AbCellera Biologics (ABCL) Q4 2024 Earnings Call Transcript

AbCellera Biologics (ABCL)
Q4 2024 Earnings Call
Feb 27, 2025, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to AbCellera’s full-year 2024 business update conference call. My name is Tamia, and I will facilitate the audio portion of today’s interactive broadcast. [Operator instructions] At this time, I would like to turn the call over to Tryn Stimart, AbCellera’s chief legal and compliance officer. You may proceed.

Tryn Stimart — Chief Legal and Compliance Officer

Thank you. Hello, everyone. Thank you for joining us for AbCellera’s 2024 full-year earnings call. I’m Tryn Stimart, AbCellera’s chief legal and compliance officer.

Dr. Carl Hansen, AbCellera’s president and CEO; and Andrew Booth, AbCellera’s CFO, are joining me on today’s call. During this call, we anticipate making projections and forward-looking statements based on our current expectations and according to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual results could differ materially due to several factors outlined in our latest Form 10-K and subsequent Forms 10-Q and 8-K filed with the Securities and Exchange Commission.

AbCellera is not obligated to update any forward-looking statements, whether due to new information, future events, or otherwise. Our presentation today, including our earnings press release and SEC filings issued earlier today are available on our Investor Relations website. The information we provide about our pipeline is for the benefit of the investment community and is not intended to be promotional. As we transition to our prepared remarks, please note that all dollars referred to during the call are U.S.

dollars. After our prepared remarks, we will open the lines for questions and answers. Now I’ll turn the call over to Carl.

Carl Hansen — Chief Executive Officer

Thanks, Tim. And thank you, everyone, for joining us today. Today, I’ll review the progress we made in 2024 and discuss our priorities for 2025. 2024 was a year of significant change at AbCellera.

In late 2023, we decided to transition from a platform and partnership company to a clinical stage biotech. Accordingly, over the past 18 months, our focus has been on building our internal pipeline and completing investments in our platform, while at the same time, improving efficiency and maintaining a strong cash position. Through the year, we achieved the following milestones. We advanced two programs, ABCL635 and ABCL575, which are now positioned for CTA filings in Q2 of this year.

Behind these, we are advancing a robust pipeline of internal programs in discovery. We completed our move into our new headquarters and are on track to bring our clinical manufacturing facility online in 2025. Importantly, we expect significant investments in our platform and facilities to be complete in the first half of this year. We are reducing the new discovery partnership activities.

In the first part of 2024, we engaged in two new partnerships and expanded one existing collaboration. And finally, we closed the year with over $800 million in available liquidity and are in a strong position to execute on our strategy. As we enter 2025, I believe we are in a unique position. We are nearing completion of a multiyear build of our facilities and workforce.

We have a demonstrated competitive advantage in the creation of therapeutic antibodies, and we have arrived here with over $800 million in liquidity. Over the coming years, we will use our capital and our technology to create and develop a pipeline of wholly owned and co-owned drug development programs. From here, the most important strategic question is, how do we allocate our time and our capital to build our pipeline? How do we choose which programs to work on? Where do we double down? Where do we stop investing? And when do we partner? In choosing programs, we are explicitly indication-agnostic. We’re open to all opportunities where we perceive an unmet need and an outsized chance of succeeding in the clinic and in the market.

We assess this by answering four central questions. First, do we have conviction in the science? Second, do we see a large unmet need and commercial opportunity? Third, is there a case for strong differentiation so we can win in the market? And lastly, is there a clear development path? At this stage, we are particularly focused on finding those opportunities where, for a limited amount of cost and time, we can get proof of concept and build conviction in our programs. In a perfect world, we would build a portfolio where every program scores highly on all of these different criteria. The reality is that every program has its strengths and its weaknesses, and these need to be weighed together.

With that framework in mind, I will share how we think about our first two programs, ABCL635 and ABCL575. ABCL635, which is our lead program, is for an undisclosed target and indication in the area of metabolic and endocrine conditions. This is a program that we are particularly excited about because it scores well across all four dimensions. First, from the pathway side, this is a target that has been well-validated both in preclinical work and in the clinic with small molecules.

