Source: sec
Source ID: 0001703057-26-000046
URL: https://www.sec.gov/Archives/edgar/data/1703057/000170305726000046/abcl-20260630.htm
Symbol: (ABCL)
Published: 2026-08-05 16:28:15 EDT
Time precision: minute
Title: 10-Q 10-Q

0001703057
12-31
Q2
2026
false
Unlimited
Unlimited
http://www.abcellera.com/20260630#PropertyPlantAndEquipmentAndOperatingLeaseRightOfUseAssetsAfterAccumulatedDepreciationAndAmortization
http://www.abcellera.com/20260630#PropertyPlantAndEquipmentAndOperatingLeaseRightOfUseAssetsAfterAccumulatedDepreciationAndAmortization
http://fasb.org/us-gaap/2026#AccountsPayableAndOtherAccruedLiabilitiesCurrent
http://fasb.org/us-gaap/2026#AccountsPayableAndOtherAccruedLiabilitiesCurrent
xbrli:shares
iso4217:USD
iso4217:USD
xbrli:shares
abcl:jointVenture
xbrli:pure
iso4217:CAD
abcl:research_program
0001703057
2026-01-01
2026-06-30
0001703057
2026-08-03
0001703057
2025-12-31
0001703057
2026-06-30
0001703057
2025-01-01
2025-12-31
0001703057
abcl:ResearchFeesMember
2025-04-01
2025-06-30
0001703057
abcl:ResearchFeesMember
2026-04-01
2026-06-30
0001703057
abcl:ResearchFeesMember
2025-01-01
2025-06-30
0001703057
abcl:ResearchFeesMember
2026-01-01
2026-06-30
0001703057
abcl:LicensingAndRoyaltyRevenueMember
2025-04-01
2025-06-30
0001703057
abcl:LicensingAndRoyaltyRevenueMember
2026-04-01
2026-06-30
0001703057
abcl:LicensingAndRoyaltyRevenueMember
2025-01-01
2025-06-30
0001703057
abcl:LicensingAndRoyaltyRevenueMember
2026-01-01
2026-06-30
0001703057
2025-04-01
2025-06-30
0001703057
2026-04-01
2026-06-30
0001703057
2025-01-01
2025-06-30
0001703057
us-gaap:CommonStockMember
2025-12-31
0001703057
us-gaap:AdditionalPaidInCapitalMember
2025-12-31
0001703057
us-gaap:RetainedEarningsMember
2025-12-31
0001703057
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2025-12-31
0001703057
us-gaap:CommonStockMember
2026-01-01
2026-03-31
0001703057
us-gaap:AdditionalPaidInCapitalMember
2026-01-01
2026-03-31
0001703057
2026-01-01
2026-03-31
0001703057
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2026-01-01
2026-03-31
0001703057
us-gaap:RetainedEarningsMember
2026-01-01
2026-03-31
0001703057
us-gaap:CommonStockMember
2026-03-31
0001703057
us-gaap:AdditionalPaidInCapitalMember
2026-03-31
0001703057
us-gaap:RetainedEarningsMember
2026-03-31
0001703057
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2026-03-31
0001703057
2026-03-31
0001703057
us-gaap:CommonStockMember
2026-04-01
2026-06-30
0001703057
us-gaap:AdditionalPaidInCapitalMember
2026-04-01
2026-06-30
0001703057
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2026-04-01
2026-06-30
0001703057
us-gaap:RetainedEarningsMember
2026-04-01
2026-06-30
0001703057
us-gaap:CommonStockMember
2026-06-30
0001703057
us-gaap:AdditionalPaidInCapitalMember
2026-06-30
0001703057
us-gaap:RetainedEarningsMember
2026-06-30
0001703057
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2026-06-30
0001703057
us-gaap:CommonStockMember
2024-12-31
0001703057
us-gaap:AdditionalPaidInCapitalMember
2024-12-31
0001703057
us-gaap:RetainedEarningsMember
2024-12-31
0001703057
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2024-12-31
0001703057
2024-12-31
0001703057
us-gaap:CommonStockMember
2025-01-01
2025-03-31
0001703057
us-gaap:AdditionalPaidInCapitalMember
2025-01-01
2025-03-31
0001703057
2025-01-01
2025-03-31
0001703057
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2025-01-01
2025-03-31
0001703057
us-gaap:RetainedEarningsMember
2025-01-01
2025-03-31
0001703057
us-gaap:CommonStockMember
2025-03-31
0001703057
us-gaap:AdditionalPaidInCapitalMember
2025-03-31
0001703057
us-gaap:RetainedEarningsMember
2025-03-31
0001703057
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2025-03-31
0001703057
2025-03-31
0001703057
us-gaap:CommonStockMember
2025-04-01
2025-06-30
0001703057
us-gaap:AdditionalPaidInCapitalMember
2025-04-01
2025-06-30
0001703057
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2025-04-01
2025-06-30
0001703057
us-gaap:RetainedEarningsMember
2025-04-01
2025-06-30
0001703057
us-gaap:CommonStockMember
2025-06-30
0001703057
us-gaap:AdditionalPaidInCapitalMember
2025-06-30
0001703057
us-gaap:RetainedEarningsMember
2025-06-30
0001703057
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2025-06-30
0001703057
2025-06-30
0001703057
us-gaap:LandMember
2025-12-31
0001703057
us-gaap:LandMember
2026-06-30
0001703057
us-gaap:BuildingAndBuildingImprovementsMember
2025-12-31
0001703057
us-gaap:BuildingAndBuildingImprovementsMember
2026-06-30
0001703057
us-gaap:EquipmentMember
2025-12-31
0001703057
us-gaap:EquipmentMember
2026-06-30
0001703057
abcl:LicenseBasedIntangibleAssetsMember
2025-12-31
0001703057
abcl:LicenseBasedIntangibleAssetsMember
2026-06-30
0001703057
us-gaap:TechnologyBasedIntangibleAssetsMember
2025-12-31
0001703057
us-gaap:TechnologyBasedIntangibleAssetsMember
2026-06-30
0001703057
abcl:BeedieJointVentureMember
2026-06-30
0001703057
abcl:DayhuJointVentureMember
2026-06-30
0001703057
abcl:DayhuJointVentureMember
2025-12-31
0001703057
abcl:DayhuJointVentureMember
2025-04-01
2025-06-30
0001703057
abcl:DayhuJointVentureMember
2026-04-01
2026-06-30
0001703057
abcl:DayhuJointVentureMember
2025-01-01
2025-06-30
0001703057
abcl:DayhuJointVentureMember
2026-01-01
2026-06-30
0001703057
abcl:DayluJVLoanMember
abcl:DayhuJointVentureMember
2025-01-01
2025-12-31
0001703057
abcl:DayluJVLoanMember
abcl:DayhuJointVentureMember
2026-01-01
2026-06-30
0001703057
abcl:BeedieJointVentureMember
2025-12-31
0001703057
abcl:BeedieJointVentureMember
2025-04-01
2025-06-30
0001703057
abcl:BeedieJointVentureMember
2026-04-01
2026-06-30
0001703057
abcl:BeedieJointVentureMember
2025-01-01
2025-06-30
0001703057
abcl:BeedieJointVentureMember
2026-01-01
2026-06-30
0001703057
abcl:PreInitialPublicOfferingPlanMember
2025-12-31
0001703057
abcl:PreInitialPublicOfferingPlanMember
2026-01-01
2026-06-30
0001703057
abcl:PreInitialPublicOfferingPlanMember
2026-06-30
0001703057
abcl:TwoThousandTwentyShareOptionAndIncentivePlanMember
2025-12-31
0001703057
abcl:TwoThousandTwentyShareOptionAndIncentivePlanMember
2026-01-01
2026-06-30
0001703057
abcl:TwoThousandTwentyShareOptionAndIncentivePlanMember
2026-06-30
0001703057
abcl:TwoThousandTwentyShareOptionAndIncentivePlanMember
us-gaap:RestrictedStockUnitsRSUMember
2025-12-31
0001703057
abcl:TwoThousandTwentyShareOptionAndIncentivePlanMember
us-gaap:RestrictedStockUnitsRSUMember
2026-01-01
2026-06-30
0001703057
abcl:TwoThousandTwentyShareOptionAndIncentivePlanMember
us-gaap:RestrictedStockUnitsRSUMember
2026-06-30
0001703057
us-gaap:ResearchAndDevelopmentExpense
2025-04-01
2025-06-30
0001703057
us-gaap:ResearchAndDevelopmentExpense
2026-04-01
2026-06-30
0001703057
us-gaap:ResearchAndDevelopmentExpense
2025-01-01
2025-06-30
0001703057
us-gaap:ResearchAndDevelopmentExpense
2026-01-01
2026-06-30
0001703057
us-gaap:SellingGeneralAndAdministrativeExpense
2025-04-01
2025-06-30
0001703057
us-gaap:SellingGeneralAndAdministrativeExpense
2026-04-01
2026-06-30
0001703057
us-gaap:SellingGeneralAndAdministrativeExpense
2025-01-01
2025-06-30
0001703057
us-gaap:SellingGeneralAndAdministrativeExpense
2026-01-01
2026-06-30
0001703057
us-gaap:CollaborativeArrangementTransactionWithPartyToCollaborativeArrangementMember
2026-06-30
0001703057
2026-07-01
2026-06-30
0001703057
2027-07-01
2026-06-30
0001703057
us-gaap:USGovernmentAgenciesDebtSecuritiesMember
us-gaap:FairValueInputsLevel1Member
2026-06-30
0001703057
us-gaap:USGovernmentAgenciesDebtSecuritiesMember
us-gaap:FairValueInputsLevel2Member
2026-06-30
0001703057
us-gaap:USGovernmentAgenciesDebtSecuritiesMember
us-gaap:FairValueInputsLevel3Member
2026-06-30
0001703057
us-gaap:USGovernmentAgenciesDebtSecuritiesMember
2026-06-30
0001703057
us-gaap:CertificatesOfDepositMember
us-gaap:FairValueInputsLevel1Member
2026-06-30
0001703057
us-gaap:CertificatesOfDepositMember
us-gaap:FairValueInputsLevel2Member
2026-06-30
0001703057
us-gaap:CertificatesOfDepositMember
us-gaap:FairValueInputsLevel3Member
2026-06-30
0001703057
us-gaap:CertificatesOfDepositMember
2026-06-30
0001703057
us-gaap:CommercialPaperMember
us-gaap:FairValueInputsLevel1Member
2026-06-30
0001703057
us-gaap:CommercialPaperMember
us-gaap:FairValueInputsLevel2Member
2026-06-30
0001703057
us-gaap:CommercialPaperMember
us-gaap:FairValueInputsLevel3Member
2026-06-30
0001703057
us-gaap:CommercialPaperMember
2026-06-30
0001703057
us-gaap:CorporateBondSecuritiesMember
us-gaap:FairValueInputsLevel1Member
2026-06-30
0001703057
us-gaap:CorporateBondSecuritiesMember
us-gaap:FairValueInputsLevel2Member
2026-06-30
0001703057
us-gaap:CorporateBondSecuritiesMember
us-gaap:FairValueInputsLevel3Member
2026-06-30
0001703057
us-gaap:CorporateBondSecuritiesMember
2026-06-30
0001703057
us-gaap:AssetBackedSecuritiesMember
us-gaap:FairValueInputsLevel1Member
2026-06-30
0001703057
us-gaap:AssetBackedSecuritiesMember
us-gaap:FairValueInputsLevel2Member
2026-06-30
0001703057
us-gaap:AssetBackedSecuritiesMember
us-gaap:FairValueInputsLevel3Member
2026-06-30
0001703057
us-gaap:AssetBackedSecuritiesMember
2026-06-30
0001703057
us-gaap:FairValueInputsLevel1Member
2026-06-30
0001703057
us-gaap:FairValueInputsLevel2Member
2026-06-30
0001703057
us-gaap:FairValueInputsLevel3Member
2026-06-30
0001703057
country:CA
abcl:TransactionOneMember
2026-06-30
0001703057
country:CA
abcl:TransactionOneMember
abcl:NonRepayableMember
2026-06-30
0001703057
country:CA
abcl:TransactionOneMember
abcl:ConditionallyRepayableMember
2026-06-30
0001703057
country:CA
abcl:TransactionOneMember
abcl:RepayableMember
2026-06-30
0001703057
country:CA
abcl:TransactionTwoMember
2026-06-30
0001703057
country:CA
abcl:TransactionTwoMember
abcl:NonRepayableMember
2026-06-30
0001703057
country:CA
abcl:TransactionTwoMember
abcl:ConditionallyRepayableMember
2026-06-30
0001703057
country:CA
abcl:TransactionTwoMember
abcl:RepayableMember
2026-06-30
0001703057
stpr:CA-BC
abcl:TransactionTwoMember
2026-06-30
0001703057
stpr:CA-BC
abcl:TransactionTwoMember
abcl:NonRepayableMember
2026-06-30
0001703057
stpr:CA-BC
abcl:TransactionTwoMember
abcl:ConditionallyRepayableMember
2026-06-30
0001703057
stpr:CA-BC
abcl:TransactionTwoMember
abcl:RepayableMember
2026-06-30
0001703057
abcl:OtherGovernmentGrantsMember
2026-06-30
0001703057
abcl:OtherGovernmentGrantsMember
abcl:NonRepayableMember
2026-06-30
0001703057
abcl:OtherGovernmentGrantsMember
abcl:ConditionallyRepayableMember
2026-06-30
0001703057
abcl:OtherGovernmentGrantsMember
abcl:RepayableMember
2026-06-30
0001703057
abcl:NonRepayableMember
2026-06-30
0001703057
abcl:ConditionallyRepayableMember
2026-06-30
0001703057
abcl:RepayableMember
2026-06-30
0001703057
abcl:NonRepayableMember
2025-12-31
0001703057
abcl:ConditionallyRepayableMember
2025-12-31
0001703057
abcl:RepayableMember
2025-12-31
0001703057
country:CA
abcl:TransactionOneMember
abcl:RepayableMember
2024-01-01
2024-12-31
0001703057
country:CA
abcl:TransactionTwoMember
abcl:RepayableMember
2026-01-01
2026-06-30
0001703057
country:CA
abcl:TransactionTwoMember
abcl:ConditionallyRepayableMember
2026-01-01
2026-06-30
0001703057
country:CA
abcl:TransactionTwoMember
2026-01-01
2026-06-30
0001703057
stpr:CA-BC
abcl:TransactionTwoMember
abcl:ConditionallyRepayableMember
2026-01-01
2026-06-30
0001703057
us-gaap:SubsequentEventMember
us-gaap:CollaborativeArrangementTransactionWithPartyToCollaborativeArrangementMember
2026-07-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________________________________________________
FORM
10-Q
_________________________________________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 2026
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number:
001-39781
_________________________________________________________
AbCellera Biologics Inc.
