Q2 2022 Abcellera Biologics Inc Earnings Call
Operator: Good afternoon and welcome to Abcellera's second quarter 2022 business update and conference call.
Good afternoon, and welcome to upsell over second quarter, 2022 update and conference call.
Lydia: My name is Lydia and I'll facilitate the audio portion of today's interactive broadcast.
My name is lithium adult facilitate the audio portion of today's interactive broadcast.
Lydia: If you'd like to ask a question after the prepared remark, please press start, followed by the number one on your telephone keypad.
If you'd like to ask a question after that please press star followed by the number one on your kind of thank you Pat.
Lydia: At this time, I'd like to turn the
At this time I'd like to turn the call over to train steamer.
Lydia: call over to Tryn Stimart, Abcellera's Chief Legal and Compliance Officer.
Lewis Chief legal and compliance officer.
Tryn Stimart: Thank you.
Thank you good afternoon, and welcome to accelerate second quarter 2020, 'twenty two business update.
Tryn Stimart: Good afternoon and welcome to Abcellera's second quarter 2020-22 business update.
Pleased to have you with US today, 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.
Tryn Stimart: We're 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.
Tryn Stimart: With me on the call are Dr. Carl Hansen, Abcellera's Chief Executive Officer and President, and Andrew Booth, Abcellera's Chief Financial Officer.
With me on the call are Dr. Carl Hansen, accelerates, Chief Executive Officer, and President and Andrew Booth, and sellers Chief Financial Officer.
Tryn Stimart: The webcast portion of this call contains a slide presentation that we will refer to during the call.
The webcast portion of this call contains a slide presentation that we will refer to during the call. If you are following along on the phone and wish to access the slide portion of this presentation. You may do so on the Investor Relations section of our website.
Tryn Stimart: If you are following along on the phone and wish to access the slide portion of this presentation, you may do so on the investor relations section of our website.
For those 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 post questions via the web.
Tryn Stimart: 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 post questions via the web.
Tryn Stimart: The presentation here today 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.
The presentation here today 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 could impact our future performance.
Tryn Stimart: Please review our SEC filings for risk factors that could impact our future performance. Our presentation and SEC filings are available on our investor relations website.
<unk>, our presentation and <unk> SEC filings are available on our Investor Relations website.
Tryn Stimart: Note that all dollars referred to during our call today are U.S. dollars.
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.
Tryn Stimart: Now,
Tryn Stimart: I am pleased to turn the call over to Carl Hansen.
Thanks, Craig and thanks, everyone for joining us today.
Pleasure to provide an update on our business for the second quarter of 2022.
Carl Hansen: Thanks, Trent, and thanks, everyone, for joining us today.
At solar has been rock solid footing.
Carl Hansen: It's my pleasure to provide an update, on our business for the second quarter of 2022.
Despite what has been a challenging time for bad debt. We believe the current market environment is a strong tailwind for our business.
Carl Hansen: Abcellera is on rock-solid footing.
We ended the quarter with over $1 billion in cash cash equivalents marketable securities.
Carl Hansen: Despite what has been a challenging time for biotech, we believe the current market environment is a strong tailwind for our business. We ended the quarter with over a billion dollars in cash, cash equivalents, and marketable securities, and we are fully funded to continue executing on our strategy and building our business.
Fully funded to continue executing on our strategy and building our business.
Carl Hansen: In contrast, the current environment is serious challenges for would-be competitors, and we therefore expect to extend our competitive advantage.
In contrast, the current environment.
Serious challenges would be competitors and we therefore expect to extend our competitive advantage.
Carl Hansen: At the same time, well-managed biotech companies must continue to drive innovation while also prioritizing efficiency and capital preservation. This dynamic reinforces the value of our business model, which empowers them to leverage outside expertise, save time, reduce fixed costs, and improve their chances of success.
At the same time, well managed biotech companies must continue to drive innovation, while also prioritizing efficiency and capital preservation.
This dynamic reinforces the value of our business model, which empowers them to leverage outside expertise safe time reduce fixed costs and improve their chances of success.
Finally rationalization across the industry is likely to result in a consolidation of talent, which will benefit companies that are positioned for growth.
Carl Hansen: Finally, rationalization across the industry is likely to result in a consolidation of talent, which will benefit companies that are positioned for growth.
Carl Hansen: We continue to attract top-tier talent, including new CMC and GMP leaders, and we expect to leverage this trend as we continue to scale our operations and capabilities.
We've continued to attract top tier talent, including new CMC and GMP leaders and we expect to leverage this trend as we continue to scale our operations and capabilities.
Carl Hansen: Accelera's purpose is to be a catalyst for the industry by developing technologies, that make drug development faster, more efficient, and more accessible.
<unk> purpose is to be a catalyst for the industry by developing technology make drug development faster more efficient and more accessible.
Carl Hansen: There are three foundational steps in drug development. Product ideation is the basic biological research that identifies the target and defines the, properties required for a therapeutic. Once this is done, the next step is to create the therapeutic product. This step of product creation is arguably one of the most complex, regulated, and technologically, intensive in any sector. Yet this is also the step that is most critical to get right.
There are three foundational steps in drug development.
Product ideation, the basic biological research that identifies the target and defines the properties required for <unk> therapeutics.
Once this is done the next step is to create therapeutic product <unk>.
This step of product creation is arguably one of the most complex regulated and technologically intensive in any sector.
It is also the staff that is most critical to get right.
Carl Hansen: And that is because in drug development, unlike any other industry, by far the most, time and most money is spent on the third step, which is product testing and validation. This involves clinical trials that typically take seven to 10 years and incur costs in, the range of a billion dollars.
And that is because in drug development. Unlike any other industry by far the most time and most money spent on the third step which is product testing and validation.
This involves clinical trials typically take seven to 10 years and incurred costs in the range of $1 billion.
Carl Hansen: Once the process begins, you're committed. Therefore, if you're going to embark on such an investment of time and capital, it is imperative, that you get it right from the start.
Once the process begins you're committed.
Therefore, if youre going to embark on such an investment of time and capital. It is imperative that you get it right from the start.
Carl Hansen: We believe product creation is also the step in drug development that has been most neglected, and that this is the place where our technology can drive the most value.
We believe product creation is also the step in drug development that has been most neglected and if this is the place where our technology can drive the most value.
Carl Hansen: Our long-term strategy is to build a competitive advantage in antibody product creation and, to use this advantage to amass a diversified portfolio of stakes in next-generation antibody products.
Our long term strategy is to build a competitive advantage in antibody product creation and to use disadvantage to a math a diversified portfolio of steaks and next generation antibody products.
Carl Hansen: Our business model and investments create significant value in three ways.
Our business model and investment to create significant value in three ways.
Carl Hansen: By making drug development faster, by doing things that haven't been done before, and, by leveling the playing field for partners and expanding the ecosystem of innovators. For example, we believe bringing an antibody treatment to those who need it one year faster, than the current industry standard could increase the value of an approved treatment by more than $200 million in net present value.
By making drug development faster by doing things that haven't been done before.
And by leveling the playing field for partners and expanding the ecosystem of innovators.
For example, we believe bringing an antibody treatment to those who need it one year faster than the current industry standards could increase the value of an approved treatment by more than $200 million.
And net present value.
Carl Hansen: Moreover, being the first to market could result in larger market share and billions, of dollars in additional therapy sales.
Moreover, being the first to market could result in larger market share and billions of dollars in additional therapy sales.
Carl Hansen: Similarly, we estimate that opening up new target space and modalities has the potential, to unlock market segments that together represent more than $100 billion in opportunity.
Similarly, we estimate that opening up new target space and modalities as the potential to unlock market segments that together represent more than $100 billion in opportunity.
Carl Hansen: And finally, removing the need to reinvent the wheel lowers the barrier to entry and, can help small companies compete more effectively. For innovative biotech companies committed to doing drug development at the highest level, this could save them more than a year and tens of millions of dollars at the earliest stages.
And finally.
Removing the need to reinvent the wheel lowers the barrier to entry and can help small companies to compete more effectively.
For innovative biotech companies committed to doing drug development at the highest level this could save them more than a year and tens of millions of dollars at the earliest stages.
Carl Hansen: As an example, this quarter we signed a number of new deals to unlock breakthrough science, by collaborating with premier venture capital firms, Versa Ventures and Atlas Ventures. Both of these teams have proven track records in identifying exceptional science and in, translating those breakthroughs into exciting and impactful companies.
As an example, this quarter, we signed a number of new deals to unlock breakthrough science by collaborating with Premier venture capital firms Versant ventures and Atlas venture.
Both of these teams have proven track record of identifying exceptional science, and then translating those breakthroughs into exciting and impactful company.
Carl Hansen: We provide these early-stage companies with the ability to start discovery immediately, and advance programs without having to build the underlying capabilities, teams and infrastructure. This allows them to focus on their innovative science, operate with enhanced capital efficiency, and increase the probability of finding an optimal therapeutic candidate.
We provide these early stage companies with the ability to start discovery immediately and advanced programs without having to build the underlying capabilities teams and infrastructure.
This allows them to focus on their innovative science operate with enhanced capital efficiency and increase the probability of finding an optimal therapeutic candidates.
Carl Hansen: In turn, Accelera benefits from these partnerships by connecting with the very best science, fueling the growth of our diverse portfolio of states in next-generation antibody therapy.
