Abcellera Biologics Inc

NASDAQ:ABCL

Earnings Call Transcript 2021-Q3

[Operator]

Good day, and thank you for standing by. Welcome to the AbCellera Q3 2021 Earnings Results and Business Update Conference Call. [Operator Instructions].

And now I would like to hand the conference over to your first speaker today Tryn Stimart, Chief Legal Officer. Thank you. Please go ahead.

[Tryn Stimart]

Thank you. Good afternoon, everyone, and welcome to AbCellera's Third Quarter 2021 Business Update. We are pleased to have you with us today where we will discuss the results announced in our press release issued after the market closed today which you can find on our Investor Relations website. With me on the call are Dr. Carl Hansen, AbCellera's Chief Executive Officer and President; and Andrew Booth, AbCellera's Chief Financial Officer. The webcast portion of this call contains a slide presentation that we will refer to during the call. Those of you following along on the phone who wish to access the slide portion of this presentation may do so on the Investor Relations section of our website.

For those who have accessed the streaming portion of the webcast, please be aware that there may be a delay and that you will not be able to post questions via the web. This presentation may contain forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Any forward-looking statements are based on management's current expectations and are subject to certain risks and uncertainties. Please review our SEC filings for risk factors that could impact our future performance. Our presentation and SEC filings are available on our Investor Relations website. Note that all dollars referred to on our call today are U.S. dollars. Now I am pleased to turn the call over to Carl Hansen.

[Carl Hansen, President, CEO & Director]

Thank you, Tryn, and thank you, everyone, for joining us today. It's my pleasure to provide an update for the third quarter of 2021. We continue to focus on our long-term business objectives, and we've made strong progress executing across the organization. We closed the quarter with nearly $800 million in liquidity, including over $750 million in cash, cash equivalents and marketable securities and over $40 million in accounts and accrued receivables.

In addition to our strong financial position, we posted strong growth across key business metrics, including 17 new programs under contract, bringing our total number of programs to 155, 9 new program starts bringing our total number of starts to 69 and 1 new molecule that has entered the clinic, bringing our total number of molecules in the clinic to 5.

First, to frame the results from this quarter, it is important to stress our strategy and how we believe this will drive long-term value for patients, for our partners and for our shareholders. There are no shortcuts in building a truly great company. We are focused on building something of substance, something that will endure and something that hasn't existed before.

We are building a vertically integrated technology staff that covers all steps in preclinical antibody discovery and development. What makes us different is that we are replacing the legacy approaches that have their roots in the 1980s with an interlocking chain of modern technologies, including microfluidics, genomics, single cell analysis, protein engineering, computational methods and artificial intelligence. These technologies are held together by software engineering and hyperscale data science that provides and that we believe we'll continue to provide increasing gains in efficiency and scalability across our workflow. Along with our investments in infrastructure and high-performance workforces, we believe our technology allows us to respond to any discovery challenge across the industry and to deliver candidates more quickly and with higher probability of success.

We believe that we have already established best-in-world capabilities across this critical part of the drug development workflow. And we continue to expand our technology. Now forward integrating with investments in translational science, CMC and GMP manufacturing. We expect these capabilities to be in place in the first half of 2024. This will allow us to go from a drug target to delivering the DNA sequence of lead antibody, the data needed to support an investigational new drug application filing and the drug substance that supports clinical testing in Phase I and Phase II. By putting all these capabilities together, we believe we can help our partners bring drugs to patients faster and with greater probability of success.

In the long run, our bold vision is to be recognized as the industry's premier drug discovery engine to have built the platform with capacity to deliver lead antibodies for over 100-plus discovery programs per year and to be supporting dozens of these through IND filing each year. All of this done in half the time that it currently takes.

Building on our technology foundation, our business generates multiple sources of value for shareholders. These include upfront payments for tech assets, research payments for executing on programs, licensing fees and milestones and royalties associated with clinical and commercial success of the molecule that we discovered.

This year, we have expanded our deal structures to add new ways to capture value, including taking equity stakes and building the option to invest and deepen our participation in molecules that have come from our platform. Through this business model, we are building a large and diversified portfolio of stakes in the next generation of antibody-based therapies.