(Exact Name of Registrant as Specified in its Charter)
_________________________________________________________
British Columbia
Not Applicable
( State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
150 W 4th Avenue
Vancouver
,
BC
V5Y 1G6
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (
604
)
559-9005
_________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common shares, no par value per share
ABCL
The Nasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
x
No
o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
x
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
o
Emerging growth company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
o
No
x
As of August 3, 2026, the registrant had
306,611,466
common shares, no par value per share, outstanding.
Table of Contents
Page
PART I.
FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited)
1
Condensed Consolidated Balance Sheets
1
Condensed Consolidated Statements of Loss and Comprehensive Loss
2
Condensed Consolidated Statements of Stockholders’ Equity
3
Condensed Consolidated Statements of Cash Flows
4
Notes to Unaudited Condensed Consolidated Financial Statements
5
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
12
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
21
Item 4.
Controls and Procedures
21
PART II.
OTHER INFORMATION
Item 1.
Legal Proceedings
23
Item 1A.
Risk Factors
24
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
81
Item 5.
Other Information
81
Item 6.
Exhibits
82
Signatures
83
i
Summary of the Material and Other Risks Associated with Our Business
Our business is subject to numerous material and other risks and uncertainties. You should carefully consider the following information together with the other information appearing elsewhere in this Quarterly Report, including our financial statements and related notes hereto. The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations and future growth prospects. The risks and uncertainties described below may change over time and other risks and uncertainties, including those that we do not currently consider material, may impair our business. These risks include, but are not limited to, the following:
•
We have incurred losses in certain years since inception, including in 2025, and we may not be able to generate sufficient revenue to achieve profitability.
•
Our quarterly and annual operating results have fluctuated significantly in the past and may fluctuate significantly in the future, making it difficult to predict our future operating results and could cause our operating results to fall below expectations.
•
Our commercial success depends on the quality of our antibody discovery and development capabilities, technological capabilities, the advancement of internal programs, and their acceptance by new and existing partners in our industry.
•
Failure to execute our business strategy could adversely impact our growth and profitability.
•
Successful development of our current and future drug candidates is uncertain and we may discontinue or reprioritize the development of any of our drug candidates at any time, at our discretion.
•
Development of a biological molecule or other drug is inherently uncertain, and it is possible that none of the drug candidates discovered using our discovery and development capabilities that are further developed by us or our partners will receive marketing approval or become viable commercial drugs, on a timely basis, or at all.
•
Interim, preliminary or top-line data from our clinical trials, including Phase 1 clinical data for ABCL635, that we may announce or publish may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
•
We may not be able to file applications or amendments to commence additional clinical trials on the timelines we expect, and even if we are able to file as expected, the regulatory body may not permit us to proceed
.
•
We have no marketed proprietary drugs and have not yet independently started late-stage clinical development, which makes it difficult to assess our ability to independently develop future drug candidates and monetize any resulting drugs.
•
Our long-term prospects depend in part upon discovering, developing and commercializing additional drug candidates, which may fail in development or suffer delays that adversely affect their commercial viability.
•
Our partners have significant discretion in determining when and whether to make announcements, if any, about the status of our partnerships, including about clinical developments and timelines for advancing collaborative programs, and the price of our common shares may decline as a result of announcements of unexpected results or developments.
•
We face significant competition, and if our competitors develop and market therapies that are more effective, safer or less expensive than our drug candidates, our commercial opportunities will be negatively impacted.
•
Upgrading and integrating our business systems could result in implementation issues and business disruptions.
•
If we are unable to obtain and maintain sufficient intellectual property protection for our technology, including our discovery and development capabilities and the resulting drug candidates, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technologies or a platform similar or identical to ours, and our ability to successfully sell our drug candidates, drugs or services may be impaired.
•
We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful and have a material adverse effect on the success of our business.
•
If we fail to maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.
•
Sales of a substantial number of our common shares in the public market could cause our share price to fall significantly, even if our business is doing well.
ii
•
Impairment charges pertaining to goodwill, identifiable intangible assets or other long-lived assets could have an adverse non-cash accounting impact on our results of operations.
•
The market price of our common shares may be volatile, including the market's reaction to near-term clinical milestones, such as our recent Phase 1 clinical data release and the top-line data from the Phase 2 trial anticipated in August of 2026; consequently, you could lose all or part of your investment.
Investing in our common shares involves a high degree of risk. You should carefully consider the risks and uncertainties contained in Part II, Item 1A, Risk Factors, together with all other information in this Quarterly Report on Form 10-Q, including our consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our other filings with the Securities and Exchange Commission, or the SEC, before investing in our common shares. Any of the risk factors we describe below under Part II, Item 1A, Risk Factors, could adversely affect our business, financial condition or results of operations. The market price of our common shares could decline if one or more of these risks or uncertainties were to occur, which may cause you to lose all or part of the money you paid to buy our common shares. Additional risks that are currently unknown to us or that we currently believe to be immaterial may also impair our business. Certain statements below are forward-looking statements. See “Forward-Looking Information” in this Quarterly Report on Form 10-Q.
iii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
AbCellera Biologics Inc.
Condensed Consolidated Balance Sheets
(All figures in U.S. dollars. Amounts are expressed in thousands except share data.)
(Unaudited)
December 31, 2025
June 30, 2026
Assets
Current assets:
Cash and cash equivalents
$
128,513
$
120,065
Marketable securities
405,313
420,039
Total cash, cash equivalents, and marketable securities
533,826
540,104
Accounts and accrued receivable
58,293
18,597
Restricted cash
25,000
25,000
Other current assets
111,113
95,529
Total current assets
728,232
679,230
Long-term assets:
Property and equipment, net
428,003
416,677
Intangible assets, net
38,381
36,530
Goodwill
47,806
47,806
Investments in equity accounted investees
62,580
65,229
Other long-term assets
51,948
62,103
Total long-term assets
628,718
628,345
Total assets
$
1,356,950
$
1,307,575
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and other current liabilities
$
50,781
$
32,484
Deferred revenue
13,526
20,705
Total current liabilities
64,307
53,189
Long-term liabilities:
Operating lease liability
137,403
129,948
Deferred revenue
3,500
40,450
Deferred government contributions
174,453
178,254
Other long-term liabilities
10,383
9,714
Total long-term liabilities
325,739
358,366
Total liabilities
390,046
411,555
Commitments and contingencies
Shareholders' equity:
Common shares:
no
par value, unlimited authorized shares at December 31, 2025 and June 30, 2026:
300,600,710
and
306,469,632
shares issued and outstanding at December 31, 2025 and June 30, 2026, respectively
802,341
821,242
Additional paid-in capital
198,279
206,004
Accumulated other comprehensive loss
(
4,234
)
(
3,152
)
Accumulated deficit
(
29,482
)
(
128,074
)
Total shareholders' equity
966,904
896,020
Total liabilities and shareholders' equity
$
1,356,950
$
1,307,575
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
AbCellera Biologics Inc.
Condensed Consolidated Statements of Loss and Comprehensive Loss
(All figures in U.S. dollars. Amounts are expressed in thousands except share and per share data.)
(Unaudited)
Three months ended June 30,
Six months ended June 30,
2025
2026
2025
2026
Revenue:
Research fees
$
6,639
$
3,901
$
10,707
$
12,021
Licensing and royalty revenue
10,445
149
10,613
341
Total revenue
17,084
4,050
21,320
12,362
Operating expenses:
Research and development
(1)
39,213
45,987
81,711
92,649
Sales, general, and administrative
(1)
21,986
13,850
41,054
26,185
Depreciation and amortization
5,470
6,990
10,801
13,828
Total operating expenses
66,669
66,827
133,566
132,662
Loss from operations
(
49,585
)
(
62,777
)
(
112,246
)
(
120,300
)
Other (income) expense:
Interest and other
(
9,549
)
42
(
15,073
)
(
3,606
)
Grants and incentives
(
3,692
)
(
3,854
)
(
7,845
)
(
8,193
)
Total other income
(
13,241
)
(
3,812
)
(
22,918
)
(
11,799
)
Loss before income tax
(
36,344
)
(
58,965
)
(
89,328
)
(
108,501
)
Income tax recovery
(
1,617
)
(
3,538
)
(
8,980
)
(
9,909
)
Net loss
$
(
34,727
)
$
(
55,427
)
$
(
80,348
)
$
(
98,592
)
Foreign currency translation adjustment
4,341
(
733
)
1,721
1,082
Comprehensive loss
$
(
30,386
)
$
(
56,160
)
$
(
78,627
)
$
(
97,510
)
Net loss per share
Basic
$
(
0.12
)
$
(
0.18
)
$
(
0.27
)
$
(
0.32
)
Diluted
$
(
0.12
)
$
(
0.18
)
$
(
0.27
)
$
(
0.32
)
Weighted-average common shares outstanding
Basic
298,508,601
305,557,294
298,105,760
304,329,623
Diluted
298,508,601
305,557,294
298,105,760
304,329,623
The accompanying notes are an integral part of these condensed consolidated financial statements.
(1)
Exclusive of depreciation and amortization
2
AbCellera Biologics Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(All figures in U.S. dollars. Amounts are expressed in thousands except share data.)
(Unaudited)
Common Shares
Additional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Shareholders'
Equity
Shares
Amount
Balances as of December 31, 2025
300,600,710
$
802,341
$
198,279
$
(
29,482
)
$
(
4,234
)
$
966,904
Shares issued and restricted stock units (“RSUs”) vested under stock option plan
3,344,871
14,192
(
13,676
)
–
–
516
Stock-based compensation
–
–
12,013
–
–
12,013
Foreign currency translation adjustment
–
–
–
–
1,815
1,815
Net loss
–
–
–
(
43,165
)
–
(
43,165
)
Balances as of March 31, 2026
303,945,581
$
816,533
$
196,616
$
(
72,647
)
$
(
2,419
)
$
938,083
Shares issued and restricted stock units (“RSUs”) vested under stock option plan
2,524,051
4,709
(
2,898
)
–
–
1,811
Stock-based compensation
–
–
12,286
–
–
12,286
Foreign currency translation adjustment
–
–
–
–
(
733
)
(
733
)
Net loss
–
–
–
(
55,427
)
–
(
55,427
)
Balances as of June 30, 2026
306,469,632
$
821,242
$
206,004
$
(
128,074
)
$
(
3,152
)
$
896,020
Common Shares
Additional
Paid-in
Capital
Accumulated
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders'
Equity
Shares
Amount
Balances as of December 31, 2024
295,757,002
$
777,171
$
166,361
$
116,930
$
(
4,378
)
$
1,056,084
Shares issued and restricted stock units (“RSUs”) vested under stock option plan
2,598,750
12,897
(
12,746
)
–
–
151
Stock-based compensation
–
–
14,988
–
–
14,988
Foreign currency translation adjustment
–
–
–
–
(
2,620
)
(
2,620
)
Net loss
–
–
–
(
45,621
)
–
(
45,621
)
Balances as of March 31, 2025
298,355,752
$
790,068
$
168,603
$
71,309
$
(
6,998
)
$
1,022,982
Shares issued and restricted stock units (“RSUs”) vested under stock option plan
297,215
1,600
(
1,527
)
–
–
73
Stock-based compensation
–
–
14,407
–
–
14,407
Foreign currency translation adjustment
–
–
–
–
4,341
4,341
Net loss
–
–
–
(
34,727
)
–
-
34,727
Balances as of June 30, 2025
298,652,967
$
791,668
$
181,483
$
36,582
$
(
2,657
)
$
1,007,076
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
AbCellera Biologics Inc.
Condensed Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars.)
(Unaudited)
Six months ended June 30,
2025
2026
Cash flows from operating activities:
Net loss
$
(
80,348
)
$
(
98,592
)
Cash flows from operating activities:
Depreciation of property and equipment
8,951
11,977
Amortization of intangible assets
1,851
1,851
Amortization of operating lease right-of-use assets
2,863
3,610
Stock-based compensation
28,993
24,299
Other
70
7,019
Changes in operating assets and liabilities:
Research fees and grants receivable
(
12,524
)
25,367
Income taxes receivable
(
7,588
)
(
8,024
)
Accounts payable and accrued liabilities
(
7,356
)
(
16,621
)
Deferred revenue
9,361
44,129
Deferred grant income
(
1,681
)
(
4,453
)
Other assets
13,450
1,838
Net cash used in operating activities
(
43,958
)
(
7,600
)
Cash flows from investing activities:
Purchases of property and equipment
(
24,001
)
(
5,963
)
Purchase of marketable securities
(
291,542
)
(
308,184
)
Proceeds from marketable securities
303,437
293,557
Receipt of grant funding
6,448
6,955
Long-term investments and other assets
(
18,218
)
(
105
)
Net cash used in investing activities
(
23,876
)
(
13,740
)
Cash flows from financing activities:
Proceeds from deferred government contributions and other
2,595
13,585
Net cash provided by financing activities
2,595
13,585
Effect of exchange rate changes on cash and cash equivalents
1,351
(
468
)
Decrease in cash and cash equivalents
(
63,888
)
(
8,223
)
Cash and cash equivalents and restricted cash, beginning of period
183,615
155,249
Cash and cash equivalents and restricted cash, end of period
$
119,727
$
147,026
Restricted cash included in other assets
2,290
1,961
Total cash, cash equivalents, and restricted cash shown on the balance sheet
$
117,437
$
145,065
Supplemental disclosure of non-cash investing and financing activities
Property and equipment in accounts payable
12,733
979
Right-of-use assets obtained in exchange for operating lease obligation
69,787
–
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
AbCellera Biologics Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(All figures in U.S. dollars. Amounts are expressed in thousands except share data.)
(Unaudited)
1.
Nature of operations
AbCellera Biologics Inc.’s (the “Company”) is a clinical-stage biotechnology company focused on discovering and developing antibody medicines for indications with high unmet medical need. The Company aims to bring antibody drug candidates from target to clinic by combining expertise, technologies, and infrastructure for antibody drug discovery and development. The Company uses its capabilities to develop its own pipeline of future antibody drugs and has a diversified portfolio of royalty (and equivalent) stakes in future antibody drugs with partners.
2.
Basis of presentation
The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, the year-end condensed consolidated financial statement data was derived from audited financial statements and these financial statements do not include all the information and footnotes required for complete financial statements. These statements should be read in conjunction with the audited consolidated financial statements of the Company and the accompanying notes thereto for the year ended December 31, 2025.
These unaudited interim condensed consolidated financial statements reflect all adjustments, consisting solely of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods presented. The results of operations for the three and six months ended June 30, 2025 and 2026 are not necessarily indicative of results that can be expected for a full year. These unaudited interim condensed consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the year ended December 31, 2025.
All amounts expressed in these unaudited interim condensed consolidated financial statements of the Company and the accompanying notes thereto are expressed in thousands of U.S. dollars, except for share data and where otherwise indicated. References to “$” are to U.S. dollars and references to “C$” and “CAD” are to Canadian dollars.
3.
