ABCELLERA BIOLOGICS INC. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of theU.S. Private Securities Litigation Reform Act of 1995 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, 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 rate and degree of market acceptance of our antibody
discovery platform;
• companies and technologies in our industry that compete with our business;
• our ability to manage and grow our business by introducing our antibody
discovery platform to new partners and expanding our relationships with
existing partners;
• our partners ability to achieve projected discovery and development
milestones and other anticipated key events, including commercial sales
resulting in royalties to us, in the expected timelines or at all;
• our ability to provide our partners with a full solution from target to
investigational new drug, or IND, submission;
• our partners ability to develop a molecule discovered by us into a viable
commercial product, on a timely basis or at all;
• our expectations regarding the completion of our good manufacturing
practices, or GMP, facility and our manufacturing capabilities;
• our ability to establish and maintain intellectual property protection for our 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 future growth effectively;
• our ability to obtain additional financing in future offerings; • the volatility of the trading price of our common shares;
• our ability to attract and retain key scientific and engineering personnel;
• business disruptions affecting our operations and the development of our platform due to the global COVID-19 pandemic;
• the global economic impact of the ongoing conflict between
• our ability to avoid material weaknesses or significant deficiencies in
our internal control over financial reporting in the future;
• our expectations regarding our
PFIC, status for our taxable year ended December 31, 2022 , or any future
taxable year;
• our expectations regarding our recent business acquisitions and our
ability to realize the intended benefits of such transactions;
• our expectations regarding the use of our cash resources;
• the ability of our partners to deliver royalty bearing products to the
market;
• our expectations about market trends; and
• our ability to predict and manage government regulation.
12-------------------------------------------------------------------------------- We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in the 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. You should read this Quarterly Report and the documents that we file with theSecurities and Exchange Commission , or theSEC , 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. In addition, statements that "we believe" and similar statements reflect our 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 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
Except as otherwise indicated, references in this Quarterly Report on Form 10-Q to "AbCellera," the "Company," "we," "us" and "our" refer toAbCellera Biologics Inc. and its consolidated subsidiaries.
Impact of COVID-19
Since the start of the COVID-19 pandemic, we have taken and continue to take steps to protect our employees, business partners, vendors, and contractors. To address the multiple dimensions of the pandemic, we have been continuously monitoring the global situation, executing mitigation activities whenever and wherever required, following guidance from provincial and federal health authorities, and implementing a hybrid return to our facilities for those employees who have been working remotely.
We continue to take the following actions to address the evolving COVID-19 pandemic:
• We implemented comprehensive COVID-19 guidelines that are shared via our
internal communication platform to provide real-time updates company-wide
relying on directives from local health authorities. As information is
gathered, we adapt accordingly, including work from home requirements.
• We implemented protocols for employees necessary to carryout Company
functions in the office and laboratory facilities including physical
distancing, personal protective equipment, signage, erecting barriers
between desks and lab benches, and implementing space restrictions for
different areas of the facilities.
• We have limited business travel to essential activities and have robust
procedures to control and monitor all office and facility access.• We have not been required to stop research activities due to the COVID-19
pandemic. We will continue to adapt and apply new measures as required and
as directed by local health authorities.
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Overview
We believe that the surest path to a better future is through technological advancement and that the new frontier of technology lies at the interface of computation, engineering and biology. Our mission is to improve health with technologies that transform the way that antibody-based therapies are discovered. We aim to become the centralized operating system for next generation antibody discovery.
