AbCellera Biologics Inc. Common Shares 2026 Q2 Earnings Call

Hello, everyone. Thank you for joining us for AbCellera's second quarter 2026 earnings call. I'm Tryn Stimart, AbCellera's Chief Legal and Compliance Officer. Dr. Carl Hansen, AbCellera's President and CEO, and Andrew Booth, AbCellera's Chief Financial Officer, are speaking on today's call. During this call, we may make statements about our strategic priorities and financial outlook based on our current expectations and in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our statements are subject to a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those described. Please review the Risk Factors section of our most recent Form 10-K and subsequent 10-Q filings with the SEC for a more detailed discussion of these risks. AbCellera assumes no obligation to update any forward-looking statements to reflect events or circumstances after today's date.

Our presentation today, our earnings press release, and our SEC filings are available on our investor relations website. The information we provide about our pipeline is intended for the investment community and is not promotional. As we transition to our prepared remarks, please note that this call is being recorded and will be available for replay on our investor relations website, and that all dollars referred to during the call are US dollars. After our prepared remarks, we will open the lines for questions and answers. Now, I'll turn the call over to Carl.

Thanks, Tryn, and thank you everyone for joining us today. The most important data readout this year is the top-line results for ABCL635 in the treatment of moderate to severe hot flashes associated with menopause. Last quarter, we shared our interim phase I data that showed robust and sustained target engagement in healthy male volunteers and supported quickly advancing into a phase I study in post-menopausal women experiencing moderate to severe hot flashes. Recruitment in this study accelerated through H1, and we completed enrollment and initial dosing of patients in June, well ahead of schedule. Based on this, we expect a top-line data readout very soon. If the data is positive, we believe ABCL635 will be highly de-risked.

As noted in our last call, we've been preparing for next steps, which would include late-stage clinical development in moderate to severe VMS associated with menopause and clinical studies to evaluate ABCL635 in treating VMS associated with cancer treatment. Turning to our broader portfolio, ABCL688 and ABCL386 continue to progress through IND-enabling activities, and we expect both to enter phase I/II studies in 2027. We will disclose more information on these programs when they enter clinical studies. Our phase I trial for ABCL575 completed dosing and is on track for a readout in Q4. As previously discussed, we intend to complete phase I studies, and we currently have no plans to develop it past phase I. Finally, I had previously communicated a goal of moving another program into IND-enabling activities in the first half of this year.

Although we missed this timeline, we are making good progress, and I'm confident in the productivity and innovation of discovery. The most significant public disclosures since our last earnings call are related to business development associated with our T-cell engagement platform. As a reminder, it was five years ago that we started working on TCEs, and since then, we have invested heavily in the platform. Our efforts began with the hypothesis that more diverse CD3 binders would be important for engineering TCEs with improved therapeutic properties. Our internal work to date has proven this to be true, but it's also revealed that diversity of CD3 binders alone is not sufficient. Today, we know that repeated success in generating optimal TCEs requires a comprehensive toolkit of binders, technologies, assays, models, and biological insight.

Accordingly, our platform now includes diverse panels of CD3 targeting antibodies along with proprietary panels of costimulatory antibodies to enhance and fine-tune TCE function, scalable protein engineering workflows to create a large diversity of binder combinations and formats, scalable in vitro assays to assess TCE function and development properties, experience in the translation between in vitro assays and in vivo models across multiple targets, and increasingly, a connection between TCE properties and third-party clinical data. Together, we believe this creates a highly enabled platform for developing multi-specific TCEs with broad applications across oncology and autoimmunity. While we are leveraging this capability to advance internal programs, we also view it as a key platform for strategic partnerships. Last year, we announced our first significant TCE collaboration with AbbVie. Adding to this, we have recently entered into two new TCE collaborations with Vertex and with Jazz.

These two deals are adding over $110 million in upfront cash to our balance sheet and have the potential for larger value in downstream payments and tiered royalties on net sales. Last week, we announced our most recent collaboration, which is with Vertex, focused on TCEs for autoimmune diseases and other conditions. Under the terms of the deal, AbCellera will receive $28 million in upfront payments, is eligible for potential downstream payments and tiered royalties on net sales, and as a potential option to conduct process development and clinical manufacturing. In June, we also announced a collaboration with Jazz Pharmaceuticals that includes three confirmed discovery programs with $84 million in total near-term upfront payments. We have received $56 million in upfront payments for the first two programs, and we will receive another $28 million for the third program, which will be initiated within the next 12 months.

Under the agreement, AbCellera is also eligible to receive over $2 billion in potential downstream payments, along with mid-single digits to low double-digit tiered royalties on net sales. The deal also includes a mutual option for two additional discovery programs under the same financial terms, and a mutual option for AbCellera to undertake certain R&D enabling activities and clinical manufacturing. The total potential deal value with all five programs included would be over $4 billion. We believe that this is one of the largest TCE discovery deals reported to date. Before handing over to Andrew, I'm pleased to welcome Dr. Victor Sandor and Dr. Lynn Seely as new independent directors on AbCellera's board. Dr. Sandor and Dr. Seely are experienced biopharmaceutical executives with proven and complementary expertise in development across oncology, women's health, immunology, and endocrinology.

Lynn and Victor bring deep expertise and development experience that will serve us well as we build our portfolio and our company. With that, I will hand it over to Andrew to discuss our financials.

Andrew? Thanks, Carl. As Carl pointed out, AbCellera continues to be in a strong liquidity position with over $565 million in cash and equivalents and with roughly $110 million in available committed government funding to execute on our strategy.

We are continuing to execute on our plans with a focus on internal programs and leveraging our process development and clinical manufacturing investments. Looking at revenue and expenses, revenue for the quarter was around $4 million compared to total revenue of approximately $17 million in the same quarter of 2025. The revenue this quarter consisted mostly of research fees. Our research and development expenses for the quarter were approximately $46 million, approximately $7 million more than last year. This expense reflects the focus on investment in our internal programs. In sales, general, and administration, expenses were approximately $14 million compared to $22 million last year.

The large decrease in SG&A expenses relates to the conclusion of our intellectual property litigation case and to changes in the teams following the focus on our internal pipeline. Looking at earnings, we are reporting a net loss of roughly $55 million for the second quarter of 2026, compared to a loss of about $35 million a year earlier. In terms of earnings per share, this result works out to a loss of $0.18 per share on a basic and diluted basis. Turning to cash, altogether, we finished the quarter with $567 million of total cash and marketable securities. That's a $6 million increase in total cash for the first half of 2026.

Operating activities for the first half of the year used approximately CAD 8 million in cash. Included in the operating cash flow is the receipt of CAD 56 million from the upfront payments under our TCE deal with Jazz. This portion of the upfront payments from the Jazz partnership was received in the quarter. Excluding marketable securities, investment activities year to date included approximately CAD 6 million of capital expenditures offset by CAD 7 million in government grants received. As a part of our treasury strategy, we have CAD 420 million invested in short-term marketable securities. Our investment activities for the quarter included a CAD 15 million investment in these holdings. As a reminder, we have received commitments for funding the advancement of our internal pipeline from the Government of Canada Strategic Innovation Fund and the Government of British Columbia.