Abcellera: The Palantir of Biotech in the Making.

Q1 2025 ER Digest

This is an update of my original Abcellera deep dive.

To get the most out of this update, I highly recommend reading the original deep dive to get an in depth understand of Abcellera’s technology and platform.

ABCL575 and ABCL635 may be an inflection point for Abcellera, as it tentatively continues to evolve into the Palantir of biotech.

As I explain in my original deep dive, Abcellera becomes a much better business the moment it’s able to bring new molecules to the clinic with a regular cadence and/or finding more applications per molecule advanced to the clinic. While this has not happened yet, ABLC575 and ABCL635 were recently approved to initiate clinical trials. These drugs work by tapping into cellular mechanisms in the body via which many conditions can be hypothetically addressed. Hence, their evolution towards clinical stage is a tentatively points to an inflection point in Abcellera’s ability to solve real problems for end customers.

ABLC575 works by leveraging the OX-40 pathway, which plays a key role in mediating T-cell responses. T-cells coordinate and execute immune system responses and ABCL575 works by binding onto the OX-40 receptor on the T-cell, enabling physicians to either increase or decrease T-cell activity. Health Canada has approved Abcellera to run clinical trials for ABCL575 for the treatment of atopic dermatitis. In my experience, many of these chronic conditions arise from persistent viral and bacterial infections - once they are cleared, the “chronic” condition seems to going into remission.

This is in effect why Abcellera has found ABCL575 useful enough for atopic dermatitis to run a clinical trial. In the Q1 2025 earnings call, Abcellera CEO Carl Hansen mentioned that OX-40 is also an effective pathway to treat alopecia. Guess why? Because a lot of times alopecia is the result of chronic viral and bacterial infections too:

In addition to that, there was a readout for another OX40, OX40-Ligand molecule imaging with some early efficacy in alopecia, which again highlights that OX40-Ligand will have applications broadly in INI.

-Abcellera CEO Carl Hansen, during the Q1 2025 earnings call.

Therefore, as Abcellera advances ABCL575 to the clinic, Abcellera is increasingly positioned to treat many such chronic conditions. And naturally, the end applications of regulating T cells go way beyond dermatitis and alopecia, with potential applications in acute viral and bacterial infections, cancers and auto-immune conditions (which in my experience, also fundamentally stem from low-level viral and bacterial infections). Once/if ABCL575 makes it through clinical trials, Abcellera will likely get more efficient at leveraging the OX-40 pathway to solve real customer problems.

Similarly, ABCL635 works by targeting the NK3R receptor, found in the infundibular nucleus (a part of the brain). ABCL635 binds onto that receptor, regulating endocrine homeostasis and thermoregulation - effectively eliminating hot flashes for menopausal women. The NK3R receptor is one of over 800 hundred GPCRs: by binding onto any of these GPCRs, we can regulate a wide range of physiological processes: everything from sensory perception (smell, taste, vision) to hormone secretion (insulin, testosterone, estrogen) and neurotransmission (pain, mood).

In effect, once/if ABCL635 makes it through clinical trials, this will also be a critical proof point for Abcellera. If ABCL635 works for hot flashes, it likely won’t take long for Abcellera to unlock applications across a broad range of physiological processes. CEO Carl Hansen tentatively pointed to the rise in operating leverage Abcellera could see, in case of success in their clinical trials:

Coming back to the development path, it is a big advantage that there is a clear development path that has now been successfully navigated by two products. So it’s obvious what the final endpoints should be the patient population how to set that up.

So once we have that in hand, then if it looks the way that we hope, we would be working to accelerate the path forward to development, and there’s already some thinking and planning around that, but of course, it depends upon regulatory engagement and on the data that we get from the Phase 1 trial.

In the abstract, notice how both ABCL575 and ABCL635 stem from the same technological ability: synthesising molecules with specific shapes. As I’ve explained numerous times when outlining the long term potential of Hims’s platform, shape determines function in the (human) proteome. We can get a precise job in the body by inserting a molecule with a specific shape. This is why as Abcellera’s platform is trending towards becoming something foundational for the emerging biotech industry.

As Abcellera continues to advance molecules to the clinic, its proving the various components of its platform. In case of clinical success, Abcellera’s present technological abilities position it to potentially cure any human ailment. As you can see depicted in the graph below, Abcellera’s financials remain abysmal, which makes it a highly risky investment at present. I am nonetheless quite impressed with the management team and that’s why I continue to monitor the company closely.

Abcellera Revenue (orange line) and Cash from Operations (blue line), $.

In the post below, I explain why Hims is tracking to build the most valuable subscription service on Earth. In the abstract, if you knew exactly what’s happening in your body at the molecular level at any point in time, you could totally prevent any illness by inserting molecules with specific shapes into your body. In effect, Hims and Abcellera are starting to build the foundation for this sort of future. The former is positioned to become the network with the data and the latter the machine that turns the data into precision and preventative drugs. However, Hims is far more mature as a business and Abcellera remains in a much more incipient bucket.

How Hims Becomes the Most Valuable Subscription on the Planet.

Until next time!

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Disclosure

These are opinions only of the individual author. The contents of this piece do not contain investment advice and the information provided is for educational purposes only and no discussions constitute an offer to sell or the solicitation of an offer to buy any securities of any company. All content is purely subjective and you should do your own due diligence.

Antonio Linares makes no representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness or reasonableness of the information contained in the piece. Any assumptions, opinions and estimates expressed in the piece constitute judgments of the author as of the date thereof and are subject to change without notice. Any projections contained in the Information are based on a number of assumptions as to market conditions and there can be no guarantee that any projected outcomes will be achieved. Antonio Linares does not accept any liability for any direct, consequential or other loss arising from reliance on the contents of this presentation. Antonio Linares is not acting as your financial, legal, accounting, tax or other adviser or in any fiduciary capacity.