enabled to provide the critical regions that is sufficient quantities of highly pure GPC are in high end channel proteins. These.

These proteins are used at every step of the discovery workflow to immunize screen characterize an engineer therapeutic antibodies.

We are integrating petrogenetic into our tech that to provide an optimized source of protein for our antibody discovery efforts and to solve a key challenge in pursuing these highly sought after but difficult to access growth target.

On that note I'd like to extend a warm welcome to pop committee and the rest of the talented team et cetera today.

Another example of an inorganic technology acquisition that we have made and which is now unlocked new opportunities and creating value is our acquisition of the orphan that specific platform last year.

By specific antibodies are the fastest growing subset of antibodies in development. They represent a major growth driver within the $140 billion antibody therapeutics market.

Despite early success there are numerous technical challenges for successful development device specifics. These include challenges in discovery challenges.

Challenges in selection of appropriate binding Perez and challenges and protein engineering and manufacturing.

Or the map is a clinically validated platform, which addresses the perking engineering and manufacturing challenges that have hampered the development divide specifics.

This platform advanced computational and experimental protein engineering method to create agg, Mike by specific antibodies from any too starting antibody sequences.

The resulting by specifics are made using standard production and purification techniques.

Orphan that also supports a variety of multi specific format that can be tailored to the target biology until the desired mechanism of action.

By integrating fourth map into our existing technologies that we can provide our partners with a rapid and complete solution for generating tailored stable and developable bispecific antibiotics.

Due to the flexibility and differentiation of north on that platform, we're seeing inbound interest for many partners.

To date over a dozen programs under contract now include the use or the option to use our bispecific technology and we're regularly starting discovery on Bispecific anybody programs.

We view worth a map is an important focus for our business development and one that is also being supported by high value R&D to expand our platform.

For example, we see a large and growing market opportunity and the use of 5% expertise L redirection and oncology specifically through CD three receptor engagement on T felt.

Finding ndtv three antibodies with the right property, including appropriate affinity and epitope recognition is critical to the success of this class of therapeutics and depend upon the antibody being used and the targets that are being addressed.

53 is in a tourist lead difficult target.

As a result, there are limited options available for companies Anthony entering this space and.

In response to this need this quarter, we initiated an internal effort to generate a proprietary pal of fully human C. Three antibodies we.

We plan to make these available alongside are worth on that platform by.

By adding new accelerates owned C D three antibodies with or the map and carrying that with our discovery capabilities and hydrofoil assays for functional assessment, we aim to provide a complete and high value solution for drug developers wanting to develop the next generation of Bispecific T selling deserves we.

We anticipate having results to share with you on this project next year.

In addition to solving the hardest problems our business model also addresses another critical impediment that impact the entire industry.

Today, many drug developers are not able to access the technology the expertise the facilities or the people that they need to quickly advanced their therapeutic programs.

By bringing our solutions to the market in a partnership model, we are working to close that gap.

This is particularly powerful when launching new companies, where asset to our platform can dramatically accelerated discovery by removing the need to build internal capabilities.

In these cases are fullstack solution provide even more value and as a result, we have had the opportunity to evolve our deals structures beyond royalties and milestones to capture that value.

This now includes equity and equity late participation and options to invest in molecule that we discover.

Our collaboration with Inditex is one of the first examples about taking an equity position in a collaboration partner in.

<unk> is developing biotherapeutics for animal health and is one and as one of the founding partners. We have been there discovery engine since inception.

We initiated but first program in 2019 and this quarter in advance, but first molecule from this collaboration Ivy at zero one into the clinic.

Ivy editor, one is a canine specific antibody treatment for an undisclosed chronic indication in dogs.

This is the first program as part of a broad collaboration that includes multiple programs over multiple years.

The use of biologics for the improvement of health and longevity of companion animals represent a new and growing subset of biologics, we look forward to continuing to launch programs with our partner in the text.

Summing up this quarter, we have continued to make excellent progress across our core business. We remain focused on our three top priorities which include first.

Building and executing on our partnership business to expand our diversified portfolio of royalty streams.

