NOTICE SHADOW BEFORE ARD SEE ANNOUNCEMENTS


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 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 level of market acceptance մեր of our drug detection platform.


  • companies and technologies in our industry that we compete with;

• Develop our ability to manage our business by expanding sales to existing partners or introducing our drug discovery platform to new partners.

• Our ability to provide a complete solution from target to IND presentation to our partners.

• Our expectations for the completion մեր production capacity of our GMP facility.

• Our ability to establish and maintain intellectual property protection for our technologies և workflows, including our intellectual property

              property litigation with Berkeley Lights, or avoid or defend 

against breach claims;

• Our ability to attract, hire, retain, and effectively manage our future growth.


  • our ability to obtain additional financing in future offerings;


  • the volatility of the trading price of our common shares;

• Our ability to engage and retain key scientific and engineering staff.

• Our expectations for the period during which we qualify as a developing company under the JOBS Act.

• Business failures that affect the development of our business և our platform due to the global COVID-19 epidemic.


  • our ability to remediate our material weaknesses;

• Our expectations for our PFIC status for our taxable year are over December 31, 2020 or any future taxable year.

• Our expectations regarding the acquisition of Trianni և Our ability to realize the intended benefits of such a transaction.

• Our expectations regarding the use of the proceeds of our initial public offering;


  • our expectations about market trends; and


  • our ability to predict and manage 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 our
forward-looking statements. Actual results or events could differ materially
from the plans, intentions, and expectations disclosed in the forward-looking
statements we make. Moreover, we operate in a competitive and rapidly changing
environment. 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.

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 be materially different from what we expect. The
forward-looking

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The announcements contained in this Quarterly Report are made as of the date of this Quarterly Report; we have no obligation to update any prospective statement, be it new information, future events or otherwise, unless 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 of the 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 represent all amounts in this quarterly 10-Q horse report USA dollars, unless otherwise stated. The “$” and “US $” links apply USA
և “C $” և “CAD $” links are 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.

The effect of COVID-19


At the onset of the pandemic in March 2020, the Company took proactive measures
to protect the health and safety of our employees, business partners, vendors,
and contractors. The spread of more contagious strains, such as the Delta
variant, could cause the COVID-19 pandemic to last longer than expected and
could result in the reinstatement of restrictive orders that could disrupt our
business. Some of the actions we continue to take include the following:

• We implemented a comprehensive COVID-19 policy և communication platform

        and provided real-time updates company-wide relying on directives from
        local health authorities. As the situation progressed, we adapted
        accordingly, including adjusting all administrative staff to work from
        home.

• We have carried out protocols for the employees needed to relocate the Company

functions in the office ություններում in laboratory facilities, including physical

distance, personal և protective equipment, signs, installation of barriers

        between desks and lab benches, and implementing space restrictions for
        different areas of the facilities.

• With relevant national և local health authorities, we have limited

        business travel and implemented procedures to control and monitor all
        office and facility access.

• We are not required to discontinue laboratory research

Against the COVID-19 epidemic. We will continue to adapt և apply new measures

as required և as directed by local health authorities.

• In: June 2021“Canadian offices are gradually returning to work in the laboratory.”

office facilities in accordance with the extension of health and safety protocols

according to the guidelines given by the local health authorities.

Hint:

We believe that the most reliable way to a better future is technological advancement, that the new frontier of technology lies in the interface of computing, engineering, and biology. Our mission is to improve our health with technologies that change the way we treat antibody-based therapies. We aim to become the next generation centralized antibody detection operating system.


Our full-stack, artificial intelligence-, or AI-, powered drug 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.
Rather than advancing our own clinical pipeline of drug candidates, we forge
partnerships with drug developers of all sizes, from large cap

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pharmaceutical to small biotechnology companies. We empower them to move
quickly, reduce cost and tackle the toughest problems in drug development. As of
June 30, 2021, we had 138 discovery programs that are either completed, in
progress or under contract with 33 partners. As a recent example, in a
collaboration with Eli Lilly and Company, we applied our technology stack to
co-develop bamlanivimab and bebtelovimab, two therapeutic antibodies to treat
and prevent COVID-19. Bamlanivimab, which was discovered in March 2020, was the
first antibody therapy for COVID-19 to reach the clinic and the first to receive
Emergency Use Authorization (EUA) by the U.S. FDA. Since receiving EUA in
November 2020, bamlanivimab has been used alone and together with other
antibodies to treat over 500,000 high-risk patients with mild to moderate
COVID-19. It is estimated that bamlanivimab alone and together with other
antibodies has prevented tens of thousands of hospitalizations and saved more
than 11,000 lives. Our second COVID-19 antibody therapy from our partnership
with Eli Lilly, bebtelovimab, was developed to address the emergence of variants
in January 2021. Preclinical data demonstrate that bebtelovimab is effective
against all known variants of concern and interest, and Eli Lilly has advanced
it into Phase 2 clinical testing. Eli 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
this one AbCellera discovery program and two Trianni programs result in
milestone or royalty payments to us to date, and we have not yet had a program
receive marketing approval.