Accordingly, we believe that if we can achieve sufficient target engagement, it is likely to be both efficacious and safe. Second, we believe that this program would address an important unmet need with a significant commercial opportunity. In our estimation, there is a total addressable market of at least $2 billion in annual sales. In terms of differentiation, ABCL635 has the potential to be a first-in-class antibody therapy.

We believe there is potential for differentiation in terms of the safety profile, and we believe that a product that is a once-monthly subcutaneous injection will be preferred by patients. And lastly, this is a program where a clear development path and well-established biomarkers exist. At the end of our Phase 1 trial, we expect to have a clear view as to whether or not we are engaging the target and whether it’s likely to work as a therapeutic. We plan to disclose the target and the indication for ABCL635 at our next earnings call.

Our second program, ABCL575, is a nondepleting OX40 ligand antagonist. This is a program following amlitelimab, which is a molecule that’s now in Phase 3 by Sanofi in atopic dermatitis and is also being evaluated in Phase 2 for several other indications. In Phase 2, amlitelimab has demonstrated efficacy that was comparable to Dupixent in atopic dermatitis at a clean safety profile and a longer duration, albeit with a slower time to the onset of that effect. With this precedent, we have high conviction that ABCL575 will also prove to be efficacious and safe.

There is clearly a large commercial opportunity here. Atopic dermatitis is already north of a $10 billion market with biologic penetration in the single-digit percentage range for the patient group. We also know that for Dupixent, there’s approximately a 20% of patients that discontinue. So that even as a second-line therapy, this represents an attractive commercial opportunity.

Although there is also lebrikizumab from Lilly, lebri targets the IL-13 pathway and therefore, has nearly complete overlap with Dupixent’s mechanism of action. For this reason, for patients that proceed to second line, having a distinct option like an OX40 ligand antagonist is attractive. Beyond atopic dermatitis, there’s a good case to be made for the development of OX40 ligand antagonist across many autoimmune conditions. As I mentioned, amlitelimab is currently being evaluated for celiac disease, asthma, HS, alopecia, and others.

We view success in these trials as potential upside that support the proposition that OX40 ligand will emerge as a dominant class in treating autoimmune conditions. As compared to amlitelimab, the main differentiation thesis for ABCL575 is a combination of high potency and excellent biophysical properties, making it amenable to a high concentration formulation and an Fc that is engineered with a YTE mutation to provide extended half-life that supports less frequent dosing. We view this as a modest case for differentiation, but one that could prove more or less important depending on what happens in ongoing trials with amlitelimab and the profile of other early stage OX40 ligand antagonists that are currently in late preclinical or early clinical development. From a development perspective, there is a clear path, and we expect to have a CPA submitted in Q2 of 2025.

We expect the first readout for safety and PK in 2026, which is at the same time as ABCL635. In summary, we view ABCL575 as a program with low scientific risk and a large potential market opportunity across multiple autoimmune indications but a program with risks associated with being in a competitive space with modest differentiation. With ABCL635 and ABCL575 on track for entry into the clinic in 2025, we expect to complete our transition from a preclinical platform and partnership company to a clinical stage biotech. Behind these programs, we have a robust portfolio of more than 20 preclinical programs that we view as having the potential to become highly differentiated assets.

As we focus our activities on our pipeline, we are reducing our new partnering activities. In the first half of 2024, we added two additional partnerships with Biogen and with ArrowMark and Viking and expanded our collaboration with Lilly. Subsequent to the close of Q4, we entered into our first significant partnership based on our TCE platform with AbbVie, who we first began working with at the end of 2022. We see our TCE platform as a source for internal programs and as a basis for future partnership activities.

And accordingly, we will continue to seek collaborations in this area. Looking to 2025, we are focused on entering the clinic and bringing our manufacturing capabilities online. Our priorities for the year are: first, to initiate Phase 1 clinical trials for ABCL635 and ABCL575; second, to nominate additional development candidates for CT-enabling studies; third, to complete platform investments by the end of the second quarter; and fourth, to start activities in our new clinical manufacturing facility. In terms of key milestones, we expect to see the following to occur over the next 18 to 24 months.

