Executive Summary / Key Takeaways

• AbCellera is strategically transitioning from a platform and partnership-centric model to a clinical-stage biotech, focusing capital and resources on building a proprietary pipeline of antibody therapeutics.
• The company's differentiated AI-powered antibody discovery platform, capable of tackling challenging targets like GPCRs, ion channels, and T-cell engagers, is foundational to this pivot and provides a competitive edge in identifying novel, high-potential drug candidates.
• The first two wholly-owned programs, ABCL635 (targeting NK3R for VMS) and ABCL575 (an OX40 ligand antagonist), are on track for CTA filings in Q2 2025 and Phase 1 clinical trial starts in Q3 2025, representing critical near-term catalysts.
• Significant investments in infrastructure, including a new headquarters and a clinical manufacturing facility, are nearing completion in 2025, expected to reduce future capital expenditures and enable in-house manufacturing for clinical supply.
• AbCellera maintains a strong liquidity position, with approximately $810 million in total available capital as of March 31, 2025, providing a funding runway projected to extend well beyond the next three years of increasing pipeline investments.

The Evolution of AbCellera: From Platform Powerhouse to Pipeline Builder

AbCellera Biologics emerged with a mission to revolutionize antibody drug discovery, aiming to bring better therapeutics to patients faster by combining expertise, cutting-edge technologies, and integrated infrastructure. For years, the company primarily operated as a platform and partnership business, leveraging its capabilities to identify antibodies for partners ranging from innovative biotechs to leading pharmaceutical companies like Eli Lilly (LLY). This model generated revenue through research fees, technology access payments, and offered significant potential upside through downstream clinical and commercial milestones and royalties on approved products. Early success, notably with the discovery of COVID-19 antibodies like bamlanivimab and bebtelovimab in partnership with Lilly, demonstrated the platform's power and generated substantial, albeit fluctuating, royalty revenue in 2021 and 2022.

However, the inherent variability of partnership-dependent revenue, particularly highlighted by the cessation of COVID-19 antibody royalties, coupled with a maturing platform and significant capital raised, prompted a strategic re-evaluation. In late 2023, AbCellera made a decisive pivot to transition into a clinical-stage biotech. This strategic shift involves a fundamental reallocation of resources, prioritizing the discovery and development of a proprietary pipeline of wholly-owned and co-owned antibody drug candidates. While maintaining select strategic partnerships, particularly those focused on co-development or leveraging emerging platforms like T-cell engagers (TCEs), the emphasis has clearly moved towards capturing greater long-term value by advancing assets through clinical development internally.

This transition is not merely a change in focus; it is underpinned by substantial investments in both technological capabilities and physical infrastructure. Over the past several years, AbCellera has been building out its integrated platform, including significant capital expenditures on a new corporate headquarters (completed in Q3 2024) and a clinical manufacturing (CMC/GMP) facility. These facility investments are on track for substantial completion in the first half of 2025, with the GMP facility expected to come online by the end of the year. This forward integration into manufacturing is a critical step, intended to provide greater control over clinical supply, potentially accelerate timelines, and reduce reliance on third-party contract manufacturers as the internal pipeline advances.

Technological Foundation: The Engine of Discovery

At the heart of AbCellera's strategy is its differentiated technology platform for antibody discovery. This platform integrates high-throughput screening, single-cell analysis, and advanced computational biology, including AI and machine learning, to search, decode, and analyze natural immune responses. The company claims this integrated approach offers significant advantages over traditional methods, particularly in its ability to efficiently find antibodies against challenging targets and identify candidates with desirable therapeutic properties.

A key area of focus has been the development of capabilities to target multi-pass transmembrane proteins, including GPCRs and ion channels. These target classes are notoriously difficult for antibody discovery due to their complex structures and presentation on cell membranes. AbCellera's success in advancing ABCL635, the first program from its GPCR and ion channels platform, into the pipeline is viewed by management as an important proof point of the technology's ability to unlock these high-value target classes. These challenging targets represent approximately half of the company's preclinical programs, indicating a strategic focus on areas where its technology can provide a distinct competitive edge.

