Q4 2021 Abcellera Biologics Inc Earnings Call

Tryn Stimart: 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, Abcellera's Chief Executive Officer and President, and Andrew Booth, Abcellera's Chief Financial Officer. The webcast portion of this call includes a slide presentation that we will refer to during the call.

Okay.

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 seller, as Chief Executive Officer, and President and Andrew Booth accelerates Chief Financial Officer.

The webcast portion of this call contains a slide presentation that we will refer to during the call.

Tryn Stimart: If you are following along on the phone and wish to access the slide portion of this presentation, you may do so in the Investor Relations section of our website. For those who have accessed the streaming portion of the webcast, please be aware that there may be a delay and that you will not be able to pose questions via the web.

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 who have accessed the streaming portion of the webcast. Please be aware that there may be a delay and that you will not be able to pose questions via the web.

Tryn Stimart: 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 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 US dollars. Now, I am pleased to turn the call over to Carl Hansen. Thanks, Tryn, and thank you, everyone, for joining us today.

This presentation may contain forward looking statements pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095 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 impact our future performance, our presentation and <unk> 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 Carl Hansen.

Thanks, Tim and thank you everyone for joining us today.

Carl Hansen: It's my pleasure to provide an update on our business and a recap of 2021. Abcellera had a banner first year as a publicly listed company, executing on our long term strategy by growing our portfolio, deepening our platform to unlock new modalities, and expanding our deal structure to add new ways to capture value. We ended 2021 with over $720 million in cash, cash equivalents, and marketable securities, and approximately $70 million in receivables net of payables.

It's my pleasure to provide an update on our business and a recap of 2021.

<unk> had a banner first year as a publicly listed company executing on our long term strategy by growing our portfolio deepening our platform to a mark new modalities and expanding our deal structures to add new ways to capture value.

We ended 2021 with over $720 million in cash cash equivalents and marketable securities and approximately $70 million in receivables net of payables.

We added 53, new programs under contract with nine new partners, bringing our cumulative total of programs that are contracted 156 with a total of 36 partners.

Carl Hansen: We added 53 new programs under contract with 9 new partners, bringing our cumulative total of programs under contract to 156 with a total of 36 partners. We ramped up our discovery capacity and started work on 26 new drug discovery programs, bringing our total number of program starts to 78. Finally, we saw four molecules we discovered enter the clinic, bringing our total number to five new molecules in the clinic for indications in oncology, infectious disease, animal health, and immunology, dermatology, and gastrointestinal disease. Building an Armamentum from 2021.

We ramped up our discovery capacity and started to work on 26, new drug discovery programs, bringing our total number of programs starts to 78.

Finally, we saw four molecules, we discovered entered the clinic, bringing our total number to five new molecules in the clinic for indications in oncology infectious disease animal health and immunology dermatology and gastrointestinal disease.

Building on our momentum from 2021, we are now well positioned to continue executing on our growth strategy.

Carl Hansen: We are now well positioned to continue executing on our growth. Abcellera is building a technology company that drives innovation in antibody therapeutics, which currently represents an estimated $170 billion market opportunity, based on a historical compounded annual growth of over 10% for the last three decades. This market is expected to reach over 350 billion by 2030. Our strategy for growth in this market is to become the de facto technology leader in the early part of drug development, ultimately covering all the activities that lie between target discovery and clinical testing.

Have seller is building a technology company that drives innovation and antibody therapeutics, which currently represents an estimated $170 billion market opportunity.

Based on our historical compound compounded annual growth of over 10% for the last three decades. This market is expected to reach over $350 billion by 2030.

Our strategy for growth in this market is to become the de facto technology leader in the early part of drug development ultimately covering all of the activities that lie between target discovery and clinical testing.

Carl Hansen: Our work begins once the fundamental science has been done and a drug target has been identified. Starting from the indication and requirements of a drug target and therapeutic candidate, we used our technology stack to deliver antibodies with optimal drug-like properties.

Our work begins once the fundamental science has been done and a drug target has been identified.

Starting from the indication and requirements of a drug target and therapeutic candidate we use our technology stack to deliver antibodies with optimal drug like properties.

We deliver our lead drug candidate and data packages to our partners and they've been bringing these antibodies forward through late stage preclinical and clinical development.

Carl Hansen: We deliver lead drug candidates and data packages to our partners and they then bring these antibodies forward through late stage preclinical and clinical development. Our technology gives our partners a competitive advantage in advancing their programs. In exchange, we take a stake in these programs, allowing us to build a large and diversified portfolio in the next generation of antibody therapy. Over the long run, we believe this strategy will provide superior returns and value to our shareholders while avoiding the large capital outlays for clinical development and the extreme binary risk that is normally associated with biotech. In 2021, we had a record year in business development, adding another 53 programs under contract with nine new partners. This underscores a strong market fit for our business model.

Our technology gives our partners a competitive advantage in advancing their programs and exchange we take a stake in these programs, allowing us to build a large and diversified portfolio in the next generation of antibody therapies.

Over the long run we believe this strategy will provide superior returns and value to our shareholders, while avoiding the large capital outlays for clinical development and the extreme binary risk that is normally associated with biotech.

In 2021, we had a record year in business development, adding another 53 programs under contract with nine new partners.

This underscores our strong market fit for our business model.

Carl Hansen: Our partners span the full range of drug developers, from early-stage biotech to mid-cap, publicly-traded biotech, to large, vertically-integrated biopharmaceutical companies. Enabled partners come to us to find antibodies with superior drug properties or to advance programs that have proven refractory to traditional workloads. For smaller biotech companies, our technology does more than just level the playing field. It allows them to advance their programs with a technology advantage while saving time and capital that would otherwise be needed to assemble or build internal capabilities.

Our partners stand the full range of drug developers from early stage biotech to mid cap publicly traded biotech to large vertically integrated biopharmaceutical companies.

Enabled partners come to us to find antibodies with superior drug properties or to advance programs that have proven refractory to traditional workflows.

For smaller biotech companies are technology, that's more than just leveled the playing field. It allows them to advance the programs with the technology advantage, while saving time and capital that would otherwise be needed to assemble or build internal capabilities.

Collaborating with diverse partners allows us to open up new modalities and targets for example, our deal with Madonna opens up a new modality of RNA based antibody therapies.

Carl Hansen: Collaborating with diverse partners allows us to open up new modalities and targets. For example, our deal with Moderna opens up a new avenue of RNA-based antibody therapy. Another strong area of growth is in bi-specific antibodies, which is enabled using our OrthoMap platform. In total, we now have 156 programs under contract, of which 131 have downstream participation. Approximately half of our programs under contract have yet to begin the discovery phase. As a result, we entered 2022 with a full book of work.

Another strong area of growth is in bi specific antibodies, which has enabled using our ortho Mt platform.

In total we now have 156 programs under contract of which 131 have downstream participation approx.

Approximately half of our programs under contract have yet to begin the discovery phase.

As a result, we entered 2022 with a full book of work.

Carl Hansen: Specifically, we now have over 70 programs under contract that are yet to be started. We are therefore in a position to be increasingly selective in our dealmaking and expect to be shifting our business development focus towards strategic partnerships where we have the potential for even deeper participation in the molecules that we discover. To maintain future flexibility in our business and deal terms, we also intend to limit the number of programs under contract that are associated with new multi-year agreements.

Specifically, we now have over 70 programs under contract that are yet to be started we are therefore in a position to be increasingly selective in our dealmaking and expect to be shifting our business development focus towards strategic partnerships, where we have the potential for even deeper participation in the molecule that we discover.

To maintain future flexibility in our business and deal terms. We also intend to limit the number of programs under contract that are associated with new multi year agreements.

Carl Hansen: As indicated during our last business update, we will now be focusing on program starts rather than programs under contract as a key metric for the growth of our portfolio. In 2021, we started 26 programs, bringing the cumulative number of program starts to 78. Today we are excited to share additional details about our portfolio. We think of our portfolio as a financial asset where diversification can be effectively used to achieve strong growth while at the same time mitigating risk.

As indicated during our last business update we will now be focusing on program starts rather than programs under contract as a key metric for the growth of our portfolio.

In 2021, we started 26 programs, bringing the cumulative number of program starts to 78.

Today, we are excited to share additional details about our portfolio, we think of our portfolio as a financial asset where diversification can be effectively used to achieve strong growth, but at the same time mitigating risk.

Carl Hansen: The wide applicability of antibodies and the breadth of our platform allow us to diversify our portfolio across antibody modalities, partnerships, and therapeutic areas. As illustrated, our programs are diversified in indications that now include oncology, immunology, neurology, infectious disease, ophthalmology, and beyond. For the 65 human health programs, there is no therapeutic application.

The wide applicability of antibodies and the breadth of our platform allow us to diversify our portfolio across antibody modalities partnerships and therapeutic areas.

As illustrated our programs are diversified and indications that now include oncology immunology, neurology infectious disease ophthalmology and beyond.