Forward integration of the platform and scaling of our teams and facilities to support all antibody discovery activities up to an <unk> submission and finally investing in data site to further our technological differentiation and to increase the speed and this capability of our tech back.

And with that I will hand over to Andrew Booth, our CFO to provide an overview of our third quarter of 2021 financials Andrew.

Thanks Carl.

I'll start by highlighting are key business metrics. We ended the third quarter of 2021 with 155 programs under contract with 35 unique partners. That's a 65% increase in programs under contract as compared to the end of Q3 and 2020.

We continue to see the combined positive impacts of our investments and our business development team and the increasing awareness of our platform on our business development activities.

In the quarter, we added moderna and at risk to our partnership portfolio.

The programs with both of these partners include downstream participation in the form of milestones and royalties on net sales.

Also in the quarter, we started nine new programs to take us to a cumulative number of 69 program starts 17 of which were started in the first nine months of 2021.

We continue to build capacity and to engage with many partners on preparations for their program starts.

We also continue to expect a robust number of program starts as part of this generally increasing trend while.

While starts will always be somewhat irregular as you would expect the increase in programs under contract is a leading indicator of the long term trajectory expected for program stairs.

Last quarter, we introduced a new business metric molecules in the clinic, which represent the number of unique molecules for which an indie or equivalent application has been approved based on an antibody that was discovered by us or by a partner using license step cellarer technology.

We are pleased to report progress on this metric as we view it as an indication of our near and mid term potential revenue from downstream milestone fees and royalty payments in the longer term.

In Q3, one new molecule reached the clinic, taking us to a total of five Carl as already noted that this molecule IBM zero. One is the result of our first program is a collaboration with <unk>, we congratulate the team for reaching this important milestone and look forward to progress on this and other programs in the future.

As an update on our first molecule to reach the clinic.

As noted in their previous earnings call us shipments of bandwidth in the mat with lilies at <unk>, where paused in June because at the time beta and gamma variance were resistant to this combination.

That were resistant to this combination were prevalent in the United States.

September 2nd use shipments of them one diplomat together with additive Mad resumed since then the U S. Government has distributed over 400000 doses of them were diplomat with editing that which is on average over 50000 doses per week. These shipments to the US dates were made from existing federal government supplies.

In the U S. The U S. Government has also recently ordered an additional over 600000 doses of them whenever mad with additive amount from Lily at least 400000 of which are expected to be delivered in queue for with the balance in January of 2022.

Additionally in September the European Commission entered into a framework agreement with Lily under which European countries May purchase up to 220000 doses of family diplomat in combination with Edison event.

The momentum we have so far achieved with number of partners number of programs under contract program starts and molecules in the clinic at the end of Q3 has far outperformed our expectations from one year ago for the entire year of 2021.

These will be key drivers of growth in the business end of shareholder value over the longer term.

Looking at revenue revenue in the quarter was five $5 million.

Weird our revenue predominantly for research fees, which accounted for $5.1 million. This is an increase from the same quarter last year and reflects activity with a diverse set of partners across a range of programs.

As program starts to increase we would expect this trend of revenue for research fees over an increasingly diversified set of customers to continue to grow as.

As expected we are reporting limited royalty revenues in this quarter of about $200000 from new shipments of them liniment, which had been caused in the United States in June when use affirmative nomad with added diplomat resumed the U S government was able to draw on their existing supply of them.

This did not triggered new orders of Daimler diplomat, too Lilly or royalties to us in the quarter. The recent U S government order, which I discussed earlier is in line with our belief that is COVID-19 to comes in Demick. There is a potential for revenue from COVID-19 products, which we view as an upside and not integral to our long term business strategy.

Milestone revenue naturally occurs irregularly and no revenue linked milestone events occurred in Q3 of 2021.

The milestone revenue in Q3 of 2020 was related to borrow stores achieved by then when they've been with you from last year.

Finally, we earned approximately $200000 in the quarter and license fees from our tree any platform.

Turning to operating expenses are research and development spend for the quarter was 18 million.

