Good afternoon. And welcome to AbCellera's First Quarter 2023 Business Update Conference Call. My name is Terry, and I will facilitate the audio portion of today's interactive broadcast. [Operator instructions] At this time, I would like to turn the call over to Tryn Stimart, AbCellera’s Chief Legal and Compliance Officer. Please proceed.

Thank you. Good afternoon, and welcome to AbCellera's first quarter 2023 business update. We're pleased to have you with us today as 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 today are 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. 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 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 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 during our call today are U.S. dollars. Now, I am pleased to turn the call over to Dr. Carl Hansen.

Thank you, Tryn. And thanks everyone for joining us today. It's my pleasure to provide an update on our business for the first quarter of 2023. Through the first quarter, we continue to allocate our resources to the execution of our long-term strategy, investing in building team's technology and infrastructure to create the industry's preferred engine for antibody therapeutics and using this engine with partners to develop a diversified portfolio of stakes in future antibody therapies. This is a long-term strategy designed to create an increasing competitive advantage, to maximize value creation, and to mitigate the risk that is inherent in drug development. We continue to make progress on both objectives of our strategy. With respect to our engine at the front end from program launch to the candidate generation, I believe we now have capabilities that are unmatched in the industry, and that continue to improve. At the middle of our engine over the past 12 months, we have brought online a set of powerful new technologies and workflows for antibody engineering, high throughput assessment of drug like properties, and lead optimization. These capabilities are now being deployed in partnered and pre-partnered programs, and enable us to move programs quickly from idea right through to final drug candidate. A major focus is now on building the backend of our platform, including drug manufacturing, and regulatory capabilities. We're making good progress in recruiting the leadership to these efforts, and are actively building the labs and facilities that are needed for these functions. I'm confident we are on track and believe these efforts will prove highly valuable to our partners and will provide AbCellera a major strategic advantage to all dimensions of our business. Underpinning our workflows, we continue to invest in the automation and software systems that are critical to…

Thanks, Carl. First, let me highlight progress made in our key business metrics in the first quarter of 2023. We ended Q1 with a cumulative total of 101 program starts. There were no new programs starts in the quarter. As a reminder, the number of starts in any given quarter will be irregular. Over the trailing 12 months, we have started to work on 17 programs representing almost a fifth of our cumulative number of programs starts. We expect that the long-term trend on program starts will remain solid. While we continue to do more work and add more value on programs. We signed three new programs under contract with one new partner RQ Bio in the quarter. We ended the first quarter of 2023 with 177 programs under contract with 41 unique partners. As we mentioned on the last call, the numbers income included in our key business metrics did not include pre-partnered programs from our technology development efforts. For our molecules at the clinical stage, we saw one additional molecule from a discovery partnership reached the clinic progressing into Phase 1 clinical trials. This new molecule brings our total number of molecules in the clinic to nine. The new molecule was discovered by us in partnership with Teva and has entered clinical trials with an indication in neuroscience. As we have said in the past, we view our growing list of molecules in the clinic as specific examples of our near and midterm potential revenue from downstream milestone fees and long-term royalty payments. Turning to revenue, revenue in the quarter was approximately $12 million. This is our first full quarter without COVID royalty revenues since the FDA announced in Q4 of 2022 that bebtelovimab is no longer authorized for emergency use. Revenue this quarter was driven by approximately…

[Operator Instructions] The first question on the line comes from Andrea Tan of Goldman Sachs. Please go ahead. Your line is open.

Carl, could you maybe speak more on the feedback from the ACR poster presentations? And then when you do think about the panel of the CD3 antibodies that you've built, what are the next steps here?