In turn accelerate benefits from these partnerships by connecting with the very best science fueling the growth of our diverse portfolio of states and next generation antibody therapy.
Carl Hansen: We also believe we can use our technology advantage to do things that have not been done before. Specifically, I'm excited to update you on our progress in building a panel of CD3-binding, antibodies for next-generation T-cell engagers, an effort that we first announced in November of last year.
We also believe we can use our technology advantage to do things that have not been done before.
Specifically im.
To update you on our progress in building a panel at <unk> III binding antibodies for next generation T cell engagements and effort that we first announced in November of last year.
Carl Hansen: As a quick reminder, T-cell engagers are bispecific antibodies that guide the immune system to, recognize and kill cancer cells by binding both T-cells and tumor cells at the same time.
As a quick reminder, T cell engages our bispecific antibodies that guided the immune system to recognize and kill cancer cells by binding both T cells and tumor cells at the same time.
Carl Hansen: CD3 is a large protein complex found on the surface of T-cells, and it's recognized, as a difficult target. As a result, there's only a small number of CD3-targeting antibodies available, which, limits the ability to fine-tune T-cell activation.
<unk> III is a large protein complex found on the surface of T cells and is recognized as a difficult target.
As a result, there is only a small number of CDP targeting antibodies available, which limits the ability to fine tune T cell activation.
Carl Hansen: Building optimal T-cell engagers requires access to a panel of CD3 antibodies that have, a broad range of binding properties and the ability to bind to a wide variety of sites on the CD3 complex.
Building optimal T cell engagements requires access to a panel of <unk> antibodies that have a broad range of binding properties and the ability to bind to a wide variety of sites on the CD three complex.
Carl Hansen: Using our technology, we believe we have built the industry's largest panel of diverse, high-quality, and fully human CD3 antibodies that is currently available. We presented our data at AACR earlier this year. As an update to this, we have new data showing that our CD3 panel includes more than 200, unique antibodies that bind broadly across multiple sites on the CD3 complex. Our panel also exhibits a broad range of binding affinities, spanning almost three orders of, magnitude.
Using our technology, we believe we have built the industry's largest panel a diverse high quality and fully human <unk> antibody that is currently available.
We presented our data at ACR earlier this year.
As an update to this we have new data showing that our CD. Three panel includes more than 200 unique antibodies that bind broadly across multiple sites on the CD three complex.
Our panel also exhibit a broad range of binding affinities spanning almost three orders of magnitude.
Carl Hansen: As a first demonstration of this panel, we paired different CD3 antibodies with an antibody, response directed against a model tumor antigen, GFR, creating bi-specific antibodies for testing. These proof-of-concept bi-specifics showed that they induced a wide range of T-cell activation.
As a first demonstration of this panel repair different CD three antibodies with an antibody directed against the model tumor antigen <unk>.
<unk>, creating bi specific antibodies for testing.
These proof of concept by specifics showed that they induced a wide range of T cell activation.
Carl Hansen: And importantly, we identified bi-specifics that effectively kill tumor cells with either, no or very low cytokine release, suggesting these molecules could overcome key hurdles in the clinic.
And importantly, we identified by specifics that effectively kill tumor cells with either no or very low set of kind of release.
Adjusting these molecules could overcome key hurdles in the clinic.
Carl Hansen: These data indicate that our CD3 panel is capable of constructing antibodies with a, wide range of functional activities, which is exactly what is needed to build tunable, optimized, therapeutic T-cell engagers. As a next step, we are actively working to demonstrate the application of our platform, with a number of different tumor-targeting arms, where we are optimizing both arms of the bi-specific.
These data indicate that our CD three panel is capable of constructing antibodies with a wide range of functional activities, which is exactly what is needed to build tunable optimized therapeutic T cell engagements.
The next step we are actively working to demonstrate the application of our platform with a number of different tumor targeting arms, but we are optimizing both arms of the bi specific.
Carl Hansen: To date, we've initiated discovery against two well-known tumor antigens, and we anticipate, starting work on two or three more before the end of the year.
To date, we've initiated discovery against two well known tumor antigens and we anticipate starting work on two or three more before the end of the year.
We will be sharing data from these programs as they become available and believe doing this work on real world problems with high commercial potential is critical both to the development and validation of our T cell engagement platform.
Carl Hansen: We will be sharing data from these programs as they become available, and believe that, doing this work on real-world problems with high commercial potential is critical both to the development and validation of our T-cell engager platform.
Carl Hansen: While the primary objective of this work is technology development, the byproduct of these, efforts could be bi-specific antibodies with the potential to be advanced as best-in-class cancer therapies.
While the primary objective of this work is technology development. The byproduct of these efforts could be bi specific antibodies with the potential to be advanced as best in class cancer therapies.
Carl Hansen: This potential for asset generation as a benefit of technology development is also, present in our work in unlocking difficult target classes, including GPCRs and ion channels.
This potential for asset generation as the benefit of technology development is also present in our work and unlocking difficult target classes, including <unk> and <unk> channels.
Carl Hansen: In either case, for T-cell engagers or for difficult targets, our intention is to partner, any resulting assets for clinical and commercial development.
In either case for T cell <unk> or for difficult targets. Our intention is to partner any resulting assets for clinical and commercial development.
Carl Hansen: For that reason, we refer to them as pre-partnered programs, and we will share more information, on these as they mature.
For that reason, we refer to them as pre partnered programs and we will share more information on these as they mature.
Carl Hansen: I would like to highlight that we have previously had assets arise from our technology development, efforts. Specifically, our work on platform development for rapid pandemic response, is what resulted in the COVID-19 antibodies, which we subsequently partnered with Eli Lilly. In this case, we had spent two years developing our technology specifically for pandemic response, prior to the emergence of the COVID-19 pandemic, and we initiated our work before entering into a partnership with Eli Lilly.
I would like to highlight that we previously had assets arise from our technology development efforts.
Specifically our work on platform development for rapid pandemic response is what resulted in the COVID-19 antibody, which we subsequently partnered with Eli Lilly.
In this case, we spent two years developing our technology specifically for pandemic response prior to the emergence of the COVID-19 pandemic.
We initiated our work before entering into a partnership with Eli Lilly.
Carl Hansen: Familinifimab was the first antibody to be authorized by the FDA, and betulovimab continues to be used to combat the virus, remains effective against all known variants of concern, and is still the most potent COVID-19 antibody treatment available.
Download map with the first antibody to be authorized by the FDA and bet. The logo map continues to be used to combat. The virus remains effective against all know very known variance of concern and it's still the most potent COVID-19 antibody treatment available.
Carl Hansen: The value of assets that can be generated through technology development efforts, is illustrated by the 2.5 million doses that have been delivered to patients thus far, saving tens of thousands of lives.
The value of assets that can be generated through technology development efforts is illustrated by the $2 5 million doses that have been delivered to patients thus far saving tens of thousands of lives.
Carl Hansen: In summary, Abcellera is ideally positioned to stay on course and to deliver value for patients, for our partners, and for our shareholders.
In summary at solar is ideally positioned to stay on course and to deliver value for patients for our partners and for our shareholders.
Carl Hansen: And with that,
Carl Hansen: I'll hand it over to Andrew Booth, our CFO, to provide an overview of our second quarter 2022 financials.
And with that I'll hand, it over to Andrew <unk>, our CFO to provide an overview of our second quarter 2022 financials Andrew.
Andrew Booth: Andrew?
Thanks Carl.
I am pleased to highlight the progress we've made on our key business metrics beginning with programs start.
Andrew Booth: Thanks, Karl.
We started four new programs in the second quarter of 2022, taking us to a cumulative number of 88 program Sir.
Andrew Booth: I'm pleased to highlight the progress we've made, in our key business metrics, beginning with program starts. We started four new programs in the second quarter of 2022, taking us to a cumulative number of 88 program starts.
Andrew Booth: As we've stated previously, we expect the number of starts in a quarter to be somewhat irregular, and we expect the strong underlying number of starts to continue. This holds true for the last year. We started 28 programs in the 12 months ended June 30, 2022, compared to 12 programs in the trailing 12 months ended June 30, 2021.
As <unk> stated previously we expect the number of starts in the quarter to be somewhat irregular and we expect the strong underlying number of starts to continue.
This holds true for the last year, we started 28 programs in the 12 months ended June 32022, compared to 12 programs and the trailing 12 months ended June 32021.
Andrew Booth: For clarity, the program starts reported here do not include the discovery efforts initiated by Abcellera that may lead to the pre-partnered programs that Karl mentioned earlier in the call. We ended the quarter with 16 programs under contract, all of which were with two new partners. That's a 19% increase in programs under contract as compared to the end of Q2 2021.
For clarity the program starts reported here do not include the discovery efforts initiated by et cetera that may lead to the pre partnered program that Karl mentioned earlier in the call.
We ended the quarter with 60 programs under contract all of which were with two new partners.
That's a 19% increase in programs under contract as compared to the end of Q2 2021.
Andrew Booth: With our total of 164 programs under contract, we continue to have a strong book of worms.
With our total of 164 programs under contract we continue to have a strong book of work.