For the 65 human health programs.

Therapeutic application oncology represents just over half of our portfolio and has been a growth area over the past year.

Carl Hansen: Oncology represents just over half of our portfolio and has been a growth area over the past year. We expect this trend to continue in 2022, broadly reflecting the activity in the sector. In all of our partnerships, the large majority of the deal value is tied to the success of the molecules that we discover. We achieve this through a variety of deal structures, the most frequent of which includes upfront and research payments, followed by clinical and commercial milestones and royalties on net sales.

We expect this trend to continue in 2022 broadly reflecting the activity in the sector.

In all of our partnerships. The large majority of the deal value is tied to the success of the molecules that we discovered.

We achieved this through a variety of deal structures. The most frequent of which includes upfront and research payments, followed by clinical and commercial milestones and royalties on net sales.

Carl Hansen: The timing and the relative value of these payments is illustrated on this slide, which represents an example of one of our programs in the case that it is successful in bringing a new therapy to the market. This example hypothetically assumes a typical timeline of 10 years from program start to market approval, modest total upfront fees, aggregate milestones of over $90 million, peak sales of $1.7 billion per year, and a 5% royalty on net sales. What's important to note is that for a successful program, by far the largest fraction of the value of Abcellera is associated with royalties. These typically occur 10 years after the program has started.

The timing and the relative value of these payments as illustrated on this slide which presents an example of one of our programs in the case that it is successful in bringing a new therapy to the market.

This example, hypothetically assumes a typical timeline of 10 years from program start to market approval.

Modest total upfront fees aggregate milestones of over $90 million peak sales of $1 7 billion per year, and a 5% royalty on net sales.

What's important to note is that for a successful program by far the largest fraction of the value for a seller is associated with the royalties.

<unk> typically occur 10 years. After the program is started from.

Carl Hansen: For molecules that reach the clinic, royalties represent approximately 90% of the total value. Milestones are the second most valuable portion of the deal and represent approximately 7% of the total value. Milestone payments begin when a molecule reaches the clinic, approximately three to four years after a program starts. Milestone then continued to progress at higher payments until a drug candidate reaches Mark the approval and achieve certain failed levels. [inaudible] Finally, upfront and research payments are the smallest portion of the deal and are recognized as Abcellera completes its work. Commonly, these payments are between 1 and 3 million and represent approximately 1 percent or less the total value of a successful drug development program.

For molecules that reached the clinic royalties represent approximately 90% of the total value.

Milestones are the second most valuable portion of the deal and represent approximately 7% of the total value.

Milestone payments begin when a molecule reaches the clinic approximately three to four years after our program starts.

Milestones then continued to progress at higher payments until the drug candidate reaches market approval and achieve certain sales levels.

Finally upfront and research payments are the smallest portion of the deal and are recognized as a seller a complete this work.

Commonly these payments are between one and $3 million and represent approximately 1% or less the total value of a successful drug development program.

Carl Hansen: Our COVID-19 program with Eli Lilly is a real world and time compressed example of the value associated with our business model. Over the period between March 2020 and December 31, 2021, we received $526 million in royalties, representing over 90% of the program value to date. Structuring deals that emphasize value and royalties also aligns our success with the delivery of therapies that make a difference for patients. In this particular case, family nivamab, used either alone or together with other antibodies, has been used to help more than 1 million patients.

Our COVID-19 program with Eli Lilly is a real world and time compressed example of the value associated with our business model over the period between March 2020, and December 31, 2021, we received $526 million in royalties representing over 90% of the program value to date.

Structuring deals that emphasize value and royalties also aligns our success with the delivery of therapies that make a difference for patients.

In this particular case family <unk> Mab used either alone or together with other antibodies has been used to help more than 1 million patients.

Carl Hansen: We estimate that this has saved more than 100,000 hospitalizations and more than 40,000 lives. This is but one example of what can happen when a program is successful. However, this example is atypical due both to the timelines associated with pandemic response and our larger royalty position, which reflects both the high value placed on speed and the fact that we initiated our COVID-19 response independently as part of our internal technology development effort.

We estimate that this has saved more than 1000, 100000, hospitalizations and more than 40000 lives.

This is one example of what can happen when a program is successful. However. This example is atypical due both to the timelines associated with pandemic response, and our larger royalty position, which reflects both the high value placed on speed and the fact that we had initiated our COVID-19 response independently as part of our intern.

Technology development efforts.

Carl Hansen: Moreover, it is also important to realize that any particular drug development program is a high-risk, high-reward endeavor and that the large majority of programs are expected to fail to result in approved therapies. This is why it is so important to build a large and diversified portfolio, as we have been doing. In addition to the number of program starts in our portfolio, the main drivers of value are the probability of success, the speed of a program moving forward, and our economic participation in each program.

Moreover, it is also important to realize that any particular drug development program is a high risk high reward endeavor and that the large majority of programs are expected to fail to result in improved therapies.

This is why it is so important to build a large and diversified portfolio as we have been doing.

In addition to the number of program starts in our portfolio main drivers of value are the probability of success the speed of our program advancing and our economic participation in each program.

Carl Hansen: Because of this, we make platform investments and business development decisions that seek to optimize these combined factors. We carefully evaluate each program to identify the highest value opportunities considering the scientific hypothesis, the commercial potential, and the capabilities of our partners.

Because of this we made platform investments and business development decisions that seek to optimize these combined factors.

We carefully evaluate each program to identify the highest value opportunities considering the scientific hypothesis, the commercial potential and the capabilities of our partners.

Carl Hansen: To build capacity, we continue to invest in the expansion of our facilities and our workforce. Importantly, we are leveraging modern automation, data science software solutions, and computation that we believe will yield continuous improvement in speed, efficiency, and success rates across our program. As already mentioned, this includes investments in a multi-year project of forward integration, which includes translational science, CMC, and GMP manufacturing. We believe that seamless integration of these capabilities with our upstream technologies will allow us to greatly accelerate the path from program start to the start of clinical development.

To build capacity, we continue to invest in the expansion of our facilities and our workforce importantly.

Importantly, we are leveraging modern automation data science software solutions and computation that we believe will yield continuous improvement in speed efficiency and success rates across our programs.

As already mentioned this includes investment in our multi year project of forward integration, which includes translational science.

<unk> and GMP manufacturing.

We believe that seamless integration of these capabilities with our upstream technologies will allow us to greatly accelerate the path from program start to the start of clinical development.

Carl Hansen: As we build our business, expand our technology, and increase the value we bring to our partners, we expect that our economic participation in each program will increase. These next few slides confirm that this has been the case over the past two years. This graph shows the progression of our royalty rates from early in our business between 2015 and 2019 to more recently between 2020 and 2021. The box and whisker plot indicate the inner two quartiles and the 5th and 95th percentiles for deals done within each period.

As we build our business expand our technology and increase the value we bring to our partners. We expect that our economic participation in each program will increase.

These next few slides confirm that this has been the case over the past few years.

This graph shows the progression of our royalty rates from early in our business between 2015 and 2019 to more recently between 2020 and 2021.

The box and whisker plot indicate the <unk> quartile and the fifth and 95 percentile for deals done within each period.

Carl Hansen: As shown, the mean royalty value from our earlier deals was 2.5% and has now increased to 4.3% with a quarter of the deals having a royalty rate above 5%. At the top end, royalty rates reach over 8%, while very few programs now have rates below 2.5%. We note that the distribution of royalties shown here are firm numbers that are not subject to buyout clauses.

As shown the mean royalty value from our earlier deals with two 5% and has now increased to four 3% with a quarter of deals having a royalty rates above 5%.

At the top end royalty rates reached over 8%, while very few programs now have rates below two 5% we.

We note that the distribution of royalty as shown here our firm numbers that are not subject to buyout clauses.

Carl Hansen: In addition to strong growth in the number and size of our royalty positions, as shown on this slide, we have also accumulated a large amount of potential milestone payments. The aggregate value of potential milestone payments for our portfolio of programs currently under contract is $4.6 billion, of which more than half of this is associated with commercial success. I would like to emphasize that this is the maximum potential value and has not been adjusted for the probability of success.

In addition to strong growth in the number and size of our royalty position as shown on this slide we have also accumulated a large value of potential milestone payments.

The aggregate value of potential milestone payments for our portfolio of programs currently under contract is $4 6 billion.

Of which more than half of it is associated with commercial success.

I would like to emphasize that this is the maximum potential value and has not been adjusted for the probability of success.

Carl Hansen: As I said previously, the large majority of programs do not succeed in becoming approved products, and therefore, we would expect to recognize only a fraction of this total value. In addition to milestones and royalties, which have been typical of how we achieved downstream participation in our early years, as we provide more value to partners, we are now adding deal structures to capture that value. This is particularly true when engaging with Ruby Stage firms.

As I said previously the large majority of programs do not succeed in becoming approved products and therefore, we would expect to recognize only a fraction of this total value.