Significant accounting policies
Use of estimates
The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Areas of significant estimates include, but are not limited to, revenue recognition including estimated timing of completion of performance obligations and determining whether an option for additional goods or services represents a material right, the impairment assessment of intangible assets and goodwill, and the estimates associated with stock-based compensation awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could significantly differ from those estimates.
Recent accounting pronouncements
The Company has reviewed recent accounting pronouncements and concluded that they are either not applicable to the Company or no material impact is expected in the unaudited interim condensed consolidated financial statements as a result of future adoption.
5
4.
Net loss per share
Basic and diluted net loss per share was calculated as follows:
Three months ended June 30,
Six months ended June 30,
Basic and diluted loss per share
2025
2026
2025
2026
Net loss
$
(
34,727
)
$
(
55,427
)
$
(
80,348
)
$
(
98,592
)
Weighted-average common shares outstanding
298,508,601
305,557,294
298,105,760
304,329,623
Net loss per share - basic and diluted
$
(
0.12
)
$
(
0.18
)
$
(
0.27
)
$
(
0.32
)
The Company’s potentially dilutive securities, which include stock options and restricted share units (“RSUs”), have been excluded from the computation of diluted net loss per share for the three and six months ended June 30, 2025 and June 30, 2026 as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding for the three and six months ended June 30, 2025 and June 30, 2026 used to calculate both basic and diluted net loss per share is the same.
The Company excluded
71,749,963
and
76,174,457
potential common shares for the
three months ended June 30, 2025 and 2026,
respectively,
and
71,848,805
and
77,657,529
potential common shares for the
six months ended June 30, 2025
and 2026
, respectively,
from the computation of diluted net loss per share because including them would have had an anti-dilutive effect.
5.
Property and equipment, net
Property and equipment, net consisted of the following:
December 31, 2025
June 30, 2026
Land
$
53,405
$
53,405
Building and building improvements
193,160
195,074
Equipment
102,935
105,912
Operating lease right-of-use assets
136,117
131,822
Property and equipment
485,617
486,213
Less: accumulated depreciation
(
57,614
)
(
69,536
)
Property and equipment, net
$
428,003
$
416,677
Depreciation expense on property and equipment was $
4.6
million and $
6.1
million for the
three months ended June 30, 2025 and 2026, respectively,
and $
9.0
million and $
12.0
million for the
six months ended June 30, 2025
and 2026
, respectively.
6.
Intangible assets
Intangible assets consisted of the following:
December 31, 2025
June 30, 2026
Gross
carrying
amount
Accumulated
amortization
Net book
value
Gross
carrying
amount
Accumulated
amortization
Net book
value
License
$
16,620
$
8,968
$
7,652
$
16,620
$
9,785
$
6,835
Technology
52,700
21,971
30,729
52,700
23,005
29,695
Total
$
69,320
$
30,939
$
38,381
$
69,320
$
32,790
$
36,530
6
Amortization expense on intangible assets subject to amortization is estimated to be as follows for each of the next five years ended June 30:
Amortization
Expense
2027
$
3,732
2028
3,732
2029
3,732
2030
3,335
2031
2,326
$
16,857
7.
Investments in equity accounted investees and other assets
The Company has entered into
two
separate
50
% joint ventures, Dayhu JV and Beedie JV, as part of the construction of new office and laboratory headquarters. The Company recorded immaterial amounts of proportionate income or loss with respect to either venture in the three and six months ended June 30, 2025 and 2026.
Dayhu JV
As of December 31, 2025
and
June 30, 2026, the equity investment balance was $
10.8
million and $
11.4
million, respectively, of which substantially all the assets in the Dayhu JV are comprised of property and equipment. As of December 31, 2025 and June 30, 2026, the Company recorded a right-of-use asset of $
45.9
million and $
44.5
million, respectively, and an operating lease liability of $
46.7
million and $
44.2
million, respectively, associated with an office lease with the Dayhu JV. The Company incurred lease expense to the Dayhu JV, included within operating expenses, of $
1.3
million and $
1.3
million for the three months ended June 30, 2025 and 2026, respectively, and $
2.5
million and $
2.5
million for the six months ended June 30, 2025 and 2026 respectively.
As of December 31, 2025 and June 30, 2026, the Dayhu JV’s fixed-rate mortgage had a balance of $
61.2
million and $
58.8
million, respectively. The Company provides a limited guarantee of the JV's loan obligations, capped at CAD $
42.0
million ($
29.6
million), which matches a corresponding guarantee provided by the Dayhu JV partner.
Beedie JV
As of
December 31, 2025
and
June 30, 2026,
the equity investment balance was
$
51.8
million
and
$
53.8
million
, respectively, of which substantially all the assets in the Beedie JV are comprised of property and equipment.
As of December 31, 2025 and June 30, 2026, the Company recorded a right-of-use asset of $
71.5
million and $
70.5
million, respectively, and an operating lease liability of $
75.7
million and $
72.8
million, respectively, associated with an office lease with the Beedie JV.
T
he Company incurred lease expense to the Beedie JV, included within operating expenses, of $
1.1
million and $
1.8
million, for the three months ended June 30, 2025 and 2026, respectively, and $
1.1
million and $
3.5
million for the six months ended June 30, 2025, and 2026, respectively.
The Company had a loan receivable balance of
$
39.4
million
and
$
38.4
million
at
December 31, 2025 and
June 30, 2026, respectively,
included within other current assets. The loan receivable is directly with our JV partner, Beedie, which relates to the land and construction loan that matures in February 2027.
7
8.
Other current assets and liabilities
Other current assets
December 31, 2025
June 30, 2026
Taxes receivable
$
55,695
$
38,408
Prepaid expenses and other
9,670
11,123
Materials and supplies
6,336
7,578
Loans receivable from JV partners
39,412
38,420
Total other current assets
$
111,113
$
95,529
Current accounts payable and other current liabilities
December 31, 2025
June 30, 2026
Accounts payable and accrued liabilities
$
25,228
$
12,107
Current portion of operating lease liability
5,815
5,669
Payroll liabilities
10,755
6,076
Current portion of deferred government contribution
8,983
8,632
Total accounts payable and other current liabilities
$
50,781
$
32,484
9.
Shareholders’ equity
The following table summarizes the Company’s stock option activity under the Pre-IPO Plan since December 31, 2025:
Number of
Shares
Weighted-
Average Exercise
Price
Outstanding as of December 31, 2025
24,089,219
$
1.07
Granted
–
–
Exercised
(
2,862,389
)
0.27
Forfeited
–
–
Outstanding as of June 30, 2026
21,226,830
$
1.18
Options exercisable as of June 30, 2026
21,226,830
$
1.18
The following table summarizes the Company’s stock option activity under the 2020 Plan since December 31, 2025:
Number of
Shares
Weighted-
Average Exercise
Price
Outstanding as of December 31, 2025
36,376,041
$
7.38
Granted
10,545,951
3.50
Exercised
(
443,561
)
3.49
Forfeited
(
1,372,144
)
6.98
Outstanding as of June 30, 2026
45,106,287
$
6.53
Options exercisable as of June 30, 2026
21,588,549
$
9.40
8
The following table summarizes the Company’s RSU activity under the 2020 Plan since December 31, 2025:
Number of
Shares
Weighted-
Average Grant
Date Fair Value
Outstanding as of December 31, 2025
8,837,384
$
4.75
Granted
4,126,574
3.45
Vested and settled
(
2,562,972
)
5.56
Forfeited
(
559,646
)
4.36
Outstanding as of June 30, 2026
9,841,340
$
4.02
As of June 30, 2026, the number of shares available for issuance under the 2020 Plan was
34,201,079
, which includes awards granted and outstanding under the Pre-IPO Plan that are forfeited after December 10, 2020.
Stock-based compensation:
Stock-based compensation was classified in the condensed consolidated statements of loss and comprehensive loss as follows:
Three months ended June 30,
Six months ended June 30,
2025
2026
2025
2026
Research and development expenses
$
7,506
$
6,714
$
15,642
$
13,753
Sales, general, and administrative expenses
6,702
5,572
13,351
10,546
$
14,208
$
12,286
$
28,993
$
24,299
10.
Revenue
The disaggregated revenue categories are presented on the face of the condensed consolidated statements of loss and comprehensive loss.
Deferred revenue outstanding in each respective period is as follows:
December 31, 2024
June 30, 2025
December 31, 2025
June 30, 2026
Deferred revenue
$
19,221
$
28,582
$
17,026
$
61,155
The Company recognized $
4.1
million and $
3.7
million during the three months ended June 30, 2025 and 2026, respectively, and $
4.3
million and $
11.6
million during the six months ended June 30, 2025 and 2026, respectively, that was included in deferred revenue at the end of the preceding periods.
Additionally, the Company fully collected the $
36.0
million litigation settlement receivable outstanding as of December 31, 2025, receiving $
18.0
million during the three months ended March 31, 2026 and the remaining $
18.0
million during the three months ended June 30, 2026.
In June 2026, the Company entered into a preclinical research collaboration, option, and license agreement with Jazz Pharmaceuticals PLC (Jazz) to discover and develop next-generation T-cell engaging (TCE) multispecific antibodies. Under the terms of the agreement, the Company received $
56.0
million in the quarter in non-refundable upfront payments for
two
research programs, with an additional $
28.0
million due upon the initiation of a third program. Under the agreement Jazz may exercise its option for development whereby AbCellera is eligible to receive additional option fees and development, regulatory, and commercial sales milestone payments along with tiered royalties on net sales ranging from mid-single digits to low double-digits.
As the non-refundable upfront funding for the research services means the Company is not exposed to significant risks dependent on the commercial success of the collaborative activity and there is a customer-vendor relationship, the Company accounts for the agreement as a contract with a customer. The Company concluded that the arrangement does not contain a significant financing component, as substantive business purposes support the payment structure. As of June 30, 2026, the aggregate transaction price allocated to unsatisfied performance obligations for the contract was $
56.0
million, which the Company expects to recognize $
16.8
million in the next
12
months, with remainder to be recognized thereafter.
9
11.
Financial instruments
Fair Value Measurements
The Company categorizes its financial assets and liabilities measured at fair value into a three-level hierarchy established by U.S. GAAP that prioritizes those inputs to valuation techniques used to measure fair value based on the degree to which they are observable. The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices in active markets for identical assets and liabilities; Level 2 inputs, other than quoted prices included within Level 1, are observable for the asset or liability either directly or indirectly; and Level 3 inputs are not observable in the market.
The Company’s financial instruments consist of cash and cash equivalents, restricted cash, marketable securities, accounts receivable, loans receivable, and accounts payable and other liabilities. The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and other liabilities, and loans receivable, approximate their fair values, and are primarily classified as Level 2.
At June 30, 2026, the Company also held non-marketable securities included in other long-term assets of $
26.4
million (December 31, 2025 - $
32.5
million), reflecting a $
6.1
million impairment recognized within other income (expense) during the quarter. These non-marketable securities are measured at cost less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.
Marketable Securities
As part of the Company’s cash management strategy, the Company holds high credit quality marketable securities that are available to support the Company’s current operations. As of June 30, 2026, our marketable securities were rated A- or higher (or its equivalent) by at least two of the major rating agencies with a weighted average life of approximately
0.6
years
.
Level 2 marketable securities in the fair value hierarchy were based on quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs to determine fair value. There were no transfers between Level 1, Level 2 and Level 3 during the period.
The following table presents information about the Company’s marketable securities that are measured at fair value on a recurring basis and indicates the level of the fair value hierarchy used to determine such fair values:
Fair Value Measurements at June 30, 2026:
Level 1
Level 2
Level 3
Total
Marketable securities
U.S. government agencies
$
57,797
$
–
$
–
$
57,797
Certificate of deposit
–
105,233
–
105,233
Commercial paper
–
48,123
–
48,123
Corporate bonds
–
139,534
–
139,534
Asset backed securities
–
69,352
–
69,352
$
57,797
$
362,242
$
–
$
420,039
12.
Commitments and contingencies
From time to time, the Company may become involved in routine litigation arising in the ordinary course of business. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company does not have contingency reserves established for any litigation liabilities and any of the costs related to such legal proceedings are expensed as incurred.
The Company may enter into certain agreements with strategic partners in the ordinary course of operations that may include investments in collaborative arrangements, contractual milestone payments related to the achievement of pre-specified research, development, regulatory and commercialization events and indemnification provisions, which are common in such agreements.
Pursuant to the agreements, the Company may be obligated to make research and development and regulatory milestone payments upon the occurrence of certain events and upo
n receipt of royalty payments in the low single-digits to
10
mid-twenties based on certain net sales targets. Immaterial amounts were expensed during the three and six months ended June 30, 2025 or June 30, 2026.
13.
Government contributions
The Company recognized the following on the consolidated balance sheets:
June 30, 2026
Deferred Government Contribution
Accounts Receivable
5
Government Grant
1
Total
Non-repayable
Conditionally Repayable
Repayable
Government Contribution 1 (Canada)
2
$
–
$
869
$
75,529
$
–
$
76,398
Government Contribution 2 (Canada)
3
13,166
10,759
–
74,402
85,161
Government Contribution 2 (British Columbia)
4
12,303
–
24,365
–
24,365
Other Government Grants
–
962
–
–
962
June 30, 2026
$
25,469
$
12,590
$
99,894
$
74,402
$
186,886
December 31, 2025
$
33,592
$
13,690
$
103,247
$
66,499
$
183,436
June 30, 2026
Current
$
17,925
$
1,983
$
6,649
$
–
$
8,632
Long-term
$
7,544
$
10,607
$
93,245
$
74,402
$
178,254
1
No amounts have been accrued related to the repayment terms as the conditions are estimated to be non-probable.
2
As of December 31, 2024, the Company had incurred the maximum expenditures under the agreement. Repayment of CAD $
116.9
million ($
88.5
million) of the funded amount is conditional on achieving certain revenue thresholds over a specified period of time.
3
The funding includes repayable and conditionally repayable amounts starting in 2033 over
15
years, where the conditional portion is based on certain revenue thresholds, at a factor of up to
1.4
times the original grant. As of June 30, 2026, total available undrawn grant funding was approximately CAD $
103.1
million ($
72.7
million), consisting of CAD $
84.5
million ($
59.5
million) for future qualifying expenditures and $
13.2
million in accrued grants receivable for which claims will be filed subsequently.
4
Conditionally repayable amounts starting in 2032 over up to
15
years, based on certain revenue thresholds. As of June 30, 2026, total available undrawn grant funding was approximately CAD $
53.0
million ($
37.3
million), consisting of CAD $
35.5
million ($
25.0
million) upon the achievement of certain defined milestones and $
12.3
million in accrued grants receivable for claims already filed for past expenditures, which remain pending reimbursement due to annual provincial disbursement limits.
