AbCellera Biologics Inc (ABCL) Q4 2022 Earnings Call Transcript

AbCellera Biologics Inc. (NASDAQ:ABCL) Q4 2022 Earnings Conference Call February 21, 2023 5:00 PM ET

Company Participants

Tryn Stimart - Chief Legal and Compliance Officer

Carl Hansen - Chairman, Chief Executive Officer, and President

Andrew Booth - Chief Financial Officer

Conference Call Participants

Tiago Fauth - Credit Suisse

Andrea Tan - Goldman Sachs

Gary Nachman - BMO

Robyn Karnauskas - Truist

Gaurav Goparaju - Berenberg

Antonia Borovina - Bloom Burton

Operator

Good afternoon. And invited to AbCellera's Full-Year 2022 Business Update Conference Call. My sanction is Daniel, and I will facilitate nan audio information of today's interactive broadcast. [Operator instructions] At this time, I would for illustration to move nan telephone complete to Tryn Stimart, AbCellera’s Chief Legal and Compliance Officer. Please proceed.

Tryn Stimart

Thank you. Good afternoon, and invited to AbCellera's full-year and 4th fourth 2022 business update. We're pleased to person you pinch america coming arsenic we will talk nan results announced successful our property merchandise issued aft nan marketplace closed today, which you tin find connected our investor relations website. With maine connected nan telephone coming are Dr. Carl Hansen, AbCellera's Chief Executive Officer and President; and Andrew Booth, AbCellera's Chief Financial Officer.

The webcast information of this telephone contains a descent position that we will mention to during nan call. If you are pursuing on connected nan telephone and wish to entree nan descent information of this presentation, you whitethorn do truthful connected nan investor relations conception of our website. For those of you who person accessed nan streaming information of nan webcast, please beryllium alert that location whitethorn beryllium a hold and that you will not beryllium capable to station questions via nan web.

This position whitethorn incorporate forward-looking statements pursuant to nan safe harbor provisions of nan Private Securities Litigation Act of 1995. Any forward-looking statements are based connected management's existent expectations and are taxable to definite risks and uncertainties. Please reappraisal our SEC filings for consequence factors that could effect our early performance. Our position and SEC filings are disposable connected our investor relations website. Note that each dollars referred to during our telephone coming are U.S. dollars.

Now, I americium pleased to move nan telephone complete to Dr. Carl Hansen.

Carl Hansen

Thanks Tryn. And acknowledgment everyone for joining america today. It’s my pleasance to supply an update connected our business and nan beardown advancement we made successful 2022. 2022 marked AbCellera’s 10th anniversary. And successful nan year, we deed a symbolic milestone [in starting] [ph] our 100th collaborated antibody find program.

Much has changed since we founded nan institution successful 2012. We person grown from six founders to complete 500 employees. We've opened accommodation successful 4 countries and person developed systems and processes to support our operations that person grown successful size and successful complexity.

Throughout, we person continued to create and merge technologies arsenic we build an motor for antibody find and improvement that we judge now stands astatine nan forefront of nan industry. And on nan way, we person expanded our business and evolved nan ways successful which we bring our increasing capabilities to our partners.

Two years ago, we embraced much alteration arsenic we made nan modulation to a publically traded institution and accelerated our growth. As we participate 2023, I judge we are now astatine an inflection constituent and are entering a caller shape of translator and maturation of our capabilities. Expanding our motor pinch translational science, manufacturing, and regulatory matters to create a unified way from thought to nan session and demonstrating our capabilities successful solving immoderate of nan astir difficult find problems successful nan industry.

Over nan past decade, AbCellera has been a institution of continual betterment and change. However, passim each this change, our strategy and nan halfway beliefs that underpin it person remained constant. Every business is built connected a hypothesis. Ours is that sustained investments successful exertion tin move nan needle successful supplier improvement and make our manufacture much productive.

Every business besides reflects a measurement of seeing nan world of philosophy. Ours is that nan surest way to occurrence is done building spot and utilizing it to create worth for others. That is why our superior attraction is not connected processing a caller drug, but alternatively connected building a institution that useful pinch others to find galore drugs. Our belief successful exertion and our accuracy connected really we create worth is captured successful our strategy.

Our strategy is simply this. First, to build an motor that is champion successful world astatine going from an thought to a drug; and second, to usage our motor pinch partners to build a ample and diversified portfolio of stakes successful early antibody therapies. The first portion of our strategy to build an motor for antibody find and improvement is an eager and semipermanent exertion task that encapsulates astir everything we do arsenic a company.

The problem we're moving to lick is to return a partner specification for a caller therapeutic antibody and move this into a curen that is fresh for objective testing. Our motor creates worth for nan manufacture by speeding up find and development, unlocking caller areas for antibody drugs, and by leveling nan playing section to make antibody find much accessible to supplier developers of each sizes.

Drug find is not done successful a azygous measurement and our motor is not built connected a azygous instrumentality aliases technology. It is simply a centralized solution that integrates expertise, technology, data, know-how, and infrastructure to alteration america to respond to immoderate problem that partners whitethorn person and to do truthful pinch precision and pinch speed.

The challenges of building specified an motor are formidable. It takes time, technology, expertise, capital, and mastery of nan complexity that is inherent successful doing antibody find astatine scale. The 2nd portion of our strategy is to build a ample and diversified portfolio of stakes successful early therapies.

Over nan years, our partnerships person evolved to see 3 different programme types. The first 2 types are partner initiated programs, which see find programs and co-development programs. The 3rd programme type known arsenic pre-partnered programs, arises from agelong scope R&D projects that activity to unlock precocious worth areas of antibody therapeutics. When successful, these efforts person nan imaginable to make wholly-owned assets for partnering.