CPAs and clinical starts in 2025; our first two clinical readouts in 2026; and the election of, on average, two additional development candidates per year. And with that, I’ll hand over to Andrew to discuss our financials. Andrew?

Andrew Booth — Chief Financial Officer

Thanks, Carl. As Carl pointed out, AbCellera continues to be in a strong liquidity position with approximately $650 million in cash and equivalents and with roughly $190 million in available committed government funding to execute on our strategy. In 2024, we continue to execute on our plans, shifting our efforts toward internal programs and to completing our CMC and GMP investments. Looking at our key business metrics.

In the fourth quarter, we started work on partner-initiated program, which takes us to a cumulative total of 96 programs with downstream participation. In 2024, we saw our partner Abdera advance its lead molecule, ABD147, into Phase 1 clinical trials. And in addition, two new molecules developed under a Trianni license, GigaGen’s GIGA-564, and an undisclosed molecule were brought into the clinic. That brings us to a cumulative total of 16 molecules to have reached the clinic.

As we have stated previously, we view our growing list of progressing molecules in the clinic as specific examples of our near and midterm potential revenue from downstream milestone fees and royalty payments in the longer term. As we do annually, we’ll take a closer look at the progression of those 96 partner-initiated programs with downstream participation. As of December 31, we were still actively leading or co-leading the work on 14 of these programs. For 76 programs, we have successfully completed the agreed scope of work and have transferred the resulting antibody sequences and data to our partners for evaluation and further development under their leadership.

To the best of our knowledge, our partners are actively progressing 37 of those 76 programs. Of the 51 programs that are actively progressing, we believe that 42 are in late-stage discovery, 5 in preclinical development, and 4 have reached clinical development. Overall, we view the progress of the molecules we have discovered in our partners’ hands positively, and the attrition is consistent with our expectations. Over half of all programs with downstream participation that we have started are currently still progressing.

We look forward to more molecules from our programs reaching the clinic over time, and we will continue to report on these progressions to the clinic on a quarterly basis. Looking more broadly across the program starts in both our partner-initiated portfolio as well as our AbCellera-initiated internal programs, we see significant diversification across therapeutic indications. Of our 96 partner-initiated programs with downstreams, the majority are in oncology, neurology, immunology, broadly reflecting the activity in the industry. As of December 2024, we also have 27 AbCellera-initiated programs, up from the 19 at the beginning of the year, and all of the AbCellera-initiated programs are in human health.

It is from this set of programs that we aim to advance on average, two programs per year into CTA-enabling studies. Turning to revenue and expenses. Revenue for the year was almost $29 million, mostly driven by research fees relating to work on partnered programs. This compares to revenue of approximately $38 million in 2023.

We expect research fee revenue to trend lower as we are increasingly focused on internal and co-development programs. Our research and development expenses for the year were approximately $167 million, $8 million less than the previous year. This expense is driven by ongoing program execution, continuing platform development and our increasing investment in our internal programs. The overall decrease from the prior year reflects a specific onetime payment of approximately $32 million related to investment in our internal programs that we made in 2023.

In sales and marketing, our expenses for 2024 were approximately $13 million, a small reduction relative to the previous year. And in general and administration, expenses were approximately $73 million compared to roughly $61 million in 2023, with the increase largely driven by expenses related to the defense of our intellectual property. Looking at earnings, we are reporting a net loss of roughly $163 million for the year compared to a loss of about $146 million the previous year. This year’s loss includes noncash impairment charges for in-process R&D of approximately $47 million, net of their deferred tax impact.

In terms of earnings per share, this year’s result works out to a loss of $0.55 per share on a basic and diluted basis. Turning to cash flows. Operating activities for 2024 used approximately $110 million of cash and equivalents. Excluding investments in marketable securities, investment activities amounted to net $51 million, including just over $78 million invested in property, plant, and equipment, driven by our ongoing work to establish CMC and GMP manufacturing capabilities.

