Good day and thank you for standing by. Welcome to the AbCellera 2020 Business Update Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Tryn Stimart. Thank you. Please go ahead.

Good afternoon, and welcome to AbCellera’s first earnings conference call and our 2020 annual 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 that you can find in our Investor Relations website. With me on the call today are Dr. Carl Hansen, AbCellera’s President and Chief Executive Officer; 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 of you 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 they’re 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 during our call today are U.S. dollars. Now I am pleased to turn the call over to Carl Hansen.

Thank you, Tryn, and thank you everyone for joining us today. 2020 was a breakout year for AbCellera on all fronts. We secured financing, expanded our technology platform, and in December began trading on the NASDAQ. I’m excited to tell you about 2020 and where we will be going in 2021 and beyond. Briefly through our work in pandemic response, we proved the power of our technology and our business model, discovering bamlanivimab, the first therapeutic antibody against COVID-19 at world record speed. Bamlanivimab was granted Emergency Use Authorization in November, and it’s already been used to treat more than 400,000 patients. At the same time, we continue to invest in our platform and build capacity, including almost doubling our headcount and acquiring key technologies, including a proprietary humanized rodent platform and a bispecific engineering platform. We also secured funding for and began work on the buildup of CMC and GMP manufacturing capabilities. Finally, we ended the year with nearly $600 million in cash and over $200 million in accounts receivable. This provides a strong cash position with which we will execute our plan for future growth. Since this is our first earnings call, I’d like to highlight how we are executing on our vision to develop new technologies and new business models that accelerate drug discovery across the industry. AbCellera was founded on the philosophy that pushing back the frontiers of technology is the surest way to transform drug development, and that the impact of these technologies is amplified by business models that are centered around partnerships. Working at the interface of computation, engineering and biology, AbCellera is redefining the process of how drugs are discovered. We’ve spent the last nine years building an operating system that can search, decode and analyze natural immune systems to find rare antibodies…

Thanks Carl. I’ll start by looking at our KPIs. We ended 2020 with 103 programs under contract with 27 different partners, that’s a 72% increase in programs under contracts as compared to how we had ended the end of 2019. In 2020, we added nine program starts to the cumulative 43 starts we had at the end of 2019. We believe that the lion’s share of the economic value in our partnerships is connected with our shared participation in the success of the therapeutics that we discover – that are discovered by our platform. Since 2018, we have only accepted programs with downstream participation, and in 2020, we actually converted some existing programs without royalties to now include downstream participation, as we have expanded our collaboration with certain partners. Looking at revenue. Revenue in 2020 grew 20-fold over 2019 to $233 million. We have significant royalties and several milestone payments from bamlanivimab in our 2020 results that were not present in 2019. At the same time, our results also reflect the healthy growth of our underlying partnership business. While our business model emphasizes participations in downstream economics, we earned research fees of approximately $20 million, which were attributable to the range of discovery programs we worked on for our partners this represents 71% growth over 2019. The research fees reflect work on new programs with new and existing partners, as well as activities from ongoing projects. We achieved royalty revenue of $198 million and milestone payments of $15 million attributable to bamlanivimab, achieving milestones all the way from Phase 1 through two first commercial sale by Lilly in the United States. In terms of bamlanivimab, we are eligible to receive royalties on all sales, whether it is used alone or together with another antibody. We are also eligible to receive…

[Operator Instructions] Your first question is from Tiago Fauth with Credit Suisse.

Hey, thanks for taking the question and congrats on the progress. So can you just contextualize historically your presence and efforts in the business development front, and now with greater access to capital, how will that move forward? What’s your kind of fascinating in terms of new program starts per year, how quickly can that scale up? And perhaps the follow-up to that would be the communication plan with the investor community, a lot of that is out of your hands, it’s in the hands of partners. But how can investors expect to hear updates on the advancement of the preclinical portfolio and perhaps based on sparkle rates? What should we expect in the next 12 months or two or three years of programs sort of in clinic? Thanks.