Andrew Booth: In addition, we entered into a collaboration with Versant Ventures to discover therapeutic antibodies for multiple targets selected by Versant's portfolio of biotech companies. This collaboration builds on previous work between Versant and Abcellera, which has already enabled three of the firm's stealth stage companies.
In addition, we entered into a collaboration with Versant ventures to discover therapeutic antibody for multiple targets selected by <unk> portfolio, a biotech company.
This collaboration builds on previous work between <unk> and <unk>, which is already enabled three of the firm.
Andrew Booth: Our business development focus continues to be on high-quality programs that are a complement to our existing partnerships and where Abcellera has a strong economic position.
Page company.
Our business development focus continues to be on high quality programs that are a complement to our existing partnerships and were accelerated as a strong economic position.
Andrew Booth: Consistent with these objectives, we believe, that the partnerships that we've entered into in this last quarter are excellent additions to our portfolio.
<unk> with these objectives, we believe that the partnerships that we've entered into in this last quarter are excellent additions to our portfolio.
Andrew Booth: As we've previously indicated, the total number of programs under contract is a leading indicator of the longer-term trajectory expected for program start. As of June 30, 2022, we continue to report six molecules in the clinic.
As we've previously indicated the total number of programs under contract is a leading indicator of the longer term trajectory expected for programs start.
As of June 32022, we continue to report six molecules in the clinic.
Andrew Booth: For our molecules at a commercial stage, a U.S. government purchase order for 150,000 doses of Beptolomaz was received and partially fulfilled by our partner, Eli Lilly, during June of 2022. This contributed meaningfully to our Q2 results.
For our molecules at a commercial stage a U S government purchase order for 150000 doses of <unk> met was received and partially fulfilled by our partner Eli Lilly During June of 2022. This contributed meaningfully to our Q2 results.
Andrew Booth: In addition, Willey recently announced that they will begin commercial sales of Bepthalovimab, to states, hospitals, and other health care providers starting this month.
In addition, we recently announced that they will begin commercial sales of depth of love and that the state hospitals and other health care providers starting this month.
Andrew Booth: We would expect this arrangement to enable the use of Bepthalovimab in the future.
We would expect this arrangement to enable to use.
Views of that some of that in the future.
Andrew Booth: According to US HHS data, Bepthalovimab has recently been administered at an average rate, of approximately 4,000 doses per day within the United States.
According to U S. HHS data that the level of <unk> has recently been administered at an average rate of approximately 4000 doses per day within the United States.
Andrew Booth: As we've stated in the past, 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 loyalty payments in the longer term.
As we've stated in the past 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.
Andrew Booth: We expect to see continued strong growth on these key drivers of the business and of shareholder, value in the years ahead.
We expect to see continued strong growth on these key drivers of the business and shareholder value in the years ahead.
Andrew Booth: Turning to revenue, our revenue in the quarter was $46 million. Payments were driven in large part by the $33 million of royalties we earned from shipments, of Bepthalovimab at the end of the quarter.
Turning to revenue our revenue in the quarter was $46 million.
Revenues were driven in large part by the $33 million of royalties, we earn from shipments of love and that at the end of the quarter.
Andrew Booth: Research fees connected to our work on many programs with a wide range of partners in, Q2 2022 were approximately $13 million, a meaningful increase from the same quarter last year, reflecting the strength of our core discovery activities.
Research fees connected to a work of many programs with a wide range of partners in Q2 2022 were approximately $13 million.
Meaningful increase from the same quarter last year, reflecting the strength of our core discovery activities.
Andrew Booth: Licensing fees were minimal this quarter, and we earned no new milestone payments. Looking ahead to the remainder of 2022, we expect continued strength in research fees, and the majority of total 2022 revenue to be derived from royalties on COVID antibodies.
Licensing fees were minimal this quarter and we earned no new milestone payments.
Looking ahead to the remainder of 2022, we expect continued strength in research fee and the majority of total 2022 revenue to be derived from royalties on COVID-19 antibodies.
Andrew Booth: Lilly sold and shipped over 670,000 doses of Bepthalovimab to the U.S. government in, the first half of 2022. We expect this to reach 750,000 doses cumulatively in Q3, given the current confirmed orders, by the U.S. government.
Newly sold and shipped over 670000 doses of <unk> to the U S government in the first half of 2022.
We expect this to reach 750000 doses cumulatively in Q3, given the current confirmed orders by the U S government.
Andrew Booth: The new arrangement of commercial sales by Lilly of Bepthalovimab to states, hospitals, and other health care providers starting this month is expected to result in additional royalties to Accelera, and we will be watching that closely as usage normalizes in the coming months and quarters. As a reminder, under our agreement with Lilly, we are entitled to receive royalties in the, mid-teens to mid-20s on sales of Bepthalovimab.
The new arrangements of commercial sales by Lilly of depth of love math to states hospitals and other health care providers. Starting this month is expected to result in additional royalties to accelerate and we will be watching that closely as usage normalizes in the coming months and quarters.
As a reminder, under our agreement with Lilly, we are entitled to receive royalties in the mid teens to mid twenties on sales of <unk>.
Andrew Booth: We continue to view COVID royalties as a non-dilutive source of funding to support, our investments in capacity and platform capability building, including investments into forward integration.
We continue to view COVID-19 royalties as a non dilutive source of funding to support our investments in capacity and platform capability building, including investments into forward integration.
Andrew Booth: Turning to our operating expenses, our research and development expenses for the second quarter, were approximately $27 million, a $12 million increase over the previous year. The overall increase reflects the ongoing investments into R&D, which will continue, to grow as we expand our R&D team's capabilities and capacity.
Turning to our operating expenses, our research and development expenses for the second quarter were approximately $27 million.
At $12 million increase over the previous year.
The overall increase reflects the ongoing investments into R&D, which will continue to grow as we expand our R&D team capabilities and capacity.
Andrew Booth: This allows us to deliver our partner programs as well as to enhance our capabilities organically.
This allows us to deliver our partnered programs as well as to enhance our capabilities organically.
Andrew Booth: Of note, approximately two-thirds of our R&D efforts are directed at enhancing capabilities, and about one-third relates to partner program execution.
Of note.
Approximately two thirds of our R&D efforts are directed at enhancing capabilities and about one third relates to partnered program execution.
Andrew Booth: In sales and marketing, expenses for the quarter were approximately $3 million, compared to, $1 million in Q2 of 2021. General and administration expenses for the quarter were approximately $14 million, compared, to approximately $11 million in Q2 of 2021. The increase is largely driven by the need to support the growing business.
In sales and marketing expenses for the quarter were approximately $3 million compared to $1 million in Q2 2021.
General and administration expenses for the quarter were approximately $14 million compared to approximately $11 million in Q2 of 2021.
The increase is largely driven by the need to support the growing business.
Andrew Booth: We are reporting a net loss of approximately $7 million for Q2 2022, compared to a loss, of approximately $2 million in Q2 2021. In terms of earnings per share, this works out to a loss of $0.02 per share on a basic, and diluted basis for the quarter. This result reflects the recognition of royalties on Beth Tlaibameth, mostly offsetting 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.
We are reporting a net loss of approximately $7 million for Q2 2022 compared to a loss of approximately $2 million in Q2 2021.
In terms of earnings per share. This works out to a loss of <unk> <unk> per share on a basic and diluted basis for the quarter.
This result reflects the recognition of royalties on best of loving that mostly offsetting our ongoing investments to expand and enhance our discovery platform and to grow our diversified portfolio of long term steaks in the next generation of antibody drugs, while running discovery efforts for our partners.
Looking at cash flow operating activities for the first six months of 2022 contributed $373 million to cash. This notably includes the collection of the accrued accounts receivable balance.
Andrew Booth: Looking at cash flow, operating activities for the first six months of 2022 contributed, $373 million to cash. This notably includes the collection of the accrued accounts receivable balance from royalties, earned in the last quarter of 2021 and the first quarter of 2022.
Royalties earned in the last quarter of 2021, and the first quarter of 2022.
Andrew Booth: On the investing activities side, the first half of the year shows a total investment, of $54 million, largely related to investments in property, plants, and equipment as we continue to build our facility, including those supporting our investments in forward integration into translational sciences, CMC, and GMP manufacturing.
On the investing activity side, the first half of the year shows a total investments of $54 million.
Largely related to investments in property plant and equipment as we can tell we continue to build our facilities, including those supporting our investments in forward integration into translational Sciences, TMT and GMP manufacturing.
Andrew Booth: As a part of our treasury strategy, we continue to keep approximately $230 million invested, in short-term marketable securities. As a result, we finish the quarter with over $1 billion of unrestricted cash, equivalents, and marketable securities.
As a part of our Treasury strategy, we continue to keep approximately $230 million invested in short term marketable securities.
As a result, we finished the quarter with over $1 billion of unrestricted cash equivalents and marketable securities.
Andrew Booth: In summary, we remain in an increasingly strong liquidity position that allows us to execute, on our strategy, including making material investments to build capacity, capabilities, and expand the platform. We believe that we have sufficient liquidity for well beyond the next three years while, making these investments.
In summary, we remain in an increasingly strong liquidity position that allows us to execute on our strategy, including making material investments to build capacity capabilities and expand the platform.
We believe that we have sufficient liquidity for well beyond the next three years, while making these investments.
Andrew Booth: And with that, we'll be happy to take your questions.
And with that we'll be happy to take your questions.