The investments in PP&E were partially offset by government contributions and the cash proceeds from the sale of our stake in Invetx during the year. We expect our PP&E investments to continue in the first half of 2025 and be substantially complete by midyear. As a part of our treasury strategy, we have nearly $470 million invested in short-term marketable securities. Our investment activities for the year included approximately $170 million net decrease in these holdings.

Altogether, we finished the year with over $650 million of cash, cash equivalents, and marketable securities. And as a reminder, we have received commitments for funding for our GMP facility and for the advancement of our internal pipeline from the Government of Canada’s Strategic Innovation Fund and the government of British Columbia. This available capital does not show up on our balance sheet. And with over $650 million in cash and equivalents and the unused portion of our secured government funding, we have approximately $840 million in total available liquidity to execute on our strategy.

For 2025, we expect cash usage for operating activities to be similar to 2024, and we would expect investments in PP&E to be approximately half of what we spent in 2024 and weighted toward the first half of the year as we complete our investments in CMC and GMP capabilities. The cash used in 2025 will prioritize advancing our two lead programs to the clinic, building the preclinical pipeline, and completing our investments in an integrated CMC/GMP capabilities. As previously communicated, the new manufacturing facility is scheduled to come online at the end of 2025. With respect to our overall operating expenditures, our capital needs are very manageable, and we continue to believe that we have sufficient liquidity to fund well beyond the next 3 years of increasing pipeline investments.

And with that, we will be happy to take any questions. Operator?

Questions & Answers:

Operator

Thank you. We will now begin the Q&A session [Operator instructions] The first question comes from Stephen Willey with Stifel. You may proceed.

Steve Willey — Stifel Financial Corp. — Analyst

Yeah. Good afternoon. Thanks for taking my questions, and I appreciate the additional clarity around some of the metrics in the slide deck today. Maybe just a question for Carl.

You talked about being indication agnostic. And I guess I appreciate the concept there. But how do you think about the longer-term competencies that you’re gonna need to bring into the organization to effectively design and execute clinical trials across multiple different disease areas?

Carl Hansen — Chief Executive Officer

Thanks, Steve. Great question. Yes. So we are explicitly indication agnostic.

Obviously, the reason for that is that it is a nontrivial thing to find an attractive opportunity for drug development, and we wanna keep our aperture broad, and we have a platform that can respond quite broadly across antibodies, both in terms of targets and modalities. So for that reason, we’re looking for a winner, and we’re looking broadly to find programs where we have really high conviction. At this point, we have our first two programs that are moving into clinical development. As part of that, over the past year, we have made significant investments in building up translational science and the clinical development teams that are now in place to support those, and so we’re building that in a manner that is on time for the programs and driven by the programs.

And I do expect that that’s gonna be the case as we move forward. So what you will see in terms of hiring and recruitment from AbCellera will be heavy on the back end of the company, looking at development and clinical development, and the areas in which we need to build are gonna be motivated by where we see the best opportunities as the programs progress. And so it’s clear you need the expertise, and we’re confident we’ll be able to bring it in on time. But there’s work to be done there, both in terms of figuring out which are the best programs and then getting those teams in place.

Steve Willey — Stifel Financial Corp. — Analyst

Understood. And then congrats on getting the AbbVie collaboration done on the TCE side. Is there a finite number of candidates that are — that’s contemplated under that collaboration? And maybe second to that, I think you talked about seeking new partnerships on the TCE side. I know there’s been a lot of chatter about business development that’s happening in China right now and the headwinds that, that might be posing to the sector itself.

Are you seeing any kind of those headwinds as you’re engaging with partners and discussions?

Carl Hansen — Chief Executive Officer

Great questions. First, at the highest level, we are confident in the capabilities of the TC platform that’s been maturing. So we feel we’re very well positioned. And we are increasingly enthusiastic based not just on internal results, but also on what’s happening in the market broadly in the space of TCEs.