Hello Tiago, Carl Hansen here. Thank you for the question. Maybe I’ll answer, there were a few questions wrapped up together there, maybe I’ll answer the last one that you asked and then give some background on the business development team then hand off to Andrew in terms of future expectations for business development. So starting with the last part of your question, our business model is predicated on forging partnerships that connect our success with that of our partners. We typically do that by bringing their programs in-house, applying our technology and then handing back either hits or development ready leads. Once we do that, it is within the responsibility of our partners to prosecute those in preclinical development and through the clinic, and then we collect milestone and royalty payments as those molecules move through development. We typically do not have good insight into the stage of those programs as they reach the clinic. Of course, when they do reach the clinic and we receive milestone payments, we know the progress and we we’ll be reporting on those. Coming to the first part of the question, which was about business development activities, in the early years of AbCellera, business development was I’d say, modestly resourced, that was largely because the company was growing quickly inorganically. Recently we have changed postured and begun to build out that business development team that included several new hires. And we will be establishing a presence in the U.S. and perhaps also in Europe in the near-term. And with that I’ll hand over to Andrew to give some color on the rest of your question.

Yes, just a quick correction. Carl said in the early years we were growing inorganically, actually, I think he meant we were growing organically within the – by driving our own business development. So we have expanded the size of the team and really that has been to accommodate the demand that we’re seeing. So our business development pipeline, I think, has never been stronger than in the eight year history of the company. And so we anticipate, as we have talked about on previous calls of really making sure we’re staffing and resourcing that team appropriately. You talked about capacity there. I just wanted to point out that, when you look at the programs that we have under contract, and then the ones we’ve started on, it would be a mistake to think that that’s a backlog that we’re dealing with. It is actually more – that we have signed more multi-year, multi-target deals, where it’s completely normal to have our customers calling those programs over time and agreeing on a statement of work, arranging reagents and then for the programs to start, we really view that more as a almost sales that we have secured in advance and we have – as of yet not been in a position where we did not have capacity in order to start any of the programs that were called and we’ll continue to make sure we’re making the investments, so that’s the case.

Great. Thank you so much. Appreciate it.

Your next question is from Stephen Willey with Stifel.

Yes, good afternoon. Thanks for taking the questions. I was wondering if you could maybe just provide a little bit more color around 1404. I know that you – and again, I’m not sure to what extent you are constrained and what you might be able to say. But you did highlight the significant increase of potency that you see, just wondering if you can maybe speak to some of the other biochemical properties of the antibody, and I guess I’m specifically interested in whether or not this has been kind of perspectively developed with the attention to make sure that you have a subcue administrable product.

Thanks, Steve; Carl Hansen here. I’ll take that question. So 1404, as I mentioned in my prepared remarks was the result of going back deliberately into a large library of antibodies that we have assembled since the beginning of the pandemic, searching for one that has that rare combination of ultra potency and breadth against all the variants that have emerged. We’re at a position now that the pandemic has been going on for a year, and we’ve got a pretty good idea of what are the most mutated regions of the virus and ones that have occurred and created an issue with existing therapeutics. 1404 fits that bill perfectly. So in our internal neutralization assays, we have benchmarked this against bamlanivimab, which in our hands is the most potent antibody of any that’s out there in neutralization assets. And it performs superior to that antibody and considerably better than others that are out there. And it also, as I mentioned has very broad reactivity across all the strains that are currently of concern. Given the potency of this antibody, we believe – and its behavior thus far in preclinical studies, which of course are not finished yet. We believe this antibody has high potential for one that could be administered subcue, and I’ll also note the importance of the potency of that antibody on manufacturing, because of course, given a fixed amount of manufacturing, the more potent in antibody and the lower the dose that’s possible, the more people that can be helped. So we’re very excited about this molecule, I want to just temper that with a statement that this molecule is still in preclinical development. And so until it is in the clinic and it has been tested in patients, we don’t yet know its potency and that’s why we need to make sure that those clinical trials proceed as quickly as possible.

