10-Q 1 abcl-10q_20220331.htm 10-Q abcl-10q_20220331.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-39781

 

AbCellera Biologics Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

British Columbia

Not Applicable

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

2215 Yukon Street

Vancouver, BC

V5Y 0A1

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (604) 559-9005

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common shares, no par value per share

 

ABCL

 

The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  

 

As of May 5, 2022, the registrant had  284,536,212 common shares, no par value per share, outstanding.

 

 

 


 

 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Income and Comprehensive Income

2

 

Condensed Consolidated Statements of Stockholders’ Equity

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

Item 4.

Controls and Procedures

23

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

24

Item 1A.

Risk Factors

24

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

61

Item 3.

Defaults Upon Senior Securities

61

Item 4.

Mine Safety Disclosures

61

Item 5.

Other Information

61

Item 6.

Exhibits

62

 

Signatures

63

 

 

i


 

 

Summary of the Material and Other Risks Associated with Our Business

Our business is subject to numerous material and other risks and uncertainties. You should carefully consider the following information about these risks, together with the other information appearing elsewhere in this Quarterly Report, including our financial statements and related notes hereto. The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations and future growth prospects. The risks and uncertainties described below may change over time and other risks and uncertainties, including those that we do not currently consider material, may impair our business. These risks include, but are not limited to, the following:

 

We have incurred losses in certain years since inception and we may not be able to generate sufficient revenue to maintain profitability.

 

Our quarterly and annual operating results have fluctuated significantly in the past and may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations.

 

Our commercial success depends on the quality of our antibody discovery platform and technological capabilities and their acceptance by new and existing partners in our market.

 

If we cannot maintain and expand current partnerships and agreements and enter new partnership agreements that generate discovery programs for antibodies, our business could be adversely affected.

 

In recent periods, we have depended on a limited number of partners for our revenue, the loss of any of which could have an adverse impact on our business.

 

Development of a biologic molecule is inherently uncertain, and it is possible that none of the drug candidates discovered using our antibody discovery platform that are further developed by our partners will receive marketing approval or become viable commercial products, on a timely basis or at all.

 

The failure of our partners to meet their contractual obligations to us could adversely affect our business.

 

We may be unable to manage our current and future growth effectively, which could make it difficult to execute on our business strategy.

 

We have invested, and expect to continue to invest, in research and development efforts that further enhance our antibody discovery platform. Such investments in technology are inherently risky and may affect our operating results. If the return on these investments is lower or develops more slowly than we expect, our revenue and operating results may suffer.

 

Our partners have significant discretion in determining when and whether to make announcements, if any, about the status of our partnerships, including about clinical developments and timelines for advancing collaborative programs with the antibodies that we have discovered, and the price of our common shares may decline as a result of announcements of unexpected results or developments.

 

Our partners may not achieve projected discovery and development milestones and other anticipated key events in the expected timelines or at all, which could have an adverse impact on our business and could cause the price of our common shares to decline.

 

The life sciences and biotech platform technology market is highly competitive, and if we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue, or sustain profitability.

 

Our business has been and may continue to be adversely affected by the COVID-19 pandemic.

 

The ongoing military action between Russia and Ukraine and related sanctions could adversely affect our business, financial condition, and patent administration.

 

Our success depends on our ability to protect our intellectual property.

 

If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.

 

Sales of a substantial number of our common shares in the public market could cause our share price to fall significantly, even if our business is doing well.

Investing in our common shares involves a high degree of risk. You should carefully consider the risks and uncertainties contained in Part II, Item 1A, Risk Factors, together with all other information in this Quarterly Report on Form 10-Q, including our consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our other filings with the Securities and Exchange Commission, or the SEC, before investing in our common stock. Any of the risk factors we describe below under Part II, Item 1A, Risk Factors, could adversely affect our business, financial condition or results of operations. The market price of our common stock could decline if one or more of these risks or uncertainties were to occur, which may cause you to lose all or part of the money you paid to buy our common shares. Additional risks that are currently unknown to us or that we currently believe to be immaterial may also impair our business. Certain statements below are forward-looking statements. See “Forward-Looking Information” in this Quarterly Report on Form 10-Q.

 

ii


 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

AbCellera Biologics Inc.