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

Today, we have built a portfolio of 155 programs under contract and 131 of these have downstream participation. We're working on indications that span oncology, pain, neurodegeneration infectious disease, autoimmune disease, allergic inflammation, ophthalmology, women's health and cardiovascular disease. Through our programs, we deliver antibodies to be developed for the full range of therapeutic modalities. This includes IgGs, IgMs and IgAs, bispecific antibodies, single-chain antibodies, CAR T cell therapies, radioisotope conjugates and CNS delivered antibodies.

Finally, the power of our platform has attracted partnerships across the spectrum of drug development companies. This includes the most enabled companies like Lilly, Gilead and Regeneron fast-moving biotech such as EQRx, Kanai and IgM and also innovative emerging biotechs, such as ImpuriCo, Angios and Cation.

We continue to see strong and accelerated demand across our partnership business. In the third quarter, we added another 17 new programs under contract. Over the first 9 months of the year, we have now added 52 programs under contract as compared to 34 that were added over the same period in 2020. -- While the number of programs under contract will vary from quarter-to-quarter, we have now built up a robust book of work that we expect will translate into a steadily growing rhythm of annual program starts, which is when the work on each program actually begins. We will increasingly be focusing on program starts as a primary metric in building our portfolio and also as a reflection of our growing capacity to execute. In the third quarter, we started 9 programs, bringing our total program starts to -- This quarter, we also added 2 new multi-target partnerships that bring important and unique dimensions to our growing portfolio of programs, including opening up new geographic markets and pioneering new therapeutic modalities. Our most recent partnership, which is what Everest Medicines, represent our first engagement with a company focused on developing drugs in Asia. Everest is a late-stage clinical development company whose leadership has a proven track record in the rapid development and commercialization of innovative therapeutics.

This partnership is already off to a great start and has the potential to bring multiple molecules into the clinic with accelerated time lines. We look forward to working with them on 10 targets across multiple indications, starting first with oncology. We are also excited about a new collaboration with Moderna to advance their portfolio of RNA-based medicines. This partnership will address 6 different targets. Over the past year, the massive impact of RNA vaccine has solidified RNA as an important and proven modality. Outside of vaccines, there are many other opportunities for RNA-based medicines, including antibodies.

Through our collaboration with Moderna, we are pairing a seller's discovery engine with Moderna's industry-leading platform to pioneer a new way of delivering antibodies. We use our platform to find antibodies and provide modern with a data package that includes the DNA sequence that encodes these antibodies. Moderna will then use the technology, deliver these themes to the patient in the form of an RNA module so the patient's own body can make the ad body and combat the disease. This bypasses the conventional manufacturing process that is used mix standard antibiotics.

In addition, in the potential to significantly accelerate the path towards clinical development, RNA delivery also provides opportunities to use antibodies in ways that would be difficult or impractical with conventional manufacturing methods. This is yet another example of what seller can work through partnerships to unlock innovation and accelerate the development of new types of antibody-based medicines. It also highlights the importance of continued investment in our platform to open up new opportunities in drug development. An opportunity of particularly high value is the space of GPCR and ion channel proteins. These targets play key roles in cellular function and include many well-validated targets for a broad range of indications, cancer, inflammation, pain, obesity, fibrosis and more. While these drug targets are widely regarded as a large and untapped opportunity for therapeutic antibodies, they have proven largely intractable using existing technologies. For context, more than 50% of approved small molecule drugs are against GPCRs and ion channels. In many instances, small molecule development has been hampered by poor specificity and off-target toxicity. Something antibodies are ideally suited to remedy. Despite this recognized opportunity and despite intense work across the industry, there are only 2 approved antibodies against GPCR. And to date, no antibodies against I have even made it into clinical development. There are many challenges in tackling these targets, and we have an overarching technology development program to systematically address each of them. One of the most important is that many of these targets are extremely difficult to produce, which is the first step in discovery.