In addition to milestones and royalties, which have been which has been typical of how we achieved downstream participation in our early years as we provide more value to partners. We are now adding deal structures to capture that value.

This is particularly true when engaging with early stage firms.

Carl Hansen: These fields include equity or equity-like stakes in new companies, as well as options to co-invest in program development to obtain a progressively larger effective ownership position. These should be viewed as a subset of potentially higher-value programs and are part of balancing our portfolio in terms of indication risk, partner type, and deal structure. At this point, the large majority of our programs are preclinical, reflecting the stage of our business and the higher concentration of new programs in the past few years.

These deals include equity or equity like stakes and new companies as well as options to co invest in program development to obtain a progressively larger effective ownership position.

Should be viewed as a subset of potentially higher value programs and are part of balancing our portfolio in terms of indication risk partner type and deal structure.

At this point the large majority of our programs our preclinical reflecting the stage of our business and a higher concentration of new programs in the past few years.

Carl Hansen: As our portfolio matures, we expect to see an increasing pace of molecules entering the clinic and an increasing average state of these clinical assets. As mentioned, in 2021, we saw four new molecules enter the clinic. Recently, one of these molecules, Depthalovimab, received emergency use authorization from the U.S. FDA.

As our portfolio matures, we expect to see an increasing pace of molecules entering the clinic and an increasing average stake in these clinical assets.

As mentioned in 2021, we saw four new molecules into the clinic recently one of these molecules depth logo map received emergency use authorization from the U S. FDA.

Carl Hansen: Beptalovimab is our second COVID-19 antibody to receive emergency use authorization and is the culmination of a two-pronged strategy that we executed in response to the pandemic. In March of 2020, at the start of the COVID-19 pandemic, we made a conscious decision to first prioritize speed in getting therapies out to patients. This resulted in the discovery of Bala Nivamath, the first COVID-19 antibody to reach the clinic and the first to receive emergency use authorization by the FDA.

<unk> is our second COVID-19 antibody to received emergency use authorization and is the culmination of a two pronged strategy that we executed in response to the pandemic.

In March of 2020 at the start of the COVID-19 pandemic, we made a conscious decision to first prioritize speed and getting therapies out to patients.

This resulted in the discovery of <unk>. The first COVID-19 antibody to reach the clinic and the first received emergency use authorization by the FDA.

Carl Hansen: Because we anticipated that resistant strains would emerge, we didn't stop. We continued our screening efforts and built up a collection of several thousand diverse candidate antibodies. In early 2021, responding to the emergence of new variants, we began to search this library to find a next generation solution, this time prioritizing maximum possible potency and breadth of neutralization. This effort resulted in the discovery and now the emergency use authorization of PEPFAR-LOVIMAP. Demptylobimab neutralizes every known variant of concern, and to our knowledge, it is by far the most potent antibody in development against the Omicron variant and the BA2 subvariant.

Because we anticipated that resisting screens would emerge we didn't stop we continued our screening efforts and built up a collection of several thousand diverse candidate antibodies in early 2021 responding to the emergence of new variance. We began to search this library to find a next generation solution. This time prioritizing maximum possible.

C and breath of neutralization.

This effort resulted in the discovery and now the emergency use authorization of Pepsi logo map.

<unk> it neutralizes every known variance of concern and to our knowledge. It is by far the most potent antibody in development against the Omicron variant and the two sub variant.

Carl Hansen: This graph shows our laboratory measurements of the potency of various antibodies that are in development, either as monotherapies or as part of a cocktail of two antibodies. For each antibody, the potency against Omicron is quantified by the IC50 value, which refers to the concentration of antibody that is needed to achieve a 50% neutralization of a fixed amount of pseudotype virus.

This graph shows our laboratory measurement of the potency of various antibodies that are in development, either as monotherapy or as part of a cocktail of two antibodies.

For each antibody the potency gains omicron as quantified by the IC 50 value, which refers to the concentration of antibody that is needed to achieve a 50% neutralization of a fixed amount of pseudo type virus.

Carl Hansen: Lower numbers are good and indicate a more potent antibody. This data shows that bethalimab is at least 50 times more potent against Omicron than other antibodies we tested, and it has either been approved or is in late-stage development. Moreover, for the three most potent antibodies against Omicron, we believe that only Beptolibumab maintains full effectiveness against the BA2 subvariant, which is thought to be more effective and is rapidly growing in prevalence.

Lower numbers are good and indicate a more potent antibody.

This data shows the depth of living that is at least 50 times more potent against <unk> and other antibodies, we tested and it has either been authorized or are in late stage development.

Moreover, the three most potent antibodies against <unk>.

Moreover for the most part excuse me. Moreover for the three most potent antibodies against Omicron, we believe that only best deliver map maintained full effectiveness against the two sub variant, which is thought to be more effective and is rapidly growing and prevalent.

Carl Hansen: The high potency of Vessel of map allows for full effectiveness at a dose of only 175 mg, which can be delivered by IV push in less than a minute as compared to a 30-minute infusion with some other antibody therapy. Furthermore, we believe that deptolizumab's potency and breadth give it the potential for development as a prophylactic to protect against COVID-19 infection in high-risk populations. The discovery of two authorized therapeutic antibodies within a year of each other demonstrates the power of our platform and its potential to quickly generate best-in-class therapeutics for our partners across other indications. However, I would like to emphasize that we are not a COVID-19 company. In fact, infectious disease represents a small fraction, approximately 5% of Abcellera's portfolio.

The high potency of vessel of map allows for full effectiveness at a dose of only 175 milligrams, which can be delivered by IV push in less than a minute as compared to a 30 minute infusion with some other antibody therapies.

Furthermore, we believe that <unk> potency in breath, given the potential for development as a prophylactic to protect against COVID-19 infection and high risk populations.

The discovery of two authorized therapeutic antibodies within a year of each other demonstrates the power of our platform and its potential to quickly generate best in class therapeutics for our partners across other indications.

I would like to emphasize that we're not in a COVID-19 company in fact infectious disease represents a small fraction approximately 5% <unk> portfolio.

Carl Hansen: In 2022, we will continue to drive innovative science that we believe will enhance the power of our platform to open up new target spaces and enable next-generation antibody therapies. We anticipate a number of exciting updates this year that are in part the result of successful integration of the acquisitions that we have made over the past couple of years. For instance, we have made substantial progress enhancing technologies for the discovery of antibodies against GPCRs and ion channels, including integration of the TetraGenetics platform, which we acquired in 2021.

In 2022, we will continue to drive innovative science that we believe will enhance the power of our platform to open up new target spaces and enabled next generation antibody therapies.

We anticipate a number of exciting updates this year that are in part the result of successful integration of the acquisitions that we've made over the past couple of years.

For instance, we have made substantial progress enhancing technologies for the discovery of antibodies against <unk> and <unk> channels, including integration of the Tetra genetics platform, which we acquired in 2021.

Carl Hansen: We look forward to updating you on those advancements in future business updates. In our last update, you'll recall that we discussed how the combination of our discovery, bi-specific, and computational platforms could be used to create next-generation T-cell Engageers based on CD3. Here, we are leveraging our Triani platform to generate fully human antibodies for T-cells and tumor targets, and combining them to create bispecifics using our OrthoMAP protein engineering platform

We look forward to updating you on those advancements and future business updates.

And our last update you will recall that we discussed how the combination of our discovery by specific and competition of platforms can be used to create next generation T cell engagements based on CD. Three here, we are leveraging our <unk> platform to generate fully human antibodies for T cells and tumor targets and combining them to create bi specifics using our <unk>.

<unk> protein engineering platform.

Carl Hansen: That's an effort that is just underway, and we are pleased to be sharing data about that program at the upcoming American Association for Cancer Research (AACR) meeting in April. Summing up, we've made tremendous progress in 2021. We are now moving into 2022 with a full head of steam. Despite the challenges of operating in a pandemic, we posted a record year in growing our business and have expanded our operations now to include over 400 people working in locations across the globe.

That's an effort that is just underway and we are pleased to be sharing data about that program at the upcoming American Association for cancer research or ACR meeting in April .

Summing up we have made tremendous progress in 2021, we are now moving into 2022 with a full head of steam.

Despite the challenges of operating in a pandemic, we posted a record year in growing our business and have expanded our operations now to include over 400 people working in locations across the globe.

Carl Hansen: Since our last earnings call, we have also strengthened our leadership team with the appointment of Nila Bouchon as Chief Commercial Officer and Dr. Andrew Lo as Independent Director. And with that, I'll hand over to Andrew Booth, our CFO, to provide an overview of our 2021 financials. Andrew.

Since our last earnings call. We have also strengthened our leadership team with the appointment of new logo shown as Chief commercial officer and Dr. Andrew Lo as independent director.

And with that I'll hand over to Andrew <unk>, our CFO to provide an overview of our 2021 financials Andrew.