Partner initiated find programs are nan largest constituent of our portfolio and person woody position that see near-term upfront and investigation payments, downstream milestones, and royalties connected occurrence and nan waste of products. Because near-term payments typically screen our costs of doing nan work, nan return connected marginal finance for these programs is high. The largest fraction of nan worth of these programs is associated pinch early royalty streams from approved drugs.

Royalty rates for these programs are typically successful nan low-to-mid single-digit scope and person accrued arsenic nan capabilities of our motor person grown. Partner initiated find programs correspond a ample number of programs successful which we person a mini royalty position. It is nan aggregate of these positions that has nan imaginable to create important semipermanent worth successful a measurement that is predictable and does not dangle connected nan occurrence of immoderate 1 circumstantial program.

Noteworthy partnerships for america successful 2022 see agreements pinch premier task superior groups, Versant Ventures and Atlas Venture. These relationships are valuable for connecting our motor to early shape innovation. In 2022, we besides entered into a caller business pinch AbbVie, highlighting nan worth we tin bring to ample and well-enabled partners.

Similarly, we announced our business pinch Regeneron past twelvemonth and nan advancement of our first programme pinch them towards precocious shape preclinical development. Although partner initiated find programs person a precocious return connected investment, nan bulk of nan returns will not beryllium realized until therapies scope nan market, which has historically taken an mean of much than 10 years.

Due to nan confidential quality of find programs, we are capable to supply only constricted accusation astir this portion of our portfolio pinch specifications connected immoderate circumstantial programme only disclosed erstwhile it reaches nan clinic. Because of nan constricted disclosure and nan agelong timelines, we judge this ample and important constituent of our portfolio whitethorn person been underappreciated, but should beryllium of liking to those investors who look for businesslike superior allocation pinch a semipermanent view.

Our 2nd type of partner initiated programs are co-developments. Although location are less of these programs successful our portfolio, immoderate 1 of them has nan imaginable to meaningfully effect our business. Co-development programs springiness america nan option, but not nan responsibility to co-invest successful nan sequential stages of programme development.

We statesman find pinch a 50% liking successful nan programme and person nan action to put connected a shape by shape ground to clasp this position. This besides gives america visibility connected nan information and nan advancement of each program. We announced our first co-development business successful 2021 and to day we person started activity connected six co-development programs.

We expect to prime last objective candidates for 1 aliases much of these programs successful nan adjacent 12 months to 18 months, which will let them to beforehand into CMC and IND enabling studies. In 2022, we announced a caller co-development business pinch Rallybio to bring treatments to patients pinch uncommon diseases.

Finally, we person been moving connected agelong scope exertion improvement projects that activity to unfastened up areas of therapeutic find wherever we judge location is not conscionable 1 target aliases 1 opportunity, but a full family of opportunities that could beryllium prosecuted. While nan superior nonsubjective of our pre-partnered activity is to grow nan capabilities of our motor successful precocious worth areas, these efforts whitethorn nutrient wholly-owned assets pinch nan imaginable to go first-in-class antibody therapies that reside ample areas of unmet aesculapian need.

Our pre-partnered programs are focused connected 3 areas including T-Cell Engagers, GPCRs & Ion Channels, and Pandemic Response. To date, we've started 5 programs directed against well-known coagulated tumor targets utilizing our T-Cell Engager platform. We expect nan first of these programs to beforehand nan improvement candidates wrong nan adjacent 12 months to 18 months.

In GPCRs & Ion Channels, we've initiated preparatory activity connected astir a twelve targets and six of these person now progressed to programme starts. While method consequence remains, we expect sharing information connected nan first objective campaigner resulting from this activity successful 2023.

Finally, our astir precocious pre-partnered programme is of people COVID-19, wherever antibody assets emerged from our efforts to create a pandemic consequence platform. We collaborated these assets pinch Lilly to bring our first 2 COVID-19 antibodies, bamlanivimab and bebtelovimab that helped astir 2 cardinal patients successful nan U.S. and worldwide.

As mentioned connected our erstwhile net call, we person a 3rd COVID-19 antibody that we judge will beryllium effective against each known variants of concern, including nan caller BQ1, BQ1.1, and XBB variants. This antibody continues to advancement done preclinical improvement pinch Lilly. If a clear way for objective improvement and diligent entree tin beryllium established, we guidelines fresh together pinch Lilly to move this programme guardant quickly.

Looking guardant into 2023 and beyond, we will proceed to allocate our resources to build nan pillars of our strategy. First, building exertion and infrastructure to create a centralized motor for nan find and improvement of antibody therapies astatine scale. Here, our adjacent to medium-term attraction is connected building retired our capabilities for guardant integration, including translational science, manufacturing, and regulatory capabilities to alteration afloat preclinical antibody find and development.

Second, continuing exertion improvement to unlock caller target classes and to alteration caller modalities, including our activity successful TCEs and GPCRs & Ion Channels. We are excited to spot these efforts advancing and look guardant to demonstrating our capacity successful bringing caller objective candidates guardant for development.

And third, executing connected collaborated programs to build a diversified portfolio of stakes successful adjacent procreation therapeutic antibodies. Our business improvement efforts stay focused connected connecting pinch nan highest worth programs, some pinch caller and existing partners. And arsenic our capabilities grow, we expect building deeper relationships that return our partners faster and further towards nan clinic.

As we execute connected this strategy, we are defining an breathtaking caller class of institution called tech-enabled biotech. We judge companies successful this space, including our own, must yet beryllium evaluated not connected nan committedness of their technology, but connected nan output of their platforms. We show this by solving find problems that are recognized arsenic difficult crossed nan industry, by signing caller and expanded partnerships pinch apical tier supplier developers and erstwhile nan molecules that we observe are advancing towards and done nan clinic.

And successful nan end, our occurrence will travel down to nan people. I americium fiercely proud of nan squad that we've built and what we've accomplished complete nan first 10 years of nan business. We person momentum. We are astatine an inflection point. And successful nan adjacent 2 years arsenic a team, we will show what our motor tin really do.