Operator: Operator?
Later.
Operator: Thank you.
Operator: If you'd like to ask a question, please press star followed by the number 1 on your telephone, keypad now.
Thank you thank.
If you'd like to ask a question. Please press star followed by the number one on your telephone keypad now.
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Operator: Our first question today comes from Tiago Fogg of Credit Suisse.
Our first question today comes from Paul.
<unk> Suisse. Your line is open. Please go ahead.
Operator: Your line is open.
Tiago Fogg: Please go ahead.
Tiago Fogg: Great.
Tiago Fogg: Thanks for the question and congrats on all the progress.
Great.
The question and congrats on all the progress so just wanted a little bit more detail on the person venture deal.
Tiago Fogg: So, just wanted a little bit more detail on the diverse ventures deal.
Tiago Fogg: It's very interesting.
Tiago Fogg: Again, the value proposition for early-stage innovators not having to build out some capacities, is a little bit more obvious and accepted by the investor community relative to potential value-add to the larger biopharmaceutical companies.
It's pretty interesting again, the value proposition for early stage innovators not having to build out.
<unk>.
There's a little bit more obvious.
Accepted by the Investor community.
The potential value add so it's the larger biopharmaceutical companies.
Tiago Fogg: In a way, you can give more context how that transaction came about potentially.
Any way you can give more context, how that transaction came about potentially so.
Tiago Fogg: So, is this something that you can actually replicate across other venture capital firms, more aggressively perhaps at this stage of existence?
Is this something that you can actually replicate across other venture capital firms.
We're aggressively perhaps at this stage.
So they.
The existence.
Tiago Fogg: I'm curious about your thoughts there.
What about your thoughts there. Thank you.
Tiago Fogg: Thank you.
Carl Hansen: Thanks, Tiago, for the question.
Thanks, Thiago for the question Carl Hansen here.
Carl Hansen: Carl Hansen here.
Carl Hansen: Let me start by saying, you know, this is a segment of the market that we have been, excited about for some time.
Let me start by saying this is a segment of the market that we have been excited about for some time.
Carl Hansen: And I think, you know, as for your question, I think it's important to use investments, in technology centrally along with a partnering business model to allow for the best ideas and the best science to compete on a level playing field and not be operational friction in moving a molecule from an idea through to something that can actually be used in the market.
And I think as for you to use investments in technology centrally along with our partnering business model to allow for the best ideas and the best science to compete on a level playing field.
Not be operational friction in moving the molecule from an idea through to something that can actually be used in the.
Carl Hansen: You know, if you'll indulge me, an analogy of the semiconductor industry, where we're at a point now where two innovators, with a good idea in a garage can very quickly move that forward and advance that because they can leverage a huge amount of infrastructure that is the foundation on which they can build their innovation.
Patient.
If you will if you'll indulge me an analogy.
Semiconductor industry, where we're at.
At a point now where Q.
Innovators with a good idea and a garage can very quickly move that forward and adapt because they can leverage.
A huge amount of infrastructure.
That is the foundation on which they can build their innovation. So we focus only on what is.
Carl Hansen: So they focus only on what is unique and essential to their business.
Unique and essential to their business.
Carl Hansen: The current state of biotech is not like that.
State of biotech, it's not like that in biotech. If you have an idea you need to get right down to the ground level and start to put in place to labs and hired the PV wasteful.
Carl Hansen: In biotech, if you have an idea, you need to get right down to the ground level and start to put in place the labs, and hire the people, you know, wasteful, and it actually holds back innovation to the detriment of, you know, those innovators, of investors, of the biotech community, and ultimately patients.
And it actually hold back innovation to the detriment of those innovators of investors.
Of the biotech community and ultimately patients.
And the business model challenges.
Carl Hansen: Now a challenge with this is that if you look at the number of opportunities, there are ideas out there, and innovators, and have them supported by, you know, experienced entrepreneurs and venture capital firms that can bring, you know, the people and the operations and the capital to turn those into viable businesses is a very important thing.
So a bit is that if you look at the number of opportunities there are ideas out there and innovators.
Okay.
And have them.
Reported by <unk>.
Experienced entrepreneurs and venture capital firms that can bring.
The people in the operations and the capital to turn those into viable businesses is a very important thing. So this engagement with two top tier firms with versant and width.
Carl Hansen: So this engagement with two top-tier firms, with Versant and with Atlas, is very much about that.
With Atlas.
Carl Hansen: It's a win-win interaction where we help them to be more competitive to people that are looking for venture capital investment. We help them to get their ideas off the start line faster and more efficiently, and in turn we benefit by connecting with science that's already been vetted and with teams that know how to build companies that ultimately create value and bring molecules to the planet.
Is very much about that it's a win win interaction where we help them to be more competitive to people that are looking for venture capital investment, we help them to get their ideas off the start line faster and more efficiently and in turn.
Benefit by connecting with science, that's already been bedded in with teams that know how to build companies that ultimately create value and bring molecules to the clinic.
Carl Hansen: I don't know if that makes sense.
Carl Hansen: Thanks again for taking the question.
Got it that makes sense.
Thanks again for taking the question.
Ronald: Hi, this is Ronald.
Hi.
This is ronald.
Ronald: I'm at the desk of Gaurav.
<unk>.
Ronald: I just had a few questions regarding, you know, COVID antibody.
I just had a few questions regarding <unk>.
No.
Ronald: You know, as they're, you know, can you tell us, like, what the next thing is on your pipeline commercialization, and do you know if you have, like, an internal company that's going to be outside of just the percentage that you have?
Corporate antibody.
Sure.
Yes.
Can you tell us like what the next thing is on your <unk>.
Our pipeline and commercialization.
And do you know.
Are you, having an internal cost.
Our credit experience that you have.
Yes, Hey, Ronald it's Andrew here, Thanks for the question.
Ronald: Yeah.
Andrew Booth: Hey, Ronald, it's Andrew here.
Andrew Booth: Thanks for the question.
Actually.
Before their earnings that moving.
Best of luck with math they are now selling vessel of map directly to states in order to make sure that that product can get through to patients that are that are meeting that.
Andrew Booth: Actually, before their earnings, needing the COVID antibodies in those states so it will no longer be going through the government purchase order mechanism and I think we see this very positively as a way for the supply chain to kind of simplify and maybe be a little bit more the standard way of delivering those product and supply chain to patients that Lily is from.
Leading the Covid antibodies in those states. So it will no longer be going through the government purchase order mechanism and I think we'd see this very positively as a way for the supply chain to kind of simplify and maybe be a little bit more the standard way of delivering those product and supply chain.
Two patients that really is for you.
In terms of getting.
Andrew Booth: In terms of getting standing in terms of its effectiveness against COVID, ultimately to the patients that are in need.
Standing in terms of its effectiveness.
Yeah.
Against Covid.
Ultimately to the patients that are in need.
Ronald: Okay, thank you for that.
Okay. Thank you for that.
Just one last.
Ronald: Just one last, you know, you've got over a billion, dollars for the Department of Homeland Security, do you have any short-term plans for that?
You said over $1 billion.
So its marketable securities.
Do you have any short term plans for that.
Andrew Booth: We do have short-term plans for the billion dollars we have in cash and it's not lost of us, of course, the great position we're in to have such a strong balance sheet, especially as we are investing heavily in the capability building of the company and of the platform.
Yeah.
And plans for the $1 billion, we have in cash.
It's not loss of us of course.
Great position, we're in to have such a strong balance sheet.
Especially as.
We are investing heavily in the capability building of.
The company and of the platform.
Andrew Booth: As we've seen in the past, we have consistently been great stewards of capital in growing that investment in R&D and in sales and marketing year over year and Q2 is much the same, growing almost 100% over the same period in 2021.
As we've seen in the past, we have consistently been great stewards of capital and growing that investment.
In R&D and in sales and marketing year over year in Q2 was much the same growing almost 100% over the same period in 2021 in.
Andrew Booth: In addition, of course, we have very ambitious plans with our investment in the vertical integration through Translational Sciences, CMC and GMP.
In addition of course, we have very ambitious plans with our investment in the vertical integration through translational Sciences, CMC and GMP those are the investments in the in the short the immediate and mid and long term that we are.
Andrew Booth: Those are the investments in the, short, the immediate and mid and long-term that we are capital to work.
Capital to work.
Ronald: Congratulations on a great quarter.
Congratulations on a great quarter.
Thank you for taking my question.
Ronald: Thank you for taking my question.
The next question comes from the South.
TD Securities Your line is open.
Puneet Souda: The next question comes from Puneet Souda of SVB Securities.
Yeah, Hi, Karl Andrew Thanks for taking the question so a couple of them.
Puneet Souda: Your line is open.
To understand the first it's been about.
Pre partnered programs.
Andrew maybe you can can you quantify maybe.
Yes.
For pre partnered programs and sort of what sort of investment that they require.
And maybe just give us a sense of what.
Sure.
Despite the early days.
Prepare and.
Yeah.
Britain partner programs are going to be.
Across sort of there.
Different therapeutic categories or whatnot and then ultimately this is something that is routine.
Term objective here.
Is this something that you would want.
Two delap molecule are.
Drugs that you would want to develop yourself.
Puneet Souda: Hi, Carl, Andrew.
Yes.