Our full-stack, artificial intelligence, or AI, powered antibody discovery platform searches and analyzes the database of natural immune systems to find antibodies that can be developed as drugs. We believe our technology increases the speed and the probability of success of therapeutic antibody discovery, including enabling discovery against targets that may otherwise be intractable. We forge partnerships with drug developers of all sizes, from large cap pharmaceutical to small biotechnology companies. We empower them to move quickly, reduce cost and tackle the toughest problems in drug development. As ofMarch 31, 2022 , we had 158 discovery programs that are either completed, in progress or under contract with 36 partners. As a recent example, in a collaboration with Eli Lilly and Company, or Lilly, we applied our technology stack to co-develop two antibody therapies to treat and prevent COVID-19. Starting from a single blood sample obtained from a convalescent patient, we and our partners identified a viable antibody drug candidate within three weeks that advanced into clinical testing 90 days after initiation of the program. Lilly progressed into these clinical trials at a greatly accelerated pace as a result of the Coronavirus Treatment Acceleration Program, which is a special emergency program for possible coronavirus therapies created by the FDA in 2020 to expedite the development of potentially safe and effective life-saving treatments to combat the COVID-19 pandemic. With respect to other or future product candidates, there is no assurance that any of our partners or collaborators will be able to advance a product candidate into clinical development on this timeframe again in the future, or at all. We initiated our partnering program in 2015 and have only had two AbCellera discovery programs and two Trianni programs result in milestone or royalty payments to us to date, and we have not yet had a program receive clinical marketing approval. We structure our agreements in a way that is designed to align our partners' economic interests with our own. We forge partnerships with large cap pharmaceutical companies, biotechnology companies of all sizes and non-profit and government organizations. Our partners select a target and define the antibody properties needed for therapeutic development. We provide discovery solutions to partners that have a range of discovery capabilities, from the highly enabled to the less enabled. We enable discovery against targets that have traditionally been intractable, and we accelerate programs against less difficult targets. Our deals emphasize participation in the success and upside of future antibody therapeutics. Our partnership agreements include near-term payments for technology access, research and intellectual property rights, and downstream payments in the form of clinical and commercial milestones, and royalties on net sales. We also participate in alternative investment opportunities including equity in our business partners and various rights for deeper involvement in moving molecules forward. Longer-term we are eligible to receive additional payments upon satisfaction of clinical and commercial milestones, which we refer to as milestone payments, as well as royalties on sales of products derived from antibodies that we discover for our partners. Our discovery partnerships generally include royalty payments on net sales in the single digit to low-double digit range. 14 -------------------------------------------------------------------------------- We generated revenue of$202.7 million and$316.6 million for the three months endedMarch 31, 2021 and 2022, respectively. We have also grown the number of programs that we have under contract with our partners, as illustrated by the following charts. [[Image Removed]] We incurred sales and marketing expenses of$2.6 million and$2.4 million for the three months endedMarch 31, 2021 and 2022, respectively. We are continuing to invest into our business development team and into marketing our solutions to new and existing partners. We focus a substantial portion of our resources on research and development efforts towards deepening our technology and expertise along our technology stack, and we expect to continue to make significant investments in this area for the foreseeable future. We incurred research and development expenses of$12.4 million and$26.4 million for the three months endedMarch 31, 2021 and 2022, respectively. We incurred general and administrative expenses of$6.4 million and$14.3 million for the three months endedMarch 31, 2021 and 2022, respectively. We expect to continue to incur significant expenses, and we expect such expenses to increase substantially in connection with our ongoing activities, including as we:
• invest in research and development activities to improve our technology
stack and platform;
• market and sell our solutions to existing and new partners;
• expand 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;
• continue to establish, protect and defend our intellectual property and
patent portfolio, including our ongoing litigation; and
• operate as a public company.
To date, we have financed our operations primarily from revenue from our antibody discovery partnerships in the form of revenue, government funding from grants, external borrowings, and from the issuance and sale of convertible preferred shares and notes, and common shares.
Our net earnings for the three months endedMarch 31, 2021 , was$117.2 million and our net earnings for the three months endedMarch 31, 2022 , was$168.6 million . As ofMarch 31, 2022 , we had accumulated earnings of$436.2 million and we had cash, cash equivalents and marketable securities totaling$786.1 million . 15 --------------------------------------------------------------------------------
Recent Developments
InFebruary 2022 , we announced that bebtelovimab (LY-CoV1404), the second antibody developed through our collaboration with Lilly, received an Emergency Use Authorization, or EUA, from the FDA for the treatment of mild-to-moderate COVID-19. Lilly announced inFebruary 2022 that they entered into a purchase agreement with theU.S. government to supply up to 600,000 doses of bebtelovimab no later thanMarch 31, 2022 , with an option of 500,000 additional doses no later thanJuly 31, 2022 , for at least$720 million .
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 in order 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 of this report, captioned "Risk Factors".