Andrew Booth: Thanks, Carl. I'm pleased to highlight the progress we've made on our key business metrics, beginning with our program start. We started 26 new programs in 2021, of which nine were in the fourth quarter, to take us to a cumulative number of 78 programs started. While starts will continue to be somewhat irregular, we expect a generally increasing trend year over year, as we have seen throughout this past year. We ended 2021 with 156 programs under contract with 36 unique partners.

Thanks Carl.

I'm pleased to highlight the progress we've made on our key business metrics beginning with our programs starts. We started 26 new programs in 2021 of which nine were in the fourth quarter to take us to accumulative number of 78 program starts while.

While starts will continue to be somewhat irregular we expected generally increasing trend year over year as we have seen throughout this past year.

We ended 2021 was 156 programs under contract with 36 unique partners that is a 51% increase in programs under contract as compared to 2020.

Andrew Booth: That is a 51% increase in programs under contract as compared to 2020. As we noted previously, programs under contract have been a leading indicator of the long-term trajectory expected for program start. Also, in 2021, our partners advanced four more molecules into the clinic, bringing our total molecules in the clinic to five at year end.

As we noted previously programs and the contract has been a leading indicator of the long term trajectory expected for program starts.

Also in 2021, our partners events formal molecules into the clinic, bringing our total molecules in the clinic to five at year end.

Andrew Booth: We view the growing list of molecules in the clinic as specific examples of our near and mid-term potential revenue from downstream milestone fees and royalty payments in the longer term. The recent EUA of that beloved mad and the concurrent US government purchase order do, of course, imply meaningful near-term royalty potential. The momentum you achieve with the number of partners, programs in the contract, program starts, and molecules in the clinic this year has far outperformed our expectations from one year ago. These will be key drivers of growth in the business and of shareholder value in the years ahead. Turning to revenue, revenue for the year was $375 million.

We view the growing list of molecules in the clinic as specific examples of our near and midterm potential revenue from downstream milestone fees and royalty payments in the longer term.

The recent EUA of that below the med and the concurrent U S government purchase order due of course imply meaningful near term royalty potential.

The momentum we achieved with the number of partners programs under contract programs starts and molecules in the clinic this year as far outperformed our expectations from one year ago.

These will be key drivers of growth in the business out of shareholder value in the years ahead.

Andrew Booth: Revenues for 2021 were dominated by the $327 million of royalties we earned from shipments of Ben-Linivimab during the year. We realized $8 million in milestone fees in 2021, $7 million of which relate to the commercial milestones from the sale of Ben-Linivimab. We recognize $21 million of licensing fees in revenue in 2021, mostly attributable to one large Trianti licensing agreement in the first quarter.

Turning to revenue revenue in the year was $375 million.

Revenues for 2021 were dominated by the $327 million of royalties, we earn from shipments of <unk> during the year we.

We realized $8 million and milestone fees in 2021 $7 million of which relate to the commercial milestones from the sale of <unk>.

We recognized $21 million of licensing fees in revenue in 2021, mostly attributable to one large tree any licensing agreement in the first quarter.

Andrew Booth: Finally, research fees connected to our work on a great many programs with a wide range of partners in 2021 were $19 million. That is similar to the $20 million we recognized in 2020, a year that included significant fees for our work with our partner DARPA. Looking ahead, we expect the majority of 2022 revenue still to be derived from royalties on COVID-19. Lilly continued to ship damilidivimab into early 2022 and entered into a purchase agreement with the U.S. government to supply up to 600,000 doses of beflavimab for at least $720 million, no later than March 31, 2022, with an option of an additional $500,000. Ladies and gentlemen, please stand by. Their contents will resume... When the speakers reconnect, one moment, please.

Finally research fees connected to our work on a great. Many programs with a wide range of partners in 2021 were $19 million that is similar to the $20 million. We recognized in 2020, a year that includes significant fees for our work with our partner DARPA.

Looking ahead, we expect the majority of 2022 revenue still to be derived from royalties on Covid antibody Lilly.

Lilly continues to ship them the diplomat into early 2022 and entered into a purchase agreement with the U S government to supply up to 601000 doses of depth of love them out for at least $720 million. No later than March 31, 2022, with an option of an additional 500.

Ladies and gentlemen, thank you bye.

Your conference will resume.

When they speakers reconnect one month please.

Andrew Booth: Hello, this is Andrew Booth speaking. It looks like we had some technical difficulties and dropped the line. I understand where we left off, and I'll just continue on the business update. So looking ahead, we expect the majority of 2022 revenue to still be derived from royalties on COVID antibodies. Lilly continued to ship damlanivimab into early 2022 and entered into a purchase agreement with the U.S. government to supply up to 600,000 doses of Veptimovimab for at least 720 million, no later than March 31st, with an option of an additional 500,000 doses for delivery no later than July 30th.

Hello. This is Andrew Boone speaking it looks like we had some technical difficulties and dropped the line.

Understand.

Where we left off and I will just continue.

On the business update so looking ahead, we expect the majority of 2022 revenue to still be derived from royalties on Covid antibody Lily continued to ship them whenever mab into early 2022 and entered into a purchase agreement with the U S government to supply up to 600000 doses of <unk> for at least $720 million no.

Later than March 31, with an option of an additional 500000 doses for delivery no later than July 31.

Andrew Booth: As a reminder, under our agreement with Lilly for any COVID-19 products developed, we are eligible to receive royalties in the low to mid-teens for aggregate sales below $125 million and mid-teens to mid-twenties on aggregate sales above $125 million. We continue to view COVID royalties as a non-vandative source of funding to support our investments in capacity and platform capabilities, including investments into forward integration. Turning to operating expenses. Our research and development expenses for the year were approximately $62 million, a $33 million increase over the previous year.

As a reminder, under our agreement with Lilly for any COVID-19 products developed we are eligible to receive royalties in the low to mid teens for aggregate sales below $125 million and mid teens to mid twenties on aggregate sales above $125 million.

We continue to view COVID-19 royalties as a non dilutive source of funding to support our investments in capacity and platform capabilities, including investments into forward integration.

Andrew Booth: 10 million of which relate to non-cash stock-based compensation. The overall increase reflects our ongoing investments in R&D, which will continue to grow as we expand our R&D team's capabilities and capacity. This allows us to deliver our partner programs as well as enhance our technology stack organically. In sales and marketing, expenses for the year were approximately $7 million, nearly doubling from 2020. This reflects the ongoing growth of our business development team, capabilities, and reach. General and administration expenses for the year were approximately $42 million, compared to approximately $12 million in 2020.

Turning to operating expenses.

Our research and development expenses for the year were approximately $62 million a $33 million increase over the previous year 10.

$10 million of which relate to noncash stock based compensation. The overall increase reflects our ongoing investments into R&D, which we will continue to grow as we extend our R&D team's capabilities and capacity. This allows us to deliver our partner programs as well as enhance our technology stack organically.

In sales and marketing expenses for the year were approximately $7 million nearly doubling from 2020. This reflects the ongoing growth of our business development team capabilities and reach.

General and administration expenses for the year were approximately $42 million compared to.

Approximately $12 million in 2020.

Andrew Booth: Almost $12 million of this increase was related to higher non-cash stock-based compensation expenses, bringing us in line with publicly listed companies. The increase is otherwise driven by the need to support a much larger business and the associated legal and corporate requirements of being a publicly listed company, as well as ongoing investments to protect our intellectual property. We are reporting earnings of over $153 million for 2021 compared to approximately $119 million in 2020. In terms of earnings per share, this works out to earnings of $0.56 per share on a basic and $0.48 on a diluted basis for the year.

Almost $12 million of this increase were related to higher noncash 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 and corporate requirements of being a publicly listed company as well as ongoing investments to protect our intellectual property.

We are reporting earnings of over $153 million for 2021 compared to approximately $119 million in 2020.

In terms of earnings per share. This works out to an earnings of 56 per share on a basic and 48 on a diluted basis for the year.

Andrew Booth: This result reflects the receipt of royalties on Vanlinibumab and our ongoing investments to expand and enhance our discovery platform and to grow our diversified portfolio of long-term stakes in the next generation of antibody drugs while running discovery efforts for our partners. Looking at cash flows, operating activities for 2021 contributed $245 million to cash flow, which included the collection of the accrued accounts receivable balance from December 2020 and the strong royalties earned from Van La Nivamad in the first half of the year.

This result reflects the receipt of royalties on <unk> and our ongoing investments to expand and enhance our discovery platform and to grow our diversified portfolio of long term stakes in the next generation of antibody drugs, while running discovery efforts for our partners.

Looking at cash flows operating activities for 2021 contributed $245 million to cash flow, which includes the collection of accrued accounts receivable balance from December 2022, 2020, and the strong royalties earned from <unk> in the first half of the year.