Understood that’s helpful color. And then was just maybe wondering if you could provide a little bit of color with respect to where you are on the litigation with Berkeley, just whether or not we should be anticipating any kind of material updates there throughout the year? And thanks.

Sure. The litigation with Berkeley Lights is proceeding as expected. We don’t have any material updates, but of course if there are updates we will be disclosing those to the public.

All right. Thanks for taking the questions.

Thank you, Steve.

Your next question is from Gal Munda with Berenberg.

Hi there, thanks for taking my questions. I just have a couple, and maybe if I can just start a little bit about the success you’ve had over 2020 when you added – most important year, new programs under contract, and then in terms of the programs starts as well as seeing good progression. Do you have any indication of what we could reasonably expect for 2021? And is that a good way to kind of continue to track progress within the year?

I’d say that is the right KPI to be looking at. Again, we have been stressing programs under contract as the leading indicator of the long-term success of the business model. We will be giving those updates as we progress through the year. So once we finalize contracts and agree on a press release with our partner in the ordinary course, we will be – we’re issuing press releases accordingly. So that would absolutely be the thing to watch out for Gal. So – and thanks for the question. Then of course, we will continue to on a quarterly basis report out with the programs under contract that have been secured for the period that we’ll be reporting on. So in future earnings releases, we will make sure we highlight those as we go through the year.

Currently as you know, just to add one more bit of color on that, I think it is fair to say that the business development pipeline has never been stronger. I believe that that’s a combination of the success of the IPO or the profile that we’ve built with the program on COVID-19, which has underscore the power of the platform and also with the continual expansion of our capabilities of both from internal R&D and inorganically and the recognition of that from the industry. So we are very bullish on continuing to grow the business.

That’s really helpful. Thank you. And then just as a follow-up, let I note that the fact that if you look at a number of programs, the number of partners that you’ve added, that number of programs per partner has increased by about one an average, but from almost three to almost four. Is that a trend that you continue to see to expend going forward considering the fact that you kind of – is it a proof-of-concept that the partners are adding more programs with you and that’s something that we could continue to expect in the future as well?

Absolutely, so we’re of course always interested in connecting with new firms, high quality firms across the entire spectrum of the industry. But through our existing partnerships, when we are successful, we are able to expand those partnerships as we’ve done recently, as I mentioned with Invetx and we have some other ones that are in discussion along those lines as well. So in terms of the numbers it may not always be the case that the number of programs per partner increases on a quarter-to-quarter basis, because of course, some firms have only a small number of programs to do. But we absolutely are excited to deepen our interaction with high quality firms that have the need to build their large pipeline off into the future.

Got you. Thank you so much. Appreciate it.

Your next question is from Puneet Souda with SVB Leerink.

Yes. Hi, Carl, Andrew; and thanks for taking the question. So – and first of all, congrats on the progress and impact you’ve made there to bamlanivimab. My first one is on – just wanted to clarify on project ads or program ads that were in the fourth quarter. Can you just remind us again, what was the exact edition and also given Carl’s comments about the pipeline has been really strong? Maybe can you provide us any sort of metrics, I know in the guide – you provided in the guide – your revenue guide, but maybe can you provide us any of the, in terms of at least for the first quarter sort of what sort of a number that we should expect here for – in total program ads and how should we think about that number sort of going forward as a metric? Is that a metric that you can provide in terms of the guide?

Thanks, Puneet. Carl here, I’ll pick first pass of that one. I don’t have in front of me the accurate numbers for how many additional programs were added in the fourth quarter of last year. So that’s one that I’ll have to get back to you on, Andrew may know. In terms of what has happened in Q1 of this year, as I mentioned, we’ve had strong business development, we’re working on several negotiations. The way that our business development cycle normally works is we first engage in a scientific discussion, we ultimately come to terms and then there is some time involved in contracting, that is unpredictable. But we have several contracts right now that are underway and we will be reporting on those as they are finalized, hopefully coming up in Q2 here.