• Securing additional programs under contract. Our potential to grow
revenue, in both the near and long term, is dependent on our ability to
secure additional programs under contract from new and existing partners.
For existing partners, we seek to expand our relationships with them to
cover multi-year, multi-target programs. Since our first commercial
partnership in 2015, as of
that are either completed, in progress or under contract with 36 partners.
We are building our business development team across the major
biotechnology geographic hubs in order to bring in new partners and new
programs under contract, and we believe that we have a significant
opportunity to continue to increase the number of partners who haveprograms based on our platform. Our ability to continue to grow our number
of programs under contract is dependent upon our ability to educate the
market and support the business through investment in our sales and
marketing efforts and through further research and development to enhance
our technological differentiation.
• 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
under contract 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 reliant on the degree
to which our partners successfully develop and commercialize the
antibodies that we discover based on contracts with our partners. As our
partners continue to advance development of the antibodies that we havediscovered, we expect to start receiving additional milestone payments and
royalties if any partners commence commercial sales of such antibodies.
• Rate and timing of selecting and initiating discovery projects by our
partners. Once programs are secured under contract, partners must select
targets and agree on a detailed statement of work before we commence
discovery research on any antibodies. The rate and timing of such
selection and initiation differs from partner to partner. Research fees
that we recognize under our partnerships depend on our delivery ofantibodies for development by our partners and delays by our partners in
selecting targets and agreeing on statements of work will impact revenue
recognition.
• Investing in enhancements to our technology stack. Our ability to maintain
and expand our partnerships is dependent on the advantages our technology
stack delivers to our partners. We intend to maintain our leading position
through research and development investments to refine and add
capabilities in areas such as computation, protein engineering,
immunization technologies, genetically engineered rodents and cell line
selection. We have successfully closed and will continue to look for
strategic technology acquisitions to improve, broaden and deepen ourcapabilities and expertise in antibody discovery and development, or those
that offer opportunities to expand our partnership business into adjacent
therapeutic modalities. We intend to devote substantial resources to
continue to improve our technological differentiation which will impact
our financial performance.
• Scaling our operations to execute on discovery programs. As we secure
additional programs under contract and as our partners initiate discovery
programs, our operational capacity to execute such research activities may
become strained. We are making significant investments in capital and time
to increase our ability to address future growth, including building new
headquarters through our Dayhu and Beedie joint ventures, building a new
small-scale manufacturing plant, investing in research and development and
hiring more talented personnel across functions. We have new facilities
under development scheduled to take occupancy in early 2022 and 2023 that
are intended to materially expand capacity. As we expand our workforce, we
expect a significant increase in our operating expenses, including
stock-based compensation.
16--------------------------------------------------------------------------------
Key Business Metrics
We regularly review the following key 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. For example, as our business matures and to the extent programs are discontinued, we anticipate updating these metrics to reflect such changes. Cumulative Metrics March 31, 2021 March 31, 2022 Change % Number of discovery partners 29 36 24 % Programs under contract 119 158 33 % Program starts 54 84 56 % Molecules in the clinic 1 6 500 % The table below outlines the details of molecules in the clinic as atMarch 31, 2022 : Most advanced Program Molecule stage Partner Therapy areas type Bamlanivimab Marketed, Eli Lilly and Infectious disease Discovery (LY-CoV555) Emergency Use Company - COVID-19 partnership Authorization (EUA) Bebtelovimab Phase 2, EUA Eli Lilly and Infectious disease Discovery (LY-CoV1404) Company - COVID-19 partnership