We structure our agreements in a way that is designed to align our partners'
economic interests with our own. 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. 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. In some partnerships we may receive equity or
equity-like instruments that allow us to deepen participation in the economic
success of molecules we discover.

We generated revenue of $11.2 million and $15.9 million and $27.6 million and
$230.4 million for the three and six months ended June 30, 2020 and 2021,
respectively. As of June 30, 2021, we had a total of 33 partners for whom we
were conducting drug discovery activities. We have also grown the number of
programs that we have under contract with our partners, as illustrated by the
following charts.

                               [[Image Removed]]

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We incurred sales and marketing expenses of $0.5 million and $1.0 million and
$1.3 million and $3.9 million for the three and six months ended June 30, 2020
and 2021, respectively. We are significantly increasing investment 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
$9.1 million and $13.3 million and $15.0 million and $27.4 million for the three
and six months ended June 30, 2020 and 2021, respectively. We incurred general
and administrative expenses of $1.5 million and $3.1 million and $11.2 million
and $17.7 million for the three and six months ended June 30, 2020 and 2021,
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 to improve our technology

        stack and platform;


  • Market and sell our solutions to existing and new partners;

• Expand և Expand programs, including investments, delivery activities

in production;

• Acquire businesses or technologies to support the growth of our business.


  • Attract, hire and retain qualified personnel;

• Continue to affirm, protect և protect our intellectual property և

        patent portfolio, including our ongoing litigation; and


  • Operate as a public company.


To date, we have financed our operations primarily from revenue from our drug
discovery partnerships in the form of royalties and research fees; from
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 and six months ended June 30, 2020, were $6.7
million and $4.6 million, respectively. Our net loss for the three months ended
June 30, 2021 was $2.3 million and our net earnings for the six months ended
June 30, 2021 were $114.9 million. As of June 30, 2021, we had accumulated
earnings of $229.1 million and we had cash and cash equivalents totaling
$792.6 million.



Recent Developments

In March 2020, we entered into a discovery partnership agreement with Eli Lilly
and Company, pursuant to which we will perform discovery research for a number
of targets for Eli Lilly that will result in antibodies for Eli Lilly to develop
and potentially commercialize. This partnership includes the licensing of
bamlanivimab, a monoclonal antibody designed to block viral attachment of the
COVID-19 virus and its entry into human cells as well as other candidate
antibodies against COVID-19 discovered by AbCellera. On June 1, 2020, 90 days
after program initiation, bamlanivimab moved to first-in-human testing and
progressed to Phase 3 clinical trials by July 2020.

In December 2020, we completed AbCellera's IPO on the Nasdaq. The Company
completed the sale of 27,772,500 shares of its common shares in the IPO at a
price to the public of $20.00 per share. The Company raised gross proceeds of
$555.5 million, or aggregate net proceeds of $522.8 million, after deducting
underwriting discounts and commissions and estimated offering expenses payable
by the Company. Immediately prior to the completion of our IPO, our convertible
preferred shares and notes were converted to common shares.

In February 2021, it was announced that bamlanivimab (LY-CoV555) 700 mg, a human
antibody discovered by AbCellera and developed with Eli Lilly and Company,
administered with a second Eli Lilly antibody, etesevimab (LY-CoV016) 1400 mg,
has received Emergency Use Authorization (EUA) from the U.S. Food and Drug
Administration (FDA) for the treatment of mild to moderate COVID-19 in patients
aged 12 and older who are at high risk for progressing to severe COVID-19 and/or
hospitalization. New protocols enable front-line clinicians to administer
bamlanivimab alone, and bamlanivimab and etesevimab together, in as few as 16
minutes and 21 minutes, respectively.

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In February 2021, we announced the appointment of Ester Falconer, Ph.D. as our
Chief Technology Officer. As CTO, Dr. Falconer will lead our long-term strategy
in the development, aggregation, and integration of technologies that improve
the speed and success of therapeutic antibody discovery from target to
investigational new drug application submission.

In March 2021, we entered agreements to expand our collaboration with Gilead
Sciences, Inc. including a multi-year, multi-target antibody discovery
collaboration and access to our humanized mouse technology, the Trianni
Mouse®. Under the financial terms of the agreements, we will receive an upfront
payment and we are eligible for milestone payments and royalties based on the
development and commercialization of antibodies generated by the Company under
this collaboration.

On March 5, 2021 the European Medicines Agency's (EMA) Committee for Medicinal
Products for Human Use (CHMP) issued a positive scientific opinion for
bamlanivimab alone and bamlanivimab administered together with etesevimab. The
opinion advises bamlanivimab alone and bamlanivimab administered together with
etesevimab can be used for the treatment of confirmed COVID-19 in patients aged
12 years and older that do not require supplemental oxygen for COVID-19 and who
are at high risk of progressing.

