AbCellera Biologics Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; unaudited U.S. GAAP figures. Unless stated otherwise, amounts below are U.S. dollars in millions.
Business context and financial performance
AbCellera discovers and develops antibody therapeutics, partnering with pharmaceutical and biotechnology companies for research fees and potential downstream milestones and royalties, while also advancing internal programs. The company reported 90 cumulative partner-initiated program starts with downstream participation and 13 molecules in the clinic at quarter-end.
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Revenue | $9.954 | $12.192 | Down 18% |
| Operating expenses | $64.848 | $77.066 | Down 16% |
| Loss from operations | $(54.894) | $(64.874) | Loss narrowed |
| Net loss | $(40.610) | $(40.110) | Loss increased $0.5 |
| Basic and diluted loss per share | $(0.14) | $(0.14) | Unchanged |
| Cash used in operating activities | $(41.708) | $(44.063) | Use decreased $2.4 |
Research fees were $9.774 million, licensing revenue $0.180 million, and no milestone revenue was recorded. Gross margin is not presented in the filing. The operating loss was approximately 5.5 times revenue.
Liquidity, balance sheet and cash flow
- Cash, cash equivalents and marketable securities totaled $698.023 million at March 31, down $62.562 million from year-end 2023. This comprised $123.572 million of cash and equivalents and $574.451 million of marketable securities.
- Current assets were $813.948 million and current liabilities $104.883 million. Total assets were $1,463.096 million; shareholders’ equity was $1,129.913 million.
- Cash flows included $29.910 million provided by investing activities, versus $149.609 million used in Q1 2023, largely reflecting marketable-security proceeds and prior-year one-time investments. Property and equipment purchases were $24.140 million.
- The filing does not report a conventional borrowings balance separately. Liabilities include operating lease obligations, contingent consideration, and deferred government contributions; total liabilities were $333.183 million.
Material changes and unusual items
- Revenue fell $2.238 million year over year, reflecting lower research fees, licensing revenue and no milestone payment in the quarter.
- Research and development expense decreased $13.360 million, mainly because Q1 2023 included approximately $20 million of one-time investment in co-development and internal programs. The decrease was partly offset by higher compensation and facility, supply and service costs.
- General and administrative expense increased $2.218 million, including higher compensation, legal, software and other costs. Interest income increased $0.642 million.
- Other results shifted from $3.593 million of income in Q1 2023 to $1.529 million of expense in Q1 2024. The filing cites $4.8 million of losses from fair-value adjustments to held-for-trading securities and contingent consideration, and $0.4 million of foreign-exchange loss.
- Stock-based compensation was $17.409 million, compared with $15.474 million in Q1 2023. Shares issued and outstanding at March 31 were 293.621 million; 294.054 million were outstanding as of May 1, 2024.
Outlook, commentary and risks
Management expects continued investment in research and development, internal and co-development programs, business development, headquarters and GMP manufacturing infrastructure. Based on its current plan, the company believes cash, marketable securities, loan receivables and government contributions will be sufficient for working capital and capital expenditures, and does not anticipate needing external funding for at least 36 months after the report date. This is a stated expectation, not revenue or earnings guidance.
Management highlighted dependence on partner program selection and execution, development milestones and eventual commercialization for potential downstream revenue. The company says it has not generated royalty revenue since 2022, following the end of royalties associated with Lilly’s COVID-19 antibodies. Drug development outcomes and timing remain uncertain, and the company may continue to incur losses.
Government contribution agreements support infrastructure and development activities but include conditions, covenants and potential repayment provisions. Certain repayable funding is scheduled to begin repayment in 2033; no repayment amounts were accrued for the specified conditional obligations at quarter-end because repayment was assessed as not probable. Legal proceedings include patent litigation with Bruker and civil litigation involving the Schrader estate; the filing reports no material changes and no trial date set in the Bruker case.
Management concluded disclosure controls and procedures were effective as of March 31, 2024, and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether new partner programs and internal pipeline progress can replace absent COVID-related royalties and generate recurring research, milestone or royalty revenue.
- Actual cash burn, capital spending and construction progress for the headquarters and GMP facility versus management’s 36-month funding expectation.
- Terms, timing and conditions of government contributions, including potential repayment obligations and covenant compliance.
- Developments in partner programs, clinical milestones and the Bruker and Schrader legal proceedings.
- Potential dilution from equity awards: stock options and restricted share units, including 59.1 million potential common shares excluded from diluted loss per share as anti-dilutive.