Thanks, Andrea. So we had, I'd say a terrific response from the presentation of the data at ACR, there were several conversations that have since moved forward with some of the top firms that are working in the space. Generally, I'd say the people that have been working in this space for a long time, fully appreciate the scale of what has been done in expanding the diversity and the quality of CD3 antibodies that we have at a starting place. And the early data that we presented, demonstrating that we could use this to tune the level of T cell activation, while still getting tumor cell killing attract a lot of attention. So, we are dancing those discussions. There are some groups that are particularly interested in the pre partner programs that have begun. These are still at an early stage. But we do expect that we will continue to work on those over the next year, and move some of them to the point of development candidate where we're starting to narrow in on final clinical candidates. We expect that that will have a couple of positive impacts. One, it allows us to further demonstrate the versatility of the platform across multiple targets and to move these forward into molecules that have the properties that are suitable to move into IND enabling studies. And two is a way to engage with some of the companies that are more interested in assets than in access to the capability. And at the same time, you know, the capabilities we've shown have also started to generate quite an interest from firms that want to start on new targets and begin from the beginning. So I would say this is on track. We believe that this effort is creating value. And still a little early to project just when we'll be able to engage with one of those conversations or more this ongoing.

And then my second question is just as you think about your stated goal of speeding up the time from ideation to moving a candidate into the clinic. Just curious now that you have nine molecules in the clinic, first, can you help quantify where you think you are right now in terms of the average time in between those two points? And then second, how much quicker do you think you can get as the technology and the platform improve?

Yes. That's a tough question to answer. So, we have nine molecules in the clinic. Some of these have come from the Trianni platform. Others have come from discovery work that we did, and have moved forward with partners now into early clinical development. When you look at the molecules in the clinic, this is always a trailing metric. So what you see come into the clinic today is work that was done years ago, at a time when we were a smaller company, and we were handing off molecules in the earlier state. So we are very pleased to see that even some of the earliest work, for instance, what was mentioned today from Teva, that's the program that wrapped up in 2017, made it through to the clinic and show us that, there is early work that, despite the fact that didn't get quickly to the clinic, or in a timely way, is not dead, and continues to move forward. But the more recent projects, we think that from programs start to clinical to an IND filing in roughly three years is very quick compared to the industry strict standard, and something that we expect to be happening. So we're making progress there. In terms of how quick we think we can be. We think that really comes together once we have finished off the back end of the platform here at AbCellera. So if we have integrated translational science, manufacturing, and regulatory capabilities, then we can save a lot of time through the integration and the streamlining. And so that's something that we're working on hard. But of course, that's yet in the future.

The next question on the line comes from Antonia Borovina of Bloom Burton. Please go ahead. Your line is open.

So, my first question is regarding Abdera, can you just remind us what your current economic interest is in the Company and you classify this as partner initiated program, but just wondering considering that you were one of the founders? Are you doing any more work on this program? Or are the deal terms kind of pretty similar to what we've seen with the other partner initiated?

Hi, Antonia, this is Andrew. I am happy to take that one. We were a founding partner, as Carl mentioned in the prepared remarks back in 2021, with Abdera, and we announced that with that partnership, that we would do the discovery for them, we took a minority, so less than 20 and continue today to have a minority equity position in the Company that's much less than 20%. And in addition, have the typical kind of deal with the milestones and royalties do on the molecules that we discover, in our partnership with them. Those are included in the metrics that we propose or that we publish every year in our 10-K. So they're included in those aggregate metric metrics that are published. What's important there, and it's maybe points to some comments that Carl made in the first question that those molecules look to be on track to get from that idea to the clinic within about three years. And that was a partnership of nine molecules. So we continue to do work with them on some of those additional targets. And of course, the first ones in discovery work that we've done on their first antibodies have been completed and handed back to them and then are on track to get into the clinic in 2024.

And then my additional question is just regarding the sector downturn, are you seeing anything with regards to the inbound interest from potential partners, the type of deals structures partners are interested in or maybe anything from the competitive landscape, like, is there more competition for partners or consolidation in the field?