So I think I’ve said it before, but the activity is clearly heating up, and that’s being driven by some pretty impressive clinical results that show that you can translate some of the success from blood cancers into solid tumors. So we feel we’re well-positioned for that. And the collaboration with AbbVie for us is a terrific first collaboration where we’ve got a meaningful TCE deal, and we’re working together on multiple but a small number of targets. And with them, we’re excited to explore what we think is some very promising scientific directions for TCEs that we think are gonna be important.

To the second part of your question about the increasing competitive dynamic coming from China, so we’re certainly seeing that. Obviously, that’s been a big deal in the CD19, CD3 space as there’s been several transactions there. For the most part of our — for the most part, our portfolio, speaking broadly, not just restricted to TCE, is emphasizing highly differentiated first-in-class assets. And so compared to some other peers, I believe that our portfolio is likely quite robust to that dynamic.

You don’t know what you don’t know, but I’d be surprised if for many of these programs, we saw a lot of competition. There’s always gonna be some, but a lot of competition coming from China or elsewhere. So we’re watching that carefully. But in the end, the best you can do is find the good science and make sure you’ve got molecules that toe-to-toe stand up against whatever shows up from other players.

Steve Willey — Stifel Financial Corp. — Analyst

All right. Thanks for taking the questions.

Operator

Thank you. The next question comes from Andrea Tan with Goldman Sachs. You may proceed.

Sonia Gupta — Goldman Sachs — Analyst

This is Sonia on for Andrea. Thanks for taking my questions. Two from us, please. First, could you share any more color on the attrition rate for the partner-initiated programs? And how should we expect that to trend on the forward? And then similarly, what drove the decision to reduce the number of partnerships you’re pursuing? And how should we think about the longer-term impact on new program starts?

Andrew Booth — Chief Financial Officer

It’s Andrew here. I’ll answer your first question. On the attrition rate for the partnered programs, those are — so as I explained in my prepared remarks there, those are what we’ve seen once we’ve handed back the scope of work to our partners. And there’s gonna be more details in the 10-K, very similar to the same disclosure that we had at this time last year of the partner — of those programs that we know are still being actively worked on by our partners.

We don’t disclose which of the ones are — the identity of the partner or the identity of the target until they would hit the clinic, and then you would expect to see more details on any one of those partnerships once they arrive at the clinic.

Carl Hansen — Chief Executive Officer

And Carl here, I’ll take the second part of the question. So in September of 2023, we made a clear decision to transition from a partnership and platform model to being a clinical stage biotech. That is something that we have done successfully and that we will see come to fruition in Q2 and Q3 of this year as we get our first two CTAs submitted and ultimately get into clinical development. The rationale for simultaneously ramping down the large majority of the partnership business defined as we were running it, let’s say, back in 2020, is that you need to make decisions in priority as to where you put your time and attention and your money.

And we don’t believe that you can walk both those roads simultaneously. So making a decision to be a clinical stage biotech means putting your focus on that objective. Now the one area where we still remain active in partnering and where I think there is some real potential to push forward the science to get interesting programs and possibly to generate significant cash that would help the business is on the TCE front. The deal with AbbVie is in line with that, and we will continue to look for such opportunities going forward.

I’ll also just add that while we are backing away from discovery style partnership businesses, we do remain active in partnering or collaborating with companies where we see an opportunity to bring technologies together, and we think that that can help put some interesting assets into our pipeline. So our recent collaboration would be the one we did with Prelude, where we’re working with them to bring forward a new modality that combines their small molecule chemistry with our antibody expertise. In those cases, we will evaluate those based on the criteria that I laid out. Do we like the science? Do we think there’s an unmet need and market opportunity? Can we be differentiated? And do we like the development path? And if that looks good and we find good synergy with a partner, then you’ll see us doing those, but that will be on an opportunistic basis.

Sonia Gupta — Goldman Sachs — Analyst

That’s helpful. Thank you.

Operator

Our next question comes from Steve Dechert with KeyBanc. You may proceed.