Okay. And then in terms of bamlanivimab, I appreciate you’re providing the guidance here for the first quarter. Maybe could you elaborate, maybe Andrew can elaborate on in terms of what’s the split in the bamlanivimab royalty versus research programs in the first quarter. And then just a quick follow-up on bamlanivimab, just given what we have seen in terms of the vaccination rates overall improving, and also COVID therapeutics combos and cocktails that are being approved here, some of the variants that obviously where bamlanivimab is not effective and some of the impact that we’ve seen from ASPR stopping the monotherapy. The key question in the near-term is what are the best expectations for bamlanivimab royalty as we go through the rest of the year and what 1404 also adding to that? Maybe just walk us through that. And I know that’s not an easy question to answer, but what can you provide us that gives us comfort that the full year at least the Street numbers or some numbers that where you’re comfortable with?

Yes. Thanks, Puneet, for the question. It’s Andrew here. I’ll start out on that. So with regards to the Q1 number we gave seeing as we’re only a few days from the end of the quarter, as I mentioned, we’ve taken the publicly available information from Lily on the shipment of bamlanivimab. And in terms of the splits, I think you could expect to see it very similar to what we saw in the fourth quarter. So if you look at just the Q4 numbers, I think overall our Q1 numbers will look very similar. With regards to the bamlanivimab and its effectiveness against the variants, et cetera, and the remainder of your question, I’ll hand over to Carl.

Sure. So the question was about the prospects for bamlanivimab in terms of how it will continue to be relevant or important as a therapeutic this year and often in the future. With that, the first thing I’ll say is you did mention the variants that have come up and it was announced that bamlanivimab as a monotherapy will no longer be sold in the U.S. that is largely because we are shifting over to the combination of bamlanivimab and etesevimab. Shipments of that have already been gone out and of course the Emergency Use Authorization was granted. That combination currently addresses 99% of the variants that exists in the U.S. Bamlanivimab remains a therapy that is being shipped to other countries where they do not have variants that are resistant to bamlanivimab at a significant prevalence. And the long-term plan is to also shift those over to combination therapy. Pardon me, 1404, when it comes online is a very potent and broadly reactive antibody, and one that we expect would be a great candidate to bring into that combination. The ultimate decision of which antibodies to put together both in clinical trials and ultimately commercially is one that is being made by Eli Lilly, of course in close collaboration with us. And it will depend upon how variants continue to emerge out in the market. So I wouldn’t – out in the world, pardon me. So I wouldn’t speculate too much on that. In terms of the long-term prospects for bamlanivimab, for 1404 and for antibody therapies in general, we believe that there is a likely scenario that COVID-19 certainly peaks this year, but that does not go to zero and that COVID-19 becomes an endemic problem for many years. Given the current options that exist for the treatment of COVID-19, a very strong case would be made that if you get sick you should receive antibiotic therapy as early as possible. So we believe that there will be an important use case perhaps both in prophylaxis and in treatment of mild to moderate for years to come. And we are doing everything we can to bring forward the very best solutions for patients, of which bamlanivimab has already had an impact in 1404, is our next generation molecule.

Okay. Thank you.

Your final question is from Do Kim with BMO.

Hi, good afternoon. Thanks for taking my questions and congrats on all the progress you had last year. I wanted to ask about your 52 cumulative program starts. Could you provide us how many of those programs do you participate in the downstream economics? It looks like from your graph that some of those programs with that downstream completed last year. I just want to get a sense of the number of the ones that do participate in the downstream economics. And I appreciate that you have limited visibility when your partner takes over the development of a program, but could you tell us how many programs are currently in your partner’s hands and past the discovery stage? And the contracts that haven’t started, what’s the gating factor for a partner to move forward and start the program?