Yes, sure. I am Carl Hansen and I'll take the question. So, this is something that obviously, we're watching and responding to as everyone else is. From our perspective, you know, the big change in, in our partnership business has been really focusing on finding the very highest quality partnerships, and engaging in partnerships with a deeper interaction in terms of bringing molecules further to a value inflection into clinical development. Year of focusing on that, our feeling is that despite the economic environment, the quality of the partnerships, the quality of the work that's been done, and the volume and amount of work that has been done across programs, has all gotten substantially better. And so, we feel like our business is getting stronger over time. It's definitely the case that there's a lot of companies that are facing difficult headwinds, in terms of raising capital. When it comes to competitors, we see that as a strategic advantage for AbCellera given that we're well positioned, well capitalized, and we can just focus on executing on the plan. With respect to potential partners, there is the possibility that companies are forced to prioritize on a smaller number of programs. It's up to us in our business development teams to make sure that we're finding those opportunities and engaging on the things that are highest priority in this market and in any market. And so we don't feel we're highly affected. But, of course, it's still playing out. And so, we'll keep an eye on that.

The next question on the line comes from Stephen Willey of Stifel. Please go ahead. Your line is open.

I guess on the TCE front, do you think that some of the CD3 focused collaborations that you could be doing here going forward would include scenarios where a partner is kind of bringing a variable domain against the tumor antigen to the table and just selecting one of the CD3 variants to pair with? Or do you envision I guess monetizing the CD3 library by kind of a built for purpose start from scratch type of approach, where you're developing both ends of the antibody?

The short answer is that we're open to working with partners in whatever way makes the most sense. So, the three ways that we envision partnerships being set up are, first, we have now initiated work on five pre partner programs as those advanced we expect that there will be partners that are interested in those specific targets. And that will be and we'll be able to partner with them either while we're still in development, and getting towards the final candidates, or after that has been done. So that's the first way. The second way is that by doing that work, we have the data to show partners the ability to quickly generate optimized TCEs. And this has attracted interest from groups that have new targets for which they don't yet have antibodies. And of course, our business and our capabilities allow us to quickly generate those antibodies and then Pair them and test them with different CD3. So that's the second way. And the third way is one that you alluded to where partners may have binders already that they believe are adequate or up to the task for making a new TCE. We would be happy and are interested in engaging and using our CD3 panels to properly pair those with the right binder to get the right properties. That isn't just a matter of sending over CD3s, it requires that we take the binding molecule, and we make a large panel of biospecifics and run it through the functional assays. And there may even be a couple of iterations of that, since we have a very large panel to go through. So there's still substantial work there, but that's another path forward and one that we're definitely contemplating and there are some discussions in that direction.

And then I know one of the ACR posters highlighted the capacity on the major a forefront to target these MHC peptide complexes. And I guess that's addressing the specificity part of the question, which is kind of plagued TCE and solid tumors. But then there's also this question, I guess, of intratumoral T cell availability and, I guess energy that exists in solid tumors as well. And it just curious if, in doing more work here on the TCE is if you're now I guess, inherently interested in moving towards a multi specific format, as well, where you're introducing something like co stimulation?

First off, bispecifics or multi specifics are an area that we believe is going to be very high growth for the industry and one that we're very well positioned to help drive. Our work to date has been on TCEs that are based on a variety of formats using OrthoMab that are pairing CD3 with tumor antigens. You're right to bring up you know, some questions of T cell energy or the T cells is fair. One of the things that we expect is that some of these therapies would be used in combination with other immunostimulatory or checkpoint inhibitor type therapies. And that's something that has been pursued across the industry. So that's one of the solutions. But coming back to your opening comment, the work against MHC peptide antigens, we think is showing the potential of the platform to open up a whole field of targets for TCEs, and even more broadly, to open up the target space for precision oncology. So we think that particular, result, and particularly the speed and ease with which it was done, is very significant, and has potentials in ADCs, and radioisotopes and beyond. And so that's an area that we're quite excited about and are starting to work on a strategy as to how we want to pursue that further on the technology front and the partnership front.

