AbCellera Biologics Inc. — FY2023 Form 10-K
Reporting period: Year ended December 31, 2023 (not a standalone fourth-quarter report). All amounts are in U.S. dollars unless noted. AbCellera is an antibody-discovery and development company that earns research and licensing fees and may receive development milestones and product royalties through partnerships, while also advancing internal drug programs.
Financial results and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $38.0 million | $485.4 million |
| Research fees | $35.6 million | $40.8 million |
| Licensing revenue | $1.0 million | $0.7 million |
| Milestone payments | $1.5 million | $0.9 million |
| Royalty revenue | None | $443.0 million |
| Operating expenses | $275.2 million | $268.9 million |
| Operating income (loss) | $(237.2) million | $216.5 million |
| Net income (loss) | $(146.4) million | $158.5 million |
| Operating cash flow | $(43.9) million | $277.4 million |
| Cash, cash equivalents and marketable securities at year-end | $760.6 million | $886.5 million |
Revenue fell 92% year over year, principally because AbCellera received no royalties after the FDA’s 2022 action ending U.S. emergency-use authorization for its Lilly-partnered COVID-19 antibodies. The filing says the company does not expect further royalties from that program. Research and development expense rose 63% to $175.7 million, including a $31.6 million one-time payment associated with internal programs. Interest income and grants/incentives helped offset the operating loss; the company recorded a $27.6 million income-tax recovery.
Year-end total assets were $1.49 billion and shareholders’ equity was $1.15 billion. The filing reports $133.3 million of cash and cash equivalents, $627.3 million of marketable securities and $25.0 million of current restricted cash (with additional restricted cash included elsewhere). Marketable securities had a weighted average life of about 0.4 years and ratings of A- or higher. Investing cash outflow was $221.1 million; financing cash inflow was $10.4 million.
The filing does not present a conventional debt balance in its summary. It reports $77.4 million of operating lease liabilities, $55.4 million of contingent consideration payable, and government-contribution arrangements with repayment or conditional repayment provisions. Contractual commitments and contingent consideration totaled $294.2 million, excluding lease arrangements recognized as liabilities.
Business developments and changes from the prior year
- AbCellera reported 203 programs under contract with 46 partners at year-end; 87 partner-initiated programs had downstream milestone or royalty participation. It added 29 programs under contract, started 12 partner-initiated programs with downstream participation, and partners advanced five molecules into the clinic during 2023.
- Two internal candidates, ABCL635 and ABCL575, entered IND-enabling studies. The company anticipates IND submissions for both in 2025; these are targets, not guaranteed timelines.
- AbCellera took control of the OX40L program from EQRx in September 2023 following EQRx’s acquisition. The resulting candidate is ABCL575.
- In May 2023, Canada and British Columbia committed up to CAD$300 million (reported as $222.3 million) for Canadian development, manufacturing and clinical capabilities. Funding is subject to agreement terms, eligible spending and other obligations.
- Research and development spending increased, while cash, cash equivalents and marketable securities declined by $125.9 million. The company also reported negative operating cash flow, reversing positive operating cash flow in 2021 and 2022.
Outlook, risks and unusual items
Management expects losses and negative operating cash flow in the near-to-medium term as it invests in its platform, facilities and internal pipeline. It expects the more meaningful additional royalty revenue from its portfolio to begin after 2030. The company says current liquidity, anticipated operating cash flows and government contributions should fund working capital, capital expenditures and later-stage development of its internal pipeline, and that it does not anticipate needing external funding for at least 36 months after the report date. This is management’s expectation, not a guarantee; no numerical revenue or earnings guidance is provided.
- Revenue and development uncertainty: Revenue is highly variable and depends on partner activity, milestones and commercial success. AbCellera has not yet had a program receive full marketing approval, and its partners control clinical development and commercialization decisions.
- Facilities and funding: Construction and expansion involve execution, cost and timing risks. Government contribution agreements include spending, Canadian headcount, change-of-control and dividend restrictions; breaches may lead to funding suspension or repayment demands.
- Legal matters: The company is pursuing patent-infringement litigation against Bruker, which has appealed a patent-review decision; the district-court case continues, with no trial date reported. A separate British Columbia lawsuit by the Schrader estate and ImmVivos alleges an implied partnership/joint venture and patent infringement. AbCellera disputes the claims. The filing does not quantify a clear potential loss for these matters.
- Workforce and one-time costs: A fourth-quarter 2023 reorganization reduced headcount by approximately 10% and incurred $3.2 million of costs.
- Other exposure: The filing identifies partner concentration, technology and IP competition, cybersecurity and data-protection risks, foreign-exchange exposure, supplier dependence, and potential future funding needs. AbCellera reported no material cybersecurity incident to date and effective internal controls over financial reporting as of year-end.
Investor facts to verify
- Whether research fees and new program starts can replace lost COVID-19 royalties, and whether partner milestone or royalty payments materialize.
- Progress, funding needs and IND timing for ABCL635 and ABCL575, including whether the anticipated 2025 submissions remain achievable.
- Cash deployment, operating cash burn, marketable-security liquidity and the assumptions behind management’s stated 36-month funding outlook.
- Conditions, repayment terms and compliance requirements attached to government contributions, alongside construction commitments and contingent consideration.
- Developments and potential financial effects of the Bruker and Schrader litigation, which the filing does not quantify clearly.
- Share-count changes and equity compensation: year-end shares outstanding were 290.8 million; the filing reported 292.8 million outstanding as of February 15, 2024.