NBL-012 Phase 1 NovaRock Dermatology, Trianni Biotherapeutics gastrointestinal, license Inc. immunology NBL-015 IND approved NovaRock Oncology Trianni Biotherapeutics license Inc. Undisclosed IND approved Undisclosed Undisclosed Trianni license IVX-01 Clinical field Invetx Animal health Discovery study partnership Number of discovery partners represents the unique number of partners with whom we have executed partnership contracts. We view this metric as an indication of the competitiveness of our technology stack and our current level of market penetration. The metric also relates to our opportunities to secure programs under contract from existing customers through repeat business opportunities. Programs under contract represent the number of antibody development programs that are under contract for delivery of discovery research activities. A program under contract is counted when a contract is executed with a partner under which we commit to discover antibodies against one selected target. A target is any relevant antigen for which a partner seeks our support in developing binding antibodies. We view this metric as an indication of commercial success and technological competitiveness. It further relates to revenue from technology access fees. The cumulative number of programs under contract with downstream participation is related to our ability to generate future revenue from milestone payments and royalties. Program starts represent the number of unique programs under contract for which we have commenced the discovery effort. 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 view this metric as an indication of our operational capacity to execute on programs under contract. It is also an indication of the selection and initiation of discovery projects by our partners and the resulting near-term potential to earn research fees. Cumulatively, program starts with downstream participation indicate our total opportunities to earn downstream revenue from milestone fees and royalties in the mid- to long-term. Molecules in the clinic represent the count of unique molecules for which an IND, New Animal Drug, or equivalent under other regulatory regimes, application has been approved based on an antibody that was discovered either by us or by a partner using licensed AbCellera technology. 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 view this metric as an indication of our near- and mid-term potential revenue from milestone fees and potential royalty payments in the long term. 17 --------------------------------------------------------------------------------
Summary partnership agreements with pharmaceutical and biotechnology companies
that include downstream participation from 2016 to
Partner # of Targets & Therapeutic Indication
Duration or Modality Date Announced
Empirico 2 additional Undisclosed
targets May 3, 2022
Everest Medicines Up to 10 Oncology and
targets, undisclosed
multi-year September 22, 2021
Moderna Up to 6 targets, RNA-encoded antibodies
multi-year September 15, 2021
EQRx Multi-target, Oncology and immunology
multi-year (initially) August 4, 2021
Tachyon Single target Oncology August 3, 2021
Undisclosed biotech Up to 4 targets, Undisclosed *
multi-year June 30, 2021
Angios Multi-target, Ophthalmology
multi-year May 6, 2021
Undisclosed biotech Multi-target, Oncology *
multi-year May 6, 2021
Empirico 5 targets, Undisclosed
multi-year April 14, 2021
Gilead Sciences 8 targets, Undisclosed
multi-year April 1, 2021
Abdera Therapeutics 9 targets, Oncology
multi-year January 14, 2021
Invetx Multi-target, Animal Health
multi-year November 19, 2020
Kodiak Sciences Multi-target, Ophthalmology
multi-year October 29, 2020
IGM Biosciences Multi-target, Oncology and immunology
multi-year September 24, 2020
Undisclosed Single target Bispecific June 3, 2020 *
Eli Lilly Up to 9 targets, COVID-19 program and May 22, 2020 *
multi-year additional indications
Regeneron Multi-target, Multiple undisclosed *
Pharmaceuticals multi-year March 16, 2020
Invetx Multi-target, Animal health
multi-year February 23, 2020
Undisclosed Multi-target, Cell therapy *
multi-year September 25, 2019
Gilead Sciences Single target Infectious disease June 13, 2019
Denali Therapeutics 8 targets, Neurological diseases
multi-year February 28, 2019
Novartis Up to 10 Undisclosed
targets,
multi-year February 14, 2019
Autolus Single target Cell therapy (CAR-T)
Therapeutics November 29, 2018
Denali Therapeutics Single target Neurological diseases June 12, 2018
Undisclosed mid-cap Undisclosed Undisclosed January 25, 2018
biopharma
Teva Pharmaceutical Single target Membrane protein
Industries June 13, 2017
Pfizer Multi-target, Membrane protein
multi-year January 5, 2017
Undisclosed global Multi-target, Undisclosed