And pinch that, I'll now manus it complete to Andrew Booth, our CFO, to supply an overview of our full-year 2022 financials. Andrew?

Andrew Booth

Thanks Carl. Carl provided an overview of nan motor that we person built complete nan past decade. We estimate that we person invested complete $500 cardinal to build that engine, which spans astir a 500 squad members and is connected way to see complete 650,000 quadrate feet of laboratory and agency space, including CMC and GMP capabilities by 2024. To money our growth, we person raised astir $800 cardinal successful equity since 2012.

We person besides accessed important non-dilutive backing predominantly successful nan shape of royalties from our COVID-19 consequence wherever we person generated astir $1 cardinal successful gross cumulatively. In addition, we person besides secured complete $150 cardinal successful authorities grants and contracts. We prioritize investments pinch scalability, wide applicability, and precocious expected rates of return erstwhile we allocate capital.

Since 2012, we person accumulated net of astir $430 million. From nan operation of beardown operational execution and financing, we are successful a beardown liquidity position pinch astir $900 cardinal successful cash, rate equivalents, and marketable securities. Our cardinal business metrics speak to nan beardown momentum successful our business.

In 2022, we started activity connected 23 caller find programs pinch partners. Of these, 9 starts were successful nan 4th quarter, taking america to a cumulative full of 101 collaborated programme starts. The 23 programs we started successful nan twelvemonth correspond astir a 4th of each programs that we person ever started pinch partners and bespeak an almost 30% summation successful cumulative starts compared to nan extremity of 2021.

All starts successful nan 4th fourth included downstream participation. We ended 2022 pinch 174 programs nether statement pinch 40 unsocial partners. In 2022, our partners besides precocious 3 much molecules into nan clinic, bringing our full molecules successful nan session to 8 astatine nan extremity of 2022. Our portfolio is diversified crossed partner types and therapeutic indications.

The capabilities of our motor are broadly applicable to antibody based supplier improvement truthful we tin entree a wide action of programs successful nan manufacture by partnering. Of our 148 partner initiated programs pinch down streams, 90% are successful quality health. The mostly of our collaborated programs are successful oncology, neurology, and immunology, broadly reflecting nan activity successful nan industry.

Possessing a divers portfolio of programs ameliorate definite risks associated pinch individual supplier improvement programs and we judge diversification crossed partner type and denotation makes our portfolio perchance much robust comparative to portfolios pinch a much constricted focus. Our portfolio is besides diversified crossed programme types.

Our 3 programme types provides elasticity successful really we create and seizure value. They let america to heighten our level and our economics wherever nan worth we adhd to nan programs is peculiarly large. Partner initiated find was our first type of program. Out of a full of 131 partner initiated programs nether statement pinch downstream participation, we person started activity connected 69 programs.

We proceed to adhd programs to this portfolio and their ample measurement speaks to our portfolio diversification. The imaginable return we tin gain connected our incremental finance successful these programs is very high. We announced our first co-development programme successful 2021. Out of 17 specified programs successful our portfolio, we person started activity connected 6. These programs heighten our portfolio economics by giving america 50-50 co-ownership and nan option, but not nan responsibility to co-invest to support our ownership of these programs.

We announced our pre-partnered programme class successful 2022. These efforts successful exertion improvement pinch nan imaginable to – person nan imaginable to nutrient wholly-owned assets. To date, we person started 12 of these pre-partnered programs. Success successful partnering these assets could thrust meaningful worth successful deeper royalty stakes successful each program.

They besides person nan imaginable for ample upfront payments, which could bring important rate flows forward. The worth we adhd to programs is reflected mostly successful nan royalty rates that we negotiate. We proceed to prioritize much valuable programs alternatively of maximizing nan number of programs nether contract.

As a result, nan scope and mean negotiated royalty rates successful our portfolio is shifting favorably. As we reported past year, our mean royalty complaint was 2.4% crossed 37 partner initiated find programs pinch downstream information that were contracted betwixt 2015 and 2019. Between 2020 and 2022, nan mean royalty complaint has accrued to 4.1% crossed nan 112 programs pinch downstream information that we person signed during that period.

A 4th of nan programs pinch downstream information that we've signed betwixt 2020 and 2022 person nan imaginable to execute royalty rates supra 5%. We proceed to position our increasing database of molecules successful nan session arsenic circumstantial examples of our adjacent and mid-term imaginable gross from downstream milestone fees and semipermanent royalty payments.

During nan year, we saw 3 further molecules participate nan clinic. We tin now disclose that 1 molecule DNL919 was discovered by america successful our find business pinch Denali. Denali has precocious nan molecule into a Phase 1 objective proceedings pinch an denotation successful Alzheimer's disease.

The different 2 molecules were discovered and developed by partners, 1 of them undisclosed utilizing our Trianni humanized rodent level nether license. We congratulate NovaRock connected advancing NBL-020 pinch an denotation successful oncology arsenic their 3rd Trianni derived molecule into nan session and invited nan Phase 1 commencement of NBL-015.

Turning to revenue. Our gross for nan twelvemonth was astir $485 million. Our 2022 revenues were dominated by nan $443 cardinal of royalties that we earned from shipments of bamlanivimab and bebtelovimab during nan year. This was up from 375 cardinal successful 2021. We realized astir $1 cardinal successful milestone payments and astir $1 cardinal successful licensing interest gross successful 2022.

Finally, we earned astir $48 cardinal successful investigation fees successful relationship pinch our partner initiated find programs. This is up from 19 cardinal successful 2021. We person ever viewed nan royalties earned from our income of COVID-19 antibodies arsenic a root of non-dilutive funding. As Carl mentioned earlier successful nan call, if a applicable regulatory way is established, we are fresh to spell up pinch a 3rd COVID antibody together pinch our partner Lilly.