Andrew Booth: On the investing activity side, the year shows a 58 million dollar investment in plant property and equipment, including the land purchase of our future G&P facility in Vancouver. The remainder was predominantly related to our tetrodynamic acquisition and financing of the construction of our facilities, partially offset by funding received from the Government of Canada Strategic Innovation Fund. As a part of our treasury strategy, we also invested almost $250 million in short-term marketable securities during the year. The $25 million of restricted cash at year-end relates to entering into a participation agreement with a segregated accounts company for our D&O insurance.

On the investing activity side.

The year shows a $58 million investment in plant property and equipment, including the land purchase of our future GMP facility in Vancouver, the remainder was predominantly related to our Tetra dynamics acquisition and financing of the construction of our facility partially offset by funding received from the government of Canada strategic Innovation Fund.

As a part of our Treasury strategy. We also invested almost $250 million in short term marketable securities during the year the $25 million of restricted cash at year end related to entering into a participation agreement with a segregated accounts company for our D&O insurance.

Andrew Booth: As a result, we finished the year with over $720 million of unrestricted cash, equivalence and marketable securities, and approximately 22% increase from December 2020. Given the recently announced purchase agreement for COVID antibodies from Lilly and the associated loyalty due to Abcellera, we see the potential to further build our cash balance in the near term. In summary, we continue to be in a very strong liquidity position that allows us to execute our strategy, continue to build capacity and expand the platform. 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. Operator.

As a result, we finished the year with over $720 million of unrestricted cash equivalents and marketable securities and approximately 22% increase from December of 2020.

Given the recently announced purchase agreement for Covid antibodies from Lilly and the associated royalties due to the seller, we see the potential to further build our cash balance in the near term.

In summary, we continue to be in a very strong liquidity position that allows us to execute our strategy continued to build capacity and expand the platform. 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.

Later.

Operator: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star 1 on your telephone keypad. Again, that is star 1 to ask a question, and please limit your questions to 1 and 1 follow-up. Thank you. We have your first question from Stephen Willey with Stiefel. Your line is open. Yeah, good afternoon.

Thank you at this time I would like to remind everyone in order to ask a question precious Tom one on your telephone keypad again, Thats star one to ask that question.

Please limit your questions to one and one follow up thank you.

Stephen Willey: Thanks for taking the questions. Congratulations on a really good year. It was just one. I was just wondering if, so I know that you guys are really emphasizing new program starts this year, working through, I guess, not the backlog, but the large amount of programs on the contract that you currently have. How should we think about the pace of those new program starts throughout the course of 2022, and is that pace rate limited at all on the capacity front, or is it really just a bandwidth issue at this time? Thanks, Steve.

We have your first question from Stephen Wiley with Stifel. Your line is open.

Yes, good afternoon, thanks for taking the questions.

Congrats on a really good year.

It was just one.

I was just wondering if.

So I know that you guys are really emphasizing.

New program starts this year.

Working through not the <unk>.

Backlog, but the larger amount of programs under contract.

Currently have.

Should we think about.

Those new program starts throughout the course of 2022.

Is that pace right limited at all.

On the capacity front or is it really just.

A bandwidth issue at this point.

Carl Hansen: Carl here, and I'll take a first crack at that and then maybe hand it over to Andrew if there's anything he wants to add. You know, so first of all, the shift in focus from programs under contract to programs in start is something that we did mention on the last call, and we're reinforcing that. The situation basically is that we came into the start of 2021 looking to build our book of work and make sure we had a good fit and good demand for our technology and offering.

Thanks, Steve Karl here and I'll take a first crack at that and then maybe hand over to Andrew if there's anything he wants to add.

So first of all the shift in focus from programs under contract and program starts is something that we did mentioned on the last call and we're reinforcing that the situation basically is that we came into the start of 2021.

Looking to build our book of work and make sure we had a good fit and good demand for our technology and offering.

Carl Hansen: And the business development, you know, through 2021, I would say vastly exceeded, you know, what was our expectation. You know, as a result, as mentioned, we've got about 70 or more programs that are currently under contract. That's not all for this year.

The business development through 2021, I would say vastly exceeded what was our expectation as a result as mentioned we've got about 70 70 or more programs that are currently under contract. That's not offer this year that includes <unk>.

Carl Hansen: That includes multi-target agreements that go, you know, two or three years out that have yet to be started. And, with that in mind, we are fully confident that we have put to rest any question. We will be able to find high-value work to apply our platform and our technology to. So for that reason, we are now focusing on higher value, perhaps more strategic, more selective business development activities, and thus, you know, are sort of pointing people away from programs under contract as the metric for program starts. Now, program starts. We exited the year doing nine program starts in the last quarter. That was a big uptick from the start.

Multi target agreements that go two or three years out.

That have yet to be started.

And with that in mind, we are fully confident.

That we have put to rest any question, we will be able to find high value work to apply our platform and our technology to so for that reason that we are now.

We're now focusing on more higher value, perhaps more strategic more selective business development activities.

And thus are sort of pointing people away from programs under contract as the metric to program starts now program starts we exited the year doing nine program starts in the last quarter that was a big uptick from the start.

Carl Hansen: That reflects increases in efficiency in the process, as well as the investments in equipment, people, and technology to build our capacity. We anticipate coming into 2022 at that pace, and I do expect that we're going to have strong growth in program starts over the course of 2022. But I want to also emphasize that capacity is not just the number of programs that you start. It also reflects how much work you do per program.

It reflects.

Increases in efficiency in the process as well as the investments in equipment and people and technology to build our capacity.

We anticipate coming into 2022 at that pace and I do expect that we're going to have strong growth in program starts over.

Over the course of 2022.

But I want to also emphasize that capacity is not just the number of programs that you start. It also reflects how much work you're doing per program.

Carl Hansen: And one of our big drives this year and in the next couple of years is a move towards forward integration, where we're starting to take programs much further, ultimately, once we're fully enabled, all the way to IND filing. So there will be a much larger growth in capacity in terms of work, and, of course, our participation in those programs then will be reflected in program starts. But we do believe that it's going to go up. Okay, that's the tough one.

One of our big drives this year and in the next couple of years is a move towards forward integration, where we are starting to take programs. Much further ultimately once we're fully enabled all the way to IND filings, so there'll be a much larger.

Growth in capacity in terms of work and of course, our participation in those programs. Then we will be reflected in program starts, though we do believe that's going to go up.

Okay.

That's helpful and then I guess just with the.

Andrew Booth: And then I guess just with the current liquidity position, you know, obviously, a good time to be liquid, given the fact that, you know, valuations kind of across the board seem to be down. And I'd just curious if, because of that, you think about maybe prioritizing additional technology acquisitions, given the state of the current market, or is it just going to be kind of continued opportunism on that front? Hey, Steve, great question.

The current liquidity position.

Obviously, it's a good time to be liquid given the fact that.

Valuations kind of across the board seem to be down in.

Just curious if.

Yes.

Because of that.

You think about maybe prioritizing additional technology acquisitions given the.

The state of the current market or.

Is it just going to be kind of a continued optimism on that correct. Thanks.

Andrew Booth: And yeah, we're obviously in a great liquidity position with our cash balance, a full book of receivables, and then looking into the first quarter, additional expected sales of Beto Lovimab into the future, the first couple of quarters. And of course, we aren't calling any sort of revenue number because if there's one thing we've learned in the last couple of years, it's that COVID But we would point out that there is a possibility that Beto Lovimab could be part of a long-term solution for COVID. But, of course, that's in Lily's hands.

Great question and yes, we are obviously, we're in a great liquidity position with our cash balance.

Our full book of receivables and then looking into the first quarter.

Additional expected sales of <unk> into the future for the first couple of quarters and of course, we were calling any sort of revenue number because if there's one thing we've learned in the last couple of years, it's that COVID-19 can be quite volatile, but we would point out that there is a possibility that that's below the amount could be part of.

Andrew Booth: We're quite comfortable with that cash balance to continue the investment we have in forward integration in the expansion of the team. And if it comes to as we have done in the past, any opportunities on M&A that fit within the technology stack or fit within the strategy of the company, we will have the cash balance to execute on those. So that puts us in a good position to be keep our eye out.

The long term solution towards Covid, but of course thats in lilly's hands.

We're quite comfortable with that cash balance to continue the investment we have in forward integration and the expansion of the team.

If it comes to as we have done in the past any opportunities on M&A that fit within the technology stack or fit within the strategy of the company. We will have the cash balance to execute on those so that puts us in a good position to be keep our eye out.

Andrew Booth: Yeah, I might just add to that, as mentioned, the big push on the platform is likely going to be organic. It's the move towards forward integration. I echo everything Andrew said about looking for opportunities, but, of course, M&A strategy, and, in particular, as it pertains to technologies, needs to be opportunistic. So it's really about finding the right fit. We have your next question from Tiago Falk with Credit Suisse. Your line is open.

I might just layer on to that that as mentioned.

The big push on the platform is likely going to be organic it's the move towards forward integration.