5
For the three months ended June 30, 2025 and 2026, the Company recognized non-cash investing activities for uncollected government grants of $
1.6
million and $
0.3
million, respectively, and non-cash financing activities of $
10.7
million and $
5.1
million, respectively. For the six months ended June 30, 2025 and 2026, non-cash investing activities were $
2.4
million and $
0.5
million, respectively, and non-cash financing activities were $
19.0
million and $
10.0
million, respectivel
y.
14.
Subsequent Events
In July 2026, the Company entered into a collaboration agreement with Vertex Pharmaceuticals Inc. to develop multispecific T-cell engagers. The Company received $
28.0
million upfront upon the execution of the agreement and is eligible for future milestones and tiered royalties.
11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, as amended, and “forward-looking information” within the meaning of Canadian securities laws, or collectively, forward-looking statements. Forward-looking statements include statements that may relate to our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financial position, financing needs and other information that is not historical information. Many of these statements appear, in particular, under the headings “Business”, “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Forward-looking statements can often be identified by the use of terminology such as “subject to”, “believe,” “anticipate,” “plan,” “expect,” “intend,” “estimate,” “project,” “may,” “will,” “should,” “would,” “could,” “can,” the negatives thereof, variations thereon and similar expressions, or by discussions of strategy. In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking. In particular, these forward-looking statements include, but are not limited to:
•
our expectations regarding the success, clinical advancement, and market acceptance of our internal pipeline of drug candidates, including expectations regarding the preliminary, top-line, or early-stage clinical data for ABCL635, as well as our antibody discovery and development capabilities;
•
companies and technologies in our industry that compete with our business and our internal drug candidates;
•
our ability to manage and grow our business by advancing our internal pipeline of drug candidates through clinical development and introducing our antibody discovery and development capabilities to new partners and expanding our relationships with existing partners;
•
our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if these markets achieve the forecasted growth, our drug candidates may fail to achieve sufficient market acceptance or adoption;
•
our ability to achieve projected discovery, preclinical development, and clinical milestones for our internal programs, including the top-line data from the Phase 2 trial anticipated in August of 2026 for ABCL635, as well as our partners’ ability to achieve projected discovery and development milestones and other anticipated key events, including commercial sales resulting in royalties owed to us, in the expected timelines or at all;
•
our ability to leverage our full platform capabilities - from target identification to Investigational New Drug (“IND”) application submission and to clinical development - to advance our internal pipeline of drug candidates, as well as to support our partners;
•
our ability to develop and commercialize the drugs we discover, both internally and with our partners, on a timely basis or at all;
•
our operating results, financial performance, and financial position;
•
our expectations regarding our good manufacturing practices, or GMP, facility and our manufacturing capabilities to support our clinical trials;
•
our ability to establish and maintain intellectual property protection for our internal drug candidates, technologies and workflows and avoid or defend against claims of patent infringement;
•
our ability to attract, hire and retain key personnel and to manage our personnel growth effectively;
•
our ability to obtain additional financing in future offerings;
•
the volatility of the trading price of our common shares, including in response to the market's reaction to near-term clinical milestones;
•
business disruptions affecting our operations, the advancement of our internal pipeline, and the development of our antibody discovery, preclinical development and clinical development capabilities;
•
our ability to avoid material weaknesses or significant deficiencies in our internal control over financial reporting in the future;
•
our expectations regarding our
Passive Foreign Investment Company, or
PFIC, status for our taxable year ended December 31, 2026, or any future taxable year;
12
•
our expectations regarding the use of our cash resources;
•
our expectations about market trends; and
•
our ability to predict and adapt to government regulation.
We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on the forward-looking statements. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in our forward-looking statements. We have included important factors in the cautionary statements included in this Quarterly Report, particularly in “Summary of the Material and Other Risks Associated with Our Business” above and “Risk Factors” below, that we believe could cause actual results or events to differ materially from our forward-looking statements. We operate in a competitive and rapidly changing environment and new risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures, or investments we may make or enter into.
Additionally, military conflicts, specifically the escalating conflict in the Middle East beginning in 2026, can adversely affect our business and financial statements. This dynamic situation has disrupted global supply chains, increased energy and operational costs, created capital market volatility, and heightened cybersecurity risks. A protraction or escalation of hostilities could further intensify these impacts. Beyond these conflicts, broader macroeconomic inflation generally affects us by increasing our employee-related costs and certain other expenses. Our financial condition and results of operations may also be impacted by other factors we may not be able to control, such as global supply chain disruptions, potential trade tariffs in Canada and the U.S., uncertain global economic conditions, global trade disputes or political instability, as further discussed in the section “Risk Factors” in this Quarterly Report.
You should read this Quarterly Report and the documents that we file with the Securities and Exchange Commission, or the SEC, with the understanding that our actual future results may differ materially from what we expect. The forward-looking statements contained in this Quarterly Report are made as of the date of this Quarterly Report, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law or regulation.
In addition, statements that “we believe” and similar statements reflect our current beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
This Quarterly Report includes statistical and other industry and market data that we obtained from industry publications and research, surveys, and studies conducted by third parties as well as our own estimates of potential market opportunities. All market data used in this Quarterly Report involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such data. Industry publications and third-party research, surveys, and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Our estimates of the potential market opportunities for our product candidates include several key assumptions based on our industry knowledge, industry publications, third-party research, and other surveys, which may be based on a small sample size and may fail to accurately reflect market opportunities. While we believe that our internal assumptions are reasonable, no independent source has verified such assumptions.
We express all amounts in this Quarterly Report on Form 10-Q in U.S. dollars, except where otherwise indicated. References to “$” and “US$” are to U.S. dollars and references to “C$” and “CAD$” are to Canadian dollars.
Except as otherwise indicated, references in this Quarterly Report on Form 10-Q to “AbCellera,” the “Company,” “we,” “us” and “our” refer to AbCellera Biologics Inc. and its consolidated subsidiaries.
Overview
AbCellera is a clinical-stage biotechnology company focused on discovering and developing antibody-based medicines for indications with high unmet medical need. To maximize the value and impact of our work, we are advancing a pipeline of internal programs and strategically partnering with companies that have novel science, innovative technology, or a strong track record of bringing programs through clinical development.
13
We focus on the development of antibody drugs and are committed to improving discovery and development.
We aim to build a competitive advantage in bringing antibody drugs from target into
clinical testing by combining expertise, technologies, and infrastructure to build integrated capabilities for antibody drug discovery and development
. W
e think deeply about capital allocation and strive to maximize long-term value while mitigating the risks that are inherent in drug development. We look for opportunities where we believe low-risk investments in building technology and operational efficiency can create a sustained competitive advantage and drive long-term value by making antibody drug development faster and more efficient.
We are leveraging our platform to develop internal programs and advance a pipeline of AbCellera-led programs with first-in-class potential. We evaluate these programs individually to determine whether to pursue preclinical and clinical development in-house, enter into collaborations with partners, or out-license to optimize their development and clinical and commercial potential.
We expect to continue to make significant investments in this area for the foreseeable future and expect to continue to incur significant expenses in connection with our ongoing activities, including as we:
•
invest in research and development activities to improve our antibody discovery and development capabilities;
•
advance our internal programs in preclinical and clinical development;
•
improve and enhance operations to deliver programs, including investments in manufacturing;
•
acquire businesses or technologies to support the growth of our business;
•
attract, hire and retain qualified personnel; and
•
continue to establish, protect and defend our intellectual property and patent portfolio, including our ongoing litigation.
To date, we have financed our operations primarily from revenue from our antibody discovery partnerships in the form of royalty revenue, government funding from grants, and from the issuance and sale of convertible preferred shares and notes, and common shares. Additionally, we have twice secured significant government co-investments in the form of non-dilutive capital to help fund research and development, including internal programs, and facility construction.
We previously achieved critical regulatory and clinical trial milestones for ABCL635 and ABCL575, and initiated dosing participants in clinical trials for both programs in Canada during the second half of 2025.
For ABCL635, the Phase 1/2 clinical trial is a randomized, placebo-controlled, double-blind study in healthy men and postmenopausal women with or without vasomotor symptoms (VMS). Its purpose is to evaluate safety, pharmacokinetics, pharmacodynamics, as well as frequency and severity of VMS with subcutaneous doses of ABCL635. In January 2026, following an interim assessment of the safety, tolerability, and pharmacodynamic data collected from healthy volunteers in the Phase 1 portion of the study, we announced the dosing of first patients in the Phase 2 portion of the ongoing Phase 1/2 clinical trial.
In May 2026, we announced positive interim Phase 1 data for ABCL635. Treatment with ABCL635 achieved potent and sustained reduction in biomarkers of target engagement, demonstrated a favorable tolerability profile with no observed liver toxicity or serious adverse events reported to date, and pharmacokinetic data supports monthly dosing. Enrollment of the Phase 2 study has been completed and the top-line data readout is expected in August.
For ABCL575, the Phase 1 clinical trial is a randomized, placebo-controlled, double-blind study to assess safety and tolerability in healthy participants following subcutaneous doses of ABCL575. Dosing for the Phase 1 study has been completed with the top-line data readout expected in Q4 2026. At present, we have no plans to pursue development past Phase 1.
In 2025, we advanced ABCL688 and ABCL386 into IND/CTA-enabling studies. ABCL688 is an antibody drug candidate for an undisclosed indication in autoimmunity and is the second program from our G protein-coupled receptor (GPCR) and ion channel platform to advance into IND/CTA-enabling studies. We anticipate submission of an IND/CTA for ABCL688 in 2027. ABCL386 is an antibody drug candidate against an undisclosed target in oncology. ABCL386 is in IND/CTA-enabling activities, and we anticipate initiating Phase 1/2 clinical trials in patients in 2027. Both programs align with the Company's strategy of building value, through partnerships, and through internal discovery and development of potential first-in-class antibody drugs.
14
Financial Highlights
The following table summarizes our key operating results for the three and six months ended June 30, 2025 and June 30, 2026. All figures are in U.S. dollars and amounts are expressed in thousands, except loss per share data:
Three months ended June 30,
Six Months Ended June 30,
Financial Performance
2025
2026
2025
2026
Revenue:
Research fees
$
6,639
$
3,901
$
10,707
$
12,021
Licensing and royalty revenue
10,445
149
10,613
341
Total revenue
17,084
4,050
21,320
12,362
Operating expenses:
Research and development
(1)
39,213
45,987
81,711
92,649
Other operating expenses
27,456
20,840
51,855
40,013
Total operating expenses
66,669
66,827
133,566
132,662
Loss from operations
(49,585)
(62,777)
(112,246)
(120,300)
Other income
(13,241)
(3,812)
(22,918)
(11,799)
Loss before income tax
(36,344)
(58,965)
(89,328)
(108,501)
Net loss
$
(34,727)
$
(55,427)
$
(80,348)
$
(98,592)
Net loss per share
Basic
$
(0.12)
$
(0.18)
$
(0.27)
$
(0.32)
Diluted
$
(0.12)
$
(0.18)
$
(0.27)
$
(0.32)
Stock-based compensation included within operating expenses:
Research and development expenses
7,506
6,714
15,642
13,753
Sales, general, and administrative expenses
6,702
5,572
13,351
10,546
Financial Position
December 31, 2025
June 30, 2026
Cash and cash equivalents
128,513
120,065
Marketable securities
405,313
420,039
Total cash, cash equivalents, and marketable securities
533,826
540,104
Total assets
1,356,950
1,307,575
Total shareholders' equity
966,904
896,020
(1)
Exclusive of depreciation and amortization
Recent Developments and Clinical Update
In January 2026, following an interim review of safety, tolerability, and pharmacodynamic data from healthy volunteers in the Phase 1 portion of the ABCL635 Phase 1/2 clinical trial, we announced the dosing of first patients in the Phase 2 portion of the study.
In May 2026, we announced positive interim Phase 1 data for ABCL635. Treatment with ABCL635 achieved potent and sustained reduction in biomarkers of target engagement, demonstrated a favorable safety profile with all doses well-tolerated and no observed liver toxicity or serious adverse events, and pharmacokinetic data supported monthly dosing. Enrollment of the Phase 2 study has been completed and the top-line data readout is expected in August of 2026.
In June 2026, we entered into a preclinical research collaboration, option, and license agreement with Jazz Pharmaceuticals PLC (Jazz) to discover and develop next-generation T-cell engaging (TCE) multispecific antibodies. Under the agreement, we received a $56.0 million non-refundable upfront payment in the quarter to perform discovery and early-stage research activities for two initial programs, with an additional $28.0 million due upon the initiation of a third program within 12 months. Jazz holds exclusive options to develop and commercialize each program. If Jazz exercises these options, we are eligible to receive up to $792.0 million per program in option fees and milestone payments, as well as tiered royalties on
15
net sales ranging from mid-single digits to low double-digits. The agreement also provides a mechanism to mutually initiate up to two additional programs, and for us to conduct certain investigational new drug (IND)-enabling studies and manufacture clinical supply for any program under the collaboration.
In July 2026, we entered into a collaboration agreement with Vertex Pharmaceuticals Inc. (Vertex) to research, develop, manufacture, and commercialize multispecific T-cell engagers for autoimmune diseases and other conditions. Under the terms of the agreement, we will lead discovery and early development activities, and Vertex will fund all research and development costs while retaining the right to develop and commercialize resulting therapeutic multispecific antibodies. We received $28.0 million in total upfront payments upon the execution of the agreement and are eligible to receive preclinical, development, regulatory, and commercial milestone payments, plus tiered royalties on net sales. Additionally, the parties may mutually agree to have us perform cell-line development, process development, and clinical manufacturing through Phase 1 for any program under the collaboration.
Key Factors Affecting Our Results of Operations and Future Performance
We believe that our financial performance has been, and in the foreseeable future will continue to be, primarily driven by multiple factors as described below, each of which presents growth opportunities for our business. These factors also pose important challenges that we must successfully address to sustain our growth and improve our results of operations. Our ability to successfully address these challenges is subject to various risks and uncertainties, including those described in Part II, Item 1A, Risk Factors.
•
Pursuing drug discovery and development opportunities internally
.
As our discovery and development capabilities have matured, we are increasingly in a position to pursue attractive, well-validated targets ourselves, e.g. in the GPCR, ion channel, and TCE spaces. Such programs have the potential to yield first-in-class drug candidates in indications with substantial unmet medical need which we can pursue internally. We plan on investing significant resources in the preclinical and clinical development of internal programs that will impact our financial results. The investments in each program are undertaken at risk and may ultimately not yield a return.
•
Successfully designing and executing clinical trials.
Our long-term financial success is increasingly dependent on our ability to successfully transition drug candidates from our discovery platform through clinical development. The successful execution of our current and future clinical trials requires significant financial investment. We intend to allocate resources to the design and execution of these clinical trials, which represent a substantial and ongoing commitment of capital and personnel. Our ability to generate future value from these programs, whether through independent development or strategic out-licensing, will depend on the clinical data generated.
•
Successfully out-licensing drug candidates from our internal programs.
