Small Ball Biotech

Most drug-development outfits spend years chasing the elusive billion-dollar blockbuster. ABCELLERA BIOLOGICS concentrates on base hits— a focus that has made founder Carl Hansen an overnight Covid multibillionaire.

Most drug-development outfits spend years chasing the elusive billion-dollar blockbuster. Not AbCellera Biologics founder Carl Hansen, now an overnight Covid multibillionaire.

EEvery time you’re infected by bacteria or a virus, your immune system works to create treatments to defeat it. Molecularly unique to each person, these tiny cells, or antibodies, either destroy these invaders or mark them for other killer cells to track down.

Carl Hansen, 46, is geeking out as he describes the process over Zoom. “We can make 100 trillion different antibodies,” he exclaims. “The immune system is spectacular beyond description.”

If that sounds more like a college professor than the CEO of a $13 billion (market cap) biotech company, there’s a reason: Hansen was one—until 2019, when he left to focus on Vancouver-based AbCellera Biologics, cofounded with fellow researchers from the University of British Columbia in 2012. “Universities are very good at testing new ideas and looking for which road might be effective,” he says.

The team’s academic bent has played out in an even more important way. Nearly all biotech startups develop a handful of treatment targets, then spend the next eight to 12 years developing those drugs, hoping to bring at least one of them to market. It’s not a sure thing—fewer than 10% of new drugs make it all the way. But when they do, they tend to be blockbusters: Seven of the 10 top-selling drugs in 2018 were antibody treatments, including AbbVie’s $19 billion (net revenue) immunosuppressive drug Humira and Merck’s cancer drug Keytruda, which generated $11.1 billion in 2019.

AbCellera takes a vastly different approach. Instead of trying to build a vertically integrated drug company, it is focused solely on the discovery process. That’s the portion of drug development that is earliest and most essential: It’s there that the most promising treatment prospects are selected, subjected to early laboratory tests and then moved through the pipeline.

But AbCellera, which raised $105 million from investors including Peter Thiel, the University of Minnesota and OrbiMed in May—at a valuation of $4.8 billion, according to PitchBook, just six months before going public—is not interested in seeing it through from beginning to end. Instead it offers what might be described as “drug discovery as a service.” It works with 90 outside businesses, including pharma giants Pfizer, Gilead and Novartis. Those companies ask the biotech to find antibodies that meet certain criteria. AbCellera then uses its proprietary technology to find prospects.

In its highest-profile success to date, AbCellera examined thousands of antibodies derived from the blood of people who had recovered from Covid-19 in order to identify the antibodies that did the best job fighting the virus. It then turned over the most promising antibodies to drug company Eli Lilly. Clinical trials of one of those antibodies, bamlanivimab, began in May—just 90 days after the partnership started. Tests found patients with mild or moderate cases had good results, and in November, the antibody received emergency-use authorization from the FDA.

The federal government has contracted to purchase 950,000 doses of the drug for $1.2 billion. Eli Lilly issued guidance in mid-December expecting up to $2 billion in revenue from Covid-19 therapeutics in 2021, the bulk of which will come from bamlanivimab; AbCellera, which booked $25 million through the end of September 2020, will earn estimated royalties of $270 million on those sales, according to Credit Suisse.

AbCellera is also looking to speed up the time it takes to develop its antibody therapies. The shorter time frame saves millions in development costs while enabling revenues to come in sooner than expected. “From a financial perspective, every year that you save is a huge opportunity cost for investors,” says Gal Munda, an analyst at Berenberg Capital Markets.

Hansen is now worth $3 billion, thanks to the company’s white-hot December IPO. Asked about his meteoric rise into the three-comma club, Hansen is low-key: “It feels just a little bit surreal.” He’s more articulate about the biotech’s success: “If this example of Covid shows one thing, to me, it’s the proof point of the business model and the technology.”