As it stands, we do not expect to person further royalties from our COVID-19 programme and expect our revenues to beryllium correspondingly little successful 2023. With aliases without these royalties from nan waste of COVID antibodies, we will proceed to support investments successful expanding nan capabilities of our engine, including our guardant integration into translational sciences, CMC and GMP, which we expect to beryllium operational successful 2025.

Turning to operating expenses. Our investigation and improvement expenses for nan twelvemonth were astir $108 million, compared to $62 cardinal successful 2021. This 75% summation reflects our continuing investments successful our business arsenic we grow nan capacity of our teams and nan capabilities of our motor to present connected a increasing number of find programs.

Notably, our build-out of nan teams for CMC and GMP manufacturing is now gathering gait heading into 2023. Approximately two-thirds of our R&D efforts proceed to beryllium directed astatine enhancing nan capabilities of our motor pinch nan remaining one-third relating to execution connected our partner initiated programs.

Sales and trading expenses for nan twelvemonth were astir $11 million, compared to astir $7 cardinal successful 2021. This astir 60% summation reflects our continuing investments successful business development. General and management expenses for nan twelvemonth were astir $55 million, compared to almost 42 cardinal successful 2021. This astir 30% summation was driven by nan request to support nan increasing business overall.

We were profitable for nan full-year of 2022 and are reporting net of astir $158 cardinal for nan year. This compares to net of astir $153 cardinal successful 2021. This consequence reflects nan nickname of royalties connected bamlanivimab and bebtelovimab offsetting investments to grow nan capabilities of our motor and moving find efforts for our partners.

As discussed earlier, we do not expect to person further royalties from our COVID-19 programme and truthful do not expect to beryllium profitable successful 2023. In position of net per share, our results for 2022 useful retired to a profit of $0.56 per stock successful a basal and $0.50 per stock connected a diluted basis.

Looking astatine rate flows, our operating activities for 2022 contributed astir $270 cardinal to our rate flow. This includes nan beardown royalties earned from our COVID antibodies successful nan first 3 quarters of nan twelvemonth and nan postulation of accrued accounts receivable from royalties connected income of bamlanivimab successful 2021.

As a portion of our treasury strategy, we support astir $500 cardinal invested successful short-term marketable securities and our finance activities for nan twelvemonth see an astir $250 cardinal nett summation successful these holdings. Also included successful our finance activities for nan twelvemonth is an astir $70 cardinal finance successful spot and equipment, arsenic good arsenic payments connected pinch our accommodation description , including our early GMP installation successful Vancouver.

Having surgery crushed for that facility, arsenic good arsenic connected nan caller office successful building successful 2022, we are group to proceed these investments into 2023 and 2024. As a reminder, our GMP installation is co-funded by nan Government of Canada's Strategic Innovation Fund. As a result, we vanished nan twelvemonth pinch complete $880 cardinal of unrestricted cash, rate equivalents, and marketable securities.

We stay successful a beardown liquidity position that allows america to afloat execute connected our strategy to proceed to grow nan capabilities of our motor and to do truthful pinch fantabulous visibility and runway. We proceed to judge that we person capable liquidity to money good beyond nan adjacent 3 years of finance successful nan maturation of our business.

With that, we'd beryllium happy to return your questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] The first mobility comes from nan statement of Tiago Fauth of Credit Suisse. Please proceed.

Tiago Fauth

Hey, great. Thanks for taking nan questions and congrats connected nan progress. Just a mates for me. One is connected nan pre-partnered program. So again, you had a batch of programme starts successful that category. How should we deliberation astir nan perfect timing successful wide owed to hunt for partners for those programs? I cognize that's astir apt going to beryllium a lawsuit by lawsuit basis, but funny what nan imaginable monetization business of [those programs] [ph]?

Carl Hansen

Hey Tiago, Carl here. Thank you for nan question. So, nan punch statement is, I deliberation you're right. We're going to look astatine each 1 of these opportunities arsenic they mature and it's apt that timing could beryllium different. Our strategy is to beforehand these to nan constituent wherever we person established that we person precocious likelihood aliases person really achieved objective candidates. And past to make that information available, astir apt successful a publication aliases surely erstwhile strategical astatine a meeting. That effort we expect fixed nan quality of these targets.

So, these are typically programs that are directed towards targets that are wide sought aft and admit it being arsenic precocious value. So, we judge that that disclosure is apt to kick-off discussions pinch partners. And past of course, we'll person to participate into those discussions and spot what is nan champion way for each peculiar asset.

Operator

Thank you. The adjacent mobility comes from nan statement of Andrea Tan of Goldman Sachs. Please proceed.

Andrea Tan

Hi, everyone. Thanks for taking my question. Maybe connected nan GPCR and ion transmission activity that you're readying connected highlighting this year, funny if you tin supply a spot much colour connected nan quality of those information disclosures. And past possibly fixed that this will autumn connected nan backmost of your activity pinch T-Cell engagers that you shared past year, really overmuch publication done do you deliberation location is to your broader level and your expertise to observe antibodies against these types of targets?

Carl Hansen

Thanks, Andrea. So, I'll commencement by talking astir nan GPCR & Ion Channel work. As mentioned successful nan prepared remarks, these programs person been launched not arsenic standalone programs, but successful relationship pinch agelong scope R&D activities that activity to unlock nan full class. So wrong nan people of Ion Channels and GPCRs, there's a ample number of targets that are validated.

Perhaps location are mini molecules that person worked, but location are problems pinch toxicity aliases specificity that would make antibodies an perfect solution. For these targets, that are mostly [on nan open] [ph], nan problem has been successful identifying antibodies pinch nan correct properties to make them into drugs. So, we've been moving connected respective of these programs.