We believe that our internal programs may result in drug candidates of interest to other drug developers with capabilities complementary to our own. Where these capabilities can be expected to enhance the value of our drug candidate, we may seek to out-license. Successful out-licensing agreements could generate substantial upfront payments in addition to later milestone payments and royalties. Our financial performance may therefore be impacted by our ability to produce and out-license such drug candidates from our internal programs.
•
Our partners successfully developing and commercializing the antibodies that we discover.
We estimate that, based on the terms of our existing contracts and estimates of historical rates of success of antibody drug development, the vast majority of the potential value for each program is represented by potential future milestone payments and royalties rather than research fees. As a result, we believe our business and our future results of operations will be highly impacted by the degree to which our partners successfully develop and commercialize the antibodies that we have discovered based on contracts with our partners. As our partners continue to advance development of the antibodies that we have discovered, we expect to start receiving additional milestone payments and royalties if any partners commence commercial sales of such antibodies.
•
Engaging with partners.
Our potential to grow revenue, in both the near and long-term, is dependent on successfully engaging with partners. We seek to expand our relationships with existing partners also as a basis for potentially out-licensing some of our internal programs. Our teams are selective in determining which partners we choose to engage with, focusing on the opportunities with the strong potential to generate significant value in the long-term.
•
Investing in enhancements to our discovery and development capabilities.
Our ability to generate a pipeline of potential first-in-class internal programs and expand our partnerships is dependent on the strength and advantages of our discovery and development capabilities. We intend to maintain our leading position through
16
selective investments in research and development to refine and add capabilities, including in manufacturing. We have also successfully executed and will continue to look for strategic technology acquisitions to improve, broaden and deepen our capabilities and expertise in antibody discovery and development, or those that offer opportunities to expand our business into adjacent therapeutic modalities. We intend to continue to devote resources to continue to improve our discovery differentiation which will impact our financial performance.
Business Metrics
We regularly review the following business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe that the following metrics are important to understand our current business. These metrics may change or may be substituted for additional or different metrics as our business develops as further described below with respect to changes in this and upcoming reports.
December 31, 2025
June 30, 2026
Partner-led programs with downstreams
44
35
In the clinic
5
3
In discovery or preclinical development
39
32
Molecules in the clinic with downstreams
14
12
The table below outlines the details of molecules in the clinic as of June 30, 2026:
Molecule
Stage
Partner
1
Therapeutic area(s)
Program Type
ABCL635
Phase 2
n/a
Endocrinology / Women’s Health
AbCellera-led
ABCL575
Phase 1
n/a
Immunology & Inflammation
AbCellera-led
Undisclosed
Phase 1
Teva Pharmaceutical Industries Ltd.
Neuroscience
Partner-led
Undisclosed
Pivotal studies
Dechra Pharmaceuticals
Animal Health
Partner-led
IVX-01
Clinical field study
Dechra Pharmaceuticals
Animal Health
Partner-led
AB-2100
Phase 1/2
Arsenal Bio
Oncology
Trianni license
AB-3028
Phase 1/2
Arsenal Bio
Oncology
Trianni license
GIGA-564
Phase 1
GigaGen, Inc.
Oncology
Trianni license
NBL-012
Phase 2-ready
2
NovaRock Biotherapeutics Inc.
Dermatology, Gastrointestinal, Immunology
Trianni license
NBL-015/FL-301
Phase 1
2
NovaRock Biotherapeutics Inc.
Oncology
Trianni license
NBL-020
Phase 1
2
NovaRock Biotherapeutics Inc.
Oncology
Trianni license
NBL-028
Phase 1
2
NovaRock Biotherapeutics Inc.
Oncology
Trianni license
1
If partner-led
2
As represented by partner
Partner-led programs with downstreams
represent the number of unique partner-led programs where we stand to participate financially in downstream success. Included are programs (i) for which we have commenced the discovery
17
effort and (ii) which, to the best of our knowledge, our partners are progressing towards drug approval on the reporting date.
The discovery effort commences on the later of (i) the day on which we receive sufficient reagents to start discovery of antibodies against a target and (ii) the day on which the kick-off meeting for the program is held. We exclude from the metric all programs where, based on our reasonable efforts to monitor program status, we have reason to believe that no further resources are being, or will be, invested by our partner to advance the program towards eventually producing a marketed drug.
Partner-led programs with downstreams indicate our total opportunities to earn downstream revenue from milestone fees and royalties (or royalty equivalents) in the mid- to long-term.
Molecules in the clinic with downstreams
represent the count of unique molecules for (i) which an Investigational New Drug, or IND, New Animal Drug, or equivalent under other regulatory regimes, application has reached “open” status or has otherwise been approved based on an antibody that was discovered either by us or by a partner using licensed AbCellera technology and (ii) which, to the best of our knowledge, our partners are progressing towards drug approval on the reporting date. Where the date of such application approval is not known to us, the date of the first public announcement of a clinical trial will be used for the purpose of this metric. We determine whether a program is progressing towards drug approval based on the best information available to us at the reporting date.
We view this metric as an indication of our near- and mid-term potential revenue from milestone fees, potential royalty payments, or profits from sales of approved drugs in the long-term. For AbCellera-led programs, our knowledge of a program’s status is complete and our economic stake is large. Our visibility into partner-led programs stemming from our AbCellera platform is often limited and our economic stake small. Trianni-license programs afford us the least visibility and typically the smallest economic stake.
Results of Operations
Comparison of the three and six months ended June 30, 2025 and June 30, 2026:
Revenue
Three Months Ended June 30,
Change
Six Months Ended June 30,
Change
2025
2026
Amount
%
2025
2026
Amount
%
Revenue:
Research fees
$
6,639
$
3,901
$
(2,738)
(41)
%
$
10,707
$
12,021
$
1,314
12
%
Licensing and royalty revenue
10,445
149
(10,296)
(99)
%
10,613
341
(10,272)
(97)
%
Total revenue
$
17,084
$
4,050
$
(13,034)
(76)
%
$
21,320
$
12,362
$
(8,958)
(42)
%
Revenue decreased by $13.0 million from the three months ended June 30, 2025 compared to the three months ended June 30, 2026 and decreased $9.0 million from the six months ended June 30, 2025 compared to the six months ended June 30, 2026. The decrease is attributable to licensing revenue recognized in the second quarter of 2025 and the timing and progress of our research and development efforts. We expect research fee revenues in future periods to be positively impacted as we perform our research obligations and recognize revenue from the upfront payments received under our recent collaborations with Jazz and Vertex, as further detailed in "Recent Developments".
Operating Expenses
Research and Development
Three Months Ended June 30,
Change
Six Months Ended June 30,
Change
2025
2026
Amount
%
2025
2026
Amount
%
Research and development
$
39,213
$
45,987
$
6,774
17
%
$
81,711
$
92,649
$
10,938
13
%
Research and development activities consist of investments in internal programs, partner discovery research, clinical trials, and capability enhancements. At any given time, we have a number of active preclinical, discovery, and clinical programs. Because our personnel and infrastructure are typically deployed across an extensive portfolio of
18
programs simultaneously, we generally do not allocate personnel-related expenses (including stock-based compensation), facilities, and other shared overhead on a program-specific basis. Accordingly, we track, manage, and evaluate these internal costs on an aggregated, unallocated basis.
Total research and development expenses increased by $6.8 million, or 17%, from the three months ended June 30, 2025, compared to the three months ended June 30, 2026. Of the total increase, external clinical program costs were $5.1 million for the three months ended June 30, 2026 compared to $0.8 million for the three months ended June 30, 2025, as ABCL575 and ABCL635 entered the clinic towards the end of the second quarter of 2025. Preclinical and discovery costs were $6.9 million and remained consistent period over period. Total compensation expense, including stock-based compensation, was $22.2 million for the three months ended June 30, 2026 and remained substantially unchanged compared to the prior period. Similarly, unallocated internal costs of $11.7 million for the three months ended June 30, 2026 were consistent period over period.
Total research and development expenses increased by $10.9 million, or 13%, from the six months ended June 30, 2025, compared to the six months ended June 30, 2026. Of the total increase, external clinical program costs were $9.0 million for the six months ended June 30, 2026 compared to $0.7 million for the six months ended June 30, 2025, as ABCL575 and ABCL635 entered the clinic in the end of the second quarter of 2025. Preclinical and discovery costs decreased by $2.2 million period-over-period to $15.0 million, primarily driven by prior-period preclinical spend from ABCL635 and ABCL575 IND/CTA-enabling activities. Total compensation expense, including stock-based compensation, was $45.7 million for the six months ended June 30, 2026 and remained substantially unchanged compared to the prior period. Unallocated internal costs of $23.0 million for the six months ended June 30, 2026 increased by $3.6 million compared to the six months ended June 30, 2025 due to clinical manufacturing activities and the use of materials and supplies.
Sales, General, and Administrative
Three Months Ended June 30,
Change
Six Months Ended June 30,
Change
2025
2026
Amount
%
2025
2026
Amount
%
Sales, general, and administrative
$
21,986
$
13,850
$
(8,136)
(37)
%
$
41,054
$
26,185
$
(14,869)
(36)
%
Sales, general, and administrative expenses
decreased
by $8.1 million, or (37)%, from the
three months ended June 30, 2025
compared to the three months ended June 30, 2026 and
decreased
by $14.9 million, or
(36)%
, from the six months ended June 30, 2025 compared to the
six months ended June 30, 2026
.
Total compensation expense, inclusive of stock-based compensation, was $11.3 million for the three months ended June 30, 2025, compared to $8.8 million for the
three months ended June 30, 2026 and $22.3 million
for the
six months ended June 30, 2025
, compared to
$17.9 million
for the six months ended June 30, 2026. The decrease in compensation expense is a result of our continued optimization of headcount in light of our internal pipeline focus. Legal, software, and other general administrative costs were $10.7 million for the three months ended June 30, 2025, compared to $5.0 million for the
three months ended June 30, 2026 and
$18.8 million for the
six months ended June 30, 2025 compared to
$8.3 million for the six months ended June 30, 2026. The decrease was primarily due to a legal settlement in December 2025 and a resulting reduction in legal fees incurred in 2026.
Depreciation and Amortization
Three Months Ended June 30,
Change
Six Months Ended June 30,
Change
2025
2026
Amount
%
2025
2026
Amount
%
Depreciation and amortization
$
5,470
$
6,990
$
1,520
28
%
$
10,801
$
13,828
$
3,027
28
%
Depreciation and amortization expense increased by
$1.5 million
, or
28%
, from the three months ended June 30, 2025 compared to the three months ended June 30, 2026 and increased by
$3.0 million
, or 28%, from the
six months ended June 30, 2025
compared to the six months ended June 30, 2026. The increase was primarily due to the commencement of depreciation of our clinical manufacturing facility that was put in service in December 2025.
19
Interest and Other (Income) Expense
Three Months Ended June 30,
Change
Six Months Ended June 30,
Change
2025
2026
Amount
%
2025
2026
Amount
%
Interest and other
$
(9,549)
$
42
$
9,591
(100)
%
$
(15,073)
$
(3,606)
$
11,467
(76)
%
Interest and other income decreased by
$9.6 million
, or
(100)%
, from the three months ended June 30, 2025 compared to the three months ended June 30, 2026 and decreased by
$11.5 million
, or (76)%, from the
six months ended June 30, 2025
compared to the six months ended June 30, 2026
.
The decrease was primarily driven by foreign exchange in the period due to fluctuations in the Canadian and U.S. dollar exchange rate, interest income driven by our cash, cash equivalents, and marketable securities balances and interest rate yields in the period, and other fair value adjustments.
Grants and Incentives
Three Months Ended June 30,
Change
Six Months Ended June 30,
Change
2025
2026
Amount
%
2025
2026
Amount
%
Grants and incentives
$
(3,692)
$
(3,854)
$
(162)
4
%
$
(7,845)
$
(8,193)
$
(348)
4
%
Grants and incentives increased by
$0.2 million, or 4%,
from the three months ended June 30, 2025 compared to the three months ended June 30, 2026 and increased by
$0.3 million, or
4%
,
from the
six months ended June 30, 2025
compared to the six months ended June 30, 2026
.
The change was primarily driven by activity relating to research and development expenditures that are eligible for reimbursement under government programs for the period.
Income Tax Recovery
Three Months Ended June 30,
Change
Six Months Ended June 30,
Change
2025
2026
Amount
%
2025
2026
Amount
%
Income tax recovery
$
(1,617)
$
(3,538)
$
(1,921)
119
%
$
(8,980)
$
(9,909)
$
(929)
10
%
Income tax recovery increased by
$1.9 million
from the three months ended June 30, 2025 compared to the three months ended June 30, 2026 and increased by
$0.9 million
from the
six months ended June 30, 2025
compared to the six months ended June 30, 2026
.
The increase was primarily driven by the availability of carry-back of losses to recover previously paid taxes.
Liquidity and Capital Resources
As of June 30, 2026, we had $540.1 million of cash, cash equivalents and marketable securities, comprising $120.1 million in cash and cash equivalents and $420.0 million in marketable securities. The increase of $6.3 million since December 31, 2025, was primarily driven by the full receipt of a $36.0 million litigation settlement, of which was receivable at December 31, 2025, and a $56.0 million upfront payment
to discover and develop next-generation T-cell engaging (TCE) multispecific antibodies
. This was partially offset by cash flow used in operations due to our continued research and development activity for internal programs in discovery, preclinical, and clinical development as well as for partnered programs.
We intend to continue to invest in research and development efforts towards expanding our capabilities and expertise, grow and advance our internal pipeline. Simultaneously, we intend to optimize our long-term office-lease arrangements and intend to assign or fully sublease the office and laboratory space constructed through the Beedie JV.
We substantially completed our final large platform investments in our clinical manufacturing facility and our corporate headquarters in 2025. With the completion of these large platform investments, we expect a reduction in investing cash outflows, shifting our capital allocation from building capabilities to using them as we execute our strategy of building on our internal pipeline. Based on our current business plan, we believe that our available liquidity from existing total cash balances (cash, cash equivalents, and restricted cash), marketable securities, and government contributions, will be sufficient to meet our working capital and capital expenditures over at least the next 36 months following the date of this report.
Government of Canada and Government of British Columbia Contributions
In May of 2023, we entered into multi-year contribution agreements with the Government of Canada and the Government of British Columbia. Under the agreements, up to $166.7 million ($225.0 million CAD) and $55.6 million
20
($75.0 million CAD) was committed by the Government of Canada and the Government of British Columbia, respectively, to build new capabilities in Canada to develop, manufacture, and deliver antibody medicines to patients through Phase 1 clinical trials and build expertise in translational science, technical operations, and clinical operations and research. At June 30, 2026, our government contribution agreements provided an estimated CAD
$156.1 million
(
$110.0 million
) in total available funding eligible for future claims. See the notes to our condensed consolidated financial statements for further information related to the government contributions.
