AbCellera Biologics Inc. Q1 FY2021 Earnings Call

Good day and thank you for standing by. Welcome to the AbCellera Q1 2021 Earnings Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Tryn Stimart, Chief Legal Officer and Chief Compliance Officer. Please go ahead.

Thank you. Good afternoon everyone and welcome to AbCellera's first quarter 2021 business update. We are pleased to have you with us today where we will discuss the results announced in our press release issued after the market closed today which you can find on our Investor Relations website. With me on the call are Dr. Carl Hansen, AbCellera's Chief Executive Officer and President; and Andrew Booth, AbCellera's Chief Financial Officer. The webcast portion of this call contains a slide presentation that we will refer to during the call. Those of you following along on the phone who wish to access the slide portion of this presentation may do so on the Investor Relations section of our website. For those who have accessed the streaming portion of the webcast, please be aware that there may be a delay and that you will not be able to pose questions via the web. This presentation may contain forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements are based on management's current expectations and are subject to certain risks and uncertainties. Please review our SEC filings for risk factors that could impact our future performance. Our presentation and SEC filings are available on our Investor Relations website. Note that all dollars referred to during our call today are US dollars. Now, I am pleased to turn the call over to Carl Hansen.

Thank you, Tryn and thank you to everyone for joining us today. I'm excited to share with you the results of our first quarter of 2021 which saw us carry forward momentum from 2020 and achieve strong growth performance across all areas of our business. But before I do that, I'd like to pull back and take a few minutes to revisit our long-term vision for what we are building here at AbCellera and for the magnitude of the opportunity that we see before us. Put plainly, our vision is to build the most technologically advanced antibody drug discovery engine in the world and to redefine the state of the art for the industry not just today, but for decades to come. This is a bold vision. It is one that we are uniquely positioned to achieve. We believe that the technology stack that we've assembled over the last nine years offers capabilities in the discovery of therapeutic antibodies that are already unmatched in combined metrics of speed, versatility, quality, and diversity. Despite our leading position today, we are far from done. Over the coming years, we will continue to invest aggressively in building our technology stack to push back the frontiers of what is possible. This is not only about invention and innovation; it is also about building modern facilities to empower interdisciplinary R&D, industrialized molecular biology automation, and integration of CMC and GMP manufacturing. It will require increasingly powerful computational tools based on artificial intelligence that can take advantage of hyperscale data science to predict drug-like properties. It is also about building an elite workforce one that is inspired by the opportunity to work on technologies that can radically change how drug development is done. Perhaps most importantly, it is about maintaining a culture of innovation and constant improvement across all dimensions of our organization. This is what we are building at AbCellera. Our business model is unique in that it emphasizes collaboration and partnership. We aim to empower partners, large and small, that are committed to translating science into new therapies that help people. For smaller companies, we believe we can unlock innovation and value both by stripping out the redundancy of everyone attempting to rebuild internal capabilities and also by allowing great science to connect with best-in-world capabilities. For larger companies, we believe our efforts will open up new disease areas and new target classes and that our model enables increased speed, efficiency, and adaptability by using AbCellera as an extension of their R&D teams. We expect to work on the development of hundreds of potential drugs to treat a wide array of diseases spanning cancer, inflammation, neurodegeneration, infectious disease, and beyond. Through this work, we aim to create long-term shareholder value by building a large and diversified portfolio of royalty positions in the next generation of antibody-based therapies. To achieve this vision, our efforts today are focused on expanding our capabilities, building capacity, and extending our commercial reach. Our key growth strategies include: increasing the number of programs under contract by expanding our commercial reach; forward integration of our tech stack to include translational sciences, CMC, and GMP manufacturing capabilities; scaling our teams and facilities; advancing internal R&D to further our technological differentiation; and leveraging proprietary data science to drive continual improvements in speed, precision, and automation and to increase the predictive power in the selection of antibody development candidates. We see programs under contracts or PUCs as a key indicator of our long-term commercial success. We intend to use our platform to generate a portfolio of hundreds of royalty positions, forging new partnerships and expanding our work with existing partners. This quarter, we added 16 PUCs and two new partnerships. You will note that this included expanding a previous single target deal with Gilead Sciences into a new multi-year, multi-target agreement that also included licensing of the Trianni flagship mouse. Through continual expansion of our capabilities and the addition of new technologies, we will also look to bring more value to our partners and increase the royalties associated with our partnership deals. Total revenue for the quarter was $203 million, and we ended the quarter with over $680 million in cash and over $190 million in accrued accounts receivable. Our strong cash position and our ongoing revenue stream from COVID-19 programs provide capital to quickly scale our teams, expand capacity, and extend our technological advantage. As I mentioned, AbCellera is about building technology out at scale. In the long run, we envision scaling up our tech stack to occupy over a million square feet of office and lab space, with facilities custom-designed to foster innovation at the nexus of sciences, bringing together software developers, data scientists, biologists, engineers, and business leaders. We envision the integration of computation with industrialized automation to create a modern factory for innovation and drug development. We envision AbCellera as a premier destination for the brightest and most creative minds; for people who seek challenge and want to work at the leading edge. As a first exciting step towards this vision, we recently announced our plans to build a 380,000 square foot tech campus right here in the heart of Vancouver. We are also adding capabilities to further support full chemistry manufacturing and control or CMC; and good manufacturing practice GMP manufacturing. This will provide our partners with a full solution from target to investigational new drug application submission. We are finalizing plans to build our new GMP facility here in Vancouver in close proximity to our headquarters, and I look forward to sharing more about this in the near future. As expressed already, bold technology development is a pillar of AbCellera's growth strategy. Executing on this requires strong leadership across the company. Accordingly, we are fiercely proud to announce the promotion of Dr. Ester Falconer to Chief Technology Officer earlier this year. Prior to her promotion to CTO, Dr. Falconer was Head of Research and Development, overseeing our activities in genomics, microfluidics, biochemistry, protein engineering, data science, and machine learning. She led the development of AbCellera's pandemic preparedness platform and its deployment last year against COVID-19. This effort resulted in the discovery and development of bamlanivimab and now of 1404. Esther has proven herself to be a truly exceptional scientist and a strong leader. We congratulate her on her new position and the opportunity that sits before her, which brings us to our update on COVID-19. As you know, last year we demonstrated the power of our platform and the drive of our team with the discovery of bamlanivimab. In addition to being the first antibody therapy for COVID-19 to reach the clinic and the first to receive emergency use authorization, bamlanivimab has also been by far the most broadly used antibody therapy to date against COVID-19. In the US alone, bamlanivimab has been used to treat well over 400,000 patients. It has prevented tens of thousands of hospitalizations and it has saved more than 11,000 lives. To address emerging variants, bamlanivimab has been evaluated in clinical trials with two other antibodies, including etesevimab and VIR-7831. In February, the combination of bamlanivimab and etesevimab was authorized for emergency use in the US and due to the rise in new variants, we recently transitioned to this combination with bamlanivimab alone no longer authorized for emergency use in the United States. Knowing that additional antibodies would be needed to combat emerging variants, we deployed our platform once again to develop a new antibody that we believe has the potential to become a long-term solution for COVID-19 as the virus becomes endemic. As anticipated in the last earnings call, this second antibody named 1404 has since moved into clinical testing to treat patients with mild-to-moderate COVID-19, making it the second clinical asset from AbCellera's platform in under a year. 1404 has combined breadth and potency that we believe give it the potential as a best-in-class solution for COVID-19. In terms of breadth, in preclinical studies, 1404 has been shown to be effective against SARS-CoV-2 and all currently known variants of concern. This includes those variants first identified in the UK, South Africa, Brazil, California, and New York. We also have high confidence it will be effective against the B1617 variant, which first emerged in India. In terms of potency, 1404 has been shown to neutralize SARS-CoV-2 at exceptionally low concentrations. This means it has the potential to be scaled up quickly and also that it is well suited for administration as a subcutaneous injection instead of as an infusion. We believe that the prospect of a potent and broadly neutralizing antibody that can be given as a simple shot rather than an infusion would be game-changing. It would facilitate a much broader use and impact of antibody therapies to fight COVID-19 around the world. 1404 is currently being evaluated both alone and in a three-way combination together with bamlanivimab and etesevimab. We expect clinical testing to progress quickly, and if all goes well, submission for emergency use authorization could occur this summer. I want to highlight that, as a new public company with only 260 people, we have now succeeded in bringing two therapeutic antibodies into clinical development in less than 12 months. There could be no stronger evidence of the power of our platform or the strength of our team. Moreover, I believe this is just a glimpse of what we intend to achieve over the next decade across many disease areas. And with that, I'll turn it over to Andrew Booth, our CFO to provide an overview of our first quarter 2021 financials.

Thanks, Carl. First, I'll talk about our key performance indicators. We ended the quarter with 119 programs under contract with 29 different partners. That is a 63% increase in programs under contract compared to the end of Q1 in 2020. We believe that we are starting to see the combined positive impacts of several factors with this increase in business development activity. These factors include our investment in the business development team and the profile that our platform has received both from the success of our COVID antibody programs and the broader publicity of the technology that we have received from our IPO and being a public company. Importantly, this growth also reflects the success that we have had in our initial programs with some partners, who are now looking to work on more programs with us. We saw that extension of partnerships with several groups in 2020 and again in the first quarter with the expanding relationship with Gilead. During the quarter, we saw two more program starts bringing us to 59 cumulative starts. Note that we are not including our work on 1404 as a new start. The 1404 effort was part of the same COVID antibody program that we started in 2020, which had already delivered bamlanivimab. As a reminder, program starts occur when our partners are ready to trigger the work on a selected target, including having all the appropriate reagents ready for us to start discovery and their teams ready to continue development when they get our results back. This can be variable. It's not unusual for there to be a lot of preparatory work and lag before we actually start a program after signing an agreement with a partner. At the same time, we expect a robust number of program starts in 2021, with the increase in PUCs as the leading indicator of this. Looking at revenue, revenue in the quarter was nearly $203 million, 44 times what it was in Q1 2020. We have significant royalties and a milestone payment from bamlanivimab in our results that were not present in the first quarter of 2020. We achieved royalty revenues of $171 million and a milestone payment of $7 million in Q1. These are all attributable to the Lilly sales of bamlanivimab, both alone and in combination with etesevimab. The milestone bamlanivimab reached in Q1 was the first commercial sale in Europe. Directly attributable to the $171 million in royalty revenue, we earned from Lilly sales of bamlanivimab were $20 million in royalty fees payable to the NIH. The net impact of royalties on income from operations during the quarter was therefore $151 million. As noted in our previous earnings call, we view these royalties primarily as a non-dilutive source of funding for the company, and importantly, as a proof point of what can happen when one of the many programs in our portfolio is successful. As expected, and as per Lilly's guidance on their last quarterly earnings call, we would expect royalty revenues in Q2 to be below where they have been in Q1. We remain optimistic about the prospect of long-term revenue from COVID products, including bamlanivimab and 1404. You will notice that we have also added a new line to our income statement related to license fees. We generated $20 million in license fees from our recently acquired Trianni humanized rodent platform. While the primary benefit of the Trianni platform lies in enhancing the technology stack of our discovering programs, it is worth noting that within a few short months, we've integrated that acquisition and recouped 22% of the original purchase price. In the future, we will continue to offer licenses to the flagship mouse to our partners as well as integrate it into our core discovery offering. Note that the licenses are generally one-off events, which we would expect to occur irregularly. Meanwhile, we continue to invest and develop the next generation of animals internally to expand these capabilities. While our business model emphasizes participation in downstream economics, we also receive income from the research we do for our partners. We earned research fees of approximately $4 million, which are attributable to the range of discovery programs we worked on for our partners. This is slightly less than the first quarter of 2020, where we received substantial fees from our paid COVID-related discovery work from DARPA. Turning to operating expenses, our research and development spend in the quarter was approximately $12 million, a threefold increase over the previous year. We expect that our investment into R&D will continue to grow as we keep expanding our R&D team's capabilities and capacity. This allows us to deliver on our partner programs as well as enhance our technology stack organically. In sales and marketing, expenses for the first quarter were about $3 million, an almost six-fold increase from the same quarter in 2020. This reflects significant growth in our business development team, capabilities, reach, and capacity to connect with the strong global demand that we are seeing. This expense also includes an $800,000 donation to fund the clinical study related to bamlanivimab in Canada. In general and administration expenses for the quarter, they were roughly $6 million also a significant increase from 2020, driven by the need to support a much larger business and meet the requirements of being a publicly-listed company. Looking at earnings, our net earnings were $117 million compared to a $2 million loss in the first quarter of 2020. As with our last quarter, this is in large part due to the success of bamlanivimab. In terms of earnings per share, this works out to a basic earnings of $0.43 per share and diluted earnings of $0.37 per share. Turning to cash flows, operating activities contributed $109 million, which includes the collection of accrued accounts receivable balance from December 2020. On the investing activity side, besides CapEx of nearly $4 million, you will note that we are also showing a $12 million investment in equity investees. This relates to our Vancouver facilities expansions, which are structured as joint ventures with our development partners Dayhu and Beedie group where AbCellera owns 50% of the facilities. We finished the quarter with $686 million of cash and cash equivalents and $193 million of accrued accounts receivable. We continue to maintain a strong liquidity position that allows us to continue to build capacity, expand the platform, and pursue business development initiatives. And with that, we'll be happy to take your questions, and I'll turn it back to the operator.

Our first question comes from Tiago Fauth with Crédit Suisse. Your line is open.

Hey, thanks for taking the question. So programs under contracts seem to be moving at a fairly good pace, and you did mention that it's a leading indicator and outlined some of the factors that may impact the timing of converting a PUC to a new program start. I am curious what are the potential factors that may lead to some attrition between the two, right? Because since the decision is partially driven by the partner there may be some shift in priorities or new biology finds. Curious if you have any expectations explicitly for that? And to the extent that you're comfortable discussing since you said that we can expect a robust number in 2021, during the first few days in Q2 are you seeing a change in that pace? And would you expect to see a performance kind of similar to what you've seen historically? I'm trying to understand exactly what a little bit what robust could mean? Thanks.

Fantastic. Tiago, Carl Hansen here happy to take the first part of that question maybe I'll then hand off to Andrew Booth. So your question was what was our thinking about potential attrition between programs under contract and subsequent starts. The first thing I'll say to that is that historically we have had very little, if any attrition. So in the deals that we've done historically which have included several deals that were multi-year, multi-target agreements, all of those thus far have converted into programs that are either completed or actively being pursued within AbCellera. That doesn't mean that it's not possible that there would be some attrition between the two. I think that probably happens if you sign up for deals with companies that have multiple slots that they anticipate and for some business reason decide that they no longer want to pursue those. We have built that into some of our internal models but to date that has not been a very substantial factor. I will add that one of the things that is difficult to predict is the timing of those. And it is more common that based on scientific data or decisions at the partner there may be starts that come at a later time than as originally anticipated and that is something that we try to manage. But at the same time, it's important for us that the partners have conviction in their targets and that all of the reagents and materials are in place so that we can begin a program that has the best chance possible to actually make it through to the clinic. With the last part of your question, perhaps I'll hand off to Andrew.

Yes. Thanks Carl. Tiago so as you know so many of our deals with partners especially these repeat deals are for multiple targets over multiple years. So we would expect them to be started over a longer period of time. And the large number of PUCs compared to program starts is not a backlog, but rather sales and business development activity that we've done well in advance and secured. And as Carl said, quite a high degree of confidence that we will execute on them. It's not unusual for a lot of preps and a lag before we start a program. And we see and as a result again this metric can be variable, but we do see a robust number of program starts for the duration of 2021. And so I think we have a high degree of confidence that while this metric was maybe a bit low in the first quarter, we see a high degree of confidence for the remainder of the year.

Perfect. Awesome. Appreciate it. Congrats on the progress.

Thanks, Tiago.

Our next question comes from Stephen Willey with Stifel. Your line is open.

Yes, good afternoon. And thanks for taking the questions. Congrats on the progress. So I know that building out the workflow via new technology is a focal point and I know that's something that you've talked about with respect to putting some of the bam royalties to use. But I guess maybe you can just provide a little bit of color around where you are in that process right now. I guess, how much bandwidth do you feel you have at this point to integrate new tech into the workflow? And I guess with valuations now having been reset across the space does that make you any more opportunistic over the near term?

Thank you for the question, Steve. We have been focused on rebuilding a comprehensive solution for antibody drug discovery using modern technologies for nearly nine years, and we have made significant progress. Currently, we have a strong position at the beginning of this process. We have invested in technologies that enhance diversity, speed, and adaptability, placing us at the forefront of the industry, although we know we still have work to do. One major focus going forward will be on enhancing our capabilities in translational science, CMC, and manufacturing. This will give us greater control and help accelerate the development of programs from groups without internal resources, allowing us to bring better molecules to clinics more quickly. Another key theme is achieving scale and efficiency through a combination of R&D, protocol development, and a strong emphasis on data science. We aim to better organize our operations and collect data from our various experimental capabilities, then aggregate that data and utilize machine learning and other AI algorithms to improve processing speed and efficiency. This initiative will take several years, possibly even decades, to fully realize its potential. We see significant opportunities in this area, especially given the current valuations in the market. We remain focused on finding the quickest and most effective route to our long-term goals while ensuring we have the best talent and technologies in place.

Got it. I appreciate the response. And then, just a quick follow-up on 1404, so I know you had previously intimated, I guess, there being some kind of regulatory perspective regarding the utility of combinations to cover resistant variants. But I guess, I'm just kind of wondering based on the preclinical data that was published for 1404. What does that drug combine with bam and etesevimab by you from a biological perspective?

Fantastic question, 1404, I did touch on in the prepared comments it is an antibody with spectacular potency and breadth. So in addition to being as potent or more potent than anything else that we've seen, certainly in clinical development, perhaps anything that we've seen at all, we have shown in the lab that it can neutralize all the variants of concern. And in fact, it recognizes an epitope on the spike protein, that when we look across all the genomic data that's available around the world for COVID-19, appears to be not mutated at any significant level anywhere. So from that perspective, it is currently an antibody that we would predict to be effective against everything that exists in the world for COVID-19. So from that scientific fact set, my straight answer would be, it's not clear that a combination would buy you anything, except for insurance. And it is important to be sober about this, that any monoclonal antibody has a theoretical and a practical vulnerability that a variant could come up that would render it no longer effective. The immediate solution for that is to look for combination. So a combination say with bamlanivimab or a combination with another antibody would provide a backstop to that scenario that we do not predict will be likely to happen soon, but you never know. And perhaps more importantly, the last 12 months with bamlanivimab and etesevimab show that we are able to apply our technology and to do this again. So if we found that another variant came up and was catching hold and posed a threat to people anywhere in the world, we would deploy that platform again. And I expect that Lilly would be happy to stand behind us in that effort.

Understood. Thanks for taking my questions.

Our next question comes from Gal Munda with Berenberg. Your line is open.

Hi, Carl, Andrew and the team. Just wanted to touch on one thing that I guess, we started seeing when you reported full year results, and I think it's coming a little bit more pronounced now as well. You've added 16 programs under contract across three partners effectively as you mentioned. So that average is starting to increase and it's something that is given the input also. And I guess my question there is, are we starting to see that the platform itself is less of a proof-of-concept, because we're starting to see more expansions effectively? And is that the early indicator that you've been waiting for in terms of getting the confidence that there's a number of partners that you have but those partners can significantly ramp up the number of programs that they want to engage with you? Thank you.

Thank you for the question. Right from the start, I want to clarify that our platform is not just a proof-of-concept. It has successfully delivered on many challenging programs in the industry, resulting in two clinical phase assets over the past year. This demonstrates the speed, power, and versatility of our platform across various indications and with multiple partners. Regarding the mix of programs under contract compared to partners, that ratio is likely to fluctuate and is primarily influenced by our relationships with these partners. The recent expansion with Gilead stemmed from our successes. We are seeing a trend where companies are eager to engage directly in multi-target deals, bypassing initial interactions, which signals strong confidence in the market and validates our technology. However, there will still be smaller firms involved that may not have a significant use case for more than one or two programs. We see this sector as a major opportunity for innovation and for science entrepreneurs who have long lacked access to the necessary capabilities for clinical testing. As we continue to collaborate with these smaller firms, we can expect more partners, though potentially with fewer targets per partner. This will naturally influence the ratio of projects under contract to partners.

Got you. I guess, I have a follow-up just on that specifically. So that's exactly how I've been thinking when we think about the future growth. Is it about engaging new partners? And when you think about new programs, the most likely to come from the let's say smaller biotech firms or large pharma? Like how would that balance be in the long run out there estimate particular quarter? I'm just trying to understand the balance of what your belief will happen.

It's always challenging to predict how things will unfold, but we certainly do not anticipate a significant imbalance between large partners and small partners. I believe there will always be a healthy mix. What might be more interesting is the underlying value proposition driving this. For larger, well-equipped companies like Eli Lilly, which are sophisticated and have developed strong internal capabilities, these partnerships are motivated by the need to access target classes or to accelerate beyond what traditional technologies permit. This is one of the reasons we invest extensively in R&D, as we aim to be the go-to solution for those seeking to enter areas that have traditionally been difficult to access. For smaller companies, while the discovery challenges may be more manageable, the obstacles to advancing these discoveries are substantial and tough to navigate, including issues related to facilities, technology, expertise, teams, and the need for funding. In all these scenarios, timely action is crucial because we operate in a competitive environment where patients are waiting for these therapies. Therefore, we are committed to tackling both issues and, in the long term, potentially achieving faster speeds and greater efficiencies so that major partners view us as a natural extension of their teams, allowing them to adjust their capacities based on current needs and available opportunities.

That’s very helpful. Thank you. Appreciate it.

Our next question comes from Puneet Souda with SVB Leerink. Your line is open.

Hi Carl, thank you for taking my question. Andrew, I have a clarification regarding the 52 program. The release mentioned 52 programs, the slide deck indicated 54, and I believe you mentioned 59 program starts during the call. I might have missed something, so could you clarify how these numbers relate to each other? Was it 52 in the previous quarter, and are we now at 59 cumulative program starts?

Thank you for the question, Puneet, and for the clarification. You are correct that we had 52 program starts at the end of 2020. I'm currently looking at the slide and the information I mentioned, which shows we had 54 at the end of the first quarter. I'm not certain where the 59 number came from, but the numbers I have indicate 52 at the end of 2020 and 54 at the end of 2021.

Got it. So there were two new program starts. Excellent. I also wanted to clarify regarding the 16, the PUCs or the new contracts you mentioned. Of the eight, were they all with Gilead, or were the additional eight with other companies, or is the majority still comprised of Gilead programs?

No, of the 16. And actually sorry, Tiffany here just told me that in my dialogue, I must have misspoke and said 59. So thanks for the clarification. It should be 54 at the end of the first quarter. The second question, 16 new programs under contract. Yes, eight of those were with Gilead. And they of course were an existing customer, so they did not contribute to the additional two customers that we added in the first quarter and those additional two customers contributed to the additional eight programs that were signed up in the first quarter.

Thanks for the clarification. Given the complexities surrounding COVID, how should we evaluate the royalty revenue for the second quarter? With the ongoing 1404 combination with etesevimab and the emergence of new strains, I understand this is not straightforward. Any insights you can share regarding the royalties for the second quarter would be appreciated.

Thanks, Puneet. Carl here. I'll take that one. First, I want to reiterate that with all the variables at play, such as vaccines, adoption rates, new antibodies, and shifts from monotherapy to combination therapy, we cannot predict what the royalty revenues will be in Q2. However, based on Lilly's guidance, we expect them to be lower. While royalty revenue is a highlight of our recent results, I believe it's somewhat distracting from the long-term value we are creating in the company. Although it's an important indicator, we view this as just one program that contributes a small portion of the overall value we are building in our platform. Our long-term vision is to develop a large portfolio of hundreds of programs. As Andrew mentioned, we currently see the revenue from COVID-19 royalties as a valuable tailwind. It's a non-dilutive source that helps us reinforce that vision. Additionally, we believe that COVID-19 royalties will provide revenue for the long term, as we anticipate that COVID-19 is likely to persist. This is why we are enthusiastic about molecules like bamlanivimab and especially 1404, which can be manufactured at scale, have broad delivery potential, and combine potency and breadth, making it a strong candidate for best-in-class status.