And maybe just lastly for Andrew, can you clarify just a little bit more I guess it was about 20 million of onetime impact that was embedded in R&D as a function of investment in partnered and pre- partnered programs. Are those specific to any collaboration or?

Yes, great question. Yes, absolutely. So as we've mentioned, we've got as energy know from our previous metrics, we've got a number of co-invest programs and pre-partnered programs that we've initiated. The good news there is that those programs are progressing well. And as Carl even said, we expect at the end of the year to have something to talk about in terms of lead clinical candidates in those areas. We have some upfront investments or commitments we needed to make regard specifically related to those co-invest and programs. And that's what needed to go through our P&L in the R&D in the form of 20 million. So we don't expect it to be recurrent recurring. It's one reason we call it out. So we know you're building your models. And just to get make sure you have the right kind of run rate R&D expense built into those models, we wanted to call out that upfront investment specifically, and hope to have more to share about that, at the end of the year, with, as Carl mentioned, having lead candidates or clinical candidates available to talk about.

The next question on the line comes from Nishant Gandhi of Truist. Go ahead. Your line is open.

Hi, this is Nishant. I am on for Robyn actually. So our first question is, in terms of BD, how much of your current business development in it from inbound versus like the levels of marketing that kind of have to do for this?

Yes, I'll take that. So, the nature of our business development is that it depends a great deal upon building scientific credibility and in network across the industry. So the best opportunities that we find are typically, because we have become known in the sector, through investors, through stakeholders through previous partners, and of course, at scientific conferences. So I'm not sure if you want to call that marketing or if you want to call that inbound, it's really about building relationships, and trying to find the right people within organizations that appreciate the technology, and can see how this platform can help to create value on both sides.

Second one, in terms of programs start, I mean, I know you mentioned that this water, you do not have any programs tracks and there's variability quarter to quarter. So just wondering if this variability this quarter at least, is it attributed in some level to the overall macro condition or are you think is just this one off quarter that you did not have any programs start?

Yes, it's Andrew here. As you may recall, in Q4, we had a particularly strong quarter as well, with nine program starts, it's just the way this metric is calculated. And it's quite clear in our statements and filings about how we calculate this. There's very specific triggers that would constitute a program start, just timing, I think in the first quarter, and the strong fourth quarter and then just resulted in very few or none in the first quarter. We do expect to have a strong number of programs, starts in the duration of the year. So that long term metric that we've always pointed to as kind of a trailing 12-month metric, I think, is the way to look at it. And I think that's where you would look, as we're going forward. It's not we don't think it's anything systemic that's out there. If that's what you're asking, in the health of the programs and partners that we have, we actually think it's very strong.

May be if I could just add another code for that. So, as Andrew said, you know, there's going to be fluctuation from quarter to quarter. In part, that's the nature of the type of business development that we do. So we are not managing the business development and our business in general, to hit quarterly numbers, we're managing it to find and engage with the very best programs and the highest value programs that we can find. In terms of the capacity which I think is probably the thing that snooze out and looking at the work, at any given time, we are working on perhaps 20 different partner initiative programs and over the past year, we have been doing more and more on those programs as we built out capabilities to take programs further and further towards an a value inflection point. So the growth of activity has gone up substantially. And layered on top of that, in over the last year, we've also announced initiation of more than 10 pre-partnered programs. So in terms of applying, in terms of executing the strategy, building capabilities, and using those capabilities to build a portfolio. We feel like there's been, we're in great shape and we're very, very pleased with the partnerships that we have formed, and the ones that we think are in the pipe coming up. So just wanted to add that more color.

The next question on the line comes from Gaurav Goparaju from Berenberg. Please go ahead. Your line is open.

I just wanted to ask, how should we think about the average NPV of the split between the three program types, pre-partnered, partner initiated co development and the other standard partner initiated discovery programs? Are you able to provide any color on how should we think about that? Or is it still early days? And we shouldn't think about it on a separate basis just yet?