In September, we acquired TetraGenetics, a Boston-based company that solves the production challenge and is able to provide the critical reagents that is sufficient quantities of highly pure GPCR and ion channel proteins. These proteins are used at every step of the discovery workflow to immunize, screen, characterize and engineer therapeutic antibodies. We are integrating Petrogenetics into our tech staff to provide an optimized source of proteins for our antibody discovery efforts and to solve a key challenge in pursuing these highly sought after but difficult to access drug targets.

On that note, I'd like to extend a warm welcome to Paul [indiscernible] and the rest of the talented team at Kemper Genetics. Another example of an inorganic technology acquisition that we have made and which is now unlocking new opportunities and creating value is our acquisition of the Ortho map bispecific platform last year. Bispecific antibodies are the fastest-growing subset of antibodies in development. They represent a major growth driver within the $140 billion antibody therapeutics market. Despite early success, -- There are numerous technical challenges for successful development of bispecifics. These include challenges in discovery, challenges in selection of appropriate binding pairs and challenges in protein engineering and manufacturing. Ortho map is a clinically validated platform which addresses the protein engineering and manufacturing challenges that have hampered the development of bispecifics. This platform uses advanced computational and experimental protein engineering methods to create IgG-like bispecific antibodies from any 2 starting antibody sequences.

The resulting bispecifics are made using standard production and purification techniques. OrthoMab also supports a variety of multi-specific formats that can be tailored to the target biology and to the desired mechanism of action. By integrating OrthoMab into our existing technology stack, we can provide our partners with a rapid and complete solution for generating tailored, stable and developable bispecific antibodies. Due to the flexibility and differentiation of the OrthoMab, OrthoMab platform, we're seeing inbound interest from many partners. To date, over a dozen programs under contract now include the use or the option to use our bispecific technology. and we are regularly starting discovery on bispecific antibody programs.

We view OrthoMab as an important focus for our business development and 1 that is also being supported by high-value R&D to expand our platform. For example, -- We see a large and growing market opportunity in the use of bispecifics for T-cell redirection in oncology, specifically through CD3 receptor engagement on T cells, finding anti-CD3 antibodies with great properties, including appropriate affinity and epitope recognition is critical to the success of this plaza therapeutics and depends upon antibody in use and the targets that are being addressed. CD3 is an into difficult target. As a result, there are limited options available for companies company entering this space. In response to this need, this quarter, we initiated an internal effort to generate a proprietary panel of fully human CD3 antibodies.

We plan to make these available alongside our OrthoMab platform. By adding new AbCellera owned CD3 antibodies it and pairing that with our discovery capabilities and hydro foot assays for functional assessment. We aim to provide a complete and high-value solution for drug developers wanting to develop the next generation of 5 T cell engagers. We anticipate having results to share with you on this project next year. In addition to solving the hardest problems, our business model also addresses another critical impediment that impacts the entire industry. Today, many drug developers are not able to access the technology, the expertise, the facilities or the people that they need to quickly advance their therapeutic programs.

By bringing our solutions to market in a partnership model, we are working to close that gap. This is particularly powerful when launching new companies where access to our platform can dramatically accelerate discovery by removing the need to build internal capabilities. In these cases, our full SaaS solution provides even more value. And as a result, we have had the opportunity to evolve our deal structures beyond royalties and milestones to capture that value. This now includes equity and equity-like participation and options to invest in molecules that we discover. Our collaboration with Invetx is 1 of the first examples about taking an equity position in a collaboration partner. Invetx is developing biotherapeutics for Animal Health and as 1 of the founding partners, we have been their discovery engine since inception. We initiated the first program in 2019, and this quarter, Invetx advanced the first molecule from this collaboration, IVX01 into the clinic. IBX-01 is a canine specific antibody treatment for an undisclosed chronic indication in dogs. This is the first program as part of a broad collaboration that includes multiple programs over multiple years. The use of biologics for the improvement of health and longevity of companion animals represent a new and growing subset of biologics.