Puneet Souda: Thanks for taking the question.
And then I'll pass it over to Carl to talk about that.
What we're what we'll be working on.
Puneet Souda: A couple of things I'd like to, understand first a bit about the pre-partnered programs.
So.
As Carl mentioned in his remarks.
This is here is on technology development and those are the efforts that we're spending in our R&D I did mentioned that two thirds of our efforts and our expense in R&D is.
And at these.
Sort of pre partnered assets are the benefits that.
That results from having to work on real things to make sure that your technology development is actually achieving.
<unk> aims to prove out.
In terms of <unk>.
Speed.
Speed of being able to find antibodies being able to.
It had been.
Making those investments too.
Please from having to rebuild.
Competitive so in terms of.
The added expense I think bill.
Those.
Due to the under kind of our base business model.
Having assets pop out of those investments are just not something that we are.
Some of these investments in terms of the breadth and depth of that I'll, let Karl comment on that.
Puneet Souda: Andrew, can you qualify maybe for pre-partnered programs and what sort of investment that they require and maybe just give us a sense of what, despite the early days of COVID-19 here and the duration of the COVID-19, what sort of pre-partnered programs are going to be across sort of different therapeutics categories or whatnot?
Maybe I'll just back up.
To.
To a higher level here.
And revisit.
What is the strategy and where we see.
Technologies that.
Allow for us to do discovery at greater speed at higher quality at greater scale, that's been done before.
Puneet Souda: And then ultimately, you know, this is something that is routinely a long-term objective here.
And another very important dimension is the pushback the frontier of what's possible and open up new opportunities for new modalities and neutral partner <unk>.
Puneet Souda: Is this something that you would want to develop a molecule or, you know, a drug that you would want to develop yourself?
Launching on tier two.
New technology development effort.
Heart problems to have.
Potential not to bring one asset for it but to open up entire classes.
Puneet Souda: Yeah, hey, Carl.
Two areas that we're focused on are in pizza.
Andrew Booth: And then I'll pass it over to Carl to talk about what we'll be working on.
While engagements where.
If we can demonstrate and we believe we are on track to do that that's.
Thats, a combination of ortho, Matt and CD three can generate quickly T.
T cell engages with better properties of potential targets that can be connected.
Similarly on the difficult.
Crs.
You went to Google and you did a quick search you would quickly let me come up with dozens of targets that have the potential to be first in class blockbuster therapies.
Unmet medical need so that's why.
But the big prizes.
Youre working on that you need to work on a real problems and as you make progress against the technology hurdles.
Yuval.
That needs to be brought forward into development in our strategy and capability building and to do that.
Partnering before those costs get large.
With.
Companies that are better positioned.
Frankly that clinical development and commercial development.
So I know we're not in there.
It'll be very excited about that.
At once you've done it once its likely youre going to be able to do it again and again, because we really want to get out of this is first.
Andrew Booth: So of course, as Carl mentioned in his remarks, our emphasis here is on technology development, and those are the efforts that we're spending in our R&D.
Andrew Booth: I did mention that, you know, two-thirds of our efforts and our expense in R&D is on building, and that these sort of pre-partnered assets are the benefits that result from having to work on real things to make sure that your technology development is actually achieving or you're aiming to prove out in terms of speed of being able to find antibodies, being able to figure out, you know, what had been, you know, making those investments to, you know, prevent companies from having to rebuild the, you know, competitive.
Open up these new therapeutics.
Opportunities.
Andrew Booth: So in terms of the added expense, I think those are included in a kind of our base business, model and that having assets pop out of those investments are just something that we are working on these investments and in terms of the breadth and depth of that, I'll let, Carl comment on that.
<unk>.
Carl Hansen: You know, maybe I'll just back up to a higher level here and revisit what is the strategy, and where we see these pre-partnered technologies that allow for us to do discovery at greater speed, at higher quality, at greater scale that's been done before.
Prove to people again, and we have done this before that our investments in technology are having an ROI and allowing us to succeed.
Carl Hansen: And another very important dimension is to push back the frontier of what's possible, and open up new opportunities for new modalities and new charter classes.
Carl Hansen: Launching on to technology development efforts that have hard problems, that have the potential, not to bring one asset forward but to open up entire classes.
Seed where others have failed.
And third of course bring forward assets that I believe our partners, we will be excited to take on.
And they will see it as though we have opened up opportunities and anticipated needs.
Got it that's super.
Helpful and the data releases.
Just on the bio specific data what conferences.
Sort of your target for getting there.
Just type of one.
Sure. So in terms of data release and metrics so were correct.
Let me not including anything related to pre partnered programs or this technology development effort in program starts.
We one of the advantages of doing this work is that we will have the data and we're not nearly as constrained as we normally are in terms of confidentiality and sharing this.
With with the public and having people have a sense of what is possible with the platform. So as as these programs advance and they get to the point, where we believe we've made meaningful advancements towards the end goal of actually demand that therapeutic and we will bring those forward on quarterly calls at scientific presentations.
Wherever or perhaps in publications wherever it's appropriate.
It's difficult I know you're going to ask me, it's difficult to predict the timing of that because these are difficult problems, we're trying to solve.
That said, we're excited by the progress we're making both on the T cell front and difficult targets and we're hopeful that we'll have.
All things if things line up well will have meaningful results to share within the next 12 months or so.
Carl Hansen: The two areas that we're focused on are in T-cell engagers where if we can demonstrate, and we believe we're on track to do that, that the combination of Orthomab and CD3 can generate quickly T-cell engagers with better properties of potential targets that can be connected with.
Carl Hansen: Similarly, on the difficult TCRs, if you went to Google and you did a quick search, you, would quickly come up with dozens of targets that have the potential to be first-in-class blockbuster therapies on unmet medical needs.
In terms of the T cell engagement work.
Carl Hansen: So that's what the big prize is.
We are looking to present this at some conferences in the relatively near future. Thus far we before I can share that detail with you. Thanks Nate.
Carl Hansen: Now when you're working on that, you need to work on real problems.
Carl Hansen: And as you make progress against the technology hurdles, you will have to work on those that, need to be brought forward into development.
Carl Hansen: Our strategy is capability building and then to do that by partnering before those costs, frankly, by clinical development and commercial development.
Okay, and then last one if I could.
I don't mind, if I could squeeze in one last one around and we get a lot of questions from investors around small biotech exposure. The company has have obviously you have a number of EPC projects.
And.
Early stage projects can you, maybe just give us a sense of.
Whats the exposure here for contracts or what's the exposure for small early stage biotech that you have worsened.
Worse as the larger biopharma.
Within your contract total contracts, obviously, you have a number of VT projects ongoing to so it seems like.
That could that number could increase thanks, so much sure, yes, I'm pretty I'm happy to answer that I think on a previous call I don't remember, which one we did present some details of our portfolio in terms of programs under contract within that presentation. There was a breakdown in terms of deals with biotech or with partners, we would characterize as large pharma.
Roughly a quarter to a third of programs under contract or with the large integrated pharma companies, which of course means let's say, 60% to 75% are with biotech companies that pool of biotech companies.
Spans the gamut from companies that are right out of the gate companies like the ones we have.
Working with already with these venture capital groups, but up to more mature publicly traded small mid cap biotech companies.
Incidentally.
That that breakdown is largely in line with what we believe to be the distribution of program starts across the sector and the same could be said about indications. So we seem to have a portfolio that is broadly reflecting the sector. Thus far we don't see a trend of a tipping but of course that could change over time.
Okay. Thanks, Thanks for taking the questions.
Carl Hansen: So I know when that happens, everyone will be very excited about that.
Our next question comes from Stephen Willey of Stifel.
Your line is open. Please go ahead.
Carl Hansen: But once you've done it once, it's likely you're going to be able to do it again and again.
Yes. Good afternoon, thanks for taking the questions and congrats on the progress.
Puneet Souda: Got it.
Carl Hansen: The things that we really want to get out of this is, first, open up these new therapeutic opportunities.
Carl Hansen: Second, prove to people, again, and we have done this before, that our investments in technology are having an ROI and allowing us to succeed where others have failed.
Carl Hansen: And third, of course, bring forward assets that I believe our partners will be excited to take on, and they will see it as though we have opened up opportunities and anticipated needs.
Puneet Souda: That's super helpful.
Maybe just following up on the bio specific side.
<unk>.
Maybe just curious if you can speak to whether or not these two known tumor antigens that you've initiated work on.
Puneet Souda: And the data releases.
Or are these geared towards hematological or solid tumors.
And I guess, if the ladder.
Do you feel like <unk>.
<unk> is also going to be kind of incorporated into the <unk>.
To be interrogated process here to <unk>.
Try to minimize Crs, who maybe improved safety tolerability and just cost target exposure.
Thanks, Steve Carl here I'm happy to take that so the first two programs. We've initiated are not directed towards hematology var towards solid tumors.
Puneet Souda: How can we focus on the biospecific data?
Puneet Souda: What conferences sort of you are targeting there?
Puneet Souda: And then just Ty, if you want to jump in.
Puneet Souda: Sure.
Puneet Souda: So in terms of data release and metrics, so we're currently not including anything related to pre-partnered programs or this technology development effort in program starts.
Puneet Souda: One of the advantages of doing this work is that we will have the data, and we're not nearly as constrained as we normally are in terms of confidentiality in sharing this with the public and having people have a sense of what is possible with the platform.