I Echo everything Andrew said about looking for opportunities, but of course, M&A strategy and in particular as it pertains to technologies need to be opportunistic. So it's really about finding the right fit.

We have your next question from Thiago <unk> with credit Suisse. Your line is open.

Tiago Falk: Hi, thanks for taking the question. One that we get pretty often is related to programs going into clinic, and I understand you guys have limited visibility on that, but given the cumulative number of program starts and several of those a few years ago. I was wondering if you have a sense, or additional programs perhaps going into clinics throughout 2022, and Michael Lopez is a little bigger picture than that. And again, you delivered on that in your remarks. You have a concussed head of extrication unless they were not aware of the revolving most of the operating metrics.

Hey, Thanks for taking the question.

So one day, we get pretty often related to programs in the clinic and I understand you guys have limited visibility on that but given the.

The cumulative number of program starts and several of those a few years back I was wondering if you have a sense.

Of additional programs, perhaps going into clinic throughout <unk> two.

And my follow up is a little bigger picture than that and again dilutive to that on the prepared remarks. We have executed ahead of expectations. That's ahead of our bonding most of.

Carl Hansen: That seems to be overlooked by the street. And I think a part of that is a nature of the contracts where you have the back-handed economics. So I know that the discussion's answer, but what could perhaps change the perception of the different light of investors is more about just getting a bigger proposal, more diverse policies, more diverse projects, in terms of operational progress, in terms of the stuff that you can actually control.

The operating metrics.

That same seems to be overlooked by the street right and I think a part of that is the nature of the contracts, where you have the backend economics.

So and I know, that's a tough question to answer, but what could perhaps change that perception. Neither investors is it more about just getting more a bigger portfolio module horsepower portfolios our programs into clinic.

In terms of operational progress in terms of the stuff that you can actually control. What do you think can actually at some point the deed received more positively by discreet and how do you see that dynamic in light of your current capital position a few years to execute on that thanks.

Carl Hansen: What do you think can actually, at some point, be to receive more positively by the street. And how do you see that dynamic light of the current capital position a few years to execute on that? Thanks. Thanks, Tiago. Carl here.

Carl Hansen: I think there were maybe a couple questions woven together there. If I don't cover both or more, please let me know, and I'll address anything I miss. So the first question was about our expectation or visibility of program starts. As you know, we do not have complete information about the status of all the programs that are in the portfolio. It's a large portfolio, and it is in our partners' hands. And, of course, when we do know that things are moving forward, we typically are not at liberty to communicate that. So that is definitely a challenge.

Thanks, Thiago Carl here I think there was maybe a couple of questions woven together there.

Ill cover both or more please let me know and I'll.

I'll address anything I Miss.

So the first question was about our expectation or visibility on program starts.

As you know we do not have complete information about the status of all the programs that are in the portfolio. It's a large portfolio.

It is in our partners' hands and of course, when we do know that things are moving forward. We typically are not at liberty.

To communicate on that so that is a challenge we have been investing in building up quite a strong alliance management capability within the company.

Carl Hansen: We have been investing in building up quite a strong alliance management capability within the company that allows us to build relationships and have better insight and better communication to know where those programs are. So we expect to have more predictability as things move forward. And also, you know, we are investing in forward integration, and a big part of that is that we will then be intimately involved, in fact, controlling and driving the advancement of programs further along the pipeline, ultimately all the way to IND.

It allows us to build relationships and have a better insights and better communication to know where those programs are so we expect to have more predictability as things move forward.

And also we.

We are investing in the forward integration and a big part of that is that we will then be intimately involved in fact controlling and driving.

The advancement of programs further along the pipeline ultimately all the way to <unk>.

Carl Hansen: And that, of course, is being done because we believe the integration of our front end with the back end can make a dramatic change to the speed at which we can get there. And it also has the advantage that we are in control and have good visibility into where they are.

And that of course is being done because we believe the integration of our front end with the backend can make a dramatic change to the speed at which we can get there and it also has the advantage that we are in control and have good visibility to where those all are now we expect that when we do that we will be doing that for that.

Carl Hansen: Now, we expect that when we do that, we will be doing that full suite of work for programs where we have a deeper participation. And so those are things that are going to be most meaningful for Accelera. But, of course, that's in the future.

That full suite of work for programs, where we have a deeper participation and so those are things, we're going to be most meaningful for accelerating but of course, that's out in the future.

Carl Hansen: I'll maybe just add one more thing that, as mentioned in my prepared remarks, given that we have added increasingly more programs year over year and given that the terms are getting better and better, the general trend that we expect is that we're going to see an increasing frequency or rate of programs entering the clinic, and that those programs will become more and more meaningful for Accelera as that matures. I think that is the thing, ultimately, that is going to be best received.

I'll, maybe just add one more thing.

As mentioned in my prepared remarks.

Given that we have added increasingly more programs year over year and given that the terms are getting better and better. The general trend that we expect is that we're going to see an increasing frequency or rate of programs entering the clinic and that those programs will become more and more meaningful for accelerate as that matures I think that is the thing ultimately.

<unk> debt.

That is going to be best received the other proxies of course are the repeat business the validation in the market and.

Carl Hansen: The other proxies, of course, are repeat business, validation in the market, and I think also importantly our ability to start to bring some of our own science forward for you to see so that people get an understanding not only of the performance of the technology in COVID, which has attracted a lot of attention, but how it's also opening up all these other areas. And so that's going to be, you know, a bit of a conversation over the next little while, but it's one that we're excited to have. Perfect. Thank you for coming out.

I think also importantly, our ability to start to bring some of our own science forward for you to see so that people get an understanding not only the performance of the technology in Covid, which has attracted a lot of attention, but how it's also opening up all these other areas and so that's that's going to be a bit of a conversation over the next little while but it's one that we're excited to have.

I think your company now I appreciate it.

You bet.

Carl Hansen: I appreciate it. You bet. We have your next question from Gary Nachman with BMO Capital Markets. Your line is open. Hi guys, good afternoon.

We have your next question from Gary Nachman with BMO capital markets. Your line is open.

Gary Nachman: Carl, what does the pipeline look like for these higher-value partnerships that you're looking at? And do those take longer to materialize, in general? I'm curious, like, what the cadence for these might be, if you're being more selective with partnerships now going forward to, you know, generate more value. And then also, how much more work needs to be done on this forward integration. You said it's somewhere down the road in the future, but I'm curious. I mean, is this like one to two years away, three to five years away?

Hi, guys good afternoon.

Carl what does the pipeline look like for these higher value partnerships that we're looking at and it does take longer to materialize in general I'm curious like what the cadence for these might be.

If youre being more selective with partnerships now going forward too.

Generate more value.

And then also how much more work needs to be done on this forward integration.

Said its somewhere down the road in the future, but I am curious I mean is this like one to two years away, it's three to five years away.

And how much do you need to invest behind that.

Just talk about some of the things that you're thinking about doing or in the process of doing in order to get there. Thank you.

Gary Nachman: And how much do you need to invest behind that? You know, just talk about some of the things that you're thinking about doing or in the process of doing in order to get there. Thank you. Thanks, Kerry.

Thanks Kerry so.

So first maybe a comment on the business development pipeline.

Carl Hansen: So first, maybe a comment on the business development pipeline. You know, at any given time, we have conversations ongoing with tens of companies. And as you know, this includes some very, very large vertically integrated biopharmaceuticals, sort of the top 10 names that you would recognize, and also some more innovative companies. So that is, you know, that's always the state of things.

At any given time, we have conversations ongoing with that with tens of companies and as you know this includes some very very large vertically integrated biopharma.

So the top 10 names that you would recognize and also some more innovative companies. So.

That is that's always the state of things.

Carl Hansen: We are, and we have been selective in partnerships. We had, you know, multiple examples last year where we decided to back away from opportunities. We've also had examples, particularly in the last part of 2021, where there was demand for multi-year contracts with larger numbers of program slots than we ultimately were willing to commit to. So that dynamic has already happened.

We are we have been selective and partnerships. We had multiple examples last year, where we decided to back away from opportunities. We've also had examples particularly in the last part of 2021, where there was demand for multi year contracts with larger numbers of programs slots than we ultimately were.

Carl Hansen: This year, you know, we're excited about the business development pipeline. We've made really big strides in recruiting that function, bringing in originally Neil Berkley as the chief business officer and then now having expanded that to a bigger team. But you have to give that time to mature.

Willing to commit to so that dynamic has already happened.

This year, we're excited about the business building pipeline we've made.

Really big strides in recruiting that function, bringing in originally and Neil Berkeley as the Chief business Officer, and then now have an expanded that into a bigger team. So.

You have to give that time to mature and of course closing a deal is.

Carl Hansen: And of course, you know, closing a deal is not something that is very predictable. It depends very much on the negotiation and exactly what the complexity of that particular transaction is. Your other question was about forward integration. On that front, I would think of it not as something that is either, you know, done or not done, but rather a continuous evolution towards having the full capabilities to take something right from an email that tells us what the target and what the specification of a drug are, right through to the IND filing. This year, what is coming online is the translational science part. This goes from the final leads and starts to generate the data, the biological data that supports the IND package.