We look forward to continuing to launch programs with our partner, Invetx. Summing up, this quarter, we have continued to make excellent progress across our core business. We remain focused on our 3 top priorities, which included first building and executing on our partnership business to expand our diversified portfolio of royalty streams. Next, forward integration of the platform and scaling of our teams and facilities to support all antibody discovery activities up to an IND submission. And finally, investing in data science to further our technological differentiation and to increase the speed and the scalability of our tech stack. And with that, I'll hand over to Andrew Booth, our CFO, to provide an overview of our third quarter 2021 financials. Andrew?

[Andrew Booth, CFO]

Thanks, Carl. I'll start by highlighting our key business metrics. We ended the third quarter of 2021 with 155 programs under contract with 35 unique partners. That's a 65% increase in programs under contract as compared to the end of Q3 and 2020. We continue to see the combined positive impact of our investments in our business development team and the increasing awareness of our platform on our business development activities. In the quarter, we added Moderna and Everest to our partnership portfolio. The programs with both of these partners include downstream participation in the form of milestones and royalties on net sales. Also in the quarter, we started 9 new programs to take us to a cumulative number of 69 program starts, of which were started in the first 9 months of 2021.

We continue to build capacity and to engage with many partners on preparations for their program starts. We also continue to expect a robust number of program starts as part of this generally increasing trend. While starts will always be some irregular as you expect the increase in programs under contract is a leading indicator of the long-term trajectory expected for program starts.

Last quarter, we introduced a new business metric molecules in the click, which represent the number of unique molecules for which IND or equivalent application has been approved based on an antibody that was discovered by us or by a partner using less and step cellular technology. We are pleased to report progress on this metric as we view as an indication of our near and midterm potential revenue from downstream milestone fees and royalty payments in the longer term.

In Q3, one new molecule reached the clinic pay us to a total of 5. Carl has already noted that this molecule, IVX-01, is the result of our first program in a collaboration with Index. We congratulate team for reaching this important milestone and look forward to progress on this and other program in the future. As an update on our first molecule to reach clinic, as noted in our previous earnings call, U.S. shipments of bamlanivimab with Lilly's etesevimab were paused in June because at the time, beta and gamma variants were resistant to this combination, that were resistant to this combination were present in the United States.

On September 2, U.S. shipments of bamlanivimab together with etesevimab resumed. Since then, the U.S. government has distributed over 400,000 doses of bamlanivimab with etesevimab, which is on average over 50,000 doses per week. These shipments to the U.S. states were made from existing federal government supplies. In the U.S., the U.S. government has also recently ordered an additional over 600,000 doses of bamlanivimab with etesevimab from Lilly, at least 400,000 of which are expected to be delivered in Q4 and with the balance in January of 2022.

Additionally, in September, the European Commission entered into a framework agreement with Lilly under which European countries may purchase up to 220,000 doses of bamlanivimab in combination with etesevimab.

The momentum we have so far achieved with a number of partners, number of programs under contract, program starts and molecules in the clinic at the end of Q3 has far outperformed our expectations from 1 year ago for the entire year of 2021. These will be key drivers of growth in the business and of shareholder value over the longer term. Looking at revenue. Revenue in the quarter was $5.5 million. We earned our revenue predominantly from research fees, which accounted for $5.1 million. This is an increase from the same quarter last year and reflects activity with a diverse set of partners across a range of programs. As program starts increase, we would expect this trend of revenue from research fees over an increasingly diversified set of customers to continue to grow.

As expected, we are reporting limited royalty revenues in this quarter, up about $200,000 from the shipments of etesevimab, which had been paused in the United States in June. When use of bamlanivimab with etesevimab resumed, the U.S. government was in to draw on their existing supply bamlanivimab. This did not trigger new orders of bamlanivimab to Lilly or royalties to us in the quarter. The recent U.S. government order, which I discussed earlier, is in line with our belief that as COVID-19 becomes endemic there is a potential for revenue from COVID-19 products, which we view as an upside and not integral to our long-term bid strategy. Milestone revenue naturally occurs irregularly, and no revenue-linked milestone events occurred in Q3 of 2021.

The milestone revenue in Q3 of 2020 was related to milestones achieved by bamlanivimab last year. Finally, we earned approximately $200,000 in the quarter in license fees from our Treaty platform.