On: March 10, 2021 Eli Lily reported the results of Phase 3 clinical trials showing that bamlanivimab 700 mg և etesevimab 1400 mg together reduced COVID-19 hospitalizations and deaths by 87%, most recently diagnosed with COVID-19 in high-risk patients.


In April 2021, the Company announced it entered into a joint venture (Beedie JV)
whereby we will invest in equal shares of a Vancouver building development to be
leased exclusively by AbCellera for additional office and lab facilities for our
future office headquarters.

In April 2021, Eli Lilly and Company requested the U.S. FDA revoke the Emergency
Use Authorization (EUA) for bamlanivimab (LY-CoV555) 700 mg alone. Eli Lilly
made this request due to the evolving variant landscape in the U.S. and the full
availability of bamlanivimab and etesevimab together. The request was not due to
any new safety concern. This final step in Eli Lilly's transition to only supply
bamlanivimab and etesevimab for administration together in the U.S. for the
treatment of COVID-19 - as planned with the FDA - followed the modification of
contracts with the U.S. government to ensure adequate supply of etesevimab to be
used together with bamlanivimab. The FDA announced that it had revoked the EUA
for bamlanivimab 700 mg alone on April 16, 2021.

In April 2021, we entered into a multi-target collaboration agreement with
Empirico Inc. Empirico will use its Precision Insights Platform, a human
genetics-focused discovery platform, to select up to five therapeutic
targets. AbCellera will use its AI-powered antibody discovery technology to
search and analyze natural immune responses to identify antibodies with the
desired therapeutic properties against the selected targets. Under the terms of
the agreement, Empirico will have the rights to develop and commercialize novel
antibodies resulting from the collaboration. AbCellera will receive research
payments and is eligible to receive downstream clinical and commercial milestone
payments and royalties on net sales of products from Empirico. We also have the
option to deepen our position in this partnership with further investment in the
development of certain collaboration targets in exchange for increased revenue
sharing.

In May 2021, the Company announced that a second antibody from its collaboration
with Eli Lilly, bebtelovimab (LY-CoV1404), entered clinical trials in patients
with mild-to-moderate COVID-19. Preclinical data demonstrate that bebtelovimab
is a highly potent antibody against COVID-19 and retains neutralization activity
against all known variants of concern and interest. Eli Lilly has expanded its
ongoing BLAZE-4 trials to evaluate bebtelovimab alone and together with other
monoclonal antibodies and is currently in Phase 2.

In June 2021, the Office of the Assistant Secretary for Preparedness and
Response paused shipment of bamlanivimab and etesevimab administered together in
the U.S. This was due to the prevalence of the Gamma and Beta variants in the
U.S. at that time and the fact that bamlanivimab and etesevimab administered
together do not retain neutralization effects against those variants. The
COVID-19 pandemic has involved, and may continue to involve, the spread of
variants, including the Delta variant which is currently estimated to be the
most dominant variant globally. Preclinical data demonstrate that bamlanivimab
and etesevimab administered together retain neutralization activity against the
variants currently in circulation in many countries, including Delta and Alpha.

In July 2021, the Company announced the appointment of Neil Berkley as Chief
Business Officer. As CBO, Mr. Berkley's role will include leading the strategy
and continued growth of AbCellera's partnership business, which currently
includes a diverse portfolio of more than 130 programs with drug developers of
all sizes.

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In August 2021, the Company announced partnerships with Tachyon and EQRx. The
Company has the option to invest in programs at various stages of preclinical
development, clinical development, and commercialization in exchange for an
increased share of product sales.



The main factors influencing the results of operations և our future activities


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".

• Provision of additional programs under the contract. Our growth potential

Income, both in the near and long term, depends on our ability

provide additional programs under the contract of new և existing partners.

For existing partners, we seek to expand our relationship with them

include multi-year, diverse programs. Since our first ad

as of 2015 June 30, 2021, we had 138 discovery plans

which are either completed, or in progress, or under contract with 33 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 have

applications based on our platform. Our ability to keep growing

The contracted programs depend on our ability to educate

market ել to support business by investing in our sales և

Strengthen marketing efforts through further research and development

our technological differentiation.

• Our partners successfully develop and market antibodies

        that we discover. Until recently, we had generated nearly all of our
        revenue from research fees. 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 project under the contract is presented with potential future events

Payments և royalties, not research fees. As a result, we believe

Our business ագա The future results of our activities will greatly depend

to the extent that our partners are successfully developing and commercializing

antibodies that we detect based on contracts with our partners. how

        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.

• Initiation rate for our selection of detection projects

co-workers: When projects are contracted, partners must choose

Targeting և agree on a detailed job announcement before we begin

Detection of any antibodies. Such exchange rate և time

Choice և initiative differ from partner to partner. Because it is huge

        majority of research fees that we are entitled to recognize under our
        partnerships depend on our delivery of antibodies for development by our

partners, any delays in the selection and coordination of targets of our partners

Employment reports will affect income recognition.