A $10 million increase over the previous year. This reflects our ongoing investments into R&D, which will continue to grow as we keep expanding our R&D teams capabilities and capacity this'll.

This allows us to deliver our partner programs with nine starts achieved in this quarter as well as to enhance our technology stack organically.

And sales and marketing expenses for the quarter were just over $1 million a doubling from the same quarter. In 2020. This reflects the ongoing growth of our business development team capabilities reach and capacity to connect with the strong demand that we continue to see both inbound and outbound.

General administration expenses for the quarter were roughly $11 million compared to $3 million in the second quarter of 2000 $23 million increase were related to hire non-cash stock based compensation expenses, bringing us in line with publicly listed companies.

The increases otherwise driven by the need to support a much larger business and the associated legal in corporate development requirements of being a publicly listed company as well as the ongoing investments to protect our intellectual property.

For the third quarter, we are reporting a net loss of roughly $21 million compared to in approximately $3 million loss in the third quarter of 2020 in terms of earnings per share. This works out to a loss of eight per share on both the basic and diluted basis.

This result reflects our ongoing investment to expand and enhance our discovery platform and to grow a diversified portfolio of long term steaks and the next generation of antibody drugs, while running discovery efforts for our partners.

Looking at the first nine months of the year, we've generated revenues of $236 million and net income of over $93 million.

That equates to earn earnings per share of 34 cents on a basic and 29 cents on a diluted basis year to date.

Looking at cash flows operating activities for the first nine months of 2021 contributed over $261 million, which includes the collection of the previous accounts receivable balance from December 2020, and strong royalties earned from them whenever Matt in the first half of the year.

On the investing activity side. The first nine months of the year show, a $49 million investment in property plant and equipment, including the land purchase of our future GMP facility in Vancouver, the remainder was predominantly related to our Tetra genetics acquisition and do construction financing of our facilities, which has been partially offset by funding.

Steve from the government of Canada strategic Innovation fund.

As part of our Treasury strategy, we invested approximately $240 million in short term marketable securities during the quarter.

We finished the quarter with almost $800 million in short term liquidity, including 754 million of dollars of cash cash equivalents and marketable securities and about $44 million in accounts receivable and accrued accounts receivable.

Given the recently announced purchase agreements for Covid antibodies from Lily and the associated royalty due to Ah cellarer, we see the potential for our liquidity position to further improve in the near term.

In summary, we continue to be in a very strong liquidity position that allows us to execute in our strategy and continued to build capacity to extend the platform and to pursue business and corporate development initiatives. We believe that we have sufficient liquidity for well beyond the next two years.

And with that we'll be happy to take your questions and I will turn it back to the operator.

Thank you Sir we will now begin the question and answer session. As a reminder, if you would like to ask a question. Please do so by pressing star one on your time okay.

<unk> followed by the number one and your telephone keypad, we ask that you limit yourself to one question and one from the one so we have time for as many questions as possible within the hour we have a lot of it. Please standby will compile between a rock.

First question is from government depth with bearing bank capital in line.

Mhm.

Yeah, Hi, there and thank you for taking my questions.

One is just like too.

Ask around the program starts and the new parks in the quarter, obviously very very strong performance is that any sort of common element to those either proximately programs.

In.

Between the current.

Types of customers, maybe split between the the the larger karma customers or partners sorry, or.

More biotech how'd you how did you see that the detainee trying to come back.

Sure. This is Carl I'm happy to take that one thanks for the question.

So first with respect to additional pucks in the quarter those were largely attributable to the two partnerships that we mentioned both being multiyear multi target deals with Everest in width moderna.

In terms of program starts one of the things that were very pleased with is the increasing diversity of different partners that are represented program starts and so that is a good mix of early stage of large companies and sort of mid cap, we're mid to small cap biotech companies.

I'll just add that from a business development perspective, we are seeing a lot of inbound from a mix of customers as I mentioned the by specific capabilities are definitely driving some of that in in terms of performance. We have now added 55, new programs under contract in the first quarter.

Pardon me.

Added 52 problems with a contract in the first three months pardon me nine months, let me try that one more time, we have added 52 per visitor contract in the last nine months.