Turning to operating expenses. Our research and development spend for the quarter was $18 million, a $10 million increase over the previous year. This reflects our ongoing investments into R&D, which will continue to grow as we keep expanding our R&D team's capabilities and capacity. This allows us to deliver our partner programs with 9 starts achieved in this quarter as well as to enhance our technology stack organically. In sales and marketing, expenses for the quarter were just over $1 million, doubling from the same quarter in 2020. This reflects the ongoing growth of our business development team, capabilities, reach and capacity to connect with the strong demand that we continue to see both inbound and outbound. General and administration expenses for the quarter were roughly $11 million compared to $3 million in the second quarter of 2020. $3 million of this increase were related to higher noncash stock-based compensation expenses bringing us in line with publicly listed companies. The increase is otherwise driven by the need to support a much larger business and the associated legal and corporate development requirements of being a publicly listed company as well as the ongoing investments to protect our intellectual property.

For the third quarter, we are reporting a net loss of roughly $21 million compared to an approximately $3 million loss in the third quarter of 2020. In terms of earnings per share, this work fell to a loss of $0.08 per share on both a basic and diluted basis. This result reflects our ongoing investment to expand and enhance our discovery platform and to grow our diversified portfolio of long-term stakes in the next generation of antibody drugs while running discovery efforts for our partners. Looking at the first 9 months of the year, we've generated revenues of $236 million and net income of over $93 million. That equates to an earnings per share of $0.34 on a basic and $0.29 on a diluted basis year-to-date.

Looking at cash flows. Operating activities for the first 9 months of 2021 contributed over $261 million, which includes the collection of the previous accounts receivable balance from December 2020 and strong royalties earned from bamlanivimab in the first half of the year. On the investing activity side, the first 9 months of the year show a $49 million investment in property, plant and equipment, including the land purchase of our future GMP facility in Vancouver. The remainder was predominantly related to our TETRA Genetics acquisition and to construction financing of our facilities, which has been partially offset by funding received from the Government of Canada's Strategic Innovation Fund.

As part of our treasury strategy, we invested approximately $240 million in short-term marketable securities during the quarter. We finished the quarter with almost $800 million in short-term liquidity, including $754 million of cash, cash equivalents and marketable securities and about $44 million in accounts receivable and accrued accounts receivable. Given the recently announced purchase agreements for COVID antibodies from Lilly and the associated royalty due to AbCellera, we see the potential for our liquidity position to further improve in the near term.

In summary, we continue to be in a very strong liquidity position that allows us to execute on our strategy and continue to build capacity to expand the platform and to pursue business and corporate development initiatives. We believe that we have sufficient liquidity for well beyond the next 2 years.

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

[Operator]

[Operator Instructions]. Your first question is from Gal Munda with Berenberg Capital.

[Gal Munda, Berenberg Capital]

The first one, I just like to ask around the program starts and the new packs in the quarter, obviously, a very, very strong performance. Is there any sort of common element to those either parts and program starts that you're seeing between different types of customers, maybe split between the larger pharma customers or partners, sorry, or more biotech? How did you see the digital trends in that?

[Carl Hansen, President, CEO & Director]

Sure, Gal. This is Carl. I'm happy to take that one. Thanks for the question. So first, with respect to additional pucks in the quarter, those were largely attributable to the 2 partnerships that we mentioned, both being multiyear multi-target deals with Everest and with Moderna. In terms of program starts, 1 of the things that we're very pleased with is the increasing diversity of different partners that are represented in program starts. And so that is a good mix of early stage of large companies and of the sort of mid-cap or mid- to small cap biotech companies. I'll just add that from a business development perspective, we are seeing a lot of inbound from a mix of customers. As I mentioned, the bispecific capabilities are definitely driving some of that. And in terms of performance, we have now added 55 new programs under contract in the first quarter. pardon me, we've added 52 programs under contract in the first 3 months, part 9 months, let me try that 1 more time. We have added 52 programs under contract in the last 9 months. that is exceedingly, but that is very strong and has exceeded our expectations for the year. And so we're feeling great about the business development. And really, as we mentioned, are now turning our attention towards room execution.