• Invest our technology heap. Our ability to maintain

նել Expand our partnership depends on the benefits of our technology

stack ship 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 our

Ability to detect, develop, and detect antibody drugs; or

those who provide an opportunity to expand our partner business

related treatment methods. We intend to allocate significant funds

        to continue to improve our technological differentiation which will impact
        our financial performance.

• Increase our activities to implement detection programs. How do we provide?

Additional software under the contract և when our partners initiate the discovery

programs, our operational capacity to carry out such research can

to become tense. We make significant investments in capital և time

increase our capacity to address future growth, including building new ones

headquarters, building a new small-scale production plant, making investments

        research and development and hiring more talented personnel across
        functions. We have new facilities under development scheduled to take
        occupancy in late 2021 and 2023 that are intended to materially expand

ability: We expect a significant increase in staff as the workforce expands

our operating expenses, including stock-based compensation.

Basic business criteria

We regularly review the following key business metrics to evaluate our business, measure our performance, identify trends that affect our business, make financial forecasts, and make strategic decisions. We believe that the following are the criteria

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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.



Metric                                 June 30, 2020       June 30, 2021      Change %
Number of discovery partners                       25                  33            32 %
Programs under contract, cumulative                76                 138            82 %
Program starts, cumulative                         48                  60            25 %
Molecules in the clinic                             1                   4           300 %




The table below outlines the details of molecules in the clinic as at June 30,
2021:



               Most
               advanced
Molecule       stage         Partner              Therapy areas        Program type
Bamlanivimab   Marketed      Eli Lilly and        COVID-19             Discovery
(LY-CoV555)    (EUA)*        Company                                   partnership
Bebtelovimab   Phase 2       Eli Lilly and        COVID-19             Discovery
(LY-CoV1404)                 Company                                   partnership
NBL-012        Phase 1       NovaRock             Dermatology,         Trianni
                             Biotherapeutics      gastrointestinal,    license
                             Inc.                 immunology
NBL-015        IND           NovaRock             Oncology             Trianni
               approved      Biotherapeutics                           license
                             Inc.

* For the latest regulatory developments regarding this molecule, see the “Recent Developments” above.




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
Investigational New Drug, or 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.



Going forward, AbCellera intends to report on molecules in the clinic metric in
place of the previously reported programs in the clinic metric. The change is
required to reflect two new dynamics which we believe are important to our
business:



o One program can produce multiple molecules, such as COVID-19 alone

            antibody discovery program with Eli Lilly has produced both
            bamlanivimab and bebtelovimab.


         o  As part of an acquisition, AbCellera may come to own stakes in
            molecules for which the company is also entitled to milestone

payments:

            and royalties although the discovery was not performed as an 

Abscess

            program, as is the case for several Trianni humanized rodent license
            agreements.


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As part of the change, we have raised the threshold for reaching the clinic from
IND application (or equivalent) to IND approval. We believe this more stringent
definition better reflects the common understanding for achieving clinical
status. The approval date is also more likely to be known than the application
date. We believe this change would thus make our disclosures more consistent
between molecules. The change produces no difference to historical business
results. Until the second quarter of 2021, the previous metric of programs in
the clinic was identical to the new metric of molecules in the clinic, with the
COVID-19 antibody program and bamlanivimab having been the first and only
program and molecule to have reached the clinic under either definition.
AbCellera also intends to disclose additional details about each molecule to the
extent made public or permitted by its partners. We believe that the updated
metric together with the additional list of molecules will give investors a
better understanding of AbCellera's downstream portfolio and bring AbCellera's
reporting in line with other public companies with economic stakes in
therapeutic molecules.

Summary of partnership agreements with pharmaceutical and biotechnology companies, which include downstream participation in 2016 June 30, 2021:



Partner                  # of Targets &       Therapeutic Indication
                         Duration             or Modality                   Date Announced
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                 Up to 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                         *
                         multi-year           additional indications          May 22, 2020
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 targets,    Undisclosed
                         multi-year                                      February 14, 2019
Autolus Therapeutics     Single target        Cell therapy (CAR-T)       November 29, 2018
Denali Therapeutics      Single target        Neurological diseases          June 12, 2018
Undisclosed mid-cap      Undisclosed          Undisclosed
biopharma                                                                 January 25, 2018
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


Components of transaction results

Income:


Our revenue consists of partnership research fees, licensing revenue,
development milestones, and royalty payments from commercial products. Research
fees consist primarily of technology access fees, which are generally generated
upon execution of our partnership agreements, and discovery research fees, which
are generated through our performance of antibody discovery research for our
partners. Licensing revenue is primarily from our licensing of our humanized
rodent platform, Trianni™. Our partnership agreements also entitle us to receive
payments upon the satisfaction of clinical, approval, and commercial milestones
as well as royalties on our partners' commercial sales of the molecules that we
discover.

                                       19
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We expect revenue to increase over time as we secure additional programs under
contract and conduct discovery efforts for our partners, and as our partners
continue the development of the antibodies that we deliver. We expect that our
revenue will fluctuate from period to period due to the timing of securing
additional programs under contract, the inherently uncertain nature of the
timing of milestone achievement and our dependence on the program decisions of
our partners.

