AbCellera cuts 10 per cent of staff as biotech slump hits Vancouver antibody developer

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AbCellera Biologics Inc. ABCL-Q has cut 10 per cent of its staff, joining a growing list of biotechnology companies that are reducing jobs as they face a prolonged sector slump.

The company cut 63 jobs, mostly in Vancouver where it is based, as it shifts its focus away from discovering antibody drugs for other pharmaceutical companies – it has 110 such programs under way with 42 partners – and toward developing its own treatments. Earlier this month, AbCellera revealed its first two such molecules: one for atopic dermatitis, and the other for an undisclosed metabolic and endocrine condition.

But with the biotechnology market in deep bear territory – AbCellera’s stock has shed two-thirds of its value in the past two years – the company decided to cut staff in response to “the quite bleak macroeconomic environment,” said chief executive officer Carl Hansen in an interview.

“We’re making sure we’re putting resources and people on things that will matter most to the business in the long run.”

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AbCellera is in “fantastic” financial condition, Mr. Hansen added, with more than US$1-billion in total available liquidity after a long period of investing in technology, people and facilities, and enough cash for three-plus years.

“We’re trying to build something pretty awesome here, and we need to make sure we have only things that really matter that are being resourced.” The last biotech downturn lasted six years until 2014, “and we’re arranging our plan that if that happens again, we’re masters of our fate.”

Bloom Burton analyst David Martin said that, given AbCellera’s shifting strategy, it “was probably overweight on discovery scientists. AbCellera is certainly not alone with layoffs in the biotech sector as it prioritizes programs that should be of the highest value.”

AbCellera had been on a rapid pace of growth, hiring more than 500 people since it went public nearly three years ago after rapidly discovering an antibody to treat hospitalized COVID-19 patients using its complex technology platform.

Development partner Eli Lilly & Co. got emergency authorization to take the drug and a follow-up treatment to market without having to undergo years of human trials, which netted about US$1-billion in sales royalties for AbCellera. Its IPO smashed records, bringing in more than US$550-million from investors, and its market capitalization after its first day of trading was US$15.7-billion – more than George Weston Ltd. and Imperial Oil Ltd. at the time.

The company is set to move into a new headquarters in Vancouver’s Mount Pleasant neighbourhood in March, consolidating its operations after taking up residence in five buildings in the area. Its advanced research facility in the city is part of a $700-million project that the federal and B.C. governments are supporting with $300-million in funding.

But investor interest has worn off because of the sector’s slump and the end of COVID-related revenue boom. Biotech companies typically wait a decade for drugs they develop to generate royalties; most drugs don’t make it, and most biotech companies either die, start over or are bought by pharma giants long before then. Mr. Hansen, meanwhile, remains determined to build AbCellera into Canada’s first homegrown pharmaceutical giant.

That ambitious project carries high risks and could take a decade to come to fruition if everything goes well. AbCellera’s numerous partnerships aren’t expected to yield royalties for years, and it plans to limit future partnerships to drugs where it can generate greater returns.

As for its own drugs, those would likely take years to get to market and require AbCellera to raise hundreds of millions of dollars apiece to advance them through research and development if they show promise. The few areas untouched by layoffs, Mr. Hansen noted, are more advanced areas, included manufacturing, preclinical and clinical development, where the company plans to continue hiring.

Mr. Hansen co-founded AbCellera 11 years ago, spinning it out of a cross-disciplinary lab at University of British Columbia where he taught. Its platform combines data science, protein engineering, machine learning, bioinformatics and genomics to rapidly test antibodies from humans or animals that develop an immune response to diseases, and to determine which could become drugs.

The company’s ability to unearth antibodies quicker and cheaper than conventional methods helped it land a contract in 2018 with the U.S. Defence Department’s Defense Advanced Research Projects Agency to explore rapid medical responses to pandemics after the H1N1 outbreak.

AbCellera was subsequently well positioned to show off its potential early in the COVID-19 pandemic, and made it an industrial champion for the federal government, which has committed more than $400-million in funding to the company.

Editor’s note: An earlier version of this story said the building of a manufacturing facility by Abcellera was part of a project supported by the federal and B.C. governments with $300-million in funding. In fact, the facility is not part of the project. This version has been corrected.