[Gal Munda, Berenberg Capital]

Perfect. And then just as a follow-up. When I think about the new molecule in the clinic that you reported from embedded. In terms of -- that was based on your relationship back from a couple of years ago, right? So is that how you see most of these relationships are playing out starting the program and then a couple of years in starting to kind of to the -- in terms of the timing, that seems to be pretty short time line, but just any comments on that and whether that's something that could continue more of as we exit this year?

[Carl Hansen, President, CEO & Director]

That's a great question. So this is the first program to come out of the Inditex collaboration. As we mentioned, it comes from a program that was initiated in 2019. So we are very pleased with the speed of that work, particularly given that at the time of initiating Invetx was still just a company that was in the early stages of being formed. As a general trend, we believe that our investments in technology and also the partners that we are now making collaborations with and the types of programs that we're working on have the potential to result in increasingly fast time lines from initiation to programs in the clinic. Of course, it's going to take some time to bear that out. But it is a trend that we are certainly keeping our eye on and 1 that we think is reinforcing our business thesis, which is that investments in technology and capacity and partnerships can help shorten that time from ideas to clinical testing.

[Operator]

Your next question is from the line of Stephen Willey with Stifel.

[Stephen Willey, Stifel, Nicolaus & Company]

Was just wondering if you can maybe expand upon the CD3 work that you're doing? It sounds like you're developing your own in-house panel of novel CD3 targeting antibodies. I know that there's a lot of interest in the drug development space around trying to find some attenuated CD3 binders that maybe aren't as aggressive on the CRS side as some of the current piece of redirecting bispecifics right now. And so Would just be interested in terms of how you're functionally characterizing these in-house? And when do you think these might be ready to pair up with the OrthoMab platform?

[Carl Hansen, President, CEO & Director]

Thanks, Steve. Carl here. So first, I think a lot of your comments certainly resonate. As I mentioned, we see a lot of interest from companies big and small, that are looking to get into this space with bispecific antibodies that can redirect T cells. It's 1 of the areas, I think, that is showing terrific promise, but also 1 of the areas where the technological hurdles are much higher than in other cases. So that's an opportunity for us. We are an enabler through technology. The Ortho map platform solves a big chunk of that by being -- by allowing you to pair antibodies and produce molecules that can be expressed well and are developable in a standard manufacturing process.

With the T-cell redirection, as you mentioned, there's now good evidence that the success of molecules depends very much not only on the properties of the CD3 engager but also on how that particular CD3 engager has been paired with the binding partner, which, of course, depends on the target. And so there is a requirement of generating a large panel of CD3. So do you have the starting substrate to test those combinations, something that we have initiated. It's not yet done, but we feel confident in our capabilities to deliver on that. And in parallel, we are building internal capabilities to express those advice-specifics and do the functional characterization so that we will have a full workflow that can start really just at the name of the target and can move that through to generating binders for the target panel CD3s and functional data that can help to assess which of those pairs and with CD3 molecule is best suited for that application. So that's the goal. There's a lot of work to do there. We've indicated that we hope to share progress on that in the new year. And I'll just emphasize that we do see this as an area where AbCellera is extremely well positioned to help companies more effectively bring therapies to patients and one where we are devoting significant resources to make sure that we do that as quickly as possible.

[Stephen Willey, Stifel, Nicolaus & Company]

Okay. Interesting. And then just on the Moderna collaboration. I know maybe it seems a little bit nontraditional relative to some of your other partnerships whereby there's a deliverable that you're providing, but Moderna still has to do a little bit of reverse engineering to turn it into a therapeutic. So can you maybe comment as to whether or not the economics of the per program Moderna collaboration are consistent with, I guess, the base case economics that you're extracting across all these different partnerships?