Operating Expenses

Royalty Fees. Royalty fees consist of certain contractual royalty payments to
our strategic partners upon receipt of royalty revenue based on our customers
third-party net sales.  Royalty fees are not included in every program. For
royalties received from Eli Lilly for commercial sales of bamlanivimab, royalty
fees are due to collaboration partners in AbCellera's DARPA P3 (Pandemic
Preparedness Program) project focused on rapid pandemic response. Royalty fees
are recorded when the third-party sale occurs.

Research and Development Expenses. Research and development expenses primarily
consist of salaries, benefits, incentive compensation, stock-based compensation,
laboratory supplies, materials expenses for employees and contractors engaged in
research and product development, and facilities expenses related to direct
research and development activities. These expenses are exclusive of
depreciation and amortization. Research and development activities consist of
discovery research for partners as well as our internal platform development. We
derive improvements to our technology stack from both types of activities.

We expect to continue to incur substantial research and development expenses as
we conduct discovery research for our partners. In addition, we plan to continue
to invest in research and development to enhance our solutions and offerings to
our partners, including hiring additional employees and continuing research and
development projects obtained through strategic technology acquisitions. As a
result, we expect that our research and development expenses will continue to
increase in absolute dollars in future periods and vary from period to period as
a percentage of revenue.

Sales and Marketing Expenses. Our sales and marketing expenses consist primarily
of salaries, benefits, and stock-based compensation costs for employees within
our commercial sales functions, as well as marketing, travel expenses and
information technology costs that are directly associated with sales and
marketing efforts, such as client relationship management tools and other
information technology data tools to provide insight into market segments and
trends. This activity has been complemented with research and development staff
attending a variety of scientific conferences, which has helped increase the
business development pipeline. The associated expenses are included in research
and development expenses as scientific conference attendance is primarily
related to our research and development efforts. We expect our sales and
marketing expenses to increase in absolute dollars as we expand our commercial
sales, marketing and business development teams; increase our presence globally;
and increase marketing activities to drive awareness and adoption of our
platform.

General and Administrative Expenses. General and administrative expenses
primarily consist of salaries, benefits and stock-based compensation costs for
employees in our executive, accounting and finance, project management,
corporate development, office administration, legal and human resources
functions as well as professional services fees, such as consulting, audit, tax
and legal fees, general corporate costs and allocated overhead expenses. We
expect that our general and administrative expenses will continue to increase in
absolute dollars in future periods, primarily due to increased headcount to
support anticipated growth in the business and due to incremental costs
associated with operating as a public company, including costs to comply with
the rules and regulations applicable to companies listed on a securities
exchange and costs related to compliance and reporting obligations pursuant to
the rules and regulations of the SEC and stock exchange listing standards,
public relations, insurance and professional services. We expect these expenses
to vary from period to period as a percentage of revenue.

Depreciation and Amortization. Depreciation expense consists of the depreciation
of property and equipment used actively in the business, primarily by research
and development activities. Amortization expense includes the amortization of
intangible assets over their respective useful lives.

Other (income) expenses. Other (income) expenses consist of interest income on our cash balances, interest expense on loans under any loan agreement, and currency (profit) losses due to exchange rate fluctuations between the Canadian dollar and the dollar. USA dollars.


Grants and Incentives. Grants and incentives include cost recovery on activities
that qualified for approved projects supported by grant funding or tax credits.
Grants primarily include the benefit from programs administered by the Canadian
government's Ministry of Innovation, Science and Economic Development, such as
their Industrial Research Assistance Program, and the Strategic Innovation Fund.
To the extent that grant funding covers capital expenditures, a deferred credit
is recorded on the balance sheet and recognized rateably over the benefit period
of the related expenditure for which the grant was intended to compensate.

                                       20

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Other comprehensive income. Other comprehensive income includes currency conversion adjustments as a result of currency fluctuations in functional Canadian currency organizations.

Results of operations:

The three-six month comparison is over June 30, 2020 և 2021

The table below summarizes our unverified results for three to six months of completed transaction data. June 30, 2020 և 2021



                                          Three months ended                   Six months ended
                                               June 30,                            June 30,
                                        2020              2021              2020              2021
Revenue:
Research fees                       $       8,228     $       5,215     $      12,885     $       9,201
Licensing revenue                               -               263                 -            20,522
Milestone payments                          3,000             1,000             3,000             8,000
Royalty revenue                                 -            21,165                 -           192,661
Total revenue                              11,228            27,643            15,885           230,384
Operating expenses:
Royalty fees                                    -             3,610                 -            23,622
Research and development(1)                 9,144            15,046            13,262            27,403
Sales and marketing(1)                        547             1,295               984             3,869
General and administrative(1)               1,498            11,203             3,148            17,688
Depreciation and amortization                 893             3,522             1,467             6,827
Total operating expenses                   12,082            34,676            18,861            79,409
Income (loss) from operations                (854 )          (7,033 )          (2,976 )         150,975
Other (income) expense:
Other (income) expense                        293              (314 )           1,294              (645 )
Grants and incentives                      (7,850 )          (4,646 )          (8,880 )          (7,794 )
Total other income                         (7,557 )          (4,960 )          (7,586 )          (8,439 )
Net earnings (loss) before income
tax                                         6,703            (2,073 )           4,610           159,414
Provision for income tax                        -               250                 -            44,516
Net earnings (loss)                 $       6,703     $      (2,323 )   $       4,610     $     114,898
Foreign currency translation
adjustment                                      -             2,152                 -             2,152