Steve Dechert — KeyBanc Capital Markets — Analyst

Hey, guys. Thanks for taking our questions. I was hoping to get some more background on how the partnership with AbbVie came together. I know you guys were prudent with selecting who you wanna partner with on your T cell engager platform.

Thank you.

Carl Hansen — Chief Executive Officer

I can take that one. So the backdrop of this is that now for 2 or 3 years, we have been investing significantly to build our TCE platform, which is comprised of a large and diverse and well-optimized set of CD3 molecules, our bispecific platform, a set of high-throughput assays for evaluating those and increasingly an understanding of the biology that helps direct where you wanna bring those molecules going forward. So we feel really we’re in a terrific spot. And in my view, we have certainly one of the best, if not the best, toolkit for designing TCEs, provided that you’ve got a good thesis for where you’re gonna go in terms of indication and what you want that profile to look like.

So the partnering objective was to make a significant transaction with a large and enabled partner that has a commitment to really put some time and money into that space. We have a previous collaboration with AbbVie. So we’ve got an excellent working relationship and have been productively working on the initial programs. That, of course, was the basis to initiate a collaboration around TCE.

And with that, we’ve come to a deal that we’re very happy with, one that essentially meets the objective that we set some time ago to have a first transaction in TCE and sets the stage for what we think could be a much bigger and deeper collaboration either with AbbVie or with other partners.

Steve Dechert — KeyBanc Capital Markets — Analyst

Great. Thank you.

Operator

Thank you. The following comes from Jacqueline Kisa with TD Securities. You may proceed.

Jackie Kisa — TD Securities — Analyst

Hi. This is Jackie. Thanks for taking the question. Maybe shifting back toward the geopolitical side.

Are you seeing any exposure to tariffs from the Canadian side? And how much, if any, impact do you expect this could have on customer conversations, especially if these tariffs continue to be at play from this administration?

Andrew Booth — Chief Financial Officer

This is Andrew. I’m happy to take that. In terms of the retaliatory tariffs, I think the contemplated retaliatory tariffs of products coming from the United States back into Canada, actually, in the guidance that’s set out by the Canadian government for those retaliatory tariffs, there are a number of exemptions and actually products for biomanufacturing are included in those exemptions. So we wouldn’t expect any sort of material impact in our financials or in the operations from any of the products that we buy that are originating in the United States.

So it looks as though that won’t be of an impact in our operations at this point in time. And so I do believe that we’ll — even if those tariffs are to come in place, it won’t impact the way we’re operating our business.

Jackie Kisa — TD Securities — Analyst

Great. And maybe just one more, pivoting to your internal pipeline. What are your plans with regards to carrying your assets toward commercialization? Are you interested in looking for opportunities to partner or sell off the assets? And if so, kind of what stage do you think you’d carry the asset to?

Carl Hansen — Chief Executive Officer

Sure. Carl here. Happy to take that, Jackie. So the answer really is that we are constantly evaluating each program and looking to optimize return on investment and the success of that program ultimately getting to the clinic and into patients.

So in some cases, we certainly would be on board with taking a program into late-stage clinical development and down the road, perhaps even to commercial, although. Of course, that’s quite a few years away from where we are today. In other programs, there may be a good case for getting it into the hands of another partner. As a case in point, for ABCL575, our enthusiasm and excitement for that program is about what we perceive to be an immense potential for the OX40 ligand class.

One scenario is that that program ends up being transferred to a large committed partner that can simultaneously develop that program across multiple indications and maximize value, and probably that’s the most likely scenario from where we sit today. But another scenario could be that we identify one or more indications where we could develop it ourselves and create more value at least into Phase 2 or perhaps even Phase 3. And we don’t know what the answer to that is. It’s gonna depend on what happens with the program and what happens on competitive programs, and we’re gonna make the best decision.

But the short answer is that for some programs, we would decide to partner very early if that’s what made sense. For others, we’re prepared to take it all the way, recognizing that since we’re just about to start clinical development, that’s way off on the horizon and not taking a lot of our attention and time right now.