Cash Flows
The following table summarizes our cash flows for the periods presented:
Six Months Ended June 30,
2025
2026
Net cash provided by (used in):
Operating activities
$
(43,958)
$
(7,600)
Investing activities
(23,876)
(13,740)
Financing activities
2,595
13,585
Effect of exchange rate changes on cash and cash equivalents
1,351
(468)
Decrease in cash and cash equivalents
$
(63,888)
$
(8,223)
Operating activities
Net cash used in operating activities decreased from $44.0 million in the
six months ended June 30, 2025
to $7.6 million in the
six months ended June 30, 2026.
The decrease in cash flows used in operations was primarily attributable to
a $56.0 million upfront payment received
to discover and develop next-generation TCE multispecific antibodies, the full receipt of a $36.0 million litigation settlement that was receivable at December 31, 2025, and working capital movements, partially offset by upfront payments received in Q1 2025 that did not recur in the current period.
Investing activities
Net cash used by investing activities decreased from $23.9 million in the
six months ended June 30, 2025 to
$13.7 million in the
six months ended June 30, 2026
. The decrease in cashflows used by investing activities was primarily attributable to a $36.2 million reduction
in purchases of property and equipment and other long-term assets, partially offset by a
$26.5 million
reduction
in net proceeds from
marketable securities as cash was used to purchase additional marketable securities in the current period.
Financing activities
Net cash provided by financing activities increased from $2.6 million in the
six months ended June 30, 2025
to $13.6 million
in the six months ended June 30, 2026
.
The increase was primarily attributable to proceeds from government contributions and other long-term liabilities.
Critical Accounting Policies and Significant Judgements and Estimates
Detailed information about our critical accounting policies and estimates is set forth in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes to these policies since then.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Our exposure to market risk is described in Part II. Item 7A. Quantitative and Qualitative Disclosures About Market Risk of our annual report on Form 10-K for the year ended December 31, 2025. We believe our exposure to market risk has not changed materially since then.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Our “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the
21
Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are designed to ensure that information required to be disclosed is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure. The Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of June 30, 2026 and, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of such date.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
22
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
In the pending matter Sabariah Schrader, Executrix of the Estate of John William Schrader et al. v. Carl Lars Genghis Hansen, et al., the Company filed a Notice of Application seeking to dismiss certain Company affiliates from the matter. No hearing date has been set. The Company recently obtained consent to the invalidation of the Immvivos '511 patent and removal of patent infringement allegations. The Company believes that Plaintiffs’ remaining claim is meritless in all respects and intends to defend itself appropriately.
23
Item 1A. Risk Factors.
Risks Related to Our Financial Position and Need for Additional Capital
We have incurred losses in certain years since inception, including in 2025, and we may not be able to generate sufficient revenue to achieve profitability.
We expect to continue to incur expenditures as we operate our business. We expect to incur losses for the foreseeable future. We cannot accurately predict the timing or amount of our increased expenses, or when, if at all, we may achieve profitability. Our net loss for the years ended December 31, 2025 and 2024 was $146.4 million and $162.9 million, respectively. Our accumulated losses at December 31, 2025 and accumulated earnings at December 31, 2024 was $29.5 million and $116.9 million, respectively.
Our success depends on our ability to develop and monetize a drug, either independently or through significant economic participation. Unless and until either of those events occur, we do not anticipate being able to generate sufficient revenue to achieve profitability.
Developing a drug on our own will require us to succeed in a range of challenging activities that are still in the preliminary stages, including developing drug candidates, obtaining regulatory approval, manufacturing, and commercializing approved drugs. We may never succeed in these activities and generate revenue from drug sales from our internal pipeline that are significant enough to achieve profitability.
Even if we achieve profitability, it may not be sustained. Our failure to become or remain profitable would depress our market value and impair our ability to raise capital, expand our pipeline, develop drug candidates, or continue our operations. A decline in the value of our company could also cause our stockholders to lose all or part of their investment.
Our revenue has fluctuated from period to period, and our revenue for any historical period may not be indicative of results that may be expected for any future period.
We have, and continue to receive, revenue from our partnership contracts and are eligible to receive future milestones and royalties related to potential future success of antibodies that we have discovered under past and existing agreements. We are unable to predict whether and the extent to which the minimum annual payments under our partnership agreements will be exceeded, or the timing of the achievement of any milestones under these agreements, if they are achieved at all. In some cases, the timing and likelihood of payments to us under these agreements is dependent on our partners’ successful utilization of the antibodies discovered using our discovery and development capabilities, which is outside of our control. Because of these factors, our revenue could vary materially from period to period.
Our quarterly and annual operating results have fluctuated significantly in the past and may fluctuate significantly in the future, making it difficult to predict our future operating results and could cause our operating results to fall below expectations.
Our quarterly and annual operating results have fluctuated in the past and may fluctuate in the future, making it difficult to predict our future operating results. These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to:
•
interest income from our cash management strategy, which is subject to variability due to cash, cash equivalents and marketable securities balances and market interest yields available to the Company;
•
the timing and cost of, and level of investment in, research, clinical development and commercialization activities relating to our discovery and development capabilities and initiation and advancement of internal programs, which may change from time to time;
•
the cost of maintaining and running our GMP facility, activities which are new to us;
•
our ability to generate viable development candidates;
•
the relative reliability and robustness of our discovery and development capabilities, including our data generation and computational tools;
•
the introduction of new technologies, platform features or software, by us or others in our industry;
•
costs that we may incur to acquire, develop or commercialize additional technologies;
•
costs and fees occurring in litigation that we may be involved in;
24
•
the degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners;
•
natural disasters, pandemics, outbreaks of disease or public health crises;
•
the timing and nature of any future acquisitions or partnerships;
•
future accounting pronouncements or changes in our accounting policies; and
•
general social, political and economic conditions and other factors, including inflationary pressures and factors unrelated to our operating performance or the operating performance of our competitors.
The effect of one of the factors discussed above, or the cumulative effects of a combination of factors discussed above, could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on our past results to indicate our future performance.
We may need to raise additional capital to fund our existing operations, improve our discovery and development capabilities, advance internal programs through the clinic, or expand our operations. If we are unable to raise additional capital on terms acceptable to us or at all or generate cash flows necessary to maintain or expand our operations and pipeline investments, we may not be able to compete successfully, which would harm our business, operations, and financial condition.
Based on our current business plan, we believe our available liquidity from existing total cash balances (cash, cash equivalents, and restricted cash), marketable securities, and government contributions, will be sufficient to meet our working capital and capital expenditure needs over at least the next 36 months following the date of this report. Because our core operational focus is advancing our clinical pipeline, management evaluates this total non-dilutive capital accessible to execute our strategy (including our ability to access our reimbursement-based government contributions, which cannot be utilized for general corporate purposes). If our available capital resources together with our anticipated cash flow from operations are insufficient to satisfy our liquidity requirements including because of the realization of other risks described in this report, we may be required to raise additional capital prior to such time through issuances of equity or convertible debt securities, enter into a credit facility or another form of third-party funding or seek other debt financing, including real estate and asset backed financing on the significant investments we have funded towards our corporate headquarters and GMP facility. Such additional future financing may not be available on terms acceptable to us or at all.
We may consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons. For example, this may include reasons such as to:
•
fund development and marketing efforts of our current and future internal and partner programs;
•
expand our discovery, development, clinical and regulatory capabilities;
•
advance our current and future drug candidates through clinical trials;
•
acquire, license or invest in technologies;
•
acquire or invest in complementary businesses or assets; and
•
finance capital expenditures and general and administrative expenses.
Our present and future funding requirements will depend on many factors, including:
•
our ability to achieve revenue growth;
•
the cost of expanding our operations, including our GMP activities;
•
the initiation and advancement of internal programs and marketing activities associated therewith;
•
our rate of progress in, and cost of research and development activities associated with, antibody discovery and development for our internal pipeline;
•
the receipt of potential future payments from partners related to milestones, royalties, and licensing;
•
the effect of competing technological and market developments;
•
costs and fees occurring in litigation that we may be involved in; and
•
costs related to any business and operations expansion.
25
The various ways we could raise additional capital carry potential risks. If we raise funds by issuing equity securities, dilution to our shareholders would result. Any preferred equity securities issued also would likely provide for rights, preferences or privileges senior to those of holders of our common shares. If we raise funds by issuing debt securities, those debt securities would have rights, preferences and privileges senior to those of holders of our common shares. Debt financing and preferred equity financing, if available, may also involve agreements that include covenants restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making acquisitions, making capital expenditures, or declaring dividends. For example, in December 2025, we obtained financing secured against our office building held in our Dayhu joint venture. This financing, along with our agreement with the Strategic Response Fund (SRF), previously Strategic Innovation Fund (SIF), subjects us to certain restrictive covenants. Our agreement with the SRF requires that we obtain prior consent for specific corporate actions, such as when an entity acquires 20% or more of our voting securities. Similarly, our December 2025 financing includes covenants that restrict our ability to sell or transfer the secured property without lender consent and change of control provisions when any person or group acquires beneficial ownership of more than 25% of our voting shares. If we fail to comply with these covenants or obtain necessary consents, we could be obligated to repay all or a portion of the contribution amounts from SRF and the outstanding principal under our financing, which would have a material adverse effect on our business, financial condition, and results of operations.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, if we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and could have a material adverse effect on our business, financial condition, results of operations, and prospects.
Unstable market and economic conditions may have serious adverse consequences on our business, financial condition, and share price.
From time to time, the global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that future deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including conflicts in Europe and the Middle East and elsewhere, and the related impact on our business and the markets generally. Sanctions imposed by the United States and other countries in response to such conflicts, may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. Continued disruptions in the banking system, both in the U.S. or abroad, may impact our or our customers’ liquidity and, as a result, negatively impact our business and operating results. If the current equity and credit markets deteriorate, the value and liquidity of our cash, cash equivalents and marketable securities may fluctuate substantially and it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Although we have not realized any significant losses on our cash, cash equivalents, and our diversified portfolio of high credit quality marketable securities, future fluctuations in their value could result in significant losses and could have a material adverse impact on our results of operations and financial condition. In addition, failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our strategy, financial performance, and share price. There is also a risk that one or more of our current service providers, manufacturers and other partners may not survive an economic downturn, which could directly affect our ability to attain our operating goals on schedule and on budget.
Risks Related to our Business and the Development and Commercialization of Our Drug Candidates
Our commercial success depends on the quality of our antibody discovery and development capabilities, technological capabilities, the advancement of internal programs, and their acceptance by new and existing partners in our industry.
We utilize our antibody discovery and development capabilities to identify antibodies for further development and potential commercialization by us and our partners. As a result, the quality and sophistication of our discovery and development capabilities is critical to our ability to conduct our research discovery activities and to deliver promising drug candidates. In particular, our business depends, among other things, on:
•
our discovery and development capabilities to successfully identify drug candidates on the desired timeframes that can ultimately be used as medicines to prevent and treat diseases;
•
our capabilities to successfully advance our current and future drug candidates through clinical trials;
26
•
our ability to successfully employ our newly constructed GMP facility to advance our pipeline;
•
our ability to utilize our discovery and development capabilities to build a robust pipeline of potential development candidates;
•
our ability to partner drug candidates from our internally developed pipeline;
•
the rate at which partners continue to develop molecules in which we hold an economic stake;
•
the timing and scope of any approval that may be required by regulatory bodies for drugs that are developed based on antibodies discovered by us;
•
the impact of our investments in innovation and commercial growth.
There can be no assurance that we will successfully address any of these or other factors that may affect the ability of our discovery and development capabilities to create viable molecules that ultimately lead to commercially viable drugs. If we cannot create commercially viable drugs, our business, financial condition, results of operations, and prospects could be adversely affected.
Failure to execute our business strategy could adversely impact our growth and profitability.
Our strategy focuses on the development of antibody-based drugs and improving the way these drugs are discovered and developed. Our strategy assumes a certain degree of growth in capital and capacity. Factors such as insufficient capital, inflation, supply chain interruptions, inadequate forecasting, increases in construction material costs, or labor shortages could interfere with the successful execution of our strategy and our ability to timely build infrastructure and processes to support our business. If we cannot successfully execute on our strategy, this could negatively impact our future results of operations and market capitalization.
Furthermore, our strategic pivot from a primarily partnership-focused business to one focused on developing our own internal pipeline of antibody medicines requires different capital allocation, operational expertise, and risk management compared to our historical partnership model. As we direct substantial resources toward our internal programs, we may experience reduced near-term revenue from partnerships, increased cash costs, and greater exposure to the often binary risks of clinical trial outcomes. If we fail to successfully manage this strategic transition, or if our internal pipeline fails to generate value that outweighs the reduction in partnership focus, our business and valuation may suffer.
For additional discussion of our business strategy, please see the section entitled “Item 1. Business” included in our Annual Report on Form 10-K for the year ended December 31, 2025.
We allocate our resources to pursue a particular drug candidate or indication and, as a result, may fail to capitalize on other drug candidates or indications that may be more profitable or for which there is a greater likelihood of success.
We allocate our resources to certain research programs and drug candidates. As a result, we may forgo or delay pursuit of opportunities with other drug candidates or for our current development candidates in other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable and profitable market opportunities. Our spend on current and future research and development programs and ongoing clinical development of drug candidates for specific indications may not yield commercially viable medicines.
Development of a biological molecule or other drug is inherently uncertain, and it is possible that none of the drug candidates discovered using our discovery and development capabilities that are further developed by us or our partners will receive marketing approval or become viable commercial drugs, on a timely basis, or at all.
We have used our discovery and development capabilities to offer antibodies to partners who are engaged in antibody discovery and development. These partners include pharmaceutical companies, biotechnology companies, and non-profit and government organizations. While we receive upfront payments from our partners generated through technology access and discovery research fees, we estimate that the vast majority of the economic value of the contracts with our partners is in the downstream payments that are payable if certain milestones are met or approved drugs are sold. Due to our reliance on our partners, the risks relating to drug development, regulatory clearance, authorization or approval, and commercialization apply to us derivatively through the activities of our partners. While we believe our discovery and development capabilities are capable of identifying high quality antibodies, there can be no assurance that our partnerships will successfully develop, secure marketing approvals for, and commercialize any drugs based on the antibodies that we discover. As a result, we may not realize the intended benefits of our partnerships.
27
Due to the uncertain, time-consuming and costly clinical development and regulatory approval process, there may not be successful development of any drug candidates with the antibodies that we discover, or we and our partners may choose to discontinue the development of these drug candidates for a variety of reasons, including due to safety, risk versus benefit profile, exclusivity, competitive landscape, commercialization potential, production limitations or prioritization of their resources. It is possible that none of these drug candidates will ever receive regulatory approval and, even if approved, such drug candidates may never be successfully commercialized. While we have received milestone and royalty payments in the past, there can be no assurance that we will receive additional milestone payments or any royalties in the future.
