Operator: Next question is from the line of Steve [indiscernible] with KeyCorp.
Unidentified Analyst: Is there any additional color you can provide on the 3 new partner initiative programs that were started in the fourth quarter?
Carl Hansen: Only that I would say most often you can see we had some BD activity in the second half of the year. Most often the starts are following recent deal activity, but we don’t normally go into any detail there, Steve, on what quarter to quarter are the specific deals and starts that we have.
Operator: Next question is from the line of Puneet Souda with Leerink Partners.
Unidentified Analyst : Hi. Yeah. You have Michael on for Puneet. I was just wondering, so with this, pickup in the pucks, later in this year, I was wondering if that’s like a typical seasonality in BD activity or if you’re seeing a pickup now that there’s been a decent amount of biopharma M&A and if that influences kind of your outlook for how much co-development or asset sale you might have kind of in the near term?
Carl Hansen: Hey, Michael. Thanks for joining for Puneet there. No, I think it’s just there’s no sort of predictable seasonality with the BD deal flow. It’s just it can be irregular, and it has been in the past also irregular. So we don’t I wouldn’t read into anything regarding that quite robust quarter. And as I mentioned, we’re going to, we don’t consider the programs under contract to be really the meaningful business metric we’re people turning people’s attention to going forward, and we’re going to stop reporting on that on a quarterly basis.
Unidentified Analyst : And then I was wondering if you had any visibility on whether those five preclinical assets, if they might be getting into the clinic sometime in 2024 or 2025?
Carl Hansen: Hi. Thanks for the follow-up. I mean, we would hope so, but they’re in the hands of our partners and they’re moving them at their own pace. I would say, like the progression, as we have seen in the past can take any number of years. Ones that we are particularly excited about because they have or we could expect in 2024, let’s say, because they have already disclosed this themselves is Abdera, the company we worked with on radioisotope conjugates. They have indicated that, I think, at least one would come into the clinic in 2024. So we’re definitely keeping our eye out for that. For other ones, we don’t have any particular insight on what their schedules are.
Operator: Next question is from the line of Steven Mah with Cowen.
Steven Mah: Andrew, how should we think about the R&D expense going forward in 2024, especially in light of you advancing two internal programs into IND enabling studies? And then, second part of the question, given the cadence of INDs in 2024 of one or two. Could you give us some color on what’s driving that cadence? And could you do more if you had enough if you had multiple compelling candidates? It seems like you have the cash and the manufacturing capacity to accelerate if you wanted. Is that a fair statement?
Andrew Booth: So I’ll take each of those and I think Tryn will chime in on the second one as well at the end. So on the R&D expense in 2024, as I mentioned in the prepared remarks, we’d consider it to be, we would expect it to be relatively flat versus last year’s expense. Last year, we did have some expenses related to clinical development, of a certain number of programs certainly bringing 575 and 635 to where it is in IND enabling studies. And we would expect it to actually be similar in 2024, so relatively flat overall. Regarding the second question, as what Carl mentioned is that we would expect 2 additional programs getting into development candidate and towards IND enabling studies in 2024. And actually that 635 and 575 would reach IND in 2025 and then that’s when their Phase 1 would be expected to start.
We’re on a pace of roughly that than those 2 development candidates from this year would have INDs or go into IND enabling studies with expected INDs in 2026. That appears to be the pace and cadence that we’re getting into. I’ll let Carl talk about whether what the capacity is and what are maybe the limiting features on that.
Carl Hansen: I’m sure happy to do that. So maybe just first emphasizing as I did in my prepared remarks that we believe advancing internal portfolio is going to be the biggest value driver in the long run for AbCellera. Now our focus is on making sure that we’re building that portfolio and moving it forward effectively. This is not about numbers. It’s not about putting a certain number of INDs on the board. It is completely about being able to look at the data, look at the opportunity, look at the commercial case and get excited that you have a much better than average chance of bringing forward a molecule that’s going to be a drug that helps patients. So the fundamental bottleneck here is in finding the opportunities and getting the science to the point where you really have conviction and believe that this is a program that deserves to be added to the portfolio.
That’s by far the bottleneck. Now the other piece is, if in the event that you’re working on many programs as we are and a lot of them happened to hit in the same year, I could imagine that there is a number at which we would run into a bottleneck operationally in being able to manage the manufacturing, get the IND packages together due to preclinical work. Frankly, that would be a problem that we would welcome. And given the nature of what we’re working on, we could pace those out. Most of these programs are against targets that the industry has known about for many years and where we’re not seeing antibodies move forward, because people have not been able to solve those problems. So we would love to have a backup of exciting first in class molecules to move forward.
That’s not currently the place, but we are putting our necks out a little bit and saying, hey, this year we’re hoping to get at least 1 breakthrough and perhaps 2 and add 2 more programs in development candidates.
Steven Mah : And then last one is a follow-up question on manufacturing. Given the recent discussions by the U.S. Government on the bioeconomy and securing domestic and allied supply chains, are you guys applying for any U.S. government funding for biomanufacturing or bioproduction?