Puneet Souda: So as these programs advance and they get to the point where we believe we've made a meaningful advance, towards the end goal of actually developing a therapeutic, then we will bring those forward, you know, on quarterly calls, at scientific presentations, or perhaps in publications, wherever is appropriate.
Puneet Souda: It's difficult.
The big the <unk>.
Puneet Souda: I know you're going to ask me.
Big Challenge and the Big Prize and honestly, where the biggest unmet need is right now.
Puneet Souda: It's difficult to predict the timing of that because these are difficult problems we're trying to solve.
In terms of thinking about valency.
Using the <unk> platform. This is a platform that allows us to use our CD three panel and binders on the tumor antigens in a variety of different formats, including one by one it looks like an IGT to buy one two by two so we are investigating that.
Puneet Souda: That said, you know, we're excited by the progress we're making, both on the T-cell front and on the difficult targets.
Puneet Souda: And we are hopeful that we'll have, you know, all things – if things line up well, we'll have meaningful results to share, you know, within the next 12 months or so.
That said, thus far from the characterization, we've done that a lot of the effect that you are.
Puneet Souda: In terms of the T-cell engager work, we are looking to present this at some conferences in the relatively near future.
Puneet Souda: Thus far, we – before I can share that detail with you.
Puneet Souda: Thanks, Benit.
That you are alluding to.
Can be achieved if you've got the right binder the right affinity with the right epitopes. So we would see format as one of the ways that you can change.
The functional properties of the bi specific but it's not the only one.
And given the breadth of <unk> III and the flexibility of the platform. We've got a lot of options at our disposal to look at.
Okay, that's helpful and.
I'm not sure what you can say regarding.
This transition of two of them from.
Government purchasing to more of a.
Lilly led.
Distribution channel, but.
Do we know anything about kind of where they currently are with manufacturing capacity.
Whether or not they've indicated.
Biomass, whether or not they.
Sure.
They intend to keep manufacturing here and kind of beyond mode.
Puneet Souda: Okay.
Yeah, Hey, Steve It's Andrew here.
Puneet Souda: And then last one, if I could, if you don't mind, if I could just squeeze in one last question.
Puneet Souda: Last one, if I could, if you don't mind, if I could just squeeze in one last one around – we get a lot of questions from investors around small biotech exposure that the companies have.
So we don't have a lot of extra details about this this is probably much better question for Lilly, we can point people towards as I mentioned it in my prepared remarks.
Puneet Souda: Obviously, you have a number of VC projects and, you know, early-stage projects.
Puneet Souda: Can you maybe just give us a sense of, you know, what's the exposure here for contracts, or what's the exposure for small, you know, early-stage biotech that you have versus the larger biopharma within your contract – total contracts?
The HHS data that we see.
It gets updated on a weekly basis over the last number of weeks quite consistently has been averaging.
Doses administered to four.
And doses per day.
No.
We would.
Imagine that that would continue but we don't that's the public data that we have to work for them. So.
I think.
From a manufacturing standpoint, we don't have any insight, but I would point to the fact that do.
Two of them that potency its quite a low dose that is required for the manufacturing effort is not too onerous.
With I think it's still a 175 five milligrams per dose so hopefully that would mean that that.
The manufacturing capacity that they have with stretch a long way in terms of benefiting a lot of patients.
Out there who are still contracting COVID-19 as you know.
Understood. Thanks for taking the questions.
Our next question comes from Gary Nachman of BMO capital markets. Your line is open.
Great. Thanks, good afternoon.
Six new programs under contract with two new partners Atlas and one can disclose and then also the burst in deal just talk about the economics with those new partnerships with these are higher value arrangements I'm, assuming they are and how you set them up.
Puneet Souda: Obviously, you have a number of VC projects ongoing too, so it seems like, you know, that number could increase.
I am curious if there are a lot more VC deals out there but.
How big is that universe.
Puneet Souda: Thanks so much.
Puneet Souda: Sure.
Yeah, Hey, Gary.
Good to hear from you.
Andrew Booth: Yeah, I'm pretty – I'm happy to answer that.
Yes.
Six programs under contract.
With Atlas and then undisclosed partner, but as you pointed out with versus.
Andrew Booth: I think on a previous call – I don't remember which one – we did present some details of our portfolio, in terms of programs under contract. Within that presentation, there was a breakdown in terms of deals with biotech, or with partners we would characterize as large pharma.
Other <unk> programs that was in the press release and as well in the in the.
The prepared remarks.
I think that we don't disclose.
Of course, the economic terms of any of our partnerships. So I think the last time and what we will do I think consistently on an annualized basis is kind of in aggregate show what the terms are from the previous year and we did that most recently in our 10-K.
We do see we're adding quite a bit of value and we're being quite judicious about the programs, we are putting out under contract and I think.
Sure.
Thus far in 2022.
Behaving quite consistent to our previous strategy of how we've articulated that.
I do think that there is a good market.
Two to go to.
Our offering will be quite attractive to these venture capital funds and I think Carl May have a few more words to say about.
Our attractive and the prospects we see there yes.
Hi, Carl here.
First.
Andrew Booth: Roughly a quarter to a third of programs under contract are with the large integrated pharma companies, which, of course, means, you know, let's say 60% to 75% are with biotech companies.
Maybe just a comment on sort of the big picture. If you look over the last.
Andrew Booth: That pool of biotech companies spans the gamut from companies that are right out of the gate, companies like the ones we are working with already with these venture capital groups, but up to more mature, publicly traded, you know, small, mid-cap biotech companies.
Decade, or perhaps a bit more.
One of the things that as they become very apparent is that the large majority of new.
Andrew Booth: Incidentally, that breakdown is largely in line with what we believe to be the distribution, of program starts across the sector.
Programs are new therapeutics are actually originating in biotech. So biotech is a rich source of innovation one of the reasons is that it is distributed theres lots of ideas lots of things that are being attempted.
Andrew Booth: And the same could be said about indications.
Andrew Booth: So we seem to have a portfolio that is broadly reflecting the sector.
Andrew Booth: Thus far, we don't see a trend of it tipping, but of course, that could change over time.
Puneet Souda: Thanks for taking the questions.
Operator: Our next question comes from Stephen Wiley of Stiefel.
The other side of that is that.
Our research shows that if you looked at the total number of therapeutic antibody starts ministry in any given year are roughly 50% of that comes from relatively small biotech companies.
Stephen Wiley: Your line is open.
Stephen Wiley: Please go ahead.
That's a big a big part of the market of course, it's important that you are able to find the best programs and also assembled the team around it and that's why this engagement with <unk> and Atlas and other like firms I think there is potential there.
Stephen Wiley: Yeah, good afternoon.
Stephen Wiley: Thanks for taking the questions, and congrats on the progress.
Is is synergistic and has the potential to really create some value not just for us before the investors and for the company.
The last thing I'll say is that.
Starting companies in the antibody space historically has.
Got to do and one of the reasons is that.
The complexity of doing the discovery of characterizing of doing the development work and ultimately manufacturing a therapeutic antibody presents a very formidable hurdle for a new company.
<unk>, we've done some analysis and you can quickly convince yourself that when you have to rebuild all of that even if it is a good idea good meaning that it would stand up to the same probability of success.
Traditionally been seen in the industry. It may not be a viable investment opportunity. When instead, you take that idea you're connected with infrastructure and capability and expertise that is already in place.
You shorten the timeline can you reduce the capital needs and you make that opportunity now a viable investment so from that perspective it.
It is our hope and it is our belief that this type of deals can actually expand the universe of companies and ideas that people a day and hopefully make it through to be therapeutic.
Stephen Wiley: Maybe just following up on the bi-specific side, maybe just curious if you can speak, whether or not these two known tumor antigens that you've initiated work on, are these geared towards hematological or solid tumors?
Okay, Great. That's helpful and then Carl just on the six molecules in the clinic anything more you can say on those types of studies being run therapeutic areas, where we might see some clinical data any sense on that and then I have one more.
Stephen Wiley: And I guess if the latter, do you feel like valency is also going to be kind of incorporated, into the interrogative process here to try to minimize CRS and maybe improve safety tolerability and just off-target exposure?
Carl Hansen: Thanks, Steve.
Carl Hansen: Carl here.
Carl Hansen: I'm happy to take that.
Hi.
Gary obviously the molecules are in the clinic are under are being driven by our partners and so we would we'd refer you to them to get updates and when do you expect to have the.
The results from various trials.
Many of these are still quite early so I think we're a ways off before they get to the pivotal trial.
Okay.
And then Andrew I appreciate your comments before just on Logan that and when we strategy but.
I mean should we assume it's obviously hard for us to model that going forward as it is for you right now we could look at the average number of doses per day, but assuming also there'll be a pricing benefit.
When they go through the commercial channel is that a reasonable assumption.
Yes, I think.
As you point out Gary It is.
For us to model as well So trust me, we're quite sympathetic to.
To that.
We view it of course as upside and non dilutive funding.
Allow us to continue our investment as we I think I've said quite consistently on the pricing previously the.
The government purchase orders worried about $18800 a dose for the <unk>.
That's the level that we noticed in the recent release.
The new pricing is at $2100 a dose.