[Carl Hansen, President, CEO & Director]

Yes. Great question, Steve. So first, on the Moderna collaboration in general, Moderna obviously is a company with tremendous resources right now and also world-class capabilities RNA therapeutics. There is an opportunity to use RNA to deliver antibodies. And we are very pleased that they have selected us to be their discovery engine, recognizing that to attempt to build that internally would cause undue delays and ultimately result in working with technologies that are not where they need to be to prosecute those programs. In terms of the business terms, or maybe I'll back up a second. You mentioned that they still have work to do. At this point, when we hand off candidates. Right now, it Is always -- or it is currently in our partner's hands to do the manufacturing towards the final therapeutic. Now most often, that is done through the traditional path, which is to generate a cell line and then to bring that through the regular GMP manufacturing process. In this case, the manufacturing instead is just the manufacture of the RNA and then the RNA is delivered to the patient. So conceptually, while the path is different, conceptually, I don't think it's distinct from our more difficult collaborations. And directly to the business terms, obviously, we're not disclosing details, but the terms are in line with our recent partnerships. And I'd say as a general trend over the last couple of years, we are seeing our deal value go up in recognition of the platform and increasing demand that we're seeing from partners.

[Operator]

And your next question is from the line of Puneet Souda with SVB Leerink.

[Puneet Souda, SVB Leerink]

So first on COVID and quick -- two quick ones, if I could, on the products and the pipeline and partnerships. So on the 400,000 doses, that's really great to see in the fourth quarter for you and the rest in 2022. But as you saw, there was a strong data from Pfizer on antivirals and prior to that with Mark. With that in mind, what's your expectation for bamlanivimab in 2022 I mean, obviously, there's been a lot of discussion around this among the investors. So I just wanted to get your thoughts as to what -- how you're thinking about this. And I also wanted to just confirm that you're fully expecting the U.S. orders, the current -- at least the fourth quarter and the first quarter wants to come through.

[Carl Hansen, President, CEO & Director]

Thanks, Puneet. Let me start by reiterating something that I think we've been consistent on through all the calls. We got involved with COVID-19 because we found ourselves with a technology that was needed and going to respond quickly. We are very proud of the work that we've done with our partner, Eli Lilly, in bringing now 2 molecules into the clinic and 1 faminemumab and bamlanivimab with etesevimab that have had a major impact in helping patients with COVID-19 over the past 12-plus months. In the near term, we have -- or in recent times, we have seen bamlanivimab and etesevimab shipping out in the U.S. And with the recent order, we are -- given the recent order, we would expect that, that would result in additional revenues, as we mentioned, in Q4 and Q1 of next year.

Those revenues, we view as upside and as nondilutive financing that help us to reinvest in our core business which is taking a much broader view of antibody therapeutics, investing for the long run to be able to help move ideas into molecules if we test in the clinic. -- for hundreds of different programs over the coming years. So that's where our focus is. Now in terms of the recent results on small molecules, both from Merck and Pfizer, I think both are impressive. The Pfizer result, if it stands, I think is very impressive and good news for the world. And certainly, 1 would expect that, that would take some fraction certainly of the therapeutic applications I still believe that there are patients that cannot easily be protected from vaccines and that antibodies would provide a prophylactic application that would be important for those patients. I also think that there is a scenario where antibodies would be chosen in place of small molecules, even in the therapeutic application. But of course, no one really has a clear view of how that's going to play out. If it -- if our molecules continue to be used, that will be great. We'll be happy to have helped with the COVID-19 problem. And of course, the revenue will help us to double down the business. But as Andrew said, the results of COVID-19 is not something we view as integral to our business.

[Puneet Souda, SVB Leerink]

Got it. That's super helpful. On the biospecific program, I mean you briefly mentioned about that, that's obviously gaining traction for you. wondering with the new contract adds in the quarter, that was '17 contract that was obviously strong since the time of IPO. Could you parse out for us at this point in time, what is the primary component primary driver among the sort of the tech stack and overall services and turnaround times and overall partnership that you're offering that continues to bring increasingly more partners to you today. If you could sort of parse that out? And is there a differentiating factor today, technology-wise service-wise, that's bringing -- continues to bring increasingly more partners to you.