Carl Hansen: As you probably know, we have had some close interactions with DARPA and the U.S. government in the past, and we certainly would welcome that again. We’re not currently engaged in those types of conversations. What has been interesting is, I’m sure you’ve seen is that there is there are some geopolitical factors that are making it more and more important to have manufacturing in-house and have them in North America. So we think that that’s really playing well into the strategy. And we believe that in the long run, if you have the ability to continue to generate first-in-class assets, it is highly strategic to be able to control the supply chain through PD and manufacturing. And so we view the GMP manufacturing not so much as a revenue center as a key strategic asset to execute on the vision of building a vertically integrated clinical stage biotech.
Operator: Next question is from the line of Evan Seigerman with BMO.
Evan Seigerman: Bigger picture one that I want to ask one on 635. The bigger picture, as you think about kind of your transition to this, more of a drug development type company, how do you decide what assets you’re going to put through a Phase 1, maybe it’s a Phase 2 versus partnering out? Is it really just the sheer size of resources, the economics? Walk me through kind of that thinking. And then maybe on 635, can you walk us through kind of the genesis of this? I know you’re not going to disclose the target or kind of what you’re going after here, but metabolic is obviously very hot. What do you see as differentiated about 635? And maybe how does that fit into kind of a rapidly evolving metabolic space? Thank you very much.
Carl Hansen: Sure. Happy to take those questions in turn. So the first question was about how do you decide which programs you’re working on, how far you take them and when you look to partner out. So first of all, deciding at every point in development, do we further invest in a program, we’re looking at four key dimensions. We’re looking at science. We’re looking at the commercial opportunity. We’re looking at the potential for differentiation. And we’re looking at a practical path for development. So every asset, every opportunity needs to be looked at through those four dimensions at each step. Now, as you start to get further into clinical development, I think one of the big questions as to whether it’s better to keep it in-house or better to look for partnerships depends on the scale of resources you need to commit.
So we are definitely not in the game of betting everything on a single asset. We have been diversifying our portfolio from the beginning and we’re going to continue to do that. But it’s also the clinical development capability and for some indications, particularly indications that are competitive in terms of patient enrollment, these are much better done by a large and established company. I think atopic dermatitis is probably a pretty good example of that. So there’s some combination of resource allocation and just what is practical and do you believe that you can do it effectively and that you’re going to create the most value for patients and for the company by keeping it in your own hands or by finding the right partner. And then when you find the right partner, then the question is what exactly is the nature of that partnership?
And those are the things that need to be evaluated not as a omnibus strategy, but rather on a case by case basis based on the best information you have at the time.
Evan Seigerman: And then I guess more on to two fiber kind of what else you’d want to share?
Carl Hansen: Yes. I don’t have too much more to share on 635. I mean the highlights are, we think this is a potentially first-in-class antibody therapy against the GPCR or ion channel target. It’s in the area of metabolic and endocrine disorders and we have compelling data in non-human primates that we believe has high likelihood of translating to humans. And the nature of the indication is that we believe we can get both safety and efficacy data early in clinical development. That’s the focus right now. Once we get to that point, we’ll have to reevaluate what’s the next best step.
Evan Seigerman: So as you think about kind of rightsizing or kind of reconciling your business priorities, what’s driven by, I don’t want to say pressure from the government, but kind of priorities from the Canadian government versus investors and pushing forward kind of assets that you think could be most profitable? How do you balance that? Because it’s clearly an important strategic priority for the Canadian government, which is great, but we also want to make sure you’re balancing that resource allocation with high potential assets?
Carl Hansen: I think important that, of course, the government has been the Government of Canada and the Government of British Columbia have been excellent funding partners here. Importantly, we still have full operational control of the company, and we’re making the decisions, which are best for the company to advance our assets and establish ourselves as an anchor company here in Canada. And that is exactly what the Canadian government and the government of British Columbia are looking for. So I think our interests are very well aligned there. And of course, we have certain commitments for to the Canadian government, which are highlighted in some of the documents that we’ve provided previously on the nature of that funding.
But I think the strategic objectives are of the company. So I think we find ourselves not at odds with any sort of competing, let’s say, motivation between what we’re doing that’s right for the company and for shareholders and what the Government of Canada funding is allowing us to do.
Andrew Booth: I would go even further and say, the government of Canada and British Columbia, I think the top priority is to make sure that here we are building an anchor company that is building an ecosystem in clinical trials and clinical development and that accelerate is successful. So we are 100% aligned in maximizing shareholder value, bringing great drugs to patients and building programs that really make a difference and move the needle for the industry. So there is no misalignment. This is all one thing.
Operator: There are no additional questions waiting at this time, so I’ll pass the call back to the management team for any closing remarks.
Carl Hansen: Thank you everyone for joining the call. We are very pleased to share progress and look forward to speaking with you again.
Operator: That concludes the conference call. Thank you for your participation. You may now disconnect your lines.