As I mentioned, location is still consequence and I would surely opportunity that, we're not astatine nan constituent wherever immoderate of these targets tin beryllium addressed successfully, but we do expect that we'll get there. That activity is now gathering velocity and there's capable occurrence that we expect this year, we'll beryllium capable to bring guardant astatine slightest nan first illustration of a objective candidate.

So, nan information that we would stock connected a molecule for illustration that would of people see each nan characterization that shows that it hits nan target, that it has nan desired functional properties. And that it has nan correct biophysical properties to make it developable arsenic a drug. So, we're expecting aliases surely aiming to person nan first of those show up this year.

And arsenic you mentioned, those – that occurrence successful itself will beryllium seen arsenic valuable because these person nan imaginable to beryllium developed arsenic first-in-class aliases best-in-class assets, but moreover much important for america is that it demonstrates that nan strategy of investing successful solving these problems is paying off.

And erstwhile you’ve solved one, there's a higher likelihood you'll beryllium capable to get nan adjacent one. And so, we judge there's a batch of publication done into nan level by showing examples of solving problems that person remained outstanding nan manufacture for a decade. The aforesaid is true, of course, successful nan T-Cell Engagers abstraction that effort is not arsenic advanced, but we do expect to get to nan constituent of improvement candidates for nan first programme this year.

And successful our position layering connected successes complete nan past fewer years successful CD3, successful COVID-19, successful moving guardant programs for partners, layered connected top, occurrence successful GPCR's and Ion Channels and yet successful T-Cell Engagers, each of that reinforces our thesis that prolong investments successful exertion tin move nan needle and make it much accessible and applicable to get antibodies guardant for these problems.

Andrea Tan

Thanks, Carl. And past possibly conscionable 1 past question. Could you conscionable punctual america what successful your mind is nan correct operation of partner initiated co-development and pre-partnered programs?

Carl Hansen

Yes. So, I wouldn't opportunity that we're reasoning astir it arsenic nan correct mix. Our main statement of business is to make a ample and diversified liking successful programs that are being precocious by partners. And so, partner initiated programs are 1 constituent of that. And of course, location is nan find partnerships and co-development partnerships. Pre-partnered programs, arsenic I mentioned, travel retired of our exertion improvement work.

We person been investing to build capacity to make judge that we are capable to respond to each nan precocious value partner initiated programs that we tin find. And so, we're continuing to turn that business. Of course, if we spot opportunities that are connected pinch our exertion development, we will put successful those arsenic well. And we spot that arsenic anticipating nan needs and uncovering different measurement to bring precocious value assets into nan hands of partners for objective development.

Andrea Tan

Great. Thank you truthful much.

Operator

Thank you. Next mobility comes from nan statement of Gary Nachman of BMO. Please proceed.

Gary Nachman

Hi, guys. Good afternoon. Really conscionable pursuing connected that past question, Carl. So, connected nan different strategies of creating worth pinch some collaborated and pre-partnered programs, are those moving wholly successful parallel aliases do you expect to attraction a batch much connected nan pre-partnered programs going forward? So, different measurement of asking it is, do you deliberation it will beryllium harder to accelerate nan level of your collaborated programs?

Is location a constituent wherever it conscionable gets a small spot much mature that portion of nan business? And past really do things alteration for you erstwhile you person CMC and GMP capabilities successful 2025? How will that alteration really you deliberation astir some nan collaborated and nan pre-partnered programs and possibly really you're going to building economics astir those programs pinch those capabilities?

Carl Hansen

Thanks, Gary. So first, nan partner initiated programs that we do are nan breadstuff and food of nan business. And so, we are continuing to move that forward. Now, arsenic we've said connected erstwhile calls, our business improvement strategy is not to optimize measurement successful position of nan number of programs, but alternatively to make decisions that we judge will optimize nan worth that they correspond successful nan portfolio.

So that will beryllium a operation of uncovering partners that we judge person awesome ideas and are well-enabled to bring them forward. It will beryllium being capable to discuss position that springiness america a deeper economical liking successful those and connected pinch that is our expertise to show and to execute activities that adhd much worth to those programs.

So, surely arsenic we statesman to move towards guardant integration pinch translational science, pinch manufacturing, moreover building retired regulatory capabilities to thief nan smaller and little enabled partners, we're adding much worth and we would expect to participate much successful nan occurrence of those programs.

So that's really we spot partner initiated programs is, volume, I do judge it will increase, but overmuch much I deliberation nan measurement successful which we prime opportunities nan likelihood of them moving forward, nan velocity astatine which they move forward, and our economical information are immoderate of nan large levers that we deliberation astir successful position of maximizing value.

From that perspective, nan activity connected pre-partnered programs, which is astir taking nan inaugural to show capabilities that unlock caller areas, we spot arsenic wholly synergistic pinch that. It drives business towards america because we create and show capabilities.

And successful galore instances, peculiarly pinch nan larger companies, we will person move guardant programs wherever location is an liking and that has besides generated worth by redeeming clip and de-risking those programs. And so, we really spot those 2 parts of nan business arsenic 1 really aliases astatine slightest stepping limb successful arm.

Gary Nachman

Okay. That's helpful. And past possibly you could conscionable tally done a small spot connected nan past mates of collaborated programs. AbbVie and Rallybio, it seems they are a small spot connected offset into nan spectrum successful position of nan size of nan institution and really they're system successful position of AbbVie being responsible for nan targets aliases Rallybio that's really shared successful a co-development arrangement.

So, I'm conscionable funny if you spot successful position of nan opportunities retired there, is it – are location a batch for some of those types of partnerships? And really agelong did it return for those to really to consummate? Just truthful we get a consciousness of possibly what goes a small spot down nan scenes, conscionable pinch 2 caller examples? Thanks.

Gary Nachman

Sure. So, obviously, those are 2 deals pinch companies that person a very different profile. I would opportunity that nan caller business pinch AbbVie, which we're very excited astir is typical of overmuch of our activity pinch nan larger very enabled partners that person a existent way grounds and capabilities successful antibody therapeutics.