[Carl Hansen, President, CEO & Director]

Thanks, Puneet, for the question. It's one that's very difficult to answer directly because the needs of every partner from a technology perspective are going to depend very much upon the application, the modality of the targets that they're going after. There is a trend that we definitely see happening. And one that I feel is a real tailwind for AbCellera. We're certainly seeing that the provision of technology or capabilities in discovery and development. We feel it's bifurcating into 2 classes. There are groups that are running sort of fee-for-service low-cost solutions that are fragmented. And then there are companies like ourselves, and in fact, I think we're unique in this capacity that are investing in technology and bringing it together in a fully integrated workflow. When there are partners out there who are experienced in drug development and recognize the value of having the very best molecules, they're coming to us, and that's where we want to play. We want to work with people that appreciate technology, capabilities, speed, service, infrastructure and know-how as ways to help them meet their goals of bringing therapies to patients more quickly.

[Puneet Souda, SVB Leerink]

Okay. And just last one, if I could -- Can you just at least maybe size the market for us there? Or I know you can't provide the indication, but maybe just help us understand, is this more of a proof of the platform again? Or could this be more of a meaningful royalty of the product was to get to market? Just wanted to clarify that.

[Carl Hansen, President, CEO & Director]

Great question again, Puneet. So first of all, Animal Health is a relatively new application of biologics. It's 1 that in recent years has taken off much faster than I think people had expected. So there is clearly a need and a market opportunity for taking some of the innovations that have been applied over the years in human health and applying them to companion animals. With respect to the first program that's moving forward, we are very pleased about that program, and we think it's a significant but any program that moves into the clinic is not one that we would see as being a main driver of our business. That's not how our business works. Our business is much more about providing solutions that over time, build a large and diversified portfolio so that we can, in the long run, generate returns that are exceeding what is typical in the industry, but not be tied to any particular program and therefore, not taking on the binary risk.

[Operator]

And your last question is from Dennis Renick with BMO.

[Unidentified Analyst]

Just a couple for me. So you guys have obviously had a very successful 2020, 2021 in terms of new program starts, programs under contract and all the other key metrics. Can you talk a little bit about the vision for 2022 and what we should expect to see the same run rate in key metric growth or maybe a little like tapering as we move forward? And just a quick one. If you could provide some more context on what kind of ramp-up we can see you guys do upon the completion of the CMC and GMP manufacturing facilities.

[Carl Hansen, President, CEO & Director]

Thanks, Dennis. There's a few questions in there, so I'll try to make sure I get all of them, but feel free to redirect if I miss one of the points. So as we look at 2022, I don't think there are going to be any surprises. We have 2 been investing in the platform in infrastructure and in building our workforce to build capacity to execute on the partnership business. And hand-in-hand in that, we've been making investments on our business development team to make sure that we're bringing in the programs under contract that are the leading indicators of the work that ultimately translates into starts. At this point, as I mentioned in my prepared remarks, we built a robust book of business, and we are now working closely with partners to make sure we've got the reagents. We've got the work plan set and we're starting to see an uptick as a steady rhythm of starts in this quarter. And that trend, while it may go up and down with some variability from quarter-to-quarter, we expect to be growing if average over some reasonable period off into the future. So next year is going to be a year of execution of continuing to build our business development team and on focusing on moving programs as quickly as possible through our stacks that our partners can get them into late age preclinical development and ultimately to the clinic.

In terms of the CMC and GMP manufacturing project. As I mentioned, that is a big project and our top priority in R&D and platform development. It includes translational science, building CMC capabilities and building a new facility for GMP manufacturing. That project is currently on track. It is scheduled to be live in the first half of 2024. Once live, I expect there'll be some ramp up in terms of building the workforce and the capacity but the facility is designed to be able to handle north of 30 programs per year. And so that's how we see that. And of course, that's a project that will be at version 1 in 2024, and we'll continue to make investments to integrated with the front end of the stack with an objective of shrinking the time from initiation of a program to IND filing.

[Operator]

And that ends the question-and-answer session for the call. I'll now hand the agent over to Carl Hansen CEO, for closing remarks.

[Carl Hansen, President, CEO & Director]

Great. Thank you, everyone, for joining us today. This is an exciting time for AbCellera, and we're looking forward to keeping you updated on our progress on future calls. Have a great night.

[Operator]

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