Yes, I don't think you should look at it as a separate basis just yet, Gaurav. I think, the partnership business, which you're quite familiar with that we've been large volumes, small royalty stakes, in those which we publish annually, how that's been progressing. And as Carl said, as we're doing more work, generally, we're managing to command higher and higher economics really focused on the royalty, it's easier to do the with such a number of them in that portfolio, you can do maybe that aggregate. I think it's too early to try and put an NPV formula, or we don't have enough details about either the co-investment or the pre-partnered programs. But maybe for a future time, that might that might be appropriate.

And then just a quick follow up for me. Just as a reminder, you might have touched on this earlier, I apologize. How many to date program starts have you had for pre-partner programs, and then for co development programs, respectively?

We have the 17 code development programs like under contract of which I think we've initiated about six or seven. And on the pre-partnered programs we've initiated, I believe it's well, pre-partnered programs. And that's a mixture of the EE programs that Carl talked about the difficult targets, and of course, our work in pandemic preparedness was actually the first pre-partnered program.

Yes, Carl here. I just wanted to add, maybe another comment on top of Andrew's response there. So, one of the things I want to highlight is that, whether it's partner initiated or pre-partnered programs, this is all part of building a diversified portfolio of stakes in future therapeutic programs. Now, there are some differences in the investment and in the risk reward profile of these. So partner initiated discovery programs, this is the highest volume number, the return on investment for these is very high since we do the early work, and then we hand it back to partners. And we have tremendous conviction in that as a long-term business. If these are successful as they have been historically, and you run the numbers in the long run, you end up with an outstanding P&L without building a big balance sheet to find. And that's a business that we're going to stick by and that's a key pillar of our strategy. Now on top of those, we have opportunities where we can see the opportunity to have more conviction. And those are co development programs, so they'll be a smaller number, where any one of those, if they are successful can materially change the business. And the pre-partner programs also have that profile with the added benefit that we control them that we generate the data that we can then show to partners and to the market to demonstrate that we're making progress on the strategy. And when partnered, we believe that those have the potential to generate very substantial upfront payments in cases where they're successful. Now, the nature of those is that we're working on difficult, well validated high value targets. So not every pre partnered program will result in an asset but we do believe that we're making strong progress against that. And it's one of the parts of the business that we're most excited about. But I also think it's a part of the business that people should give us value for when we've actually shown evidence that it's working. And so at this point, we wouldn't hazard to try to split, what is the value between the different pillars. We think it's all part of one strategy and it's about building a portfolio that generates value in the long-term. And that's balancing risk reward across the different programs that we run.

Awesome, thanks for the call.

Hi, Gaurav, I just wanted to make one clarification point as well. So the co-development programs are included in the program metrics that you see, but the pre partner programs in terms of starts are not. And we've tried to be consistent with that, but just to for added clarity, wanted to point that out.

The next question on the line comes from Puneet Souda of SVB Securities. Please go ahead. Your line is open.

First one, I mean, I appreciate the fluctuations in the program start and overall macroeconomic climate but now with COVID somewhat behind. Would it be possible to provide a annual maybe not a quarterly, as you pointed out, maybe an annual guide number from at least from the research fees perspective? And just wondering, how should we think about in terms of the metrics that we ought to be tracking, for the maybe at least on an annual basis?

Hey, Puneet, thanks for the question. We are not looking to provide guidance on the research fees revenue, also, because it's not where we believe the biggest value is that is reflected in kind of the metrics that we do presented, which of course, are the program starts and how we're building that portfolio. So I think we don't have a plan to provide that kind of guidance in the future for revenue. Yes, and, Carl, I think you wanted to add something to that.