Condensed Consolidated Balance Sheets

(All figures in U.S. dollars. Amounts are expressed in thousands except share data)

(Unaudited)

 

 

 

December 31, 2021

 

 

March 31, 2022

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

476,142

 

 

$

545,718

 

Marketable securities

 

 

246,835

 

 

 

240,335

 

Total cash, cash equivalents, and marketable securities

 

 

722,977

 

 

 

786,053

 

Accounts and accrued receivable

 

 

160,576

 

 

 

334,403

 

Restricted cash

 

 

25,000

 

 

 

25,000

 

Other current assets

 

 

21,247

 

 

 

28,922

 

Total current assets

 

 

929,800

 

 

 

1,174,378

 

Long-term assets:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

111,616

 

 

 

122,049

 

Intangible assets, net

 

 

148,392

 

 

 

145,785

 

Goodwill

 

 

47,806

 

 

 

47,806

 

Investments in and loans to equity accounted investees

 

 

50,313

 

 

 

58,882

 

Other long-term assets

 

 

30,642

 

 

 

43,389

 

Total long-term assets

 

 

388,769

 

 

 

417,911

 

Total assets

 

$

1,318,569

 

 

$

1,592,289

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and other liabilities

 

$

32,017

 

 

$

25,717

 

Current portion of contingent consideration payable

 

 

22,934

 

 

 

27,499

 

Income taxes payable

 

 

35,683

 

 

 

105,648

 

Accrued royalties payable

 

 

22,506

 

 

 

45,364

 

Deferred revenue

 

 

7,536

 

 

 

9,190

 

Total current liabilities

 

 

120,676

 

 

 

213,418

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Operating lease liability

 

 

36,413

 

 

 

36,356

 

Deferred revenue and grant funding

 

 

60,758

 

 

 

64,151

 

Contingent consideration payable

 

 

35,886

 

 

 

30,623

 

Deferred tax liability

 

 

37,370

 

 

 

36,804

 

Other long-term liabilities

 

 

1,733

 

 

 

3,430

 

Total long-term liabilities

 

 

172,160

 

 

 

171,364

 

Total liabilities

 

 

292,836

 

 

 

384,782

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Common shares: no par value, unlimited authorized shares at December 31, 2021 and March 31, 2022: 283,257,104 and 284,521,181 shares issued and outstanding at December 31, 2021 and March 31, 2022, respectively

 

 

722,430

 

 

 

725,755

 

Additional paid-in capital

 

 

35,357

 

 

 

44,726

 

Accumulated other comprehensive income

 

 

280

 

 

 

787

 

Accumulated earnings

 

 

267,666

 

 

 

436,239

 

Total shareholders' equity

 

 

1,025,733

 

 

 

1,207,507

 

Total liabilities and shareholders' equity

 

$

1,318,569

 

 

$

1,592,289

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


 

AbCellera Biologics Inc.

Condensed Consolidated Statements of Income and Comprehensive Income

(All figures in U.S. dollars. Amounts are expressed in thousands except share and per share data)

(Unaudited)

 

 

 

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

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

1Exclusive of depreciation and amortization

2


 

 

AbCellera Biologics Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(All figures in U.S. dollars. Amounts are expressed in thousands except share data)

(Unaudited)

 

 

 

Common Shares

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Income

 

 

Equity

 

Balances as of December 31, 2021

 

 

283,257,104

 

 

$

722,430

 

 

$

35,357

 

 

$

267,666

 

 

$

280

 

 

$

1,025,733

 

Shares issued and restricted stock units ("RSUs") vested under stock option plan

 

 

1,264,077

 

 

 

3,325

 

 

 

(2,922

)

 

 

-

 

 

 

-

 

 

 

403

 

Stock-based compensation expense

 

 

-

 

 

 

-

 

 

 

12,291

 

 

 

-

 

 

 

-

 

 

 

12,291

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

507

 

 

 

507

 

Net earnings

 

 

-

 

 

 

-

 

 

 

-

 

 

 

168,573

 

 

 

-

 

 

 

168,573

 

Balances as of March 31, 2022

 

 

284,521,181

 

 

$

725,755

 

 

$

44,726

 

 

$

436,239

 

 

$

787

 

 

$

1,207,507

 

 

 

 

Common Shares

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Income

 

 

Equity

 

Balances as of December 31, 2020

 

 

269,497,768

 

 

$

710,387

 

 

$

5,919

 

 

$

114,202

 

 

$

-

 

 

$

830,508

 

Shares issued under stock option plan

 

 

1,428,162

 

 

 

752

 

 

 

(579

)

 

 

-

 

 

 

-

 

 

 

173

 

Stock-based compensation expense

 

 

-

 

 

 

-

 

 

 

4,021

 

 

 

-

 

 

 

-

 

 

 

4,021

 

Reclassification of liability classified options

 

 

-

 

 

 

-

 

 

 

5,201

 

 

 

-

 

 

 

-

 

 

 

5,201

 

Net earnings

 

 

-

 

 

 

-

 

 

 

-

 

 

 

117,221

 

 

 

-

 

 

 

117,221

 

Balances as of March 31, 2021

 

 

270,925,930

 

 

$

711,139

 

 

$

14,562

 

 

$

231,423

 

 

$

-

 

 

$

957,124

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

AbCellera Biologics Inc.