That is.

Exceedingly but that is a very strong and it succeeded.

Our expectations for the year and so we're giving great about the business development and really as we mentioned are now turning our attention towards program execution.

Okay, and then just as a follow up when I think about the new monitoring this limit that you've reported coming back too.

In terms of.

That was.

That was based on your relationship back from a couple of years ago right is that how you see most of these relationships.

Blame on.

Starting the program and then a couple of years and I do.

Due to kind of which is that.

In terms of the time that seems to be.

Three please hold.

Mm timeline, but just any comments on that then and.

That's something that could continue to morrow.

I get this year.

That's a great question. So this is the first program to come out at the end of the techs collaboration as we mentioned it comes from a program that was initiated in 2019. So we are very pleased with the speed of that work, particularly given that at the time of initiating into Texas still just a company that lives in the earliest.

Needs to be informed.

As a general trend, we believe that our investments in technology and also.

The partners that we are now making collaborations with and the types of programs that we're working on.

The potential to result, increasingly fat timelines from initiation to programs in the clinic.

Course, it's going to take some time to bear that out but it is a trend that we are certainly keeping our ion and one that we think.

Is.

Reinforcing our business thesis, which is that investments in technology and capacity and partnerships can help shorten that time from ideas to clinical testing.

Perfect. Thank you.

Your next question is from the Latin nest, Ethan really even Stifel denying yourself.

Yeah, good afternoon mixture.

Questions.

Just wondering if you could maybe expand upon.

The CD three work that you're doing it sounds like you're developing your own it house panel novel CD three targeted yet the bodies and there's a lot of the truth.

Drug development space around trying to find some.

Attenuated C D. Three binders that maybe are does aggressive on.

Crs side at some of the current.

Peaceful and redirecting box specifics right now and so.

Who would just be interested in terms of how you are functionally characterizing these in house and when do you think these might be ready to pair up.

Would be working now.

Cool.

Thanks, Pete Carl here. So first I think a lot of your comments certainly resonate as I mentioned we.

We see a lot of interest from companies Big and small that are looking to get into this space with by civic antibodies that can redirect you felt it's one of the areas I think that is shown terrific promise, but also one of the areas where the technological hurdles are much higher than in other other cases.

So that's an opportunity for us we are an enabler through technology b or the Mac platform solved a big chunk of that by.

By being by allowing you to pair antibodies and produce molecules that can be expressed well and our developable and a standard manufacturing process.

With the T cell redirection as you mentioned.

There is now good evidence that the success of molecules depends very much not only on the properties of the CD three engage her but also on how the how that particular CD three engage or has been paired with the binding partner, which of course depends on the target and so there is a requirement of generating a large panel svd threes with you.

Half the the starting substrate to test those combinations.

It's something that we have initiated it has not yet done, but we feel confident in our capabilities to deliver on that and.

And in parallel we're building internal capabilities to express those by specifics and do the functional characterization.

So that we will have a full workflow that can start really just at the name of the target and can move that through to generating binders for the target panellist 50, threes and functional data that can help to assess which of those parents and receiving three molecule is best suited for that application. So that's the goal there's a lot of work to do there.

We've indicated that we hope to share progress on that in the new year and I will just emphasize that we do see this as an area where at seller is extremely well positioned to help companies more effectively bring therapy for patients and one where we are devoting.

Significant resources to make sure that we do that as quickly as possible.

Okay interesting.

And then just gone the Moderna collaboration I know, maybe it seems a little bit non traditional relative to some of your other partnerships whereby there's a deliverable that you are providing but madonna's still has to do a little bit of reverse engineering to turn it into a therapeutic so can you maybe comment as to whether or not.

The economics of the per program modern our collaboration are are consistent with it.

I guess the base case economics that you're extracting across all these different partnerships.

Great question, Steve So first.

Moderna collaboration in general.

During the obviously the company with with tremendous resources right now and also world class capabilities, an army of therapeutics.

There is an opportunity to use RNA to deliver antibodies.