Another emerging area is the T-cell engager (TCE) platform. This platform leverages a library of optimized CD3 binders and bispecific formats, combined with high-throughput screening and biological understanding, to design molecules that can redirect T-cells to kill target cells. AbCellera is evaluating several TCE programs for potential pipeline inclusion, including candidates targeting PSMA and B7-H4 in oncology, and CD19 for autoimmunity. The company highlights preclinical data suggesting its PSMA and B7-H4 TCE leads show comparable tumor cell killing to potent clinical benchmarks but with significantly lower cytokine release in in vitro studies. This profile, if replicated clinically, could potentially lead to improved safety, enabling higher dosing and better efficacy compared to existing or competitor TCEs. For the CD19 TCE program in autoimmunity, the goal is to achieve deep B-cell ablation comparable to CAR T therapies, but with the commercial advantages of a standard drug format, aiming for a best-in-class safety profile and convenient delivery.

The strategic 'so what' of this technological differentiation is clear: it enables AbCellera to pursue novel targets and design molecules with potentially superior profiles, forming the basis for a differentiated internal pipeline. This technological moat is crucial for competing in a crowded biotech landscape and is expected to drive the value creation in the company's new clinical-stage model.

Financial Performance Reflecting Transition and Investment

AbCellera's recent financial performance directly reflects its strategic pivot and ongoing investments. Total revenue for the first quarter of 2025 was $4.2 million, a significant decrease from $10.0 million in the same period of 2024. This decline was primarily driven by a reduction in research fees ($4.1 million in Q1 2025 vs. $9.8 million in Q1 2024), a trend management expects to continue as the focus shifts away from high-volume discovery partnerships towards internal programs and select co-development efforts.

Operating expenses remain substantial, driven by the increasing investment in the internal pipeline and platform development. Research and development expenses (exclusive of depreciation and amortization) increased by 8% to $42.5 million in Q1 2025 compared to $39.3 million in Q1 2024. This increase is attributed to continued program execution and investment in internal and partnered programs, including compensation-related costs and third-party R&D expenses.

General and administrative expenses decreased slightly to $16.2 million in Q1 2025 from $17.4 million in Q1 2024, though these expenses have been impacted by costs related to intellectual property defense in previous periods. The net result was a net loss of $45.6 million for Q1 2025, compared to a net loss of $40.6 million for Q1 2024. The 2024 net loss also included non-cash impairment charges related to in-process R&D from prior acquisitions, reflecting portfolio prioritization decisions.

From a liquidity perspective, AbCellera remains well-capitalized. As of March 31, 2025, the company held $605.3 million in cash, cash equivalents, and marketable securities.

While this balance decreased by $20.3 million since December 31, 2024, due to cash used in operations and investments in facilities, the company's operating cash usage decreased significantly in Q1 2025 ($11.6 million used) compared to Q1 2024 ($41.7 million used), partly due to favorable working capital movements and an increase in deferred revenues. Including available secured government funding (CAD 300 million committed in May 2023), total available liquidity stood at approximately $810 million as of March 31, 2025. Management projects this capital base is sufficient to fund operations and planned investments well beyond the next 36 months, mitigating the need for additional external financing in the near term.

Competitive Landscape and Strategic Positioning

The biotechnology industry is highly competitive, with numerous players vying for position in antibody discovery and drug development. AbCellera competes with large multinational pharmaceutical companies like Regeneron (REGN), Amgen (AMGN), and Eli Lilly, as well as established and emerging biotechnology firms and research institutions. These competitors often possess significantly greater financial, manufacturing, marketing, and human resources.