biotech multi-year November 4, 2016
Kodiak Sciences Single target Ophthalmology August 24, 2016
Teva Pharmaceutical Undisclosed Undisclosed
Industries February 2, 2016
* Effective date of
agreement
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Results of operations
Comparison of the three months ended
(All figures in
The following table summarizes our unaudited results of operations data for the
three months ended
Three months ended
March 31,
2021 2022
Revenue:
Research fees $ 3,986 $ 9,333
Licensing revenue 20,259 231
Milestone payments 7,000 -
Royalty revenue 171,496 307,017
Total revenue 202,741 316,581
Operating expenses:
Royalty fees 20,010 44,637
Research and development(1) 12,352 26,366
Sales and marketing(1) 2,578
2,370
General and administrative(1) 6,422
14,268
Depreciation and amortization 3,305 3,990 Total operating expenses 44,667 91,631 Income from operations 158,074 224,950 Other (income) Other income (265 ) (665 ) Grants and incentives (3,148 ) (5,194 ) Total other (income) (3,413 ) (5,859 ) Net earnings before income tax 161,487 230,809 Income tax expense 44,266 62,236 Net earnings$ 117,221 $ 168,573 Foreign currency translation adjustment -
507
Comprehensive income$ 117,221 $
169,080
Net earnings per share attributable to common shareholders Basic $ 0.43 $ 0.59 Diluted $ 0.37 $ 0.54 Weighted-average common shares outstanding Basic 269,697,212 283,895,020 Diluted 320,282,747 311,482,017
(1) Amounts are exclusive of depreciation and amortization. Amounts include
stock-based compensation as follows:
Three months ended March 31,
2021 2022
Research and development $ 3,158 $ 5,937
Sales and marketing 953 994
General and administrative 1,316 5,360
$ 5,427 $ 12,291
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Revenue
Three months ended
March 31, Change
2021 2022 Amount %
Revenue
Research fees $ 3,986 $ 9,333 $ 5,347 134 %
Licensing revenue 20,259 231 (20,028 ) (99 )%
Milestone payments 7,000 - (7,000 ) (100 )%
Royalty revenue 171,496 307,017 135,521 79 %
Total revenue $ 202,741 $ 316,581 $ 113,840 56 %
Revenue increased by $113.8 million from the three months ended March 31, 2021
to March 31, 2022 . The increase was driven primarily by royalty payments of
$307.0 million that are directly associated with the specified percentage of
proceeds that Lilly received from the sales of bebtelovimab in addition to a
$5.3 million increase in research fees attributable to the increase in programs
under contract. The increase in revenue was partially offset by a decrease of
$20.0 million in licensing revenue related to the Trianni platform and no new
milestone achievements within the period.
Operating Expenses
Royalty Fees
Three months ended
March 31, Change
2021 2022 Amount %
Royalty fees $ 20,010 $ 44,637 $ 24,627 123 %
Royalty fees for the three months ended
Research and Development
Three months ended
March 31, Change
2021 2022 Amount %
Research and development
Research and development expenses increased by$14.0 million , or 113%, from the three months endedMarch 31, 2021 toMarch 31, 2022 , reflecting continuing strong investments in the capacity and capabilities of AbCellera's discovery and development platform. Of this increase,$9.1 million is due to the increase in compensation expense consistent with the increase in headcount.$4.8 million of the increase is attributed to an increase in research materials, facilities, supplies and services consistent with the overall increase in research and development activities. Sales and Marketing Three months ended March 31, Change 2021 2022 Amount % Sales and marketing$ 2,578 $ 2,370 $ (208 ) (8 )% Sales and marketing expenses decreased by$0.2 million , or 8%, from the three months endedMarch 31, 2021 toMarch 31, 2022 . The increase in compensation costs of$0.7 million was offset by a$0.8 million donation toSurrey Hospital made in the first quarter of 2021. 20 --------------------------------------------------------------------------------
General and Administrative
Three months ended
March 31, Change
2021 2022 Amount %
General and administrative $ 6,422 $ 14,268 $ 7,846 122 %
General and administrative expenses increased by $7.8 million , or 122%, from the
three months ended March 31, 2021 to March 31, 2022 . $4.0 million of the
increase in general and administrative expense is related to the increased
impact of non-cash stock-based compensation expense. $4.4 million of the
increase in general and administrative expense is attributed to software and
licencing expenditures, compensation expense exclusive of stock-based
compensation, and general office and facilities expenses to support the growth
of the company. The overall increase was offset by a $0.8 million reduction in
legal and accounting fees and other corporate matters in the period.