Yes, I was just going to say, we definitely appreciate that people are building models or trying to get, you know, good clarity on top line revenue in the near-term. From my perspective, I think our perspective, we are executing strategies to build capabilities, and then build a stake in future therapeutic program. Now, in when market conditions get tough, there's a tendency for people to look on the short-term. We think that optimizing or running the business for short-term revenue is the surest way to destroy value in the Company. And so for that reason, we are not providing guidance, because we are not optimizing that in the business development. What we're optimizing is building strengthen the capabilities and making sure that we're engaging those capabilities on the very best programs with the best partners to ultimately bring molecules through to the clinic and to have a significant piece of those. So that's the reason that we are reluctant to provide guidance on research revenue, because that's not where we're steering the Company.

And then, on technology and the technology stack that you've developed. Carl, maybe can you provide, given the environment that we're in and the type capital funding, are there you finding opportunities on the technology side to sort of grow the stack, grow that capability? Or do you see this as a time to largely invest into the pre-partnered program? So you potentially have molecules down the line that could provide upside? How are you sort of thinking about the sort of investments into the technology versus investments into the pre-patterned programs?

Sure. So, when there are difficult market conditions, and capital is scarce, there's always an opportunity to look for M&A opportunities that make sense. And in the past, we have done that, to bring on technologies that have helped to complete our capabilities on the front end. We are always looking at opportunities. But right now, in terms of technology development, investment for capability building, the lion's share of that is going to be on completing the forward integration. So, translational science, manufacturing, regulatory and clinical capabilities, that allow us to take programs from concept right through to IND. That's where the majority of the focus is today. And then in terms of investments on pre-partnered programs, these are programs that are being advanced in connection with high value long range R&D. So if you looked at how AbCellera is allocating capital today, it's the same that we were doing a year ago or two years ago. And roughly we have three -- pardon me, two thirds of our total investment on building technology and capabilities, and about one-third on executing on the partnership business. And we expect that that will be the case for the next couple of years, at least as we complete building the antibody discovery and development engine that we set out to build more than a decade ago now.

And then just last one, if I could clarify. Was it estimated that you were expecting data in later this year? Or was that another conference that you mentioned?

I don't think I mentioned the conference. But we are making rapid progress on the TCE work. And we will look at every opportunity to present updates when they're available and major conferences and that would be an obvious one to target.

The next question on the line comes from Malcolm Hoffman of BMO. Please go ahead. Your line is open.

Hi, guys, I am Malcolm on for Evan Seigerman. We want to start by asking, if you could give a little bit of commentary regarding partners operationalizing collaborations with emergency? Have you observed changes the economics these new programs and updated terms for existing programs? Or are there any other notable trends that you'd like to call out? And then just secondarily, on the manufacturing side, how do you think about CapEx going forward? Is capacity focused more on kind of the developmental side and clinical or more towards scaling up towards commercial end later on?

Yes, It sounds like that was a two part question. I'm happy to take the first part, but I didn't quite understand nature of the question. Could you maybe restate that one?

Yes, the first question?

Yes, the first question was about business terms, but I didn't quite understand what you're asking.

Yes, we are just looking to look for a little bit more commentary basically, on the collaborations in general, the overview of kind of what the term structure has been like for some of the later stage collaborations, and any trends that you're hearing from kind of your collaboration partners in general, for those new agreements going forward, just thinking about the collaborations in general.

Sure, so, generally, the trend has been that as we add capabilities and do more work, our total value in a program has increased. And normally, we always look to have that value connected to the success of those molecules as they move to the clinic, and ultimately to approval. So that has been constant. I'd say one of the more interesting developments over the last year, in terms of the nature of our partnerships, is that now that we have built and scaled sort of the middle part of our engine, so to be able to do, not just the early, you know, early discovery and generating panels and hits and leads, but take those right through developability packages and translational work, and come with the final clinical candidates that are ready for IND enabling studies. That's a much deeper type of interaction, it's one that we think really differentiates us from many of the competitors that are out there, where there's, there's been, in our view, a tendency for groups to be providing sort of a shallow and thin offering that stops well short of what is the value inflection, particularly for the smaller companies. So what that means is these are more deep interactions and their interactions where we will look to create value with partners in a way that's even more collaborative. And I think that's a very positive thing for our business, and one that we're excited about.