Condensed Consolidated Statements of Cash Flows

(Expressed in thousands of U.S. dollars)

(Unaudited)

 

 

 

Three months ended March 31,

 

 

 

2021

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

117,221

 

 

$

168,573

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Depreciation of property and equipment

 

 

840

 

 

 

1,391

 

Amortization of intangible assets

 

 

2,465

 

 

 

2,606

 

Amortization of operating lease right-of-use assets

 

 

661

 

 

 

976

 

Stock-based compensation

 

 

5,427

 

 

 

12,291

 

Other

 

 

432

 

 

 

(592

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts and accrued research fees receivable

 

 

(30,073

)

 

 

(8,751

)

Accrued royalties receivable

 

 

26,861

 

 

 

(167,914

)

Income taxes payable

 

 

(6,123

)

 

 

69,965

 

Accounts payable and accrued liabilities

 

 

(5,194

)

 

 

751

 

Deferred revenue

 

 

6,086

 

 

 

941

 

Accrued royalties payable

 

 

(7,134

)

 

 

22,857

 

Deferred grant revenue

 

 

2,468

 

 

 

4,682

 

Other assets

 

 

(4,392

)

 

 

(7,557

)

Net cash provided by operating activities

 

 

109,545

 

 

 

100,219

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(3,644

)

 

 

(14,495

)

Purchase of marketable securities

 

 

-

 

 

 

(51,774

)

Proceeds from marketable securities

 

 

-

 

 

 

57,294

 

Receipt of grant funding

 

 

-

 

 

 

2,596

 

Long-term investments and other assets

 

 

-

 

 

 

(11,657

)

Investment in and loans to equity accounted investees

 

 

(12,195

)

 

 

(8,335

)

Net cash used in investing activities

 

 

(15,839

)

 

 

(26,371

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Repayment of long-term debt and contingent consideration

 

 

(1,716

)

 

 

(72

)

Proceeds from long-term debt and issuance of common shares pursuant to exercise of stock options

 

 

173

 

 

 

1,941

 

Payment of liability for in-licensing agreement

 

 

-

 

 

 

(5,000

)

Net cash provided by (used in) financing activities

 

 

(1,543

)

 

 

(3,131

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(484

)

 

 

(204

)

Increase in cash and cash equivalents

 

 

91,679

 

 

 

70,513

 

Cash and cash equivalents and restricted cash, beginning of period

 

 

594,116

 

 

 

501,142

 

Cash and cash equivalents and restricted cash, end of period

 

$

685,795

 

 

$

571,655

 

Restricted cash included in other long-term assets

 

 

-

 

 

 

(937

)

Total cash, cash equivalents and restricted cash shown in the statement of cash flows

 

$

685,795

 

 

$

570,718

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

 

 

Property plant and equipment in accounts payable

 

 

423

 

 

 

2,353

 

Right-of-use assets obtained in exchange for operating lease obligation

 

 

14,188

 

 

 

658

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

 

AbCellera Biologics Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(All figures in U.S. dollars. Amounts are expressed in thousands except share data)

(Unaudited)

1. Nature of operations

AbCellera Biologics Inc.’s (the “Company”) mission is to improve health with technologies that transform the way that antibody-based therapies are discovered. The Company aims to become the centralized operating system for next generation antibody discovery. The Company’s full-stack, AI-powered antibody discovery platform searches and analyzes the database of natural immune systems to find antibodies that can be developed as drugs. The Company believes its technology increases the speed and the probability of success of therapeutic antibody discovery, including enabling discovery against targets that may otherwise be intractable. The Company forges partnerships with drug developers of all sizes, from large cap pharmaceutical to small biotechnology companies. 

2. Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC for interim financial information. Accordingly, these financial statements do not include all the information and footnotes required for complete financial statements and should be read in conjunction with the audited consolidated financial statements of the Company and the accompanying notes thereto for the year ended December 31, 2021.

These unaudited interim condensed consolidated financial statements reflect all adjustments, consisting solely of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods presented. The results of operations for the three months ended March 31, 2021 and 2022 are not necessarily indicative of results that can be expected for a full year. These unaudited interim condensed consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the year ended December 31, 2021.