Jackie Kisa — TD Securities — Analyst

Great. That’s super helpful. Thank you so much.

Operator

Thank you. [Operator instructions] The next question comes from Malcolm Hoffman with BMO. You may proceed.

Malcolm Hoffman — BMO Capital Markets — Analyst

Hey, guys. Malcolm Hoffman, thanks for taking our question. With 575 and 635 coming up on the CTA filing next quarter, I just wanna ask what, if any, initial preparations are you making for these programs to enter the clinic? And are there any nuances that you think are worth noting that may change how you file the CTA in the U.S. IND? Thanks for any commentary there.

I appreciate it.

Carl Hansen — Chief Executive Officer

Sure. So obviously, we began IND-enabling studies for 565 — pardon me, for 635 and 575 more than 18 months ago. And so there’s been an immense amount of work getting prepared to bring those through CTA-enabling studies and prepare the clinical teams and the clinical plan to execute on that. All that is in place.

Both programs have proceeded very smoothly. And so there’s, at this point, nothing particularly noteworthy in terms of special considerations. We’re confident with the plan, and we’re confident we have the team in place to execute on those.

Malcolm Hoffman — BMO Capital Markets — Analyst

Appreciate it. Thanks, guys.

Operator

Thank you. The next question comes from Puneet Souda with Leerink Partners. You may proceed.

Michael Sonntag — Analyst

Hi. Michael here on for Puneet. My question has to do with your internally initiated program. Just looking relative to last year, it seems like most of the new programs you started were from the ion channels and GPCRs.

I’m curious, what is driving your decision on initiating new programs and if you think that the activity in 2024 is gonna be similar to what you’re expecting for 2025 in terms of program initiation?

Carl Hansen — Chief Executive Officer

Sure. Carl here. So I think the question was what are the considerations for initiating new programs. So the first thing I’ll say is that in addition to 635 and 575, we have a preclinical pipeline at various stages of discovery that represents roughly 20 programs or so.

When we go to elect a program, we are thinking about the framework that I mentioned in my prepared remarks. So we are looking for opportunities where we have high conviction in the science, where we see a large unmet need, where there’s a clear path to differentiation, and where we believe that the development, and I mean the clinical development, would allow us to get an answer and build conviction either in the positive or the negative for the program for a relatively small amount of money and a relatively small amount of time. In terms of the distribution of target class in that portfolio, there is a large representation of multipass transmembrane proteins, ion channels and GPCRs. And the reason for that is that, first, those are classes where there are a lot of well-known targets, where many of those targets have been validated by small molecules.

And there’s a strong case for why an antibody would be differentiated either in safety or convenience or perhaps even efficacy. It’s also a place where we believe we can have a strong differentiation because we have built a competitive advantage in the antibody discovery side. It’s our view that we are second to none in being able to prosecute what have been traditionally very difficult targets. And we’re certainly looking in that space for good opportunities to move forward.

So that — I think today, maybe 50% or so of programs sit in the ion channel and GPCR class. And moving forward, first order approximation would be that that would remain roughly constant for the next few years, but by no means are we only looking at that target class in the pipeline.

Michael Sonntag — Analyst

Great. Thank you very much.

Operator

Thank you. [Operator instructions] No more questions in queue. I’ll turn it back over to the team for closing remarks.

Carl Hansen — Chief Executive Officer

Thank you, everyone, for joining us today. It’s an exciting time for the company as we finish our transition from a platform and partnership business into a clinical stage biotech. We thank you all for joining and look forward to speaking to you on the next call.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Tryn Stimart — Chief Legal and Compliance Officer

Carl Hansen — Chief Executive Officer

Andrew Booth — Chief Financial Officer

Steve Willey — Stifel Financial Corp. — Analyst

Sonia Gupta — Goldman Sachs — Analyst

Steve Dechert — KeyBanc Capital Markets — Analyst

Jackie Kisa — TD Securities — Analyst

Malcolm Hoffman — BMO Capital Markets — Analyst

Michael Sonntag — Analyst

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