And we are very pleased that they have selected have sorry to be their discovery engine recognizing that to attempt to build that internally would cause undue delays and ultimately result in working with technologies that are not where they need to be to prosecute those programs.

In terms of the business terms.

Maybe go back a a second you mentioned that we still have work to do at.

At this point, where we have handoff candidates right.

Right now it is always or it is currently in our partner's hands to do the manufacturing towards the final therapeutic now most often that is done through the traditional path, which is to generate a cell line and then to bring that through the regular GMP manufacturing process and mitigate the manufacturing.

Instead of just the manufacturer the RNA and then the <unk> delivered to the patient so conceptually while the path is different conceptually I don't think it's.

Distinct from our more typical collaborations and.

And directly to the business terms, obviously, we're not disclosing details, but the terms are in line with our recent partnerships and I'd say at the general trend over the last couple of years, we are seeing our deal value go up in recognition of the of the platform and increasing demand that we're seeing partners.

Alright, I'm just taking the questions.

And the next question is from the line.

Sudan with SBB either.

Hi, Carl Thanks for taking the questions the first son Covid and.

Two quick ones, if I could on the products.

Products in the.

Pipeline and partnerships.

So on the 400000 doses, that's a really great to see in the fourth quarter for you.

And the rest in 2022, but as you saw there was a strong data from Pfizer on anti Virals and prior to that with Mark.

With that in mind.

What's your expectation for Ben line of amendments of 2022.

Asleep, there's been a lot of discussion around this among them Buster. So just wanted to get your thoughts as to what color you are thinking about this.

And also wanted to just confirm that you are fully expecting the U S orders the current at least the fourth quarter and the first quarter wants to come through.

Thanks Penny.

Let me start by reiterating something that I think we've been consistent on through all the calls.

We.

Got involved with COVID-19, because we found ourselves with the technology that was needed at the time it could respond quickly.

We are very proud of the work that we've done with our partner Eli Lilly and bringing now two molecules into the clinic and one family that has a map and now bama an amount with Edison. The map that have had a major impact in helping patients with COVID-19 over the past 12 months.

In the near term.

We have or in recent times, we have seen them live map and Edison Mab shipping out in the us and with the recent order.

We are.

Given the recent order we would expect.

That would result in additional revenues as you mentioned in Q4 and Q1 of next year those revenues, we view as upside and as non dilutive financing that help us to reinvest in our core business, which is taking a much broader view of antibody therapeutics investing for the long run can be able to help move.

Ideas into molecules that can be tested in the clinic for hundreds of different programs over the coming years.

So that's where our focus is.

In terms of the recent results on small molecules, both for Merck and Pfizer.

I think both are impressive Pfizer result, if it stands I think is very impressive and good news for the world.

And certainly one would expect that that would take.

Some fraction certainly be therapeutic applications of COVID-19.

I still believe that there are patients that cannot easily be protected from vaccines and antibodies would provide.

A prophylactic application that would be important for those patients I also think that there is a scenario where antibodies.

It would be chosen in place of small molecules, even the therapeutic application but of course no. One really has a clear view of how that's going to play out.

If it if our molecules continued to be used that will be great. We'll be happy to have helped.

With the COVID-19 problem and of course, the revenue will help us to double down in the business, but as Andrew said. The result of COVID-19 is not something we view is integral to our business.

Got it Super helpful.

On the by a specific.

I mean, you briefly mentioned about that that's obviously getting traction for Ya.

Wondering would the new contracts ads in the quarter that was 17 contract homes.

Obviously strong since the time of IPO.

Could you parse out for us at this point in time, what is the primary component primary driver among the sort of the tech staff and overall services and turnaround times and an overall partnerships that you are offering.

Continues to bring increasingly more partners to you today, if you could sort of parse that out there.

Differentiating factor today.

Technology Wise service wise.

Bringing continues to bring increasingly more partners too.

Thanks for the question. It's one that's very difficult to answer directly because the needs of every partner from a technology perspective are going to depend very much upon the application and the modality that targets that they are going after.

There is a trend that we definitely see happening and when that I feel is a a real teo tailwind for accelerator.