All amounts expressed in these condensed consolidated financial statements of the Company and the accompanying notes thereto are expressed in thousands of U.S. dollars, except for share data and where otherwise indicated. References to “$” are to U.S. dollars and references to “C$” and “CAD” are to Canadian dollars.

3. Significant accounting policies

Use of estimates

The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Areas of significant estimates include, but are not limited to, revenue recognition including evaluating whether contractual obligations represent distinct performance obligations, determining whether an option for additional goods or services represents a material right, allocating the transaction price to performance obligations within a contract, and assessing the recognition and possible future reversal of variable consideration, the fair value of acquired intangible assets, contingent consideration payable, and the estimates of stock-based compensation awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could significantly differ from those estimates.

COVID-19 Pandemic

With the global spread of the ongoing COVID-19 pandemic, the Company has implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on its employees and its business. The Company has taken measures to secure its research and development activities, while work in its laboratories and facilities has been re-organized to reduce risk of COVID-19 transmission. Given the global economic impact, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic, the Company’s business, financial condition, and results of operations could be materially adversely affected. The Company continues to closely monitor the COVID-19 pandemic as it evolves its business continuity plans and response strategy. As of the date of these condensed consolidated financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from these estimates, and any such differences may be material to the Company’s condensed consolidated financial statements.

5


 

Recent accounting pronouncements not yet adopted

The Company has reviewed recent accounting pronouncements and concluded that they are either not applicable to the Company or that there was no material impact or no material impact is expected in the condensed consolidated financial statements as a result of future adoption.

4. Net earnings per share

Basic and diluted net earnings per share attributable to common shareholders was calculated as follows:

 

 

 

Three months ended March 31,

 

 

 

2021

 

 

2022

 

Basic earnings per share

 

 

 

 

 

 

 

 

Net earnings attributable to common shareholders - basic

 

$

117,221

 

 

$

168,573

 

Weighted-average common shares outstanding - basic

 

 

269,697,212

 

 

 

283,895,020

 

Net earnings per share attributable to common shareholders - basic

 

$

0.43

 

 

$

0.59

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

 

 

 

 

 

 

 

Net earnings attributable to common shareholders - diluted

 

$

117,221

 

 

$

168,573

 

Weighted-average common shares outstanding - basic

 

 

269,697,212

 

 

 

283,895,020

 

Stock options and RSUs

 

 

50,585,535

 

 

 

27,586,997

 

Weighted-average common shares outstanding - diluted

 

 

320,282,747

 

 

 

311,482,017

 

Net earnings per share attributable to common shareholders - diluted

 

$

0.37

 

 

$

0.54

 

 

The Company excluded nil and 2,974,052 potential common shares based on amounts outstanding as of March 31, 2021 and March 31, 2022, respectively, from the computation of diluted net earnings per share attributable to common shareholders because including them would have had an anti-dilutive effect.

 

5. Property and equipment, net

Property and equipment, net consisted of the following:

 

 

 

December 31, 2021

 

 

March 31, 2022

 

Computers

 

$

7,843

 

 

$

8,356

 

Land

 

 

33,044

 

 

 

33,044

 

Laboratory equipment

 

 

18,805

 

 

 

25,822

 

Leasehold improvements

 

 

23,962

 

 

 

28,568

 

Operating lease right-of-use assets

 

 

37,788

 

 

 

37,469

 

Property and equipment

 

 

121,442

 

 

 

133,259

 

Less accumulated depreciation

 

 

(9,826

)

 

 

(11,210

)

Property and equipment, net

 

$

111,616

 

 

$

122,049

 

 

As of December 31, 2021 and March 31, 2022, leasehold improvements include tenant improvements in progress that have not commenced depreciation in the amount of $19.8 million and $6.6 million, respectively. Depreciation expense on property and equipment for the three months ended March 31, 2021, and 2022 was $0.8 million and $1.4 million, respectively.

 

Subsequent to March 31, 2022, the Company deposited CAD $25.0 million ($20.0 million) in trust to acquire land related to the future GMP facility, subject to customary closing conditions.