So, those engagements thin to beryllium driven by their teams uncovering problems wherever they request an other lever aliases an other advantage successful exertion to get those programs complete nan hump and commencement moving towards nan clinic. And location are nary shortage of programs for illustration that. So, there's a batch of imaginable marketplace opportunity amongst nan large and astir enabled players for illustration nan AbbVie's, for illustration nan Regeneron's, wherever they are actively willing successful moving antibody therapeutics into areas wherever it has been either difficult aliases impossible.

So that deal, I think, uncovering alignment early connected successful nan capabilities is very straightforward. Of course, it does return clip to contract, but that's portion of doing business successful this space. On nan Rallybio side, that's different awesome illustration of really our level tin present worth to partners.

So, present we person a institution that is based connected penetration into nan targets that is experienced, that has developed narcotics before. But that has not yet built soul capabilities for antibody discovery. And there, we tin prevention them nan request to reassemble those capabilities aliases build them from scratch and let them to attraction connected wherever they're really strong, while we return connected nan find and pre-clinical improvement of those assets. And that we spot arsenic a measurement to really portion retired redundancy successful nan industry.

I mentioned besides successful nan prepared remarks a mates engagements that we person made pinch premier task superior groups and I deliberation that's different illustration wherever you've sewage innovation, you've sewage capital, you've sewage executives, a business idea. And from our perspective, there's nary request for these companies to request to reinvent each nan substructure of innovation. They should beryllium focused connected wherever they tin really present worth and of people that's what a centralized motor is expected to do and that's portion of our mission.

Gary Nachman

Okay. That colour is really helpful. Thank you.

Operator

Thank you. The adjacent mobility comes from Robyn Karnauskas from Truist. Please proceed.

Robyn Karnauskas

Good try. Thanks for taking my question. So, I conscionable had a few. Just one, does nan caller NovaRock molecule that's entering nan clinic, tin you talk astir whether it has downstream information successful it? And my 2nd mobility is connected woody terms. So, nan statement you signed successful nan [last year] [ph] astir apt person a little royalty structure. And arsenic you're building retired your capabilities and fixed really agelong sometimes you tin return pharma to move to nan clinic, is location a measurement for you aliases nan partner to amend nan position of nan business to get much progressive aliases to person higher royalty rates? Is that thing that you deliberation mightiness hap astatine all?

And past my past mobility is, really has it changed since nan IRA and nan large attraction connected biologics? Your interactions pinch your partners, arsenic acold arsenic nan request to create caller molecules accelerated that are best-in-class. I'm conscionable funny if you've seen a displacement since nan IRA was announced? Thanks.

Andrew Booth

Hey, Robin, Andrew here. I'll return each of those successful turn. So, nan caller NovaRock molecule, yes, it does so person a downstream information and a royalty associated pinch it. That's why we do see it connected that chart. With regards to nan woody position that we person pinch our partners, I mean, we person – successful each of these arrangements, we person benignant of an understood scope of activity that we're doing and nan agreed economics and position associated pinch that scope of work.

It's not contemplated that we would alteration that materially passim nan execution of nan programme and surely not pinch an intent to travel to a renegotiation astatine immoderate constituent later successful nan partnership. So, I deliberation those position aliases those contracts, benignant of guidelines connected their ain pinch a group scope of activity pinch nan intent for america to do our activity and past present backmost to nan partner what is promised for them to proceed connected nan development.

You mentioned a remark arsenic good that I conscionable want to clarify, it sounded arsenic though you indicated that nan royalty rates had decreased successful nan caller past, but that's not nan case. The royalty rates person been increasing.

Robyn Karnauskas

The aged ones. Yeah. The aged ones, I was talking astir nan aged contracts [indiscernible] nan aged programs wherever nan little royalty rates are like, do you person – would you discuss – would beryllium capable to discuss higher royalty rates arsenic these companies spot that you're much tin – you person greater capabilities and that they whitethorn request that because pharma is not moving faster?

Andrew Booth

Actually, it's a awesome mobility and this is betwixt 2021 and 2022. We made a definite alteration successful nan quality of nan contracts we were negotiating. In 2021, you'll spot we negotiated respective multi-year, multi-target deals for moreover 8 aliases 10 targets astatine a time. We've since indicated connected calls that we've moved distant from locking ourselves into nan economics connected aggregate targets moreover erstwhile we are adding capabilities.

So, what we're tending to do much and much and you spot it successful our results is discuss smaller contracts for programs nether statement pinch definite economics because location really isn't nan opportunity to spell backmost to nan partner and renegotiate nan economics erstwhile they're agreed to astatine nan signing of nan contract.

The opportunity we person is to person a renewal aliases repetition engagement pinch an existing partner erstwhile they've seen our capabilities and past we person nan opportunity connected nan consequent programs to discuss again nan royalty rates fixed nan accrued capabilities and immoderate nan accrued worth is that we would beryllium doing, we would beryllium bringing to that partner.

That's much our posturing coming than it had been immoderate years ago. And so, we don't spot nan opportunity to reopen those older negotiations from 2019 and antecedently to alteration nan economics successful those contracts. Hopefully, that answers nan mobility much completely.

Robyn Karnauskas

Yes. Exactly. And past conscionable a mobility connected nan IRR. I'm conscionable funny if you're seeing – we're decidedly proceeding a displacement successful large pharma world, and biotech world astir what they're prioritizing. So, I'm conscionable funny if you're seeing a displacement successful what types of programs group are leveraging your exertion for?

Carl Hansen

I'd opportunity conscionable mostly nan IRA and surely really biologics are much favorably treated successful that archive aliases successful that regulation. It decidedly is simply a tailwind for america successful nan business pinch much group shifting towards antibody – imaginable antibody treatments. I deliberation that bodes good for america complete nan longer-term. In nan very caller past, I'm not judge we've rather seen nan elephantine uptick, but I deliberation it would only beryllium a tailwind for america successful our business going forward.