For for how doses are going out under this newer commercial arrangement through with Eli Lilly selling directly to states. So.
It's just another data point that we've also seen in the publicly available information.
Okay. That's very helpful. Thank you.
Our next question today comes from John Kim of Piper Sandler.
Go ahead.
Hi, Thanks, I just wanted to go back to Karl's comments on the.
The current biotech market environment.
Laura.
But.
As you look at your partnered programs that are past discovery.
In preclinical studies.
Do you observe any slowdown or pause.
<unk> of the program by the partner, we're seeing small cap biotech looking to cut cost or reduce cost having.
Having too.
Just.
Slow down the development of our preclinical programs just wondering if youre seeing things.
Hi, Carl here with the caveat that of course, we're relatively early in this current market.
I would say that we haven't seen any indication of that whatsoever, and I don't think that I I really anticipate that for a few reasons one is.
By and large we have managed to partner with very high quality firms.
And even in a bear market.
The high quality firms are going to be able to access capital and make sure that they are moving their programs forward.
For the smaller companies.
Biotech the last thing that you compromise is the the one asset that youre moving forward. So people prioritize these.
And thus.
Thus far.
We've seen no indication that's going to be an issue.
Of course, even if that does happen and.
As a general comment if there are smaller companies that are moving forward with assets that are promising but the companies are required for some reason too.
Too slow down operations.
Typical that those would be picked up by larger companies in the space and so in biotech.
Good good high quality asset ultimately find their way to the bigger companies that are well positioned to do late stage trials and the commercial development.
Great that's helpful.
And a question on the.
<unk>.
VC partnerships I know you can't say much about the deal economics, but.
Was getting equity in the startup companies with VC back biotechs ever on the table.
<unk> that you guys look for.
I imagine that.
It could be a potential option for these startups with.
Just.
Low starting capital.
We have done some deals in the past with early stage companies, where we do have an equity position.
We haven't disclosed all of the all the terms associated with these particular deals but I.
I feel safe to say, it's not an equity basically look more like our standard discovery agreement.
And.
That doesn't mean that that we might not be open to that.
In some special cases, but it's not our line of business to be building equity positions were much more focused on building a portfolio of royalty positions and stakes in the actual molecule.
Okay. Thank you.
Thanks for taking my question.
Yeah.
Yeah.
As a reminder, if you did have a question.
Followed by the number one on your telephone keypad.
Our next question comes from Tanya Batina off claim background. Please go ahead.
Carl Hansen: So the first two programs we've initiated are not directed towards hematology.
Hi, good afternoon.
The first question first of all with our key programs.
I know that you've mentioned before.
Those can be lumpy and quite variable from quarter to quarter, but the last two quarters.
Furthermore, anticipate them.
Just wanted to clarify that that's just a timing thing and not warrant any rollover possible concern tactical member program.
And second quarter, and also whether you're anticipating an acceleration.
Program.
We have a war.
Carl Hansen: They are towards solid tumors.
Carl Hansen: We see that as the big challenge and the big prize, and honestly, where the biggest unmet, need is right now.
Carl Hansen: In terms of thinking about valency, we are using the OrthoMAP platform. This is a platform that allows us to use our CD3 panel and binders on the tumor antigens, in a variety of different formats, including one-by-one, looks like an IgG, two-by-one, two-by-two.
Hey, Anthony it's Andrew here.
Good question.
Certainly the reason that we indicate and the reason that I presented in my prepared remarks, the trailing 12 months. It because as you point out this is expected to be somewhat irregular or lumpy.
We have not had any issues related to our capacity in terms of addressing program starts whatsoever. So I think we are seeing great benefit from our increases in new investments on on the capacity and capabilities of the team remember as well on that.
In that same.
All along that same theme every program that we do we tend to take on more and more work as we add capabilities on behalf of our partners and that we also reflect that in our where we see that in the capability and capacity that we're building.
This is not indicative of a slowdown I think I would say for the second quarter.
But.
We do expect the irregularity of this.
And why we will probably continue to stated on a trailing 12 month basis, rather than on the trailing six months, there's certainly a quarter over quarter.
Okay. Thanks, and then if I could just one follow up I wanted to clarify regarding our bite platform have you made those pop on the durable sequential.
Or have you primarily focused on improving at all with your pre partnered.
Graham.
I am Carl here I'll take that one so I think you're referring to our Bispecific T cell and use your platform.
It's related to bikes, but not our bite platform I just wanted to make sure we're clear on that.
So we have yes, we launched it in November .
That was starting from ground zero to date, we have built up the CD three panel.
We have conducted a series.
Comprehensive set of experiments to characterize that panel and believe it is best in world in.
Many dimensions, including diversity.
Cross reactivity functional properties.
What we need to do now is to prove that out against a series of antigens.
But our commercial interest and that people are well recognized as creating value. So we're doing that internally at the same time, we have been engaging in discussions with a variety of groups to start to access that panel I'd say those discussions are going very well and we've seen a great deal of interest in a vacuum and surprise.
But a lot of interest.
But we are we're still working through those and.
Not.
We don't have a timeline for when we might do it.
It might be engaging on having other people access to that platform just yet.
Okay. Thanks.
We have no further questions in the queue Sir.
Nicole Barclays Keith Paul Hudson for closing remarks.
Carl Hansen: So we are investigating that.
Carl Hansen: That said, thus far from the characterization we've done, that a lot of the effects that, you are alluding to can be achieved if you've got the right binder, the right affinity, the right epitope.
Carl Hansen: So we would see 4MAP as one of the ways that you can change the functional properties of, the bi-specific, but it's not the only one.
Carl Hansen: And given the breadth of CD3 and the flexibility of the platform, we've got a lot of options, at our disposal to look at.
Stephen Wiley: OK.
Stephen Wiley: That's helpful.
Great. Thank.
Stephen Wiley: And I'm not sure what you can say regarding this transition of Beptolivumab from government, purchasing to more of a Lilly-led distribution channel, but do we know anything about kind of where they currently are with manufacturing capacity and just whether or not they've indicated or amassed to whether or not they intend to keep manufacturing here in kind of beyond mode?
Thank you everyone for joining us today, it's been an exciting time for <unk> and we look forward to providing further updates on future calls.
Stephen Wiley: Yeah.
Andrew Booth: Hey, Steve.
Andrew Booth: It's Andrew here.
Andrew Booth: So we don't have a lot of extra details about this.
Andrew Booth: This is probably much better a question for Lilly.
Andrew Booth: What we can point people towards, and I mentioned it in my prepared remarks, is the HHS data, that we see, which gets updated on a weekly basis over the last number of weeks quite consistently has been averaging doses administered to about 4,000 doses per day.
Andrew Booth: So we would imagine that that would continue, but that's the public data that we have to, work from.
Andrew Booth: So I think from a manufacturing standpoint, we don't have any insight, but I would point, to the fact that due to Beptolivumab's potency, it's quite a low dose that is required. So the manufacturing effort is not too onerous with I think it's still 175 milligrams per, dose.
Andrew Booth: So hopefully that would mean that the manufacturing capacity that they have would stretch a long, way in terms of benefiting a lot of patients.
Stephen Wiley: Thank you for taking the questions.
Operator: Our next question comes from Gary Nachman of BMO Capital Markets.
This concludes today's call. Thank you for joining us.
Gary Nachman: Your line is open.
Gary Nachman: Great.
Gary Nachman: Thanks.
You may now disconnect your line.
Gary Nachman: Good afternoon.
Gary Nachman: So the six new programs under contract with two new partners, Atlas and one undisclosed, and then also the Burson deal.
Gary Nachman: Just talk about the economics with those new partnerships, if these are higher-value arrangements.
[music].
Gary Nachman: I'm assuming they are, and how you set them up.
Gary Nachman: And I'm curious if there are a lot more VC deals out there to come.
Gary Nachman: How big is that universe for you?
Andrew Booth: Yeah.
Andrew Booth: Hey, Gary.
Andrew Booth: Good to hear from you.
Andrew Booth: So, yeah, the six programs under contract, well, with Atlas and then undisclosed partner, as you point out, with Burson, another eight programs that was in the press release and as well in the prepared remarks.
Andrew Booth: I think that we don't disclose, of course, the economic terms of any of our partnerships.
Andrew Booth: So I think the last time, and what we will do, I think, consistently on an annualized, basis is kind of in aggregate show what the terms are from the previous year, and we did that most recently in our 10K.
Andrew Booth: We do see we're adding quite a bit of value and we're being quite judicious about the, programs we are bringing out under contract, and I think thus far in 2022, we're behaving quite consistent to our previous strategy of how we've articulated that.
Okay.
Andrew Booth: I do think that there is a good market to go to where our offering will be quite attractive, to these venture capital funds, and I think Karl may have a few more words to say about how attractive and the prospects we see there.
Andrew Booth: Yeah.
Okay.
Andrew Booth: Hi.
Carl Hansen: Hi, Derek.
Carl Hansen: Karl here.
Carl Hansen: First, maybe just a comment on sort of the big picture.
Carl Hansen: If you look over the last decade or perhaps a bit more, one of the things that has become, very apparent is that the large majority of new programs or new therapeutics are actually originating in biotech. So biotech is a rich source of innovation.
Carl Hansen: One of the reasons is that it is distributed, there's lots of ideas, lots of things that, are being attempted.