We're certainly seeing that.

B the provision of <unk>.

Technology or capabilities and discovery and development.

We feel is Bifurcating Institute classes. There are groups that are running sort of fee for service low cost solutions that are fragmented.

And then there are companies like ourselves that in fact, I think we're unique in this capacity that are investing in technology and bringing it together in a fully integrated workflow.

When there are partners out there who are experienced in drug development and recognize the value of having the very best molecules. They are coming to us and that's where we want to play we want to work with people that appreciate.

Technology capabilities speed service.

Infrastructure and Knowhow as ways to help them meet their goals of bringing therapies divisions more quickly.

Okay, and just last one if I could <unk>.

Can you just at least may be size the market for us there or I know you can provide vindication, but maybe just help us understand is this more of proof.

The platform again or could this be more of a meaningful royalty the product was to get to market and just wanted to clarify that thanks.

Great question again Cooney.

First of all.

Animal health is a relatively new application biologics, it's one that in recent years.

Has taken off much faster than I think people had expected. So there is clearly a need and a market opportunity for taking some of the innovations that have been applied over the years in human health and applying them to companion animals.

With respect to the the first program that's moving forward.

Very pleased about that program, we think it's a significant program, but any program and moves into the clinic is not one that we would see as being a main driver of our business. That's not how our business works. Our business is much more about providing solutions that over time build a large and diversified portfolio. So that we.

Can in the long run.

Generate a returns that are exceeding what.

What is typical in the industry, but not be tied to any particular program and therefore not getting on the binary risk.

Kind of gets thank you.

And your last question is from Dennis resonate with BMO. Your line is open.

Hi, Good afternoon. Thank you for taking my question Congrats on the quarter just a couple of for me. She doesn't have obviously had a very successful 2000 2021 in terms of new program starts programs under contract and all the other key metrics can you talk a little bit about the vision for 2022, and what we should expect to see the same runway and key metric growth or maybe a little slight tapering as we move forward and just just.

Click one if you could put some more contact but what kind of a ramp up we can see you guys do upon the completion of the CMC and G&P manufacturing facilities. Thanks, so much.

Fact that if there's a few questions in there so I'll try to make sure I get all of them, but feel free to redirect if I Miss one of the points.

So as we look at 2022, I don't think they're going to be any surprises we have through 2021.

Been investing in the platform and infrastructure and then building our workforce to build capacity to execute on the partnership business.

And hand in hand, and that we've been making investments on our business development team to make sure that we're bringing in the programs under contract that are the leading indicators of the work that ultimately translates into starts.

At this point as I mentioned in my prepared remarks, we built a robust.

Book of business.

And we are now working closely with partners to make sure. We've got the reagents. We've got the work plan set and we're starting to see an uptick as a steady steady rhythm of starts in this quarter and that trend well. It may go up and down with some variability from quarter to quarter, we expect to be growing if averaged over some reasonable P.

<unk> off into the future. So next year is going to be a year.

Of execution of continuing to build.

Our business development team and on focusing on moving programs as quickly as possible through our staff that our partners can get them into lately to preclinical development and ultimately to the clinic in terms of the CMC and G&P manufacturing.

Project as I mentioned that is a that is a big project at our top priority in R&D and platform development. It includes translational science building CMC capabilities and building a new facility for JP manufacturing that project is currently on track.

It is scheduled to be lives in the first half of 2024.

Once alive I expect there'll be some ramp up in terms of building the workforce in the capacity, but the facility is designed to be able to handle north of 30 programs per year.

And so that's that's how we see that and of course, that's a project that will be.

At version one in 2024 and will continue to make investments to integrated with the front end of the stack with an objective of shrinking the time from initiation of a program to iron filings.

Thank you so much.

My pleasure.

And that ends a question and answer session for a call on now Anatoxin survey too.

Karl Hansen for closing remarks.

Great.

Thank you everyone for joining us today.

This is an exciting time for a celeron, we're looking forward to keeping you updated on our progress on future calls have a great night.

This concludes today's conference call. Thank you for joining you may now disconnect have a great day.

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