In addition, even if such drug candidates receive regulatory approval in the United States, the drug candidates may never obtain approval or be commercialized outside of the United States, which would limit their full market potential and therefore our ability to realize full potential downstream value. Furthermore, approved drugs may not achieve broad market acceptance among physicians, patients, the medical community, and third-party payors, in which case revenue generated from their sales would be limited. Likewise, we or our partners have to make decisions about which clinical stage and preclinical drug candidates to develop and advance, and we or our partners may not have the resources to invest in all of the drug candidates that contain antibodies discovered using our platform, or clinical data and other development considerations may not support the advancement of one or more drug candidates. Decision-making about which drug candidates to prioritize involves inherent uncertainty, and our partners’ development program decision-making and resource prioritization decisions, which are outside of our control, may adversely affect the potential value of our economic stakes in drug programs. Additionally, subject to contractual obligations to us, if one more of our partners is involved in a business combination, the partner might de-emphasize or terminate the development or commercialization of any drug candidate that utilizes an antibody that we have discovered.
The failure to effectively advance, market, and commercialize drug candidates with the antibodies that we discover could have a material adverse effect on our business, financial condition, results of operations, and prospects, and cause the market price of our common shares to decline. In addition to the inherent uncertainty in drug development addressed above, our ability to forecast our future revenues may be limited.
Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if these markets achieve the forecasted growth, our drug candidates may fail to achieve sufficient market acceptance or adoption.
From time to time, we may make public disclosures that contain estimates of the potential market opportunity of our internal programs, including estimates of prevalence or incidence of a medical condition and total addressable market (TAM). For example, we have publicly disclosed internal estimates regarding the prevalence of women experiencing moderate-to-severe vasomotor symptoms (VMS) and the related TAM for ABCL635. Market-opportunity estimates for our drug candidates are forward-looking in nature and based on management’s internal analysis, which utilizes available scientific research, market data and third-party information, and several critical assumptions that may prove incorrect. Specifically, our projections consider, among other factors, assumptions about incidence or prevalence of the targeted condition, treatment patterns, pricing, reimbursement, demographic data, and market penetration. These estimates are inherently uncertain, are only relevant assuming successful clinical development and regulatory approval of our drug, and do not represent a guarantee of future revenue or market capture. If our assumptions regarding the population of menopausal women, the actual incidence of moderate-to-severe symptoms, patient treatment-seeking-behavior, physician-directed use of treatments, or pricing are flawed, our actual addressable market may be significantly different than estimated. A TAM estimate represents a theoretical addressable market and does not imply that we will capture any share of the market or generate equivalent revenues. Even if our market-size estimates are appropriate, our drugs may fail to gain traction if physicians, patients, or payers remain satisfied with existing treatments or give preference to competing new treatments. Any such failure to achieve market acceptance would materially and adversely affect our business, financial condition, and results of operations.
The failure of our partners to meet their contractual obligations to us could adversely affect our business.
For partners who have contractual obligations to us, we bear the risk that they may not perform their contractual obligations to us to our standards, in compliance with applicable legal or contractual requirements, in a timely manner or at all; they may not maintain the confidentiality of our proprietary information; and disagreements or disputes could arise that could cause delays in, or termination of, the research, development or commercialization of drugs using our antibodies or result in litigation or arbitration.
In addition, we are dependent on our partners' ability to accurately track and make milestone payments to us pursuant to the terms of our agreements with them. Any failure by them to inform us when milestones are reached and make related payments to us could adversely affect our results of operations.
28
Any of these factors could adversely impact their financial condition and results of operations, which could impair their ability to meet their contractual obligations to us, which may have a material adverse effect on our business, financial condition, and results of operations.
We have invested, and expect to continue to invest, in research and development efforts that further enhance our technology and platform. Such investments in technology are inherently risky and may affect our operating results. If the return on these investments is lower or develops more slowly than we expect, our operating results may suffer.
Since our inception, we have dedicated a substantial portion of our resources on the development of our capabilities and the technology that we incorporate to further enhance our antibody discovery and development capabilities, and our internal pipeline. These investments may involve significant time, risks, and uncertainties, including the risk that the expenses associated with these investments may affect operating results and that such investments may not generate sufficient technological advantage relative to alternatives in the market which would, in turn, impact revenues to offset liabilities assumed and expenses associated with these new investments. The industry in which we operate changes rapidly as a result of technological and drug developments, which may render our platform relatively less capable. We believe that we must continue to invest time and resources in our discovery and development capabilities to maintain and improve our competitive position. If we do not achieve the benefits anticipated from these investments, if the achievement of these benefits is delayed, or if our discovery and development capabilities are not able to deliver drug candidates as we anticipate, our internal pipeline, revenue, and operating results may be adversely affected.
Our partners have significant discretion in determining when and whether to make announcements, if any, about the status of our partnerships, including about clinical developments and timelines for advancing collaborative programs, and the price of our common shares may decline as a result of announcements of unexpected results or developments.
Our partners have significant discretion in determining when and whether to make announcements about the status of our partnerships, including about preclinical and clinical developments and timelines for advancing antibodies discovered using our discovery and development capabilities. We do not plan to disclose the development status and progress of individual drug candidates of our partners, unless and until those partners do so first. Our partners may wish to report such information more or less frequently than we intend to or may not wish to report such information at all, in which case we would not report that information either. As a result of this limited visibility and control, our reported business metrics rely on management's subjective estimates and third-party data. We determine the status of partner-led programs using reasonable efforts to monitor their progress. Because we do not control these programs and rely on third-party information that may be delayed or incomplete, our assessments involve significant management judgment. If our assessments of partner intent or resource commitment are incorrect, our reported metrics may not accurately reflect the actual status of our portfolio, which could materially impact investor confidence.
In addition, if partners choose to announce a collaboration with us, there is no guarantee that we will recognize research discovery fees in that quarter or even the following quarter, as such fees are not payable to us until our partner begins discovery activities. The price of our common shares may decline as a result of the public announcement of unexpected results or developments in our partnerships, or as a result of our partners withholding such information, or if our internal assessments of program progress prove to be incorrect, causing our reported metrics to fall below the expectations of analysts or investors.
29
Our partners may not achieve projected discovery and development milestones and other anticipated key events in the expected timelines or at all, which could have an adverse impact on our business and could cause the price of our common shares to decline.
From time to time, we may make public statements regarding the expected timing of certain milestones and key events, as well as regarding developments and milestones under our partnerships, to the extent that our partners have publicly disclosed such information or permit us to make such disclosures. Certain of our partners have also made public statements regarding their expectations for the development of programs under partnership with us and they and other partners may in the future make additional statements about their goals and expectations for partnerships with us. For example, while our recent collaboration agreements with Jazz Pharmaceuticals PLC and Vertex Pharmaceuticals Inc. provide for our eligibility to receive significant potential future milestone payments. The receipt of any such future option fees, milestone payments, or royalties under these and other agreements is entirely contingent upon the successful achievement of specified research, clinical, regulatory, and commercial milestones by our partners. The actual timing and achievement of these events can vary due to a number of factors such as delays or failures in our or our current and future partners’ antibody discovery and development programs, the amount of time, effort, and resources committed by us and our current and future partners, and the numerous uncertainties inherent in the development of drugs. As a result, there can be no assurance that our partners’ current and future programs in which we hold economic stakes will advance or be completed in the time frames we or they expect, or that we will realize any of these potential future payments. If our partners fail to achieve one or more of these milestones or other key events as planned, our business could be materially adversely affected and the price of our common shares could decline.
For programs that are led by a partner, but for which we have downstream economic participation, our future success is dependent on the eventual approval and commercialization of drugs developed by our partners for which we have no control over the clinical development plan, regulatory strategy or commercialization efforts.
Our business model is dependent on the eventual progression of drug candidates discovered or initially developed utilizing our discovery and development capabilities into clinical trials and commercialization. This requires us to find partners and enter into agreements with them that contain obligations for the partners to pay us milestone payments as well as royalties on sales of approved drugs for the drug candidates they develop that are generated utilizing our discovery and development capabilities. Given the nature of our relationships with our partners, we do not control the progression, clinical development, regulatory strategy or eventual commercialization, if approved, of these drug candidates. As a result, our future success and the potential to receive milestones and royalties are entirely dependent on our partners’ efforts over which we have no control. Additionally, unless publicly disclosed by our partners, we do not have access to information related to our partners’ preclinical studies or clinical trial results, including serious adverse events, or ongoing communications with the relevant health authorities regarding our partners’ development strategy, which limits our visibility into how such programs may be progressing. If our partners determine not to proceed with the development of a drug candidate discovered or initially developed utilizing our discovery and development capabilities, or if they implement preclinical, clinical or regulatory strategies that ultimately do not result in the further development or approval of the drug candidate, we will not receive the benefits of our partnerships, which may have a material and adverse effect on our operations.
We may not be able to file applications or amendments to commence additional clinical trials on the timelines we expect, and even if we are able to file as expected, the regulatory body may not permit us to proceed.
We may not be able to file applications (e.g., clinical trial applications (“CTA”) or investigational new drug (“IND”) applications for our internal pipeline candidates on the timelines we expect. Specifically, we are currently conducting a Phase 1/2 clinical trial for ABCL635 and a Phase 1 trial for ABCL575 in Canada under Health Canada CTAs. Upon completion and review of the data, we may submit an IND application to the FDA for ABCL635 to initiate Phase 3 trials in the United States. There is no guarantee that the FDA will accept data from a foreign Phase 1/2 trial as sufficient to support a U.S. Phase 3 start. The FDA may require us to conduct additional bridging studies or repeat Phase 1/2 trials within the United States, which would prevent us from initiating Phase 3 trials on our expected timeline. Moreover, we cannot be sure that submission of a CTA or IND will result in allowing the start of clinical trials, or that, once begun, issues will not arise that suspend or terminate clinical trials. Additionally, even if such regulatory authorities agree with the design and implementation of the clinical trials set forth in an application, we cannot guarantee that such regulatory authorities will not change their requirements in the future. These considerations also apply to new clinical trials we may submit as amendments to a new application. Any failure to file a clinical trial application on the timelines we expect or to obtain regulatory approvals for our trials may prevent us from completing our clinical trials or commercializing our drug candidates on a timely basis, if at all.
30
We have no marketed proprietary drugs and have not yet independently started late-stage clinical development, which makes it difficult to assess our ability to independently develop future drug candidates and monetize any resulting drugs.
As a company, we have no previous experience in completing clinical trials, and navigating and complying with the related regulatory requirements, including with respect to the submission of a New Drug Application, or NDA, or equivalent submission. We have not yet demonstrated our ability to independently conduct late-stage clinical development and obtain regulatory approval. To execute on our business plan, we will need to successfully reach agreement with multiple regulatory agencies on clinical and preclinical studies required for registration, execute our clinical development and manufacturing plans; and manage our spending as costs and expenses increase due to clinical trials, and regulatory approvals. If we are unsuccessful in accomplishing these objectives, we will not be able to develop any future drug candidates independently and could fail to realize the potential advantages of doing so.
We have a limited number of drug candidates. If we do not obtain regulatory approval of one or more of our drug candidates, or experience significant delays in doing so, our business will be materially adversely affected.
We currently have no drugs approved for sale or marketing in any country, and may never be able to obtain regulatory approval for any of our drug candidates. As a result, we are not currently permitted to market any of our drug candidates in any country until we obtain regulatory approval from the relevant health authorities. The majority of our drug candidates are in preclinical development and we have not submitted an application, or received marketing approval, for any of our drug candidates. Obtaining regulatory approval of our drug candidates will depend on many factors, including:
•
completing clinical trials that demonstrate the efficacy and safety of our drug candidates;
•
preparation and submission to the appropriate regulatory authorities of an application for marketing approval that includes substantial evidence of safety, purity and potency from results of non-clinical testing and clinical trials;
•
establishing and maintaining adequate commercial manufacturing arrangements or establishing our own commercial manufacturing capabilities or reliable arrangements with third-party contract manufacturers;
•
potential pre-approval audits of non-clinical sites, clinical trial sites, and third-party manufacturing sites that generated the data and drug product in support of the marketing application; and
•
launching commercial sales, marketing and distribution operations.
Many of these factors are wholly or partially beyond our control, including clinical advancement, the regulatory submission process, and changes in the competitive landscape. If we do not achieve one or more of these factors in a timely manner, we could experience significant delays or an inability to develop our drug candidates at all.
Clinical trials are expensive, time consuming, difficult to design and implement, and involve uncertain outcomes. If clinical trials for our drug candidates are prolonged, delayed or stopped, we may be unable to obtain regulatory approval and commercialize our drug candidates on a timely basis, or at all, which would require us to incur additional costs and delay our receipt of any drug revenue.
We have not previously submitted an application seeking approval for a drug based on antibodies that we have discovered. An application for approval (e.g. biologics license application (“BLA”)) must include extensive preclinical and clinical data and supporting information to establish the drug candidate’s safety and efficacy for each desired indication. The application for approval must also include significant information regarding the manufacturing controls for the drug. Even if we eventually complete clinical testing and receive approval of any regulatory filing for our drug candidates, the regulatory authority may approve our drug candidates for a more limited indication or a narrower patient population than we originally requested.
We may experience delays in future preclinical studies or clinical trials, and we do not know whether future preclinical studies or clinical trials will begin on time, need to be redesigned, enroll an adequate number of patients on time or be completed on schedule, if at all. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during clinical development, and, because our drug candidates are in an early stage of development, there is a high risk of failure and we may never succeed in developing marketable drugs. The results of preclinical studies and early clinical trials of our drug candidates may not be predictive of the results of later-stage clinical trials, particularly because early trials have smaller numbers of subjects tested. In addition, it is not uncommon for drug candidates to exhibit unforeseen safety or efficacy issues, such as immunogenicity, when tested in humans despite promising results in preclinical animal models.
31
Any clinical trials that we may conduct may not demonstrate the safety and efficacy profiles necessary to obtain regulatory approval to market our drug candidates. As we continue developing our drug candidates, serious adverse events, undesirable side effects, or unexpected characteristics may emerge, causing us to abandon these drug candidates or limit their development to more narrow uses or subpopulations in which the risk-benefit ratio is more acceptable.
Patients treated with our drug candidates may experience side effects or adverse events that are unrelated to our drug candidates but may still impact the success of our clinical trials. The inclusion of patients with significant co-morbidities in our clinical trials may result in deaths or other adverse medical events due to an underlying condition or other therapies or medications that such patients may be using. Any of these events could prevent us from obtaining regulatory approval or achieving or maintaining market acceptance and impair our ability to commercialize our drug candidates. In some instances, there can be significant variability in safety and efficacy results between different clinical trials of the same drug candidate due to a variety of factors, including, but not limited to, changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the clinical trial protocols, and the rate of dropout among clinical trial participants.