Carl Hansen: The other side of that is that our research shows that if you look at the total number, of therapeutic antibodies starts in the industry in any given year, roughly 50% of that comes from relatively small biotech companies.
Carl Hansen: So that's a big part of the market.
Carl Hansen: Of course, it's important that you're able to find the best programs and also assemble, the teams around it.
Carl Hansen: And that's why this engagement with Versant and Atlas and other like firms, I think there's, potential there, is synergistic and has the potential to really create some value, not just for us, but for the investors and for the companies.
Carl Hansen: The last thing I'll say is that starting companies in the antibody space historically has been, difficult to do. And one of the reasons is that the complexity of doing the discovery, of characterizing, Shatring, a therapeutic antibody, presents a very formidable hurdle for a new company.
Carl Hansen: Internally, we've done some analysis, and you can quickly convince yourself that when, you have to rebuild all of that, even if it is a good idea, good meaning that it would stand up to the same probabilities of success that have traditionally been seen in the industry, it may not be a viable investment opportunity. When instead, you take that idea and you connect it with infrastructure and capability, and expertise that is already in place, you shorten the timeline, you reduce the capital needs, and you make that opportunity now a viable investment.
Carl Hansen: So from that perspective, it is our hope and it is our belief that this type of deal can, actually expand the universe of companies and ideas that see the light of day and hopefully make it through to be therapeutics.
Gary Nachman: Okay, great.
Gary Nachman: That was helpful.
Carl Hansen: And then, Carl, just on the six molecules in the clinic, anything more you can say on, those, the types of studies being run, therapeutic areas, where we might see some clinical data?
Carl Hansen: Any sense on that?
Carl Hansen: And then I have one more.
Gary Nachman: No, Gary.
Carl Hansen: Obviously, you know, the molecules that are in the clinic are being driven by our partners.
Carl Hansen: And so, we would refer you to them to get updates and when you expect to have, you know, the results from various trials.
Carl Hansen: Many of these are still quite early, so I think we're a ways off before they get to, the pivotal trial.
Gary Nachman: Okay.
Gary Nachman: And then, Andrew, I appreciate your comments before, just on Bethel-Logan Lab and LILI, strategy.
Gary Nachman: I mean, should we assume, you know, it's obviously hard for us to model this going, forward as it is for you right now.
Gary Nachman: We could look at the average number of doses per day, but assuming also there'll be a pricing, benefit when they go through the commercial channel, is that a reasonable assumption?
Gary Nachman: Yeah.
Andrew Booth: I think, as you point out, Gary, it's tough for us to model as well.
Andrew Booth: So, trust me, we're quite sympathetic to that.
Gary Nachman: We view it, of course, as upside and non-dilutive funding to, you know, allow us to continue, our investment as we, I think, have said quite consistently.
Andrew Booth: On the pricing, previously the government purchase orders were at about $1,800 a dose, for Bethel-Logan Lab.
Andrew Booth: We noticed in the recent release that the new pricing is at $2,100 a dose for how doses, are going out, you know, under this new commercial arrangement through with D-Li-Li selling directly to states.
Andrew Booth: So, that's just another data point that we've also seen in the publicly available information.
Gary Nachman: Okay.
Gary Nachman: That's very helpful.
Operator: Thank you.
Doe Kim: Our next question today comes from Doe Kim of Piper Sandler.
Doe Kim: Please go ahead.
Doe Kim: Hi.
Doe Kim: I just want to go back to Carl's comments on the current biotech market environment.
Doe Kim: But as you look at your partner programs that are past discovery and in preclinical studies, have you observed any slowdown or pause in development of these programs by the partner?
Doe Kim: slow down the development of preclinical programs.
Doe Kim: I'm just wondering if you're seeing the same.
Carl Hansen: Hi, Joe.
Carl Hansen: Carl here.
Carl Hansen: You know, with the caveat that, of course, we're relatively early, you know, in this current market, I'd say that we haven't seen any indication of that whatsoever.
Carl Hansen: And I don't think that I really anticipate that, you know, for a few reasons. One is, you know, by and large, we have managed to partner with very high-quality firms.
Carl Hansen: And even in a bear market, the high-quality firms are going to be able to access capital and make sure that they are moving their programs forward.
Carl Hansen: You know, for the smaller companies, you know, biotech, the last thing that you compromise is the, you know, the one asset that you're moving forward.
Carl Hansen: So, people prioritize these.
Carl Hansen: And, you know, thus far, we've seen no indication that's going to be, an issue.
Carl Hansen: Of course, even if that does happen, and, you know, as a general comment, you know, if there are smaller companies that are moving forward with assets that are promising, but the companies are, you know, required for some reason, you know, to slow down operations, it's typical that those would be picked up by larger companies in the space.
Carl Hansen: And so, in biotech, you know, good high-quality assets ultimately find their way to the bigger companies that are well-positioned to do the late-stage trials and the commercial development.
Doe Kim: Great.
Doe Kim: That's helpful.
Doe Kim: And a question on the VC partnerships.
Doe Kim: I know you can't say much about the, deal economics, but was getting equity in these startup companies, these VC-backed biotechs ever on the table?
Doe Kim: Is this something that you guys look for?
Doe Kim: I imagine that it could be a potential option for these startups with just, you know, low starting capital.
Carl Hansen: You know, we have done some deals in the past with early-stage companies where we do have an, equity position.
Carl Hansen: You know, we haven't disclosed all of the terms associated with these particular deals, but, you know, I feel safe to say it's not an equity-based deal.
Carl Hansen: It's more like our standard discovery agreement.
Carl Hansen: And, you know, that doesn't mean that we might not be open to that in some special cases, but it's not our line of business to be building equity positions.
Carl Hansen: We're much more focused on building a portfolio of royalty positions and stakes in the actual, market.
Doe Kim: Okay.
Doe Kim: Thank you.
Operator: Thanks for taking my question.
Operator: As a reminder, if you did have a question today, it's star followed by the number one on your telephone keypad.
Antonia Borovina: Our next question comes from Antonia Borovina of Bloomburton.
Antonia Borovina: Please go ahead.
Antonia Borovina: Hi.
Antonia Borovina: Good afternoon.
Antonia Borovina: My first question is just related to your program starts.
Antonia Borovina: And, I know that you mentioned before that those can be lumpy and quite variable from quarter to quarter, but the last two quarters they have been a bit lighter than we were anticipating.
Antonia Borovina: So, I just want to clarify that that's just a timing thing and that there weren't any delays or capacity constraints that impacted the number of programs you could start in the second quarter and also whether you're anticipating an acceleration in program starts in the second half of the year.
Andrew Booth: Hey, Antonio.
Andrew Booth: It's Andrew here.
Andrew Booth: Good question.
Andrew Booth: Certainly, the reason that we indicate and, the reason I presented in my prepared remarks the trailing 12 months is because as you point out, this is expected to be somewhat irregular or lumpy.
Andrew Booth: We have not had any issues related to our capacity in terms of addressing program starts whatsoever.
Andrew Booth: So I think we are seeing great benefit from our increases in investments on the capacity and capabilities of the team.
Andrew Booth: Remember as well, along that same theme, every program that we do, we tend to take on more, and more work as we add capabilities on behalf of our partners.
Andrew Booth: We see that in the capability and capacity that we are building.
Andrew Booth: This is not indicative of a slowdown, I think I would say, for the second quarter, but we do expect the irregularity of this and why we will probably continue to state it on a trailing 12-month basis rather than on a trailing six months or certainly a quarter over quarter.
Antonia Borovina: Okay, thanks.
Antonia Borovina: And then if I could just one follow-up, I wanted to clarify regarding your BITE platform.
Antonia Borovina: Have you made this platform available to potential partners yet or have you primarily focused on proving it out with your pre-partnered program?
Carl Hansen: Hi, Carl here, I'll take that one.
Carl Hansen: So I think you're referring to our BITE-specific T-cell, engager platform, which is related to BITE, but it's not a BITE platform.
Carl Hansen: I just wanted to make sure we're clear on that.
Carl Hansen: So we launched this in November. That was starting from ground zero.
Carl Hansen: To date, we have built up the CD3 panel. We have conducted a series, I'd say a comprehensive set, of experiments to characterize that panel and believe it is best in world in many dimensions, including diversity and cross-reactivity, functional properties.
Carl Hansen: What we need to do now is to prove that out against a series of antigens that are of commercial interest and that people will recognize as creating value.
Carl Hansen: So we're doing that internally.
Carl Hansen: At the same time, we have been engaging in business development discussions with a variety of groups to start to access that panel.
Carl Hansen: I'd say those discussions are going very well and we've seen a great deal of interest.
Carl Hansen: I've actually, been surprised by the level of interest, but we're still working through those and it's not a – we don't have a timeline for when we might be engaging on having other people access that platform just yet.
Antonia Borovina: Okay, thanks.
Operator: We have no further questions in the queue,
Carl Hansen: so I'll hand the call back over to Carl Hansen for closing remarks.
Carl Hansen: Great.
Carl Hansen: Thank you, everyone, for joining us today.
Carl Hansen: It's been an exciting time for, Accelera, and we look forward to providing further updates on future calls.
Operator: This concludes today's call.
Operator: Thank you for joining us.
Operator: You may now disconnect your line.