Comprehensive income (loss) $ 6,703 $ (171) $:

     4,610     $     117,050
Net earnings (loss) per share
attributable to common
  shareholders
Basic                               $        0.03     $       (0.01 )   $        0.02     $        0.42
Diluted                             $        0.03     $       (0.01 )   $        0.02     $        0.36
Weighted-average common shares
outstanding
Basic                                 152,326,424       272,196,107       152,091,589       270,953,541
Diluted                               260,810,864       272,196,107       226,039,616       321,555,443



(1) Amounts are excluded from depreciation. Amounts include:

    stock-based compensation as follows:






                                                 Three months ended June 30,               Six months ended June 30,
                                                2020                   2021                 2020               2021
                                                        (in thousands)                           (in thousands)
Research and development                     $       483         $          3,720       $      1,099       $       6,877
General and administrative                            86                    4,592                694               5,907
Sales and marketing                                   37                      161                 50               1,116
                                             $       606         $          8,473       $      1,843       $      13,900






                                       21
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Revenue



                           Three months ended                                    Six months ended
                                June 30,                    Change                   June 30,                   Change
                           2020           2021        Amount         %          2020         2021         Amount         %
                               (in thousands, except percentages)                   (in thousands, except percentages)
Revenue
Research fees           $     8,228     $  5,215     $ (3,013 )       -37 %   $ 12,885     $   9,201     $  (3,684 )      -29 %
Licensing revenue                 -          263          263         N/A            -        20,522        20,522        N/A
Milestone payments            3,000        1,000       (2,000 )       -67 %      3,000         8,000         5,000        167 %
Royalty revenue                   -       21,165       21,165         N/A            -       192,661       192,661        N/A
Total revenue           $    11,228     $ 27,643     $ 16,415         146 %   $ 15,885     $ 230,384     $ 214,499       1350 %




Revenue increased by $16.4 million from the three months ended June 30, 2020 to
June 30, 2021. Royalty revenue of $21.2 million are directly associated with the
specified percentage of proceeds that Eli Lilly received from the sales of
bamlanivimab. The increase in royalty revenue was partly offset by a decrease in
milestone payments and research fees compared to the same period in the prior
year. Despite a significant increase in cumulative Programs Under Contract and
Program Starts compared to the same period in the previous year, revenues
associated with research fees decreased by $3.0 million for the three months
ended June 30, 2021. The decrease was driven by a reduction in revenue from our
COVID-19 antibody discovery program which was running at its peak activity for
the three months ended June 30, 2020.



Revenue increased by $214.5 million for the six months ended June 30, 2020 to
June 30, 2021. Royalty revenue of $192.7 million are directly associated with
the specified percentage of proceeds that Eli Lilly received from the sales of
bamlanivimab. We earned $20.5 million in licensing revenue related to the
recently acquired Trianni humanized rodent platform business. We earned $8.0
million in milestone revenue of which $7.0 million relates to the first
commercial sale in Europe by Eli Lilly relating to molecule bamlanivimab for
treatment of COVID-19 and the remaining $1.0 million milestone revenue relates
to milestone payments received from our Trianni licenses. Despite a significant
increase in cumulative Programs Under Contract and Program Starts compared to
the same period in the previous year, revenues associated with research fees
decreased by $3.7 million for the six months ended June 30, 2021. The decrease
was driven by a reduction in revenue from our COVID-19 antibody discovery
program.



Operating Expenses

Royalty Fees



                              Three months ended                                     Six months ended
                                   June 30,                     Change                   June 30,                    Change
                           2020              2021         Amount         %        2020             2021         Amount        %
                                  (in thousands, except percentages)                   (in thousands, except percentages)
Royalty fees             $       -       $      3,610     $ 3,610         N/A   $      -         $  23,622     $ 23,622       N/A






Royalty fees for the three and six months ended June 30, 2020 and 2021 were $3.6
million and $23.6 million, respectively. These were primarily attributable to
the royalty revenues received by the Company from sales of bamlanivimab by Eli
Lilly due to AbCellera's collaborators in pandemic response.