Is not not something that is very predictable it depends very much upon the negotiation on exactly what is the complexity of that particular transaction the.

Your other question was on the forward integration.

On that front I would think of it not as something that is either done or not done, but rather a continuous evolution towards having the full capabilities to take something right from an E. Mail that tells US what is the target and what is the specification of the drug right through to the IND filing.

This year.

It's coming online is the translational science part this goes from the final leads and start to generate the data that biological data that supports the IND.

Carl Hansen: We're working on two or three programs already right now on that front. The longer-term objective includes the CMC capability and GMP manufacturing. Andrew mentioned that we recently purchased land for the GMP facilities. This is a greenfield project that needs to be built.

Package, we're working on two or three programs already right now on that front.

The longer term objective includes the CMC capability and the GMP manufacturing Andrew mentioned that we recently purchased land for the GMP facilities as the Greenfield project that needs to be built.

Carl Hansen: We are still anticipating that we'll have that up and running by 2024. Of course, we'll be looking to start to line up the projects that will go into that ahead of time. And so it's not too early to start thinking about that function as part of business development. And Gary, just to add to that, you also asked me to remind you that we do have participation from the Government of Canada in order to fund those endeavors.

We are still anticipating that we'll have that up and running by 2024 of course, we'll be looking to start to line up the projects that will go into that ahead of time and so it's not too early to start thinking about that function as part of business development.

And Gary just to add to that you also.

I need to remind us remind you that.

We do have a participation from the government of Canada in order to fund those endeavors, you asked about the expense of it.

Carl Hansen: You asked about the expense of it, and the Government of Canada is contributing about $125 million towards our efforts of building out the building, the equipment, facilities, and the team processes and getting those up and running in that time frame that Carl mentioned. Yes, thanks for reminding us about that.

The government of Canada is contributing about $125 million towards our efforts.

Building out the building the equipment facilities and the teams processes and getting those up and running in that timeframe that Carl mentioned.

Andrew Booth: And I guess also, like, just with all the cash that you're generating from both BMAB antibodies, are you able to accelerate this process, Carl, that you were just talking about? You know, there are, I don't know, third parties maybe that you could bring in-house that have more of these capabilities. You know, maybe we can have more of an appreciation of deploying that capital that you're generating from the COVID antibodies to then push, you know, this whole business model to the next level. Great question, Gary.

Yes. Thanks.

For reminding us about that and I guess also.

Like just with all the cash that you're generating from both B Mab antibodies.

Yes.

Are you able to accelerate this process Karl that you were just talking about.

Sure.

I don't know third parties, maybe that you could bring in house that have more of these capabilities.

Just maybe we can have more of an appreciation of deploying that capital that you're generating from from the Covid antibodies to then push this whole business model to the next level.

Carl Hansen: We are looking at several options for how we could put that capital to work, always keeping an eye on the long term and the need to make sure we stay in a strong liquidity position, particularly given where the markets are today. But if things continue the way that they look and if Betflivimab has an impact as big as we think that it might, it opens up new options. I probably shouldn't say much more beyond that.

Great question Gary.

We are looking at.

Several options for how we could put that capital to work.

Always keeping an eye on the long term and the need to make sure we stay in a strong liquidity position, particularly given where the markets are today, but.

But if things continue.

Continue the way that they look and if <unk> has an impact as big as we think that it might.

It opens up new options.

We shouldn't say much more beyond that.

In terms of accelerating the forward integration project.

Carl Hansen: In terms of accelerating the forward integration project, there are definitely things that we can do. And I think one of the biggest things is starting to accelerate hiring, particularly in the translational science and the CMC side. There is a timeline associated with the construction and certification of facilities that I don't see a big opportunity to really move by the deployment of capital. One of the things I will highlight here is that when we thought about this, the option was always on the table to go and buy a group that was already doing manufacturing.

There are definitely things that we can do.

And I think one of the biggest things is starting to accelerate the hiring particularly in the translational science and the CMC side. There is a timeline associated with construction and certification of the facilities that I.

I don't see a big opportunity to really move by deployment of capital.

One of the things I will highlight here is that when we thought about this the option was always on the table to go out and buy a group that was already doing manufacturing, we elected not to do that because we do believe that it is absolutely mission critical that this be right next to the facility and that there's seamless integration between the front end.

Carl Hansen: We elected not to do that because we do believe that it is absolutely mission critical that this be right next to the facility and that there is seamless integration between the front-end discovery, the translational science, right through to the manufacturing.

Discovery translational science right through to the manufacturing it's through that integration that we believe we can get some major speed advances and in drug development. If you can get a leg up in speed.

Pooneet Souda: It's through that integration that we believe we can get some major speed advances. And in drug development, if you can get a leg up in speed, that is very valuable and it's something that touches every program. So it's an ambitious goal, but it's one, and you have to build it from scratch, you have to build it right. And we've decided that in the interest of long-term value, it's something that we need to do organically. So that's currently how we see it, Gary. We have your next question from Pooneet Souda with SV Bill Leary. Your line is open. Yeah, hi, Carl.

That is very valuable and it's something that touches every program. So it is an ambitious goal, but it's one and you have to build it from scratch you have to build it right.

And we've decided that in the interest of long term value, it's something that we need to do organically.

That's currently I would say Gary.

We have your next question from Puneet <unk> with SBB Leerink. Your line is open.

Andrew Booth: Andrew, thanks for taking the questions. So, maybe just a clarification, I know you're emphasizing program starts here, but on the contract ads, you want to make sure there was only one contract added in the quarter, if that's correct, and you know, in the past, you have had sort of the mid teens type of a number of contract ads. And so just thinking about that for 2022, I know you're emphasizing program starts, but, you know, how should we think about contract ads in 2022? Should we have anything in that sort of line?

Yes, Hi, Karl Andrew Thanks for taking the questions. So maybe just a clarification I know you're emphasizing program starts here.

But on the contract I just want to make sure there was only one contract added.

In the quarter.

If that's correct.

Past you have had sort of a mid teens type of a number of contract adds and so just thinking about that for 2022, I know you're emphasizing program starts but.

How should we think about contracts.

In 2022 should we have anything in that sort of blind and just asking that because ultimately it is about probabilities of success. So.

Pooneet Souda: And just asking that because, ultimately, it is about probabilities of success. So, you know, getting the programs into the funnel is important. So just want to get sort of a high-level context on that and follow-up.

Getting the programs into the funnel is important so I just wanted to get sort of a high level of context on that and I have a follow up.

Carl Hansen: So, first, I can confirm that in Q4, we closed a single deal that included a single target. That deal is with a mid-cap biotech company, and we're not at liberty to say much more beyond that, except that it's a program that we view as potentially of high value. Of course, there's risk associated with all these things. In terms of, you know, the addition of programs under contract, maybe what I would turn to is, you know, what are we actually trying to do at the company? There are two things we're doing.

Sure. So first I can confirm that in Q4, we closed a single.

Deal that included a single target that is with.

A mid cap biotech company and we're not at Liberty to say much more beyond that except that it's a it's a program that we view as being potentially a high value of.

Of course, there is.

Risks associated with all these things in.

In terms of.

The addition of programs under contract.

Maybe what I would turn to is what are we actually trying to do at the company. There's two things. We're doing one is we are investing and platform capabilities.

Carl Hansen: One is we're investing in platform capabilities to make sure that we extend and double down on our competitive position there. And the place where we play is between the identification of a target right through, ultimately, to the filing of an IMD, a big effort right now on moving forward there. The second thing that we're doing is we're using that capability to build a portfolio of stakes and programs, and we are, you know, not dogmatic about the way in which we're looking to build that portfolio. So, we have done, you know, the traditional deals that I talked about today.

To make sure that we extend and double down on our competitive position there and the place where we play is between the identification of a target right through ultimately to the filing of an R&D a big effort right now on moving forward. There. The second thing that we're doing is we're using that capability to build a portfolio of stakes in <unk>.

Rams.

And we are not dogmatic about the way in which we're looking to build that portfolio. So we have done the traditional deals that I talked about today, we've done different types of deals.

Carl Hansen: We've done different types of deals. What is most important is that we maximize probably the success, our stake in that program, and make sure that we're always also keeping an eye on it being diversified appropriately. So, at this point, given the work that we have lined up, you know, it's not really material, in my mind, whether we add additional programs under contract in the next quarter or not, though we do believe the business development pipeline is strong, and we expect to do that.

What is most important is that we maximize probably the success our stake in that program.

And make sure that we're always also keeping an eye on it being diversified appropriately.

So at this point given the.

Work that we have lined up.

It's not really material in my mind, whether we add additional programs under contract in the next quarter or not but we do believe the business still in pipeline is strong and we expect to do that what's most important is when you actually start the work because that is when they start to contribute to the portfolio.