 

6


 

 

6. Intangible assets

 

Intangible assets consisted of the following:

 

 

 

March 31, 2022

 

 

 

Gross

carrying

amount

 

 

Accumulated

amortization

 

 

Net book

value

 

License

 

$

35,873

 

 

$

11,942

 

 

$

23,931

 

Technology

 

 

52,700

 

 

 

3,246

 

 

 

49,454

 

IPR&D

 

 

72,400

 

 

 

-

 

 

 

72,400

 

 

 

$

160,973

 

 

$

15,188

 

 

$

145,785

 

 

As of March 31, 2022, amortization expense on intangible assets is estimated to be as follows for each of the next five years:

 

 

 

Amortization

Expense

 

2022

 

$

10,425

 

2023

 

 

10,399

 

2024

 

 

4,041

 

2025

 

 

4,041

 

2026

 

 

4,041

 

 

 

$

32,947

 

 

 

7. Investments in and loans to equity accounted investees

The Company has entered into two joint ventures as part of the construction of future office and laboratory headquarters. During 2020, the Company entered into a joint venture with Dayhu (Dayhu JV). As of March 31, 2022, the equity investment balance of $19.7 million represents the contributions made since inception. In March, 2021, the Company entered into the Beedie joint venture (Beedie JV). To date the equity investment balance of $14.7 million represents contributions made since inception into the Beedie JV. To date, the Company has recorded immaterial amounts of its proportionate income or loss with respect to both ventures.

In March, 2021, the Company made a commitment of up to CAD $82.7 million ($61.5 million) to the Dayhu JV to fund the construction at a rate referenced to an applicable Canadian bank prime rate plus 0.6%, and repayment on the earlier of thirty months from the date of initial advancement and September 1, 2023, or upon the trigger of certain liquidity events as defined in the agreement. The loan is secured by the underlying land and future assets of the joint venture. As of December 31, 2021, and March 31, 2022, the outstanding related party loan balance was $18.0 million and $24.4 million, respectively, to the joint venture.

8. Accounts payable and other liabilities

Accounts payable and other liabilities consisted of the following:

 

 

 

December 31, 2021

 

 

March 31, 2022

 

Accounts payable and accrued liabilities

 

$

14,924

 

 

$

10,352

 

Liability for in-licensing agreement

 

 

4,933

 

 

 

-

 

Operating lease liability

 

 

3,652

 

 

 

3,920

 

Payroll liabilities

 

 

4,035

 

 

 

6,395

 

Current portion of deferred grant funding

 

 

4,473

 

 

 

5,050

 

Total accounts payable and other liabilities

 

$

32,017

 

 

$

25,717

 

 

 

7


 

 

9. Shareholders’ equity

Sixth Amended and Restated Stock Option Plan:

The Company maintains the AbCellera Biologics Inc. Sixth Amended and Restated Stock Option Plan and our Pre-IPO Plan. Any awards granted under the Pre-IPO Plan will remain subject to the terms of our Pre-IPO Plan and applicable award agreements.

2020 Share Option and Incentive Plan:

Our 2020 Share Option and Incentive Plan, or 2020 Plan, was approved by our board of directors on November 18, 2020, and approved by our shareholders on December 1, 2020.

As of March 31, 2022, the number of shares available for issuance under the 2020 Plan was 24,796,663, which includes awards granted and outstanding under the Pre-IPO Plan that are forfeited after December 10, 2020.

The following table summarizes the Company’s stock option activity under the Pre-IPO Plan since December 31, 2021:

 

 

 

Number of

Shares

 

 

Weighted-

Average Exercise

Price

 

Outstanding as of December 31, 2021

 

 

39,206,307

 

 

$

0.86

 

Granted

 

 

-

 

 

 

-

 

Exercised

 

 

(1,220,690

)

 

 

0.33

 

Forfeited

 

 

(451,917

)

 

 

0.27

 

Outstanding as of March 31, 2022

 

 

37,533,700

 

 

 

0.89

 

Options exercisable as of March 31, 2022

 

 

19,832,636

 

 

$

0.58

 

 

The following table summarizes the Company’s stock option activity under the 2020 Plan since December 31, 2021:

 

 

 

Number of

Shares

 

 

Weighted-

Average Exercise

Price

 

Outstanding as of December 31, 2021

 

 

5,284,347

 

 

$

19.19

 

Granted

 

 

3,089,624

 

 

 

11.29

 

Exercised

 

 

-

 

 

 

-

 

Forfeited

 

 

(54,134

)

 

 

18.61

 

Outstanding as of March 31, 2022

 

 

8,319,837

 

 

$

16.26

 

Options exercisable as of March 31, 2022

 

 

461,055

 

 

 

25.90

 

 

As part of the 2020 Plan, restricted share units (RSUs) were available to be granted and are subject to annual vesting. The following table summarizes the Company’s RSU activity under the 2020 Plan since December 31, 2021: