Earnings Call
AbCellera Biologics Inc. (ABCL)
Earnings Call Transcript - ABCL Q4 2021
Operator, Operator
Ladies and gentlemen, thank you for standing by and welcome to the AbCellera Full Year 2021 Earnings Results and Business Update. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Tryn Stimart, Chief Legal and Compliance Officer. Please go ahead.
Tryn Stimart, Chief Legal and Compliance Officer
Thank you. Good afternoon and welcome to AbCellera's full year 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. If you're following along on the phone and wish to access the slide portion of this presentation, you 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 post 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 on our call today are U.S. dollars. Now, I am pleased to turn the call over to Carl Hansen.
Carl Hansen, CEO
Thanks Tryn and thank you, everyone for joining us today. It's my pleasure to provide an update on our business and a recap of 2021. AbCellera had a banner first year as a publicly-listed company, executing on our long-term strategy by growing our portfolio, deepening our platform to unlock new modalities, and expanding our deal structures to add new ways to capture value. We ended 2021 with over $720 million in cash, cash equivalents, and marketable securities, and approximately $70 million in receivables net of payables. We added 53 new programs under contract with nine new partners, bringing our cumulative total of programs under contract to 156 with a total of 36 partners. We ramped up our discovery capacity and started working on 26 new drug discovery programs, bringing our total number of program starts to 78. Finally, we saw four molecules we discovered enter the clinic, bringing our total number to five new molecules in the clinic for indications in oncology, infectious disease, animal health, and immunology, dermatology, and gastrointestinal disease. Building on our momentum from 2021, we are now well-positioned to continue executing on our growth strategy. AbCellera is building a technology company that drives innovation in antibody therapeutics, which currently represents an estimated $170 billion market opportunity. Based on historical context compounded annual growth of over 10% for the last three decades, this market is expected to reach over $350 billion by 2030. Our strategy for growth in this market is to become the de facto technology leader in the early part of drug development, ultimately covering all the activities that lie between target discovery and clinical testing. Our work begins once the fundamental science has been done and a drug target has been identified. Starting from the indication and requirements of a drug target and therapeutic candidate, we use our technology stack to deliver antibodies with optimal drug-like properties. We deliver lead drug candidates and data packages to our partners and they then bring these antibodies forward through late-stage preclinical and clinical development. Our technology gives our partners a competitive advantage in advancing their programs. In exchange, we take a stake in these programs, allowing us to build a large and diversified portfolio in the next generation of antibody therapies. Over the long run, we believe this strategy will provide superior returns and value to our shareholders, while avoiding the large capital outlays for clinical development and the extreme binary risk that is normally associated with biotech. In 2021, we had a record year in business development, adding another 53 programs as a contract with nine new partners. This underscores a strong market fit for our business model. Our partners span the full range of drug developers from early-stage biotech to midcap publicly-traded biotechs, to large vertically integrated biopharmaceutical companies. Enabling partners come to us to find antibodies with superior drug properties or to advance programs that have proven refractory to traditional workflows. For smaller biotech companies, our technology does more than just level the playing field; it allows them to advance the programs with a technology advantage, while saving time and capital that would otherwise be needed to assemble or build internal capabilities. Collaborating with diverse partners allows us to open up new modalities and targets. For example, our deal with Moderna opens up a new modality of RNA-based antibody therapies. Another strong area of growth is in bispecific antibodies, which is enabled using our OrthoMab platform. In total, we now have 156 programs under contract, of which 131 have downstream participation. Approximately half of our programs under contract have yet to begin discovery phases. As a result, we entered 2022 with a full book of work. Specifically, we now have over 70 programs that are contracts that are yet to be started. We are therefore in a position to be increasingly selective in our deal-making and expect to be shifting our business development focus towards strategic partnerships, where we have the potential for even deeper participation in the molecules that we discover. To maintain future flexibility in our business and deal terms, we also intend to limit the number of programs under contract that are associated with new multi-year agreements. As indicated during our last business update, we will now be focusing on program starts rather than programs under contract as a key metric for the growth of our portfolio. In 2021, we started 26 programs, bringing the keynote number of program starts to 78. Today, we are excited to share additional details about our portfolio. We think of our portfolio as a financial asset, where diversification can be effectively used to achieve strong growth while mitigating risk. The wide applicability of antibodies and the breadth of our platform allow us to diversify our portfolio across antibody modalities, partnerships, and therapeutic areas. As illustrated, our programs are diversified in indications that now include oncology, immunology, neurology, infectious disease, ophthalmology, and beyond. For the 65 human health programs, where we already know the therapeutic application, oncology represents just over half of our portfolio and has been a growth area over the past year. We expect this trend to continue in 2022, broadly reflecting the activity in the sector. In all of our partnerships, the large majority of the deal value is tied to the success of the molecules that we discover. We achieve this through a variety of deal structures, the most frequent of which includes upfront and research payments, followed by clinical and commercial milestones, and royalties on net sales. The timing and the relative value of these payments is illustrated on this slide, which presents an example of one of our programs in the case that it is successful in bringing a new therapy to the market. This example hypothetically assumes a typical timeline of 10 years from program start to market approval, modest total upfront fees, aggregate milestones of over $90 million, peak sales of $1.7 billion per year, and a 5% royalty on net sales. What's important to note is that for a successful program, by far the largest fraction of the value for a seller is associated with the royalties. These typically occur 10 years after the program is started. For molecules that reach the clinic, royalties represent approximately 90% of the total value. Milestones are the second most valuable portion of the deal and represent approximately 7% of the total value. Milestone payments begin when a molecule reaches the clinic approximately three to four years after a program starts. Milestones then continue to progress at higher payments until a drug candidate reaches market approval and achieves certain sales levels. Finally, upfront and research payments are the smallest portion of a deal and are recognized as a seller completes this work. Commonly, these payments are between $1 million and $3 million and represent approximately 1% or less of the total value of the successful drug development program. Our COVID-19 program with Eli Lilly is a real-world and time-compressed example of the value associated with our business model. Over the period between March 2020 and December 31, 2021, we received $526 million in royalties, representing over 90% of the program value to date. Structuring deals that emphasize value in royalties also aligns our success with the delivery of therapies that make a difference for patients. In this particular case, bamlanivimab, used either alone or together with other antibodies, has been used to help more than 1 million patients. We estimate that this has saved more than 100,000 hospitalizations and over 40,000 lives. This is one example of what can happen when a program is successful. However, this example is atypical due both to the timelines associated with pandemic response and our larger royalty position, which reflects both the high value placed on speed and the fact that we initiated our COVID-19 response independently as part of our internal technology development efforts. Moreover, it is also important to realize that any particular drug development program is a high-risk, high-reward endeavor, and that the large majority of programs are expected to fail to result in approved therapies. This is why it is so important to build a large diversified portfolio as we have been doing. In addition to the number of program starts in our portfolio, main drivers of value are the probability of success, the speed of a program advancing, and our economic participation in each program. Because of this, we make platform investments and business development decisions that seek to optimize these combined factors. We carefully evaluate each program to identify the highest value opportunities, considering the scientific hypothesis, the commercial potential, and the capabilities of our partners. To build capacity, we continue to invest in the expansion of our facilities and our workforce. Importantly, we are leveraging modern automation, data science software solutions, and computation that we believe will yield continuous improvements in speed, efficiency, and success rates across our programs. As already mentioned, this includes investments in a multi-year project of forward integration, which includes translational science, CMC, and GMP manufacturing. We believe that seamless integration of these capabilities with our upstream technologies will allow us to greatly accelerate the path from program start to the start of clinical development. As we build our business, expand our technology, and increase the value we bring to our partners, we expect that our economic participation in each program will increase. These next few slides confirm that this has been the case over the past few years. This graph shows the progression of our royalty rates from early in our business between 2015 and 2019, to more recently, between 2020 and 2021. The box and whisker plot indicate the inner two quartiles and the fifth and 95th percentiles for deals done within each period. As shown, the mean royalty value from our earlier deals was 2.5% and has now increased to 4.3%, with a quarter of deals having royalty rates above 5%. At the top end, royalty rates reach over 8%, while very few programs now have rates below 2.5%. We know that the distribution of royalties shown here are firm numbers that are not subject to buyout clauses. In addition to strong growth in the number and size of our royalty positions, as shown on this slide, we have also accumulated a large value of potential milestone payments. The aggregate value of potential milestone payments for a portfolio of programs currently under contract is $4.6 billion, of which more than half of this is associated with commercial success. I would like to emphasize that this is the maximum potential value and has not been adjusted for the probability of success. As I said previously, the large majority of programs do not succeed in becoming approved products and therefore, we would expect to recognize only a fraction of this total value. In addition to milestones and royalties, which have been typical of how we achieve downstream participation in our early years, as we provide more value to partners, we are now adding deal structures to capture that value. This is particularly true when engaging with early-stage firms. These deals include equity or equity-like stakes in new companies, as well as options to co-invest in program development to obtain a progressively larger effective ownership position. These should be viewed as a subset of potentially higher value programs and are part of balancing our portfolio in terms of indication risk, partner type, and deal structure. At this point, the large majority of our programs are preclinical, reflecting the stage of our business and a higher concentration of new programs in the past few years. As our portfolio matures, we expect to see an increasing pace of molecules entering the clinic and an increasing average stake in these clinical assets. As mentioned, in 2021, we saw four new molecules enter the clinic. Recently, one of these molecules, bebtelovimab, received emergency use authorization from the U.S. FDA. Bebtelovimab is our second COVID-19 antibody to receive emergency use authorization and is the combination of a two-pronged strategy that we executed in response to the pandemic. In March of 2020, at the start of the COVID-19 pandemic, we made a conscious decision to first prioritize speed in getting therapies out to patients. This resulted in the discovery of bamlanivimab, the first COVID-19 antibody to reach the clinic, and the first to receive emergency use authorization from the FDA. Because we anticipated that resistant strains would emerge, we didn't stop. We continued our screening efforts and built up a collection of several thousand diverse candidate antibodies. In early 2021, responding to the emergence of new variants, we began to search this library to find a next-generation solution, this time prioritizing maximum possible potency and breadth of neutralization. This effort resulted in the discovery and now the emergency use authorization of bebtelovimab. Bebtelovimab neutralizes every known variant of concern and to our knowledge, it is by far the most potent antibody in development against the Omicron variant and the BA.2 subvariant. This graph shows our laboratory measurements of the potency of various antibodies that are in development, either as monotherapy or as part of a cocktail of two antibodies. For each antibody, the potency against Omicron is quantified by the IC-50 value, which refers to the concentration of antibody that is needed to achieve a 50% neutralization of a fixed amount of pseudo-type virus. Lower numbers are better and indicate a more potent antibody. This data shows that bebtelovimab is at least 50 times more potent against Omicron than other antibodies we tested and have either been authorized or are in late-stage development. Moreover, for the three most potent antibodies against Omicron, we believe that only bebtelovimab maintains full effectiveness against the BA.2 subvariant, which is thought to be more effective and is rapidly growing in prevalence. The high potency of bebtelovimab allows for full effectiveness at a dose of only 175 milligrams, which can be delivered by IV push in less than a minute as compared to a 30-minute infusion with some other antibody therapies. Furthermore, we believe that bebtelovimab's potency and breadth give us the potential for development as a prophylactic to protect against COVID-19 infection in high-risk populations. The discovery of two authorized therapeutic antibodies within a year of each other demonstrates the power of our platform and its potential to quickly generate best-in-class therapeutics for our partners across other indications. I would like to emphasize that we are not a COVID-19 company. In fact, infectious disease represents a small fraction, approximately 5% of AbCellera's portfolio. In 2022, we will continue to drive innovative science that we believe will enhance the power of our platform to open up new target spaces and enable next-generation antibody therapies. We anticipate a number of exciting updates this year that are in part the result of successful integration of the acquisitions that we've made over the past couple of years. For instance, we have made substantial progress enhancing technologies for the discovery of antibodies against GPCRs and ion channels, including integration of the TetraGenetics platform, which we acquired in 2021. We look forward to updating you on those advancements in future business updates. In our last update, you will recall that we discussed how the combination of our discovery, bispecific, and computational platforms can be used to create next-generation T-cell engagers based on CD-3. Here, we are leveraging our training platform to generate fully human antibodies for T-cells and tumor targets and combining them to create bispecifics using our OrthoMab protein engineering platform. That's an effort that is just underway, and we are pleased to be sharing data about that program at the upcoming American Association for Cancer Research or AACR Meeting in April. Summing up, we've made tremendous progress in 2021. We are now moving into 2022 with a full head of steam. Despite the challenges of operating during the pandemic, we posted a record year in growing our business and have expanded our operations now to include over 400 people working in locations across the globe. Since our last earnings call, we've also strengthened our leadership team with the appointment of Neil Aubuchon as Chief Commercial Officer and Dr. Andrew Lo as Independent Director. And with that, I'll hand over to Andrew Booth, our CFO to provide an overview of our 2021 financials.
Andrew Booth, CFO
Thanks, Carl. I'm pleased to highlight the progress we've made on our key business metrics beginning with our program starts. We started 26 new programs in 2021, of which nine were in the fourth quarter, taking us to a cumulative number of 78 program starts. While starts will continue to be somewhat irregular, we expect a generally increasing trend year-over-year as we have seen throughout this past year. We ended 2021 with 156 programs under contract with 36 unique partners. That is a 51% increase in programs under contract as compared to 2020. As we noted previously, programs under contract has been a leading indicator of the long-term trajectory expected for program starts. Also in 2021, our partners advanced four more molecules into the clinic, bringing our total molecules in the clinic to five at year end. We view the growing list of molecules in the clinic as specific examples of our near and midterm potential revenue from downstream milestone fees and royalty payments in the longer term. The recent wave of bebtelovimab and the current U.S. government purchase order, of course, imply meaningful near-term royalty potential. The momentum we achieved with the number of partners, programs in the contract, program starts, and molecules in the clinic this year has far outperformed our expectations from one year ago. These will be key drivers of growth in the business and of shareholder value in the years ahead. Turning to revenue, revenue in the year was $375 million. Revenues for 2021 were dominated by the $327 million of royalties we earned from shipments of bamlanivimab during the year. We realized $8 million in milestone fees in 2021, $7 million of which relate to the commercial milestones from the sale of bamlanivimab. We recognized $21 million in licensing fees in revenue in 2021, mostly attributable to one large Trianni licensing agreement in the first quarter. Finally, research fees connected to our work on a great many programs with a wide range of partners in 2021 were $19 million. That is similar to the $20 million we recognized in 2020, a year that included significant fees for our work with our partner at DARPA. Looking ahead, we expect the majority of 2022 revenue still to be derived from royalties on COVID antibodies. Lilly continues to shift bamlanivimab into early 2022 and entered into a purchase agreement with the U.S. government to supply up to 600,000 doses of bebtelovimab for at least $720 million no later than March 31st, 2022, with an option of an additional 500,000 doses for delivery no later than July 31st.
Operator, Operator
Ladies and gentlemen, please stand by. Your conference will resume when the speakers reconnect. One moment please.
Andrew Booth, CFO
Hello, this is Andrew Booth speaking. It looks like we had some technical difficulties and dropped the line. I understand where we left off, and I'll just continue on the business update. So, looking ahead, we expect the majority of 2022 revenue to still be derived from royalties on COVID antibodies. Lilly continues to shift bamlanivimab into early 2022 and entered into a purchase agreement with the U.S. government to supply up to 600,000 doses of bebtelovimab for at least $720 million no later than March 31st, 2022, with an option of an additional 500,000 doses for delivery no later than July 31st. As a reminder, under our agreement with Lilly for any COVID-19 products developed, we are eligible to receive royalties in the low to mid-teens for aggregate sales below $125 million and mid-teens to mid-20s on aggregate sales above $125 million. We continue to view COVID royalties as a non-dilutive source of funding to support our investments in capacity and platform capabilities, including investments into forward integration. Turning to operating expenses, our research and development expenses for the year were approximately $62 million, a $33 million increase over the previous year, $10 million of which relates to non-cash stock-based compensation. The overall increase reflects our ongoing investments into R&D, which we will continue to grow as we expand our R&D team's capabilities and capacity. This allows us to deliver our partner programs as well as enhance our technology stack organically. In sales and marketing, expenses for the year were approximately $7 million, nearly doubling from 2020. This reflects the ongoing growth of our business development team capabilities and reach. General and administration expenses for the year were approximately $42 million, compared to approximately $12 million in 2020. Almost $12 million of this increase were related to higher non-cash stock-based compensation expenses, bringing us in line with publicly-listed companies. The increase is otherwise driven by the need to support a much larger business and the associated legal and corporate requirements of being a publicly-listed company, as well as ongoing investments to protect our intellectual property. We are reporting earnings of over $153 million for 2021 compared to approximately $119 million in 2020. In terms of earnings per share, this works out to an earnings of $0.56 per share on a basic and $0.48 on the diluted basis for the year. This result reflects the receipt of royalties on bamlanivimab and our ongoing investments to expand and enhance our discovery platform and to grow our diversified portfolio of long-term stakes in the next-generation of antibody drugs while running discovery efforts for our partners. Looking at cash flows, operating activities for 2021 contributed $245 million to cash flow, which includes the collection of approved accounts receivable balance from December 2020 to 2020 and the strong royalties earned from bamlanivimab in the first half of the year. On the investing activity side, the year shows a $58 million investment in plant, property, and equipment, including the land purchase of our future GMP facility in Vancouver. The remainder was predominantly related to our TetraGenetics acquisition and financing of the construction of our facilities, partially offset by funding received from the Government of Canada's Strategic Innovation Fund. As part of our treasury strategy, we also invested almost $250 million in short-term marketable securities during the year. The $25 million of restricted cash at year end relates to entering into a participation agreement with a segregated accounts company for our D&O insurance. As a result, we finished the year with over $720 million of unrestricted cash equivalents and marketable securities, an approximately 22% increase from December 2020. Given the recently announced purchase agreement for COVID antibodies from Lilly and the associated royalty due to seller, we see the potential to further build our cash balance in the near term. In summary, we continue to be in a very strong liquidity position that allows us to execute our strategy, continue to build capacity, and expand the platform. We believe that we have sufficient liquidity for well beyond the next two years. And with that, we'll be happy to take your questions.
Operator, Operator
Thank you. We have your first question from Stephen Willey with Stifel. Your lines open.
Stephen Willey, Analyst
Yes, good afternoon. Thanks for taking the questions and congrats on a really good year.
Carl Hansen, CEO
Thanks, Steve.
Stephen Willey, Analyst
I was curious about the emphasis on new program starts this year and how you are managing the large number of existing programs or contracts. How should we consider the progress of those new program starts throughout 2022? Is that pace limited by capacity, or is it primarily a bandwidth issue at this point?
Carl Hansen, CEO
Thanks, Steve. Carl here, and I'll start with that and then pass it over to Andrew if he has anything to add. First, I want to reiterate our shift in focus from programs under contract to new program starts, which we discussed in our last call. At the beginning of 2021, we aimed to build our portfolio and ensure a good fit and demand for our technology. Business development throughout 2021 exceeded our expectations. As a result, we currently have about 70 programs under contract, including multi-target agreements spanning two to three years that haven't started yet. We are confident that we can identify valuable work for our platform and technology. Therefore, we are now concentrating on more strategic and selective business development activities, moving the focus away from programs under contract to new program starts. We ended the year with nine program starts in the last quarter, a significant increase that reflects our improved efficiency and investments in equipment, personnel, and technology to expand our capacity. We expect to maintain that pace entering 2022, and I anticipate strong growth in program starts throughout the year. However, I want to emphasize that capacity isn't just about the number of programs started; it also depends on the amount of work done per program. A major goal over the next couple of years is to advance our programs further, ultimately reaching full capability up to IND filing. This will lead to much greater growth in capacity in terms of work, which will also be reflected in our program starts, and we believe that number will increase.
Stephen Willey, Analyst
Okay, that's helpful. And then I guess, just with the current liquidity position, obviously, a good time to be liquid, given the fact that valuations kind of across the board seem to be down. I'm just curious if because of that, you think about maybe prioritizing additional technology acquisitions given the state of the current market or is it just going to be kind of continued opportunism on that track? Thanks.
Andrew Booth, CFO
Hey, Steve, that's a great question. Yes, we are in a strong liquidity position with our cash balance and a healthy book of receivables. Looking ahead to the first quarter, we anticipate additional sales of bebtelovimab in the coming quarters. We're cautious about projecting revenue because, as we've learned recently, COVID-19 can be unpredictable. However, bebtelovimab might play a role in a long-term solution for COVID, but that is ultimately up to Lilly. We feel secure in our cash balance to continue investing in forward integration and team expansion. If opportunities arise for mergers and acquisitions that align with our technology or strategic vision, we will have the funds to pursue them. This keeps us well-positioned to explore these options.
Carl Hansen, CEO
Yes, I might just layer on to that that, as mentioned, the big push on the platform is likely going to be our organic, it's the move towards forward integration. I echo everything Andrew said about looking for opportunities. But of course, M&A strategy and in particular as it pertains to technologies, we need to be opportunistic. So, it's really about finding the right fit.
Operator, Operator
We have your next question from Tiago Fauth with Credit Suisse. Your line is open.
Tiago Fauth, Analyst
Thank you for the question. A common inquiry we receive is regarding the progress of programs entering the clinic. I understand that your insights are somewhat limited in this area. However, considering the total number of program initiations and several from a few years ago, do you have any insights into potential progress towards entering the clinic throughout 2022? My question may also be broader than that. You mentioned in your prepared remarks that you have outperformed expectations in funding and many of the operating metrics that seem to be overlooked by analysts. I believe part of this is due to the nature of your contracts that involve backend economics. While this may be a challenging question to address, what do you think could shift investor perception in the future? Is it primarily about developing a larger operational portfolio that you can control? What do you believe could be viewed more positively by the market at some point? Additionally, how do you perceive this dynamic in light of your current capital situation, given the time frame needed for execution? Thank you.
Carl Hansen, CEO
Thanks, Tiago, Carl here. I think there were a couple of questions combined. If I don't address all of them, please let me know, and I'll cover anything I missed. The first question was about our expectations regarding program starts. As you know, we don’t have complete information on all the programs in our portfolio, which is extensive and largely in our partners' control. When we do have updates that indicate progress, we're usually not allowed to disclose that information, which presents a challenge. We have been focusing on strengthening our alliance management capabilities to enhance our relationships, insight, and communication concerning these programs. We anticipate that this will lead to greater predictability as we move forward. Additionally, we are investing in forward integration, which means we will be closely involved in managing and advancing programs throughout the pipeline, all the way to IND. This integration is expected to significantly accelerate our progress. It also allows us better control and visibility over the programs. We believe that by fully engaging in our programs where we are more deeply involved, it will yield meaningful results for AbCellera. However, these developments are still in the future. I’d also like to add, as mentioned earlier, that we have continually increased the number of programs year-over-year and are securing better terms, which suggests that we will experience a growing frequency of programs entering the clinic. As these programs mature, they will become increasingly valuable for AbCellera. This progression is likely to improve our market perception. Key indicators of our success include repeat business, market validation, and importantly, our efforts to advance our own science for public review. This will help showcase the capabilities of our technology beyond its successful application in COVID, which has generated significant interest and opened up new opportunities. We look forward to discussing this in the coming period.
Tiago Fauth, Analyst
Perfect. I think you covered it all. Appreciate it.
Carl Hansen, CEO
You bet.
Operator, Operator
We had your next question from Gary Nachman with BMO Capital Markets. Your line is open.
Gary Nachman, Analyst
Hi, guys. Good afternoon. Carl, what does the pipeline look like for these higher-value partnerships that you're looking at? And do those take longer to materialize in general? I'm curious like what the cadence for these might be if you're being more selective with partnerships now going forward to generate more value? And then also, how much more work needs to be done on this forward integration? You said it's somewhere down the road in the future, but I'm curious, I mean, is this like one to two years away, three to five years away? And how much do you need to invest behind that? Just talk about some of the things that you're thinking about doing or in the process of doing in order to get there? Thank you.
Carl Hansen, CEO
Thank you, Gary. First, I'd like to provide an update on our business development pipeline. Currently, we are engaged in discussions with numerous companies, including major biopharma firms and innovative startups. We have been discerning in our partnership choices and have walked away from several opportunities in the past year. Specifically, towards the end of 2021, we faced requests for multi-year contracts involving larger numbers of programs, which we ultimately chose not to endorse. Moving forward this year, we are enthusiastic about our business building efforts and have significantly enhanced our team, starting with the appointment of Neil Berkley as Chief Business Officer. We need to allow some time for this to develop, as finalizing agreements can be unpredictable and is influenced by the intricacies of each transaction. Regarding forward integration, I view it as an ongoing process rather than a finite goal. We aim to enhance our capabilities from receiving initial email communications about targets and drug specifications to filing INDs. This year, we are focusing on the translational science aspect, which involves generating biological data that supports the IND filings, and we are actively working on two or three programs in this area. In the long term, we plan to build our CMC capabilities and GMP manufacturing. As Andrew mentioned, we have recently acquired land for GMP facilities, which will be a greenfield project estimated to be operational by 2024. We will also begin aligning projects for this initiative in advance, making it timely to consider this function as integral to our business development strategy.
Andrew Booth, CFO
And Gary, to build on that, I wanted to remind you that we have support from the government of Canada to fund these efforts. You inquired about the costs, and the Government of Canada is providing approximately $125 million to assist us in developing the building, the equipment facilities, and the team processes, ensuring that they are operational within the timeframe that Carl mentioned.
Gary Nachman, Analyst
Yeah. So, thanks for reminding me of that. And I guess also, just with all the cash that you're generating from the bam antibodies, are you able to accelerate this process, Carl, that you were just talking about? Are there, I don't know, third parties that you could bring in-house that have more of these capabilities? Just maybe we can have more of an appreciation of deploying that capital that you're generating from the COVID antibodies to then push this whole business model to the next level.
Carl Hansen, CEO
Great question, Gary. We are looking at several options for how we could put that capital to work. Always keeping an eye on the long term and the need to make sure we stay in a strong liquidity position, particularly given where the markets are today. But if things continue the way that they look and if bebtelovimab has an impact as big as we think that it might, it opens up new options. I probably shouldn't say much more beyond that. In terms of accelerating the forward integration project, there are definitely things that we can do. And I think one of the biggest things is starting to accelerate the hiring, particularly in the translational science and the CMC side. There is a timeline associated with construction and certification of facilities that I don't see a big opportunity to really expedite by deploying capital. One of the things I will highlight here is that when we thought about this the option was always on the table to go and buy a group that was already doing manufacturing. We elected not to do that because we do believe that it is absolutely mission-critical that this be right next to the facility and that there's seamless integration between the frontend discovery, the translational science right through to the manufacturing. It's through that integration that we believe we can get some major speed advances. And in drug development, if you can get a leg up in speed, that is very valuable and it touches every program. So it's an ambitious goal, but it's one, and you have to build it from scratch, you have to build it right. And we decided that in the interest of long-term value, it's something that we need to do organically. So that's currently how we see it, Gary.
Operator, Operator
We have your next question from Puneet Souda with SVB Leerink. Your line is open.
Puneet Souda, Analyst
Yes. Hi, Carl, Andrew. Thanks for taking the questions. So maybe just a clarification, I know you're emphasizing program starts here. But on the contract adds, just want to make sure there was only one contract added in the quarter, if that's correct? And you know in the past you had sort of the mid-teens type of a number of contract adds. And so just thinking about that for 2022, I know you're emphasizing program starts but how should we think about contract adds in 2022? Should we have anything in that sort of blind, and just asking that because ultimately, it is about probabilities of success? So getting the programs into the funnel is important. So just want to get sort of high-level context on that? And I have a follow-up.
Carl Hansen, CEO
Sure. So first, I can confirm that in Q4, we closed a single deal that included a single target with a mid-cap biotech company. And we're not at liberty to say much more beyond that, except that it's a program that we view as potentially of high value. Of course, there's risk associated with all these things. In terms of the addition of programs under contract, maybe what I would turn to is, what are we actually trying to do at the company? There are two things we're doing. One is, we're investing in platform capabilities to ensure that we extend and double down on our competitive position there. The place where we play is between the identification of a target right through ultimately to the filing of an IND, which is a big effort right now on moving forward there. The second thing that we're doing is we're using that capability to build a portfolio of stakes in programs. And we are not dogmatic about the way in which we're looking to build that portfolio. So we have done the traditional deals that I talked about today. We've done different types of deals. What is most important is that we maximize the probability of success for our stake in that program, and ensure that we're always also keeping an eye on it being appropriately diversified. So, at this point, given the work that we have lined up, it's not really material in my mind whether we add additional programs under contract in the next quarter or not. Though, we do believe that business still in the pipeline is strong. And we expect to do that. What's most important is when you actually start the work because that is when they start to contribute to the portfolio. At this point, we've got no concerns whatsoever, that we have the opportunities to continue to have a pace program starts and deploy those program starts on the most important programs is our number one priority right now.
Puneet Souda, Analyst
Got it. And then on the selective process that you talked about with high-value programs. I just want to try to understand a bit, I mean, given your experience with the COVID antibodies, and also a number of other projects. At this point in time, I mean, how do you overall parse out these opportunities? Do you look at the royalty percentage as a big factor in deciding battle? Or is it the indication? Or is it where the scientific team strength is? Or any other set of metrics that you parse through in order to decide whether this is high-value program set for AbCellera versus not? Thank you on that.
Carl Hansen, CEO
Yes. So, as mentioned in my prepared remarks, I think that one should not look at adding value to the portfolio along a single dimension. It very much depends, of course, on volume. You want to add more programs. You also want those programs to be with the highest quality partners on opportunities in terms of the target and the commercial opportunity that we judge to be most attractive. And then, of course, it matters what is their economic participation in those programs? And that is a combination of what value do we bring to the partner? And what are their alternatives? And what is the nature of the negotiation? So, the business development team looks at every opportunity. We assess those in terms of what we believe is the total value added to the portfolio. And that includes work done by the scientific diligence teams. It includes our scientific teams, it includes the negotiations, it includes the commercial analysis; it's very much like being an investor from that perspective.
Operator, Operator
We have your last question from Antonia Borovina with Bloom Burton. Your line is open.
Antonia Borovina, Analyst
Good afternoon. Thanks for taking my question. So, just another follow-up regarding your forward integration work. So I'm just wondering, do you expect you'll have after that work is done some room to raise your typical royalty rate? Or do you think that 5% is kind of the maximum limit that the market will bear, given the competitive environment? And then I have a follow-up.
Carl Hansen, CEO
Yes. So first of all, 5% is absolutely not the limit. We have, in fact, done a quarter of our deals that are north of 5% in recent times. So, there's a range and it depends on the nature of the interaction and how much work we're doing, how much value we're bringing. We are focused on bringing more and more value to therapeutic antibody discovery and development. That is why we're making the investments in forward integration. It's also why we make an investment in the platform generally, while adding new technology, such as the OrthoMab platform, or CMS, rodents, and some of the other technologies that we are either building organically or that we have acquired. If we connect with the right partner that has a great idea or innovation, we can take our capabilities with theirs and we've made the pie bigger, that allows us to create value through that partnership. And then the discussion is how best to split that so that both parties come away enriched from the engagement and can better meet their goals. If we are doing the work that goes all the way from discovery right through to carrying a lot of load into an IND filing, we would, of course, expect to have a much deeper participation than if we're doing the discovery and handing off candidates or leads as some of our early work has done. So, we expect that forward integration will be used primarily with programs where we have a much deeper participation than is our typical deals. And that is in part because we are doing more work. And also, of course, we believe with technology we can make that much faster and give that program a competitive advantage.
Antonia Borovina, Analyst
Okay. Thanks. And then just given the current downturn in the public markets, and then that potentially spilling over into the private markets, do you think that'll have a meaningful impact on your ability to attract new partners either positively or negatively?
Carl Hansen, CEO
Yes. That's a great question. I could probably make arguments that went both ways. I think our initial interactions have shown that it's perhaps more of an opportunity than a headwind. One of the reasons I say that, particularly for private companies is when you are starting out and you're looking at a path where you need to build capabilities, it is much more capital-efficient in terms of cash to work with AbCellera. You save yourself a lot of time and runway, and the investment that it would otherwise take to put that in place. And then, of course, we can help them in that way, accelerate those programs, and in doing that, create value for them and take a deeper position in those programs that, of course, has paid off primarily on success. And because we build a portfolio, we're able to look at those transactions in a rational way, whereas a smaller company really needs to preserve cash early on in its lifetime and even more so when the markets get more difficult, which may well transfer from what's happened in the public markets into the private markets. Thanks. I just would like to thank everyone for joining us today. We had a terrific year. It's been a very exciting time for AbCellera and we're looking forward to keeping you updated on our future progress in future calls. Thanks so much.
Operator, Operator
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.