Research and Development



                               Three months ended                                     Six months ended
                                    June 30,                    Change                    June 30,                   Change
                              2020             2021       Amount         %           2020           2021        Amount        %
                                   (in thousands, except percentages)                    (in thousands, except percentages)

Research և Development $ 9,144: $ 15,046 $ 5,902 65% $ 13,262 $ 27,403: $ 14,141: 107%





Research and development expenses increased by $5.9 million, or 65%, from the
three months ended June 30, 2020 to June 30, 2021, reflecting continuing strong
investments in the capacity and capabilities of AbCellera's discovery and
development platform. Of this increase, $6.6 million is due to the increase in
compensation expense consistent with the increase in headcount. The overall
increase was partly offset by the decrease in IPR&D expense of $4.0 million
attributable to the purchase of the OrthoMab bispecific platform during the
prior period. $2.8 million of the increase is attributed to an increase in
facilities, research materials, supplies and services consistent with the
overall increase in research and development activities.

                                       22

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Research and development expenses increased by $14.1 million, or 107%, from the
six months ended June 30, 2020 to June 30, 2021, reflecting continuing strong
investments in the capacity and capabilities of AbCellera's discovery and
development platform. Of this increase, $12.0 million is due to the increase in
compensation expense consistent with the increase in headcount. $5.9 million of
the increase is attributed to an increase in facilities, research materials,
supplies and services consistent with the overall increase in research and
development activities. The overall increase was partly offset by the decrease
in IPR&D expense of $4.0 million attributable to the purchase of the OrthoMab
bispecific platform during the prior period.



Sales and Marketing



                           Three months ended                                     Six months ended
                                June 30,                    Change                    June 30,                    Change
                          2020            2021        Amount         %          2020             2021       Amount        %
                               (in thousands, except percentages)                    (in thousands, except percentages)
Sales and marketing     $     547       $  1,295     $    748         137 %   $     984         $ 3,869     $ 2,885        293 %




Sales and marketing expenses increased by $0.7 million, or 137%, from the three
months ended June 30, 2020 to June 30, 2021 and reflects the on going investment
to build AbCellera's Business Development team. $0.4 million of the increase is
due to increase in compensation expense consistent with increased headcount. The
remaining increase is attributable to increased recruiting and consulting fees.



Sales and marketing expenses increased by $2.9 million, or 293%, from the six
months ended June 30, 2020 to June 30, 2021. $1.5 million of the increase is due
to the increase in compensation expense consistent with increased headcount.
$0.8 million of the increase is attributable to a donation made to Surrey
Hospital to fund a study related to bamlanivimab in Canada. The remaining
increase is attributable to increased recruiting and consulting fees. Sales and
marketing expenses related to travel were significantly lower for the three and
six months ended June 30, 2021 due to continued COVID-19 related travel
restrictions.



General and Administrative



                                Three months ended                                     Six months ended
                                     June 30,                    Change                    June 30,                   Change
                                2020            2021       Amount         %           2020           2021        Amount        %
                                    (in thousands, except percentages)                    (in thousands, except percentages)

General և administrative $ 1,498 $ 11,203: $ 9,705 648% $ 3,148 $ 17,688: $ 14,540 462%





General and administrative expenses increased by $9.7 million, or 648%, from the
three months ended June 30, 2020 to June 30, 2021. $4.5 million of the increase
in general and administrative expense is related to the increased impact of
non-cash stock-based compensation expense as a publicly listed company. $1.5
million of the increase is related to increased compensation expense, excluding
stock-based compensation, which was driven by increased headcount within the
general and administrative function. $2.5 million is attributable to legal fees
and other corporate matters relating to being a public company and protecting
our intellectual property. $1.4 million of the increase in general and
administrative expense is due to increased expenditures related to director and
officer insurance and increased general office and facilities expenses to
support the growth of the company.



General and administrative expenses increased by $14.5 million, or 462%, from
the six months ended June 30, 2020 to June 30, 2021. $5.2 million of the
increase in general and administrative expense is related to the increased
impact of non-cash stock-based compensation expense as a publicly listed
company. $2.8 million of the increase is related to increased compensation
expense, excluding stock-based compensation, which was driven by increased
headcount within the general and administrative function. $4.8 million is
attributable to legal fees and other corporate matters relating to being a
public company and protecting our intellectual propertly. $1.5 million of the
increase in general and administrative expense is due to increased expenditures
related to director and officer insurance and increased general office and
facilities expenses to support the growth of the company.

Depreciation և Depreciation



                           Three months ended                                     Six months ended
                                June 30,                    Change                    June 30,                    Change
                           2020            2021       Amount         %           2020            2021       Amount        %
                               (in thousands, except percentages)                    (in thousands, except percentages)
Depreciation and
amortization            $      893       $  3,522     $ 2,629         294 %   $     1,467       $ 6,827     $ 5,360        365 %


                                       23
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Depreciation and amortization expenses increased by $2.6 million, or 294%, from
the three months ended June 30, 2020 to June 30, 2021. Amortization expense
increased by $2.5 million due to the amortization of acquired intangible assets
over their respective useful lives. Depreciation expense increased by $0.2
million due to the depreciation of equipment and facilities related to capital
equipment purchases.