Robyn Karnauskas

Great. Thanks a lot.

Operator

Thank you. The adjacent mobility comes from Puneet Souda of SVB Securities. Please proceed.

Unidentified Analyst

Hi. You person Michael connected for Puneet. Congrats connected 4Q and a beardown 2022. So, now that COVID royalty is starting to normalize, I was wondering if you could supply immoderate guardrails for possibly programme starts aliases imaginable caller adds nether statement for nan year? [13] [ph], successful 2022 and 2023, you had astir akin programme start. Is that a cadence that we should expect going guardant aliases do you spot it lifting from this twelvemonth into 2023?

Carl Hansen

Thanks for nan question, Michael. So, first of all, connected nan COVID revenues, yes, we do – arsenic we mentioned successful nan prepared remarks, we are not forecasting immoderate early gross from COVID molecules. Of course, we guidelines astatine nan fresh pinch our partner Lilly if a regulatory way opens up pinch a molecule that we've discovered pinch them. And what we spot that really arsenic upside to 2023 and beyond. In position of programme starts, arsenic I think, you know, we haven't provided guidance successful nan past connected programme starts.

We person been saying, we've had a very beardown 4th successful Q4 pinch 9 programme starts. And I deliberation that mostly reflects conscionable nan momentum we have. And our attraction connected nan execution successful nan business of moving connected these pinch our partners. And successful addition, of course, we person nan programme starts relating to nan pre-partner programs.

Our cardinal metric is really for only partner initiated programme starts and we proceed to spot awesome momentum there, arsenic good arsenic – and that – we do spot that continuing into 2023. But we still do not scheme to springiness immoderate circumstantial guidance pinch regards to programme starts successful 2020 – for 2023. I would constituent to and I'm judge you noticed nan capacity connected investigation fees year-over-year.

This again points to nan truth that we're doing much per programme and that is straight reflected successful nan investigation interest gross that we're – that we are earning connected nan execution of each of those programs. That's wherever we're really focused alternatively than connected specifically nan number of programme started. How are we adding much and much worth to each programme that we're moving on, advancing those find efforts done to molecules that yet tin get to patients successful nan clinic.

Unidentified Analyst

Okay, great. That's really helpful. And past 1 point we're besides wondering, so, we've heard a small spot astir increased, I conjecture scrutiny connected superior deployment. And we were wondering if this has reflected favorably for nan business fixed your, I conjecture much superior businesslike offering aliases is that having immoderate bearings on, I guess, your trajectory for programme start?

Carl Hansen

Yes, I'll do my champion to reply that question. As you know, we're successful a very beardown liquidity position and we person large investments, which I deliberation we've been communicating consistently this guardant integration into translational sciences, CMC, GMP. It does require perfectly immoderate allocation of superior to build-out those capabilities.

We of people are doing that very superior businesslike measurement pinch nan co-funding from nan authorities of Canada. And we person successful wide taken advantage of authorities programs that are retired location successful nan past and we'll proceed to do that for immoderate disposable authorities programs successful nan early to really make judge we're investing successful a very businesslike measurement nan superior that we have.

I don't deliberation we've seen immoderate – I deliberation nan words you utilized were accrued scrutiny connected nan deployment of that capital. I deliberation we've been rather transparent successful what our plans are. And…

Unidentified Analyst

Just to clarify, this is for customers that we've been proceeding immoderate biopharma person been focusing connected making their rate runway extend. So, this is not astir [accelerate capital] [ph] deployment, but alternatively [accelerate customers] [ph], if they're – nan determination is astir really do we proceed pinch capital? That benignant of question, yes.

Carl Hansen

Okay. If this is simply a macro mobility astir galore of our customers and their expertise to deploy capital, I deliberation that nan truth that nan marketplace is down astatine nan infinitesimal really plays to our strengths wherever companies tin travel to america and we tin successful a very superior businesslike measurement wherever we are deferring nan lion's stock of nan economics to nan downstream information done milestones and royalties, they tin quickly get up and moving and person america put champion of world capabilities connected discovering antibody for them successful nan shortest magnitude of time.

That's a awesome worth proposition wide and particularly successful a tight macro market. So, I deliberation that that plays to our strengths. And tin thief america get them to a worth inflection constituent possibly much quickly than their alternative. So, I deliberation that is simply a tailwind for america astatine nan moment.

Unidentified Analyst

Okay. Thank you very much.

Operator

Thank you. The adjacent mobility comes from [indiscernible] Stifel. Please proceed.

Unidentified Analyst

Hi, guys. This is [indiscernible] connected for Steve astatine Stifel. I conscionable person a speedy mobility regarding nan pre-partnered T-Cell Engager program. So, I'm wondering, like, really differentiated your selected T-Cell Engagers should beryllium successful bid to guarantee, you know, typical partnering? But connected nan flip side, like, if you can't find a partnering, like, really acold successful nan clinic, I guess, would you beryllium capable to for illustration beforehand these selected T-Cell Engagers successful nan session by yourself? Like really acold tin you reside it successful nan clinic? So, convey you.

Carl Hansen

Thanks, [indiscernible]. This is Carl taking nan question. So, conscionable arsenic a backdrop, nan T-Cell activity is an effort we started a small spot complete a twelvemonth ago. First, moving to build retired what we judge is now nan broadest and highest value sheet of anti-CD3 antibodies, which we tin past harvester pinch our bispecific platform, OrthoMab and utilizing automation and precocious throughput functional characterization, prime antibodies that person nan bispecific antibodies that person potent tumor killing, moreover against targets pinch debased aboveground density and that simultaneously person desirable profiles successful position of cytokine release, which has been 1 of nan main issues limiting these therapies.