Carl Hansen: What's most important is when you actually start the work, because that is when they start to contribute to the portfolio. At this point, we've got no concerns whatsoever that we have the opportunities to continue to have a pace of program starts, and deploying those program starts on the most important programs is our number one priority now.

At this point we've got.

We've got no concerns whatsoever that.

We have the opportunities to continue to have a pace of program starts and to deploy those programs starts on the most important programs is our number one priority now.

Pooneet Souda: And then, on the selective process that you talked about with high-value programs, I just want to understand a bit more. I mean, given your experience with the COVID antibodies and also, you know, a number of other projects, at this point in time, how do you, you know, overall parse out these sorts of opportunities? Do you look at the royalty percentage as a big factor in deciding that? Or is it the indication that we should be worried?

Got it.

And then on the selective process that you've talked about.

With high value programs I just wanted to.

Just trying to understand a bit I mean, given your experience.

The Covid antibodies and also number of other projects at this point in time I mean, how do you.

Pooneet Souda: Or is it where the scientific team's strength is? Or any other set of sort of metrics that you parse through in order to decide whether this is, you know, high value program fit for Abcellera versus not? So thank you on that. Yeah. So, as mentioned in my prepared remarks, I think that one should not look at adding value to the portfolio along a single dimension. It very much depends, of course, on volume.

Overall parse out sort of these opportunities.

Do you look at the royalty percentage as a big factor in deciding battle or is it the indication or is it where the scientific teams. The strength is or any other set of sort of metrics that you parse through in order to decide whether this is high.

High value program set for at solar versus versus not.

You bet.

Yes.

So as mentioned in my prepared remarks.

I think that one should not look at adding value to the portfolio along a single dimension. It very much depends of course on volume do you want to add more programs. You also want those programs to be with the highest quality partners.

Carl Hansen: You want to add more programs, but you also want those programs to be with the highest quality partners on opportunities in terms of the target and the commercial opportunity that we judge to be most attractive. And then, of course, it matters what our economic participation in those programs is, and that is a combination of what value we bring to the partner and what are their alternatives and what the nature of the negotiation is.

<unk> opportunities in terms of the target and the commercial opportunity.

We judge to be most attractive and then of course it matters what is our economic participation in those programs.

That is a combination of what value do we bring to the partner and what is what are their alternatives and what are the.

What's the nature of the negotiation so the business development team looks at every opportunity and we assess those in terms of what we believe is the total value added to the portfolio.

Carl Hansen: So, the business development team looks at every opportunity, and we assess those in terms of what we believe is the total value added to the portfolio. And that includes work that's done by the scientific diligence teams. It includes our scientific teams. It includes the negotiations. It includes the commercial analysis. It's very much like being an investor from that perspective. Okay, great.

And.

That includes work that's done by the scientific diligence teams. It includes our scientific team that includes the negotiations. It includes a commercial analysis, it's very much like being an investor from that perspective.

Okay Super Thanks, guys.

Pooneet Souda: Thank you. We have your last question from Antonia Borovina with Bloomberg News. Your line is open. Good afternoon.

We have your last question from Antonio <unk> with Bloom Burton Your line is open.

Antonia Borovina: Thanks for taking that question. So just another follow-up regarding your forward integration work. So I'm just wondering, do you expect you'll have, after that work is done, some room to raise your typical royalty rate? Or do you think that 5% is kind of the maximum limit that the market will bear, given the competitive environment? And then I have a follow-up as well.

Good afternoon. Thanks for taking my question. So just another follow up regarding your forward integration work.

Just wondering do you expect you'll hogs.

After that work is done some room to raise your typical royalty rate.

Or do you think that 5% is kind of the maximum limit that the market will bear given the competitive environment and then I have a follow up.

Carl Hansen: Yeah, so first of all, 5% is absolutely not the limit. We have, in fact, done a quarter of our deals that are north of 5% in recent times. So there's a range, and it depends on the nature of the interaction and how much work we're doing, and how much value we're bringing. We are focused on bringing more and more value to therapeutic antibody discovery and development.

Yes.

First of all five.

5% is absolutely not the limit we have in fact on a quarter of our deals that are north of 5% in recent times. So there's a range and it depends on the nature of the interaction and how much work, we're doing how much value we're bringing.

We are focused on bringing <unk>.

More and more value to therapeutic antibody discovery and development.

Carl Hansen: That is why we're making investments in forward integration. It's also why we're making investments in the platform generally, such as adding new technologies such as the ortho-map platform or humanized rodents and some of the other technologies that we are either building organically or that we have acquired.

That is why we're making the investments in forward integration. It's also why are we making investments in the platform generally while adding new technologies, such as north of my platform, our humanized rodents and some of the other technologies that we are.

Other building organically or that we've acquired.

Carl Hansen: If we connect with the right partner that has a great idea, the innovation, we can take our capabilities and theirs, and we've made the pie bigger. That allows us to create value through that partnership. And then the discussion is how best to split that so that both parties come away enriched from the engagement and can better meet their goals.

If we connect with the right partner that has a.

Great idea innovation.

Can take our capabilities with theirs and we've made the pie bigger that allows us to create value through that partnership and then the discussion is how best to split that so that both parties.

Come away enriched from the engagement and can better meet their goals.

If we are doing the work that goes all the way from discovery right through to carrying a lot of load into an IND filing we would of course expect to have a much deeper participation than if we're doing the discovery and handing off candidates or needs as some of our early work has done. So we expected that toward integration will be used primarily with program.

Carl Hansen: If we are doing the work that goes all the way from discovery right through to carrying a lot of load into an IMD filing, we would of course expect to have a much deeper participation than if we're doing the discovery in handing off candidates or leads as some of our early work has done. So we expected that forward integration will be used primarily with programs where we have a much deeper participation than is our difficult deals.

<unk>, where we have a much deeper participation than us are difficult deals and that is.

Carl Hansen: And that is in part because we're doing more work and also, of course, because we believe with technology we can make that much faster and give that program a competitive advantage. Okay, thanks. And then, just given the current downturn in the public markets and then that potentially spilling over into the private market, do you think that'll have a meaningful impact on your ability to track new partners, either positively or negatively? I think that's a great question. I could probably make arguments that go both ways.

That is in part because we're doing more work and also of course, because we believe with technology, we can make that much faster and give that program a competitive advantage.

Okay. Thanks, and then.

Given the current <unk>.

Ill turn in the public markets, and then that potentially spilling over into the private market.

That will have a meaningful impact on your ability to attract new partners either positively or negatively.

That's a great question.

Carl Hansen: I think our initial interactions have shown that it's perhaps more of an opportunity than a headwind. And one of the reasons I say that, particularly for private companies, is that when you are starting out and you're looking at a path where you need to build capabilities, it is much more capital efficient in terms of cash to work with a seller. You save yourself a lot of time, a lot of runway, and the investment that would otherwise be needed to put that in place.

I could probably make arguments that went both ways I think our initial interactions have shown that it's perhaps more of an opportunity than a headwind.

And one of the reasons I would say that particularly for private companies is when you are.

Martin starting note and you Youre looking at a path, where you need to build capabilities.

It is much more capital efficient in terms of cash to work with Epsilon are you save yourself a lot of time, a lot of runway and the investment that it would otherwise take to put that in place.

Carl Hansen: And then, of course, we can help them in that way accelerate those programs. And in doing that, have created value for them and take a deeper position in those programs that, of course, has paid out primarily on success. And because we build a portfolio, we're able to look at those transactions in a rational way, whereas a smaller company really needs to preserve cash early on in the lifetime, and even more so when the markets get more difficult, which may well transfer from what's happened to public markets into the private markets.

And then of course.

We can help them in that way accelerate those programs and in doing that have created value for them and take a deeper position in those programs that of course is paid out primarily on success and because we build the portfolio. We're able to look at those transactions in a rational way, whereas a smaller company really needs to preserve cash.

Early on in its lifetime and even more so when the markets get more difficult, which may may well.

Transfer from what's happened in the public markets into the private markets.

Okay. Thanks.

Operator: I am showing no further questions at this time. I would now like to turn the conference back to Dr. Carl Hansen, Chairman, CEO, and President, for any closing remarks. Thanks. I just would like to thank everyone for joining us today. We had a terrific year. It's been a very exciting time for Acellera, and we're looking forward to keeping you updated on our future progress on future calls. Thanks so much. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. [inaudible] Andrew Booth, Andrew Booth, Andrew Booth, Andrew Booth, Andrew Booth, Andrew Booth,

I am showing no further questions at this time I would now like to turn the conference back to the Doctor Carl Hansen, Chairman CEO and president for any closing remarks.

Thanks, just would like to thank everyone for joining us today.

We had a terrific year, it's been a very exciting time for <unk> and we're looking forward to keeping you updated on our future progress on future calls thanks, so much.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

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