Depreciation and Amortization
Three months ended
March 31, Change
2021 2022 Amount %
Depreciation and amortization
Depreciation and amortization expenses increased by$0.7 million , or 21%, from the three months endedMarch 31, 2021 toMarch 31, 2022 . Amortization expense increased by$0.1 million due to the amortization of acquired intangible assets over their respective useful lives. Depreciation expense increased by$0.6 million due to the depreciation of equipment and facilities related to capital equipment purchases. Other (Income) Three months ended March 31, Change 2021 2022 Amount % Other income$ (265 ) $ (665 ) $ (400 ) 151 % Other income increased by$0.4 million , or 151%, from the three months endedMarch 31, 2021 toMarch 31, 2022 . Other income for the three months endedMarch 31, 2021 , included a foreign exchange loss and interest income of$0.4 million partially offset by a$0.6 million gain on fair value adjustments. Other income for the three months endedMarch 31, 2022 , included a foreign exchange gain and interest income of$1.2 million partially offset by$0.6 million loss on fair value adjustments related to held-for-trading marketable securities and contingent consideration. Grants and Incentives Three months ended March 31, Change 2021 2022 Amount % Grants and incentives$ (3,148 ) $ (5,194 ) $ (2,046 ) 65 % Grants and incentives increased by$2.0 million , or 65%, from the three months endedMarch 31, 2021 toMarch 31, 2022 . This increase was primarily driven by an increase in activity relating to research and development expenditures that are eligible for the SIF project. Income Tax Expense Three months ended March 31, Change 2021 2022 Amount % Income tax expense$ 44,266 $ 62,236 $ 17,970 41 %
Income taxes expense increased
21
--------------------------------------------------------------------------------Liquidity and Capital Resources
As ofMarch 31, 2022 , we had$786.1 million of cash, cash equivalents and marketable securities, comprising$545.7 million in cash and cash equivalents and$240.3 million in marketable securities. The increase of$63.1 million sinceDecember 31, 2021 , was primarily from cash flow from operations and driven by the receipt of accounts receivable relating to royalties from bamlanivimab and bebtelovimab in the three months endedMarch 31, 2022 . We have generated positive operating cash flow cumulatively since our inception in 2012 and in every year since 2018. We intend to significantly invest in our business, and as a result may incur operating losses in future periods. We will continue to invest in research and development efforts towards expanding our capabilities and expertise along our technology stack, the building of our business development team and marketing our solutions to new and existing partners, and the expansion of our future office headquarters, and related infrastructure, including execution of long-term office-lease arrangements. Based on our current business plan, we believe that our existing cash, cash equivalents, and anticipated cash flows from operations, will be sufficient to meet our working capital and capital expenditure needs and do not anticipate the need of external funding over at least the next 36 months following the date of this report. Cash Flows
The following table summarizes our cash flows for the periods presented:
Three months ended
March 31,
2021 2022
Net cash provided by (used in):
Operating activities $ 109,545 $ 100,219
Investing activities (15,839 ) (26,371 )
Financing activities (1,543 ) (3,131 )
Effect of exchange rate fluctuations on cash
and cash equivalents (484 ) (204 )
Net increase in cash and cash equivalents $ 91,679 $ 70,513
Operating activities
Net cash provided by operating activities decreased from $109.5 million in the
three months ended March 31, 2021 to $100.2 million in the three months ended
March 31, 2022 . The decrease resulted primarily from a decrease in licensing
revenue and milestone payments in the quarter and an increase in expenditures
that reflect AbCellera's investment in research and development activities and
growth of the company.
Investing activities
Net cash used by investing activities increased from $15.8 million in the three
months ended March 31, 2021 to $26.4 million in the three months ended March 31,
2022 . Investing activities during the three months ended March 31, 2021 were
attributed to the purchase of property and equipment and investments is equity
accounted investees. The increase in investing activities during the three
months ended March 31, 2022 was primarily attributable to purchases of property
and equipment and purchases of long-term investments.
Financing activities
Net cash used by financing activities was$1.5 million for the three months endedMarch 31, 2021 . This was due primarily to repayment of long-term debt. Net cash used by financing activities was$3.1 million for the three months endedMarch 31, 2022 due to final payment of an in-licensing agreement partly offset by proceeds from long-term debt.
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 endedDecember 31, 2021 . There have been no significant changes to these policies during the three months endedMarch 31, 2022 . 22
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