Yes, Malcolm, it's Andrew here. I'll take the second part of your question, which is more around CapEx. And I think it fits in very nicely, of course, with the strategy that Carl mentioned, where what we're building here is the capabilities to go from target to IND in the clinic, in our antibody discovery engine, and then doing so, the capital expenditure we're putting forward at the moment is really focused on those that vertical integration into CMC, GMP manufacturing capabilities, in order to actually go from target to drug product that could start in a Phase 1 clinical trial. As I mentioned in the prepared remarks, we have the capital to continue those investments as we have indicated in the past. And we have been, I think, quite capital efficient in looking for non dilutive sources of capital, including that the help that we got from the Canadian government Strategic Innovation Fund, to co-fund 50% of that capital investment building out that manufacturing facility. So, we have quite a detailed CapEx plan over the coming years as we complete the building of this engine and capability from target all the way to the clinic.

The final question on the line comes from Steven Mah of Cowen. Please go ahead. Your line is open.

Thanks for taking the questions. A lot of ground already covered. So, I just have one follow-up question on a previous topic. So you've talked quite a bit about the pre partner discovery efforts. But could you provide some color on how you balance this internal R&D effort versus your partnered R&D efforts? Is there ample capacity at the Company for both, especially as you think about adding new partners and new partner programs, as they start to mature, they potentially could require more R&D efforts. So how should we think about that from a capacity standpoint and then how should we? And then second part is, how should we think about pre-partnered program prioritization going forward given the higher cash burn and you talked about it being offset by the potentially higher NPV of the wholly-owned programs, but just how she would just think about that going forward? I'm talking about more like long-term, maybe not 2023?

So first, in terms of balancing partner initiated, of which there are two types there, discovery, partnerships and co development versus pre-partnered. We're not trying to manage the business to a specific mix of those two. What we are doing is making sure that we're deploying our time and resources and capital and what we think are the most valuable programs to be working on. And as I said before, we want to be diversified across indications, across modalities and across risk reward profiles. In terms of capacity, one of the things we've really seen over the last year is a major improvement in our throughput in the front end of the engine, which is what we would expect and hope to have seen, given the investments that we've made over the last little while. So the total activity that's ongoing in partner initiative programs has gone up substantially. We've layered on top of that significant work on pre-partnered programs that was already being resourced, because it's part of long range technology development efforts. And we still have capacity to take on more programs at any time, so we're not capacity limited. Now, where that probably breaks down a bit is once programs move forward into the back end of the engine. So into translational science, and certainly into manufacturing and beyond where we're still constructing those capabilities, and so there's definitely a capacity limit there. And our job right now is to make sure that we are making the investments, doing the hiring, getting organized, getting economies of scale, so that capacity exists to take the programs that move into that part of the pipeline forward without having to take the foot off the gas. The second part of the question was about capital allocation. To be clear, pre-partnered programs are not about us shifting strategy in any way. So the intent is not to suddenly double down on a single thing and run it all the way through. We're taking these forward to the point where we can hand them off to partners and have created value by having solved a tough problem and anticipated partner needs. And that typically means that we're not going -- we don't expect to incur large costs, at least in the foreseeable future connected with those. And we do believe that as a business, that that has the potential to be cash generating in the near to medium term as we had those over. So, we actually think that the cash flow profile the pre-partnered programs is a positive feature that complements well, the discovery initiative partnerships, which because they are mostly connected with royalties have great cash flow, but it's substantially, on substantially longer timelines because it requires ultimately approval and delivery of therapies to patients.

We have no further questions. So, I'll hand back to Carl Hansen for any closing remarks.

Thank you everyone for joining the call. It's always a pleasure to provide an update and we look forward to the next one.

Thank you. This concludes today's conference call. Thank you all for joining. You may now disconnect from the call.