The commencement or completion of these planned clinical trials could be substantially delayed or prevented by many factors, including:
•
further discussions with the relevant health or regulatory authorities regarding the scope or design of our clinical trials;
•
the limited number of, and competition for, suitable sites to conduct our clinical trials, many of which may already be engaged in other clinical trial programs, including some that may be for the same indication as our drug candidates;
•
any delay or failure to obtain approval or agreement to commence a clinical trial in any of the countries where enrollment is planned;
•
inability to obtain sufficient funds required for a clinical trial;
•
clinical holds on, or other regulatory objections to, a new or ongoing clinical trial;
•
delay or failure to manufacture sufficient supplies of the drug candidates for our clinical trials;
•
delay or failure to reach agreement on acceptable clinical trial agreement terms or clinical trial protocols with prospective sites or contract research organizations (“CROs”), the terms of which can be subject to extensive negotiation and may vary significantly among different sites or CROs;
•
delay or failure to obtain approval from the relevant human subjects review board (e.g., institutional review board or research ethics boards) to conduct a clinical trial in humans at a prospective site;
•
slower than expected rates of patient recruitment and enrollment;
•
failure of patients to complete the clinical trial;
•
the inability to enroll a sufficient number of patients in studies to ensure adequate statistical power to detect statistically significant treatment effects;
•
unforeseen safety issues, including severe or unexpected drug-related adverse effects experienced by patients, including possible deaths;
•
lack of efficacy during clinical trials;
•
termination of our clinical trials by one or more clinical trial sites;
•
inability or unwillingness of patients or clinical investigators to follow our clinical trial protocols;
•
inability to monitor patients adequately during or after treatment by us or our CROs;
•
our CROs or clinical study sites failing to comply with the trial protocol or regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, deviating from the protocol or dropping out of a study;
•
the inability to address any noncompliance with regulatory requirements or safety concerns that arise during the course of a clinical trial;
•
third-party contractors becoming debarred or suspended or otherwise penalized by the relevant health authorities for violations of applicable regulatory requirements;
32
•
delays in the testing, validation, manufacturing and delivery of our drug candidates to the clinical trial sites, including due to a facility manufacturing any of our drug candidates or any of their components being ordered by the relevant health authorities to temporarily or permanently shut down due to violations of cGMP regulations or other applicable requirements, or cross-contaminations of drug candidates in the manufacturing process;
•
the need to repeat or terminate clinical trials as a result of inconclusive or negative results or unforeseen complications in testing;
•
our clinical trials may be suspended or terminated upon a breach or pursuant to the terms of any agreement with, or for any other reason by, current or future partners that have responsibility for the clinical development of any of our drug candidates; and
•
receiving untimely or unfavorable feedback from applicable regulatory authorities regarding the trial or requests from regulatory authorities to modify the design of a trial.
We could also experience delays in physicians enrolling patients in clinical trials of our drug candidates in lieu of prescribing existing treatments or other clinical trials. Furthermore, a clinical trial may be suspended or terminated by us, the relevant human subjects review board for the institutions in which such trials are being conducted, the Data Monitoring Committee for such trial, or by the relevant health authorities due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the relevant health authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. If we experience termination of, or delays in the completion of, any clinical trial of our drug candidates, the commercial prospects for our drug candidates will be harmed, and our ability to generate drug revenue will be delayed. In addition, any delays in completing our clinical trials will increase our costs, slow down our drug development and approval process and jeopardize our ability to commence drug sales and generate revenue.
Securing regulatory approval also requires the submission of information about the manufacturing processes and inspection of manufacturing facilities by the relevant regulatory authority. The relevant health authorities may reject our manufacturing processes or facilities, whether run by us or our contract manufacturing organizations. In addition, if we make manufacturing changes to our drug candidates in the future, we may need to conduct additional preclinical and/or clinical studies to bridge our modified drug candidates to earlier versions.
Changes in regulatory requirements, policies and guidelines may also occur and we may need to significantly amend clinical trial protocols to reflect these changes with appropriate regulatory authorities. These changes may require us to renegotiate terms with CROs or resubmit clinical trial protocols to the relevant human subjects review board for re-consideration, which may impact the costs, timing or successful completion of a clinical trial.
In addition, even if the trials are successfully completed, clinical data are often susceptible to varying interpretations and analyses, and we cannot guarantee that the relevant health authorities will interpret the results as we do, and more trials could be required before we submit our drug candidates for approval. We cannot guarantee that the relevant health authorities will view any of our drug candidates as having adequate safety and efficacy profiles even if favorable results are observed in these clinical trials, and we may receive unexpected or unfavorable feedback from the relevant health authorities regarding satisfaction of safety, purity, and potency (including clinical efficacy), amongst other factors. To the extent that the results of the trials are not satisfactory to the relevant health authorities for support of a marketing application, approval of our drug candidates may be significantly delayed, or we may be required to expend significant additional resources, which may not be available to us, to conduct additional trials in support of potential approval of our drug candidates.
33
We rely on third parties to monitor, support, conduct, and oversee clinical trials of the drug candidates that we are developing and, in some cases, to maintain regulatory files for those drug candidates. We may not be able to obtain regulatory approval for our drug candidates or commercialize any drugs that may result from our development efforts if we are not able to maintain or secure agreements with such third parties on acceptable terms, if these third parties do not perform their services as required, or if these third parties fail to execute on a timely transfer of any regulatory information held by them to us.
We rely on entities outside of our control, which may include academic institutions, CROs, hospitals, clinics and other third-party partners, to monitor, support, conduct and oversee preclinical studies and clinical trials of our current and future drug candidates. As a result, we have less control over the timing and cost of these studies and the ability to recruit trial subjects than if we conducted these trials with our own personnel. If we are unable to maintain or enter into agreements with these third parties on acceptable terms, or if any such engagement is terminated prematurely, we may be unable to enroll patients on time or otherwise conduct our trials as anticipated. In addition, there is no guarantee that these third parties will devote adequate time and resources to our studies or perform as required by our contract or in accordance with regulatory requirements, including maintenance of clinical trial information regarding our drug candidates. These third parties, in turn, may face their own constraints in obtaining the resources and personnel needed to perform the work for which we engage them. If these third parties fail to meet expected deadlines, fail to transfer to us any regulatory information in a timely manner, fail to adhere to protocols or fail to act in accordance with regulatory requirements or our agreements with them, or if they otherwise perform in a substandard manner or in a way that compromises the quality or accuracy of their activities or the data they obtain, then clinical trials of our drug candidates may be extended or delayed with additional costs incurred, or our data may be rejected by the FDA, CTA or other regulatory agencies. Ultimately, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on third parties does not relieve us of our regulatory responsibilities. We and our CROs are required to comply with regulations and guidelines enforced by the FDA and CTA. Regulatory authorities enforce these regulations through periodic inspections of clinical trial sponsors, principal investigators, and clinical trial sites. If we or any of our CROs fail to comply with applicable regulations, the clinical data generated in our clinical trials may be deemed unreliable and our submission of marketing applications may be delayed or the regulator may require us to perform additional clinical trials before approving our marketing applications. Upon inspection, the regulator could determine that any of our clinical trials fail or have failed to comply with applicable regulations. In addition, our clinical trials must be conducted with drug product produced under the relevant regulations enforced by the FDA and CTA, and our clinical trials may require a large number of test subjects. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process and increase our costs. Moreover, our business may be implicated if any of our CROs violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws. If any of our clinical trial sites terminate our agreement for any reason, we may experience the loss of follow-up information on patients enrolled in our ongoing clinical trials unless we are able to transfer the care of those patients to another qualified clinical trial site. Further, if our relationship with any of our CROs is terminated, we may be unable to enter into arrangements with alternative CROs on commercially reasonable terms, or at all. Switching or adding CROs or other suppliers can involve substantial cost and require extensive management time and focus. In addition, there is a transition period when a new CRO or supplier commences work. As a result, delays may occur, which can materially impact our ability to meet our desired clinical development timelines. If we are required to seek alternative supply arrangements, the resulting delays and potential inability to find a suitable replacement could materially and adversely impact our business. Furthermore, we may fail to accurately estimate the cost of services performed by these third parties at any given time, which could result in significant adjustments to our accrued research and development expenses in future periods and cause our financial results to fluctuate.
Our long-term prospects depend in part upon discovering, developing and commercializing additional drug candidates, which may fail in development or suffer delays that adversely affect their commercial viability.
Our future operating results are dependent in part on our ability to successfully discover, develop, obtain regulatory approval for, and commercialize drug candidates. A drug candidate can unexpectedly fail at any stage of preclinical and clinical development. Our investments in our early-stage research and development efforts may not yield any promising drug candidates. Even if our research and development efforts yield drug candidates that advance into clinical studies, the historical failure rate for drug candidates is high due to risks relating to safety, efficacy, clinical execution, changing standards of medical care, and other unpredictable variables. The results from preclinical testing or early clinical trials of a drug candidate may not be predictive of the results that will be obtained in later stage clinical trials of the drug candidate.
The success of drug candidates we may develop will depend on many factors, including the following:
•
generating sufficient data to support the initiation or continuation of clinical trials;
34
•
obtaining regulatory permission to initiate clinical trials;
•
contracting with the necessary parties to conduct clinical trials;
•
successful enrollment of patients in, and the completion of, clinical trials on a timely basis;
•
the timely manufacture of sufficient quantities of the drug candidate for use in clinical trials; and
•
adverse events in the clinical trials.
Even if we successfully advance drug candidates into clinical development, their success will be subject to all of the clinical, regulatory, and commercial risks described elsewhere in this “Risk Factors” section. Accordingly, we may never be able to discover, develop, obtain regulatory approval of, commercialize, or generate significant revenue from drug candidates.
If we, or any of our partners, are unable to enroll patients in clinical trials, we will be unable to complete these trials on a timely basis or at all.
Patient enrollment is a significant factor in the timing of clinical trials and is affected by many factors including the size and nature of the patient population, the proximity of subjects to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, ability to obtain and maintain patient consents, risk that enrolled subjects will drop out before completion, competing clinical trials, and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved or developed for the indications we are investigating. If we, or any of our partners that perform clinical tests for our drug candidates, are unable to enroll a sufficient number of patients to complete clinical testing, we will be unable to gain marketing approval for such drug candidates and our business will be harmed.
In addition, the U.S. federal Right to Try Act (“RTA”), provides a federal framework for patients to access certain investigational new drug candidates that have completed a Phase 1 clinical trial. Similarly, Health Canada's special access program (“SAP”) provides a similar pathway for eligible Canadian patients. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining approval from the relevant health authority under the authority's expanded access program. While there is no obligation to make drug candidates available to eligible patients as a result of these programs (e.g., RTA and SAP), new and emerging legislation regarding expanded access to unapproved drugs could negatively impact enrollment in our clinical trials and our business in the future.
Interim, preliminary or top-line data from our clinical trials, including Phase 1/2 clinical data for ABCL635, that we may announce or publish may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
We may publish interim, preliminary or top-line data from clinical trials. For example, we are publicly disclosing preliminary, top-line Phase 1 clinical data for our internal program, ABCL635 and anticipate top-line clinical data from the Phase 2 trial to be disclosed in August 2026. Top-line data is based on a preliminary analysis of then-available safety, tolerability, and pharmacokinetic data, and is subject to change following a more comprehensive review. Because Phase 1 clinical trials involve a small number of patients and are primarily designed to evaluate safety and dosing rather than efficacy, preliminary or early signals observed are not necessarily predictive of final results or the results of later-stage trials. Material differences between our preliminary, top-line data and final data, or a failure to replicate positive early results in subsequent, larger-scale trials, could result in clinical holds, development delays, or the discontinuation of the ABCL635 program. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or top-line data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary or top-line data previously published. As a result, interim, preliminary and top-line data should be viewed with caution until the final data are available. Adverse differences between interim, preliminary or top-line data and final data could significantly harm our reputation and business prospects. Past results of clinical trials may not be predictive of future results.
35
In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically more extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure. Any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug candidate or our business. Similarly, even if we are able to complete our planned and ongoing preclinical studies and clinical trials of our drug candidates according to our current development timeline, the positive results from such preclinical studies and clinical trials of our drug candidates may not be replicated in subsequent preclinical studies or clinical trial results. Moreover, preclinical, non-clinical and clinical data are often susceptible to varying interpretations and analyses and many companies that believed their drug candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain the relevant regulatory approval. Further, the use of certain data derived from cross-study comparisons are not based on any head-to-head clinical trials. Such clinical trial data may not be directly comparable due to differences in study protocols, conditions and patient populations. Accordingly, these cross-trial comparisons may not be reliable predictors of the relative efficacy or other benefits of ABCL635 compared to other product candidates that may be approved or that are or are in development.
Disruptions at the relevant health authorities and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified drug candidates from being developed, or approved or commercialized in a timely manner or at all, which could negatively impact our business.
The ability of the relevant health authorities to review and clear or approve new drug candidates can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the relevant health authority's ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the relevant health authority's ability to perform routine functions. In addition, government funding of other agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. If global health concerns impact the relevant health and regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, or if the relevant health authority and other agencies experience other delays, backlogs or disruptions, it could significantly impact the ability of the relevant health authority or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Successful development of our current and future drug candidates is uncertain and we may discontinue or reprioritize the development of any of our drug candidates at any time, at our discretion.
Before obtaining regulatory approval for the commercial distribution of our drug candidates, we must conduct, at our own expense, extensive preclinical tests and clinical trials to demonstrate the safety and efficacy of our drug candidates in humans. Preclinical and clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. Additionally, the results from non-clinical testing or early clinical trials of a drug candidate may not predict the results that will be obtained in subsequent human clinical trials of that drug candidate. There is a high failure rate for drugs proceeding through clinical studies. In our pipeline updates, we may outline our belief that preclinical data of our clinical programs support a potential ‘first-in-class’ or ‘best-in-class’ profile. However, these designations and the scientific rationale supporting them are contingent upon the replication of preclinical findings in human clinical trials. For instance, although small molecules have validated the target for ABCL635, our antibody candidate faces distinct scientific considerations and may fail to demonstrate sufficient target engagement to achieve comparable therapeutic efficacy. If our clinical trials fail to support the 'first-in-class' or 'best-in-class' profiles we have disclosed, our business and valuation would be materially adversely affected. Alternatively, management may elect to discontinue development of certain drug candidates to accommodate a shift in corporate strategy, despite positive clinical results. Based on our operating results and business strategy, among other factors, we may discontinue the development of any of our drug candidates under development or reprioritize our focus on other drug candidates at any time and at our discretion.
Additionally, because we have limited financial and managerial resources, we focus on research programs, our drug discovery and development platform and drug candidates that we identify for specific indications. As a result, we may forgo or delay pursuit of opportunities with other drug discovery and development capabilities or drug candidates or for other indications that later prove to have greater commercial potential. If we do not accurately evaluate the commercial potential or target market for a particular drug candidate, we may relinquish valuable rights to that drug candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights.
36
Our drug candidates may have undesirable side effects that may delay or prevent marketing approval or, if approval is received, require them to be taken off the market, require them to include safety warnings or otherwise limit their sales.
All of our drug candidates are required to undergo ongoing s