So, we person now initiated 5 programs arsenic portion of that effort to show that capability. We still will request to do nan preclinical activity to show that these activity successful animal models and yet this needs to beryllium tested successful nan clinic. But it's worthy highlighting that successful nan section a ample mostly of nan T-Cell Engagers that person been brought forward, person been brought guardant connected either nan aforesaid aliases a very adjacent version of nan aforesaid CD3 molecule that group person been utilizing for complete a decade.

So, we've sewage a script we’re conscionable based connected nan scarcity of disposable molecules. The aforesaid research has been tally again and again and again, though pinch immoderate changes successful format and of people indication. So, our presumption is that that's not nan measurement to lick nan problem. Solving nan problem requires caller invention and we are assured that we'll beryllium capable to show that.

In position of nan partnering, we person been engaged pinch a number of conversations pinch immoderate of nan very ample players successful nan abstraction that are alert now that this is going to beryllium an important people for oncology. Those conversations are going very well. And we are optimistic that we'll beryllium capable to find a partner for 1 aliases much of those comparatively soon. But of people that activity is still ongoing.

What we're not going to do is return our ft disconnected nan brake. So, we are equipped successful bid to bring these guardant and we will proceed to move them guardant truthful that we're not losing clip connected those. And successful nan background, we do expect we whitethorn commencement immoderate different programs to show this successful nan near-term.

Unidentified Analyst

Thank you.

Operator

Thank you. The adjacent mobility comes from Gaurav Goparaju of Berenberg. Please proceed.

Gaurav Goparaju

Okay. Nothing much from maine guys, really congratulate connected nan twelvemonth and nan 4th and talk soon. Thank you.

Carl Hansen

Thanks, Gaurav.

Operator

Thank you. The adjacent mobility comes from Antonia Borovina of Bloom Burton. Please proceed.

Antonia Borovina

Great. Thanks and congrats connected a coagulated quarter. My first mobility is conscionable pinch regards to nan pre-partner programs. I'm conscionable wondering, what could that look like? Would it apt conscionable beryllium a azygous antibody campaigner that you would partner aliases would a woody apt impact immoderate backup candidates pinch somewhat different properties?

And past my 2nd mobility is pinch regards to nan macro situation and I'm conscionable wondering if nan broader assemblage downturn has impacted nan types of deals, partners want to pursue? Like I'm reasoning specifically pinch regards to nan smaller players and whether they're much willing successful pursuing co-development deals pinch you to offload immoderate of nan improvement costs?

Carl Hansen

Sure. So, this is Carl again. So, successful position of pre-partner programs, we are advancing these programs chiefly successful relationship pinch exertion improvement and we judge that bringing guardant fresh objective candidates is nan strongest impervious that nan level is moving and that we're really solving nan problems. We would expect that erstwhile we do that, we would person a lead objective campaigner that would beryllium nan focal constituent of immoderate discussion. But of course, connected a lawsuit by lawsuit basis, if location are backups and if that's appropriate, that could easy beryllium portion of a deal. So, I don't deliberation I would estimate connected that unless we had a peculiar lawsuit that we were discussing.

In position of nan marketplace information and what we are perceiving from partners. As Andrew concisely touched connected it, it is simply a difficult market, but successful galore ways, our business is rather robust to this. So, from our view, there's an nether – there's a instauration of a batch of terrific subject and invention still successful nan industry. There's a batch of superior successful nan backstage assemblage and caller companies being formed. And our business exemplary allows those companies to move guardant much quickly and pinch little investment. And so, we judge that that smaller institution aliases early innovations assemblage of nan marketplace is 1 wherever we are becoming much charismatic astatine slightest connected a comparative ground successful nan existent conditions.

I don't deliberation that we've seen an accrued activity aliases liking successful co-development. And co-development opportunities much often hap erstwhile we hap to meet a group wherever location is simply a really awesome synergy and capacity and wherever we go convinced that location is an absorbing opportunity to spell guardant and past that speech proceeds. But to date, we haven't seen that, but of course, it's still early.

Antonia Borovina

Okay. Thank you.

Operator

Thank you. And nan past mobility comes from Do Kim of Piper Sandler. Please proceed.

Unidentified Analyst

Hi. This is [Skyler] [ph] connected for Do. Thanks for taking my question. For your partner initiated programs, what is nan variety of really good defined nan partner's find scheme is erstwhile nan collaboration begins? And does that alteration importantly among your large pharma customers? And really overmuch does nan first find scheme effect your determination some to take partners and nan woody terms? Thanks.

Carl Hansen

Hey, [Skyler] [ph]. Great question. I deliberation location is decidedly variability and really good defined nan programme is aliases nan connection of activity aliases – and that is thing that usually our R&D squad will activity pinch nan R&D squad of our partner to further disagreement moreover earlier a statement gets finalized.

So, I deliberation it's – erstwhile that connection of activity gets completed for nan target of interest, we person to person a very clear knowing of what is getting delivered. And this is location wherever really AbCellera tin bring a batch of worth and moreover defining what precisely is nan output that nan partner is looking for.

Really focused connected nan years of acquisition and 100 programs that we've worked connected to activity towards that objective campaigner that tin really move guardant into translational sciences, CMC and GMP manufacturing and past yet to patients. There is immoderate variability and I deliberation we're becoming much and much experts successful really knowing really to specify that programme from nan start.

Unidentified Analyst

Got it. Thank you and congrats connected nan quarter.

Operator

Thank you. And pinch that we will reason our question-and-answer information of today's call. I would now for illustration to walk nan telephone backmost complete to Carl for closing remarks.

Carl Hansen

Great. Thank you each for joining america today. This remains an breathtaking clip for AbCellera. And we're looking guardant to keeping you updated connected our advancement connected early calls. Thanks truthful much.

Operator

And pinch that, we will reason today's convention call. Thank you for participating. You whitethorn now disconnect your lines.