Yes. Thanks, Do. Andrew here, I’ll take the start of that question. So in terms of the program starts in 2020, how many of them have downstream milestones and royalties or downstream economics. I believe that all of them do in 2020. As I mentioned on the call, in 2018 we stopped executing on contracts that didn’t have downstream milestones and royalties. That’s not to say there are cases like for Bill & Melinda Gates Foundation and et cetera, that where we would do additional programs with them, but we haven’t had any of those in 2020. You’ll even see that we converted some of the programs, which we had previously worked on in a renewal or an increase in the contract or an expansion of the contract that previously did not have downstream milestones and royalties. We even converted them into ones that do have it. Overall, 103 programs under contract, 80 of those programs have got downstream milestones and royalties. And really going forward, the program starts will really all be of those that have variety. You asked what is the constraint in terms of doing more programs. Normally in these multi-year multi-target deals, say an eight-target deal over three or four years, it would be the plan that the customer would be calling two targets a year for us to work on. So that’s where I say really that 103 programs under contract that’s secured future work for us to do, it’s not a backlog, it is – that’s how we would be anticipating to take the platform to market. And we will be waiting for the customer to call a target, agree on a statement of work with our R&D team, arrange reagents, and then we would actually start the discovery work on that program. To-date, we haven’t been capacity constraints. So we haven’t been in a situation where a customer has asked us to start and we didn’t have the capacity to do so. So with our investments, we hope to say that’s always going to be the case with building out the capacity and the teams, et cetera, and facilities. Now, the last question that you asked, which was about how do we get information on – once we have handed programs off to our customer, how do we get information about their progress through preclinical. I’ll maybe pass that over to Carl to give you a bit of color.

Yes. I think that question is close to a question that was asked earlier. It depends on the nature of the relationship. If it’s an ongoing collaboration with multiple targets, then it’s very likely that we have an ongoing dialogue about the status of molecules as they’re moving through a pre-clinical development. That is more and more the case. It wasn’t always the case in the early years. So when we have insights, then we keep a close eye on that. And of course again once molecules reach defined either technical or clinical milestones, then contractually we get an update on that. And to the extent that we can, we will be reporting that back publicly.

I just wanted to clarify on one of your answers. On the 52 program starts that you have accumulated to the end of 2020, how many of those have downstream participation? Is it 30 out of the 52? Just want to get a number on that.

Yes. From the graph, I think it looks to be about 30 and that sounds about right. I’m looking at the graph as well as you are. So that 30, 32, it might be like 20 programs that don’t, and then the remainder that do is the best I can tell. So that’s about the ballpark.

Okay. And a follow-up on the economics that you have with these partners, is there a level of variability of the agreements in terms of the size of the milestone payments and the size of the deal? And what determines the differences in the economics? Is it the indication that these partners are going for, or the partners’ requirement of using the full stack of technologies or just part of it?

There’s several factors. Carl Hansen here, I’ll take that one. The first is that it is not the case that every deal is the same. So we right-size the terms according to the value that we’re bringing to the partner and a few things to sort of add color onto that. Over the course of the last few years, we’ve seen a trend upwards in terms of the terms and in particular, in the royalties, which we view as the most important part and the most important term in terms of value to us in any agreement. We’ve also seen differences in terms depending on the class of targets or the difficulty of the discovery program. We’ve worked on, as I mentioned, some of the toughest programs in the industry successfully that includes targets such as GPCRs and ion channels. Naturally for those very difficult targets, you would expect that success would be connected to a larger stake in the ultimate development and sales of those products. The other the other element which you alluded to is as we continue to add technologies such as the addition of humanized rodents through Trianni, programs that include bispecifics through the OrthoMab platform and increase both the amount of data and the forward integration of our development, then naturally we expect that the terms of those deals will reflect that and will move upwards. And so for all those reasons, we are seeing a growth in the size of business terms and our participation in success and that is one that we keep a close eye on. And as I mentioned, for us the most important of those is of course the royalty.

Great. Thanks for taking my questions and congrats, again.

And there are no further questions. At this time, I’ll turn the call back over to Carl Hansen for closing remarks.

Thank you all 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. Thanks everyone.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.