Depreciation and amortization expenses increased by $5.4 million, or 365%, from
the six months ended June 30, 2020 to June 30, 2021. Amortization expense
increased by $4.9 million due to the amortization of acquired intangible assets
over their respective useful lives. Depreciation expense increased by $0.4
million due to the depreciation of equipment and facilities related to capital
equipment purchases.



Other (Income) Expense



                            Three months ended                                     Six months ended
                                 June 30,                     Change                   June 30,                   Change
                           2020            2021         Amount         %            2020          2021       Amount        %
                                 (in thousands, except percentages)        

(thousands, excluding interest) Other (income) expenses $ 293 $ (314) $ (607) -207% $ 1,294 $ (645) $ (1,939) -150%

Other (income) expense decreased by $0.6 million, or 207%, for the three months
ended June 30, 2020 to June 30, 2021. Other (income) expense for the three
months ended June 30, 2020 included $0.5 million in interest expense partly
offset by $0.2 million in financing fees. Other (income) expense for the three
months ended June 30, 2021 included interest income on cash balances of $0.4
million, and a foreign exchange gain of $0.8 million, offset by $0.8 million of
financing fees and contingent consideration.



Other (income) expense decreased by $1.9 million, or 150%, for the six months
ended June 30, 2020 to June 30, 2021. Other (income) expense for the six months
ended June 30, 2020 included $0.6 million in interest expense offset by $0.3
million in financing fees, and $0.9 million in foreign exchange losses. Other
(income) expense for the six months ended June 30, 2021 included interest income
on cash balances of $0.6 million and a foreign exchange gain of $0.3 million,
offset by $0.2 million of financing fees and contingent consideration.

Grants and Incentives



                           Three months ended                                     Six months ended
                                June 30,                    Change                    June 30,                    Change
                            2020           2021       Amount         %           2020            2021       Amount        %
                               (in thousands, except percentages)                    (in thousands, except percentages)
Grants and incentives   $     (7,850 )   $ (4,646 )   $ 3,204         -41 %   $   (8,880 )     $ (7,794 )   $ 1,086        -12 %




Grants and incentives decreased by $3.2 million, or 41%, from the three months
ended June 30, 2020 to June 30, 2021. This decrease was primarily driven by a
decrease in activity relating to research and development expenditures that are
eligible for the SIF project.



Grants and incentives decreased by $1.1 million, or 12%, from the six months
ended June 30, 2020 to June 30, 2021. This decrease was primarily driven by a
decrease in activity relating to research and development expenditures that are
eligible for the SIF project.

Liquidity և Capital resources


As of June 30, 2021, we had $792.6 million of cash and cash equivalents. The
increase of $198.5 million since December 31, 2020 was primarily from cash flow
from operations and driven by the receipt of accounts receivable relating to
royalties from bamlanivimab in the six months ended June 30, 2021.

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

                                       24

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plan, we believe that our existing cash and cash equivalents and anticipated
cash flows from operations, will be sufficient to meet our working capital and
capital expenditure needs over at least the next 24 months following the date of
this report.

Cash Flows

The table below summarizes our cash flows for the periods presented.



                                                            Six months ended
                                                                June 30,
                                                         2020              2021
                                                             (in thousands)
Net cash provided by (used in):
Operating activities                                 $      25,213     $     267,228
Investing activities                                        (7,713 )         (61,472 )
Financing activities                                        88,084            (6,618 )
Effect of exchange rate fluctuations on cash and
cash equivalents                                                 -              (683 )
Net increase in cash and cash equivalents            $     105,584     $     198,455




Operating activities

Net cash provided by operating activities increased from $25.2 million in the
six months ended June 30, 2020 to $267.2 million in the six months ended June
30, 2021. The increase resulted primarily from increased revenue from royalty
and licensing streams, satisfaction of clinical milestones under our partnership
with Eli Lilly, and continued discovery research activities, as well as upfront
payments from securing new multi-year, multi-target contracts with partners.

Investment activities


Net cash used by investing activities increased from $7.7 million in the six
months ended June 30, 2020 to $61.5 million in the six months ended June 30,
2021. Investing activities during the six months ended June 31, 2020 were
directly attributed to the purchase of intangible assets. Investing activities
during the six months ended June 31, 2021 were attributable to our investment in
real estate, particularly our land purchase related to our future GMP facility.
Additional investing activities during the period were related to facilities and
equipment expenditures in our Vancouver offices, offset by grant funding
received in the period.

Funding activities:


Net cash provided by financing activities was $88.1 million for the six months
ended June 30, 2020. This was due primarily to proceeds from our Series A2
financing. Net cash used by financing activities was $6.6 million for the six
months ended June 30, 2021 due to repayment of long-term debt and intangible
asset obligation, partly offset by proceeds from exercise of options for common
stock.

Accounting policy և significant judgments և 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, 2020. There have been no significant changes to these policies
during the six months ended June 30, 2021, except as referred to in Note 2 to
the condensed consolidated financial statements.

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