Okay, great. That's super helpful. If I could ask one last question, regarding the Trianni revenues, they were quite significant this quarter. You mentioned these as one-time or one-off revenues, but this line will now be part of the model. Andrew, could you share your thoughts on how we should view this moving forward? Additionally, any insights on what led to this notable $20 million in the quarter would be very helpful. Thank you.

Thank you for the question Puneet, and I'm happy to provide some clarification. As I mentioned in the prepared remarks, we expect this to be irregular. It really depends on which partners are involved and what access to the platform they seek, as noted in the press release regarding Gilead. This partnership included a license to the Trianni Mouse platform, which was a significant contributor to our revenues in the first quarter. We will continue to add to our license revenues. If I recall from our last call, you asked about the license revenues from the Trianni platform, and I mentioned we would categorize that as a separate line item going forward. I want to highlight that looking back at our acquisition of Trianni, this exemplifies the return we're anticipating from that investment, with over 20% of the acquisition cost recovered in the first quarter of this year. We are also excited about the next-generation animals we are investing in. This ties into Steve's earlier question about M&A; our past acquisitions, including repertoire sequencing and the OrthoMab bispecific platform, have been structured for immediate deployment and integration, demonstrating our capability in executing our inorganic strategy.

Okay. Great. Thank you.

Our next question comes from Do Kim with BMO. Your line is open.

Hi. Good afternoon. Thanks for taking my questions. I wanted to ask about the 16 new programs under contract this quarter. It's a pretty good step-up in programs. How much visibility do you have in future new programs? Is this a pace that you can maintain based on the discussions you're having with partners, or is it just something too unpredictable?

Hey, Do, Andrew. I'll take the first crack at that at least. As we mentioned in the last call and I mentioned in the prepared remarks, we are staffing up our business development activity, and we have the most robust pipeline we've seen in business development in the history of the company. I think the strong performance in the first quarter is really proof of that. We have built the team and you see it in the increased expenses in the first quarter in Beedie, so that we can be fielding all these opportunities. I would reiterate the same comments from the last quarterly call that we still have the strongest and most robust pipeline that we have seen in the history of the company, even after closing these 16 programs under contract in the first quarter. So we are not giving guidance of where it will be for the full year, but we still have a robust pipeline in front of us.

Great. Thanks for that. And a question about one of the recent partnerships you have the Angios partnership where you took some equity as part of the deal. Could you talk about what kind of opportunities there are out there in these newly-formed biotechs and getting creative economic terms like equity stakes, and if you're thinking about generating an internal pipeline and creating biotechs around that?

Thank you, Do. Carl here, I'll address that question. As I mentioned earlier, we believe this sector has been largely overlooked and underperforming, presenting a significant opportunity to create value. To illustrate, if you are an innovator emerging from an academic background with an idea and preclinical data indicating that it’s a viable pathway for targeting antibodies, the process of getting your project off the ground has historically been challenging. It often requires substantial capital and lengthy timelines. This disconnect, or friction, between innovative ideas and the platform's resources, personnel, and expertise leads to many promising scientific advancements and potential therapies being left unrealized. Our model effectively supports these innovators. We have established a centralized discovery engine accessible through partnerships, aiming to provide innovators with the resources they need while allowing them to concentrate on their expertise, which typically involves biology or the specific modality they wish to develop. By advancing up that chain, we can deliver significantly more value. We intend to pursue agreements that enhance our participation through milestones and royalties. However, practical limitations exist at early stages concerning what is in the best interests of the company. One method to bridge this gap involves converting these arrangements into equity and fostering alignment with those companies, ensuring we advocate for their success along with the success of their assets. We have successfully implemented this approach before, forming equity-inclusive deals with Invetx, a pioneering company in antibody applications in animal health, and with Abdera, which is innovating cancer treatments using radioisotopes. Our recent deal with Angios builds on this foundation, leveraging profound insights into biology and outstanding scientific talent. We are enthusiastic about the potential of their programs and the broader promise of this innovation-unlocking model.

That's very helpful. Congrats on the progress.

Thank you and thank you all for joining us. Just to sum up this has been a very exciting time for AbCellera and we're looking forward to keeping you updated on our progress on future calls. Very best everyone.

This concludes today's conference call. Thank you for participating. You may now disconnect.