Comparing AbCellera to large, established players like Regeneron, Amgen, and Eli Lilly highlights key differences in scale, financial health, and strategic focus. While these larger companies boast robust revenue growth (e.g., Regeneron ~15-20%, Amgen ~8-10%, Lilly ~20-25% annually in 2024 estimates) and strong profitability margins (Gross Margins typically 80-85%, Net Margins 25-30%), AbCellera is currently operating at a loss, with negative margins reflecting its investment phase. Their sheer scale also provides advantages in manufacturing efficiency and global market reach.

AbCellera's competitive positioning relies on its technological differentiation, particularly its AI-powered platform's ability to tackle challenging targets and potentially develop molecules with improved profiles. For instance, in the competitive OX40/OX40 ligand space, where Sanofi's (SNY) amlitelimab is in Phase 3 and Amgen's rocatinlimab has shown mixed results, AbCellera's ABCL575 is engineered for high potency, excellent developability, and extended half-life, aiming for a best-in-class profile with less frequent dosing. In the emerging TCE space, where PSMA and B7-H4 are targets of interest for multiple companies, AbCellera's preclinical data suggesting lower cytokine release compared to benchmarks could be a significant differentiator if validated clinically.

The strategic pivot to building an internal pipeline is a direct response to this competitive environment. By developing wholly-owned or co-owned assets, AbCellera aims to capture a larger share of the potential value generated by its discoveries, rather than relying solely on downstream payments from partners who control clinical development and commercialization. This allows AbCellera to direct its technology towards targets and indications where it believes it can create the most significant differentiation and value, such as difficult GPCRs/ion channels or novel TCE applications in autoimmunity.

However, this strategy also introduces new risks, including the high cost and inherent uncertainty of clinical development. Unlike its larger competitors with established clinical and commercial capabilities, AbCellera is building these functions, which requires significant investment and carries execution risk. The company also faces ongoing intellectual property litigation (e.g., with Bruker (BRKR) and Schrader), which incurs substantial legal costs and could impact its competitive standing if unfavorable outcomes occur.

Outlook and Key Milestones

AbCellera's outlook is firmly focused on executing its transition to a clinical-stage biotech. The key priorities for 2025 are centered around advancing the lead pipeline candidates and completing the foundational infrastructure.

Specific milestones include:

• Completing the Clinical Trial Application (CTA) process for ABCL635 and ABCL575 in Q2 2025.
• Initiating Phase 1 clinical trials for both ABCL635 and ABCL575 in Q3 2025.
• Nominating one or more additional development candidates and moving them into CTA-enabling studies, with a goal of advancing, on average, two new candidates per year into this stage.
• Completing major platform investments, including the corporate headquarters and clinical manufacturing facility, by the end of Q2 2025, with the manufacturing facility becoming operational later in the year.

Management expects cash usage for operating activities in 2025 to be similar to 2024 levels, reflecting continued investment in R&D and pipeline development. Capital expenditures are projected to decrease significantly in 2025, approximately half of 2024 levels, weighted towards the first half as facility construction concludes. The substantial liquidity position is anticipated to provide ample funding for these activities for the foreseeable future.

Early clinical readouts for ABCL635, expected by mid-2026, will be critical for validating target engagement and early efficacy, providing important data to inform future development decisions. Similarly, early data from ABCL575 will be key to assessing its profile, particularly its half-life and potential for differentiated dosing.

Conclusion

AbCellera is at a pivotal juncture, actively transforming itself from a technology platform provider into a clinical-stage biotechnology company. This strategic pivot, initiated in late 2023, is driven by the ambition to leverage its differentiated AI-powered discovery capabilities to build a valuable proprietary pipeline and capture a larger share of the potential value in antibody therapeutics. The company's focus on challenging target classes and emerging modalities like TCEs, coupled with significant investments in infrastructure like its new manufacturing facility, positions it to compete in high-value markets. While this transition involves substantial R&D investment and introduces the inherent risks of clinical development, AbCellera is well-supported by a strong liquidity position that provides a significant runway to execute its strategy. The successful initiation of Phase 1 trials for its lead candidates in Q3 2025 and the subsequent clinical readouts will be crucial tests of this new direction and key determinants of the company's future trajectory and value creation potential.