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Under the supervision of and with the participation of our management, we assessed the effectiveness of our internal control over financial reporting as of December 31, 2022, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013).
−Removed: As disclosed in Part II Item 9A Controls and Procedures in our Annual Report on Form 10-K for the year ended December, 31, 2020, a material weakness in internal control over financial reporting was identified in prior periods which was the result of a material adjustment in our financial statements, due to an overstatement of lease liability upon adoption of ASU 2016-02, as well as certain other adjustments as of and for the years ended December 31, 2018 and 2019.
−Removed: During 2021, to remediate the previously reported material weakness in internal controls over financial reporting, we designed and implemented new controls, enhanced existing controls, hired additional accounting and finance resources with public company and US GAAP experience, improved reporting processes, and enhanced related supporting technology.
−Removed: During the fourth quarter of 2021, we completed our testing of the operating effectiveness of the implemented controls and found them to be effective.
−Removed: As a result, the CEO and CFO have concluded that the material weakness has been remediated as of December 31, 2021.
+Added: Based on this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2022.
Attestation Report of Independent Registered Public Accounting Firm
1 unchanged sentence
Changes in Internal Control over Financial Reporting
−Removed: Except for changes in connection with the implementation of our remediation efforts, described above, there have been no other changes to internal control over financial reporting, that occurred during the fourth quarter of 2021 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
+Added: There were no changes in our internal control over financial reporting during the fourth quarter of 2022 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Other Information.
−Removed: Disclosure Regarding Foreign Ju risdictions that Prevent Inspections .
+Added: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
8 unchanged sentences
Principal Accounting Fees and Services.
−Removed: Our independent public accounting firm is KPMG LLP, Vancouver, BC, Canada, PCAOB Auditor ID 85 .
+Added: Our independent registered public accounting firm is KPMG LLP, Vancouver, BC, Canada, PCAOB Auditor ID 85 .
The information required by this item will be included in our definitive proxy statement with respect to our 2023 Annual Meeting of Shareholders to be filed with the SEC and is incorporated herein by reference.
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and the Registrant dated June 2, 2017, as amended (incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form S-1, as amended (File No.
−Removed: 333-250838) filed on November 20, 2020).
+Added: 333-250838) filed on N ovember 20 , 2020).
Research Collaboration and License Agreement between the Registrant and Eli Lilly and Company, dated March 11, 2020 (incorporated by reference to Exhibit 10.2 of the Registrant’s Registration Statement on Form S-1, as amended (File No.
21 unchanged sentences
333-250838) filed on December 7, 2020).
+Added: Separation Agreement and Release among the Registrant, Neil Berkley and Lineage Biosciences, Inc.
+Added: (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on July 19, 2022).
Sixth Amended and Restated Stock Option Plan, and form of award agreement thereunder (incorporated by reference to Exhibit 10.12 of the Registrant’s Registration Statement on Form S-1, as amended (File No.
10 unchanged sentences
333-250838) filed on December 7, 2020).
−Removed: Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 of the Registrant’s Registration Statement on Form S-1, as amended (File No.
−Removed: 333-250838) filed on December 7, 2020).
+Added: Subsidiaries of the Registrant.
Consent of KPMG LLP, Independent Registered Public Accounting Firm
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/s/ Véronique Lecault
+Added: Chief Operating Officer and Director
February 21, 2023
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Consolidated Balance Sheets as of December 31, 2021 and 2022
−Removed: Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Years ended December 31, 2019, 2020 and 2021
+Added: Consolidated Statements of Income and Comprehensive Income for the Years ended December 31, 202 0 , 2021 and 202 2
Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 202 0 , 2021 and 202 2
2 unchanged sentences
Report of Independent Registered Public Accounting Firm
−Removed: To the Shareholders and Board of Directors
−Removed: AbCellera Biologics Inc.:
+Added: To the Shareholders and Board of Directors AbCellera Biologics, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of AbCellera Biologics, Inc.
−Removed: and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of income (loss) and comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).
+Added: and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S.
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(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Initial measurement of the fair value of contingent consideration and acquired intangible assets related to a business combination
−Removed: As discussed in Note 21 to the consolidated financial statements, the purchase consideration associated with the business combination with TetraGenetics, Inc.
−Removed: (TetraGenetics) included potential milestone payments based on the achievement of specified technical milestones and additional development and commercial milestone payments related to successfully developed therapeutics (contingent consideration).
−Removed: The aggregate fair value of the purchase consideration is allocated across the estimated net tangible assets acquired, intangible assets with the residual amount allocated to goodwill.
−Removed: The Company estimated the fair value of the contingent consideration to be $35,100 thousand, and estimated the fair value of the intangible assets, which includes technology and in process research and development intangibles, to be $43,300 thousand (acquired intangible assets).
−Removed: We identified the assessment of the initial measurement of the fair value of contingent consideration and the acquired intangible assets in the TetraGenetics business combination as a critical audit matter.
−Removed: Evaluating the key assumptions, including certain non-observable inputs, such as the probabilities of successful achievement of technical, development, and commercial milestones, forecasted revenues and discount rates involved a high degree of auditor judgment.
−Removed: Changes in these key
−Removed: assumptions could have a significant impact on the measurement of the contingent consideration and of the acquired intangible assets recognized on acquisition .
+Added: The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: Fair value of contingent consideration liability
+Added: As discussed in Note 20 to the consolidated financial statements, the Company completed a business combination with TetraGenetics, Inc.
+Added: (TetraGenetics) in 2021.
+Added: The purchase consideration for this business combination included contingent consideration consisting of potential milestone payments based on the achievement of specified technical milestones and additional development and commercial milestone payments related to successfully developed therapeutics.
+Added: As discussed in Note 16 to the consolidated financial statements, contingent consideration related to a business acquisition is recorded at fair value on the acquisition date and adjusted on a recurring basis for changes in its fair value.
+Added: As of December 31, 2022, the Company has a contingent consideration liability of $36,760 thousand related to the TetraGenetics acquisition.
+Added: The determination of the contingent consideration liability requires the Company to make significant estimates and assumptions.
+Added: We identified the assessment of the fair value of the contingent consideration liability associated with the TetraGenetics acquisition as a critical audit matter.
+Added: Evaluating the key assumptions, including certain non-observable inputs such as the probabilities of successful achievement of technical, development, and commercial milestones and forecasted revenues involved complex and challenging auditor judgment.
+Added: Changes in these key assumptions could have a significant impact on the measurement of the contingent consideration liability.
The following are the primary procedures we performed to address this critical audit matter.
−Removed: We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process for determining the fair value of the contingent consideration and of the acquired intangible assets.
−Removed: These included an internal control related to the development of the key assumptions.
+Added: We evaluated the design and tested the operating effectiveness of an internal control related to the Company’s process for determining the fair value of the contingent consideration liability, including the development of the key assumptions.
+Added: We performed sensitivity analyses and assessed the impact of possible changes to the key assumptions on the fair value of the contingent consideration liability.
We evaluated the probabilities of successful achievement of technical, development, and commercial milestones assumptions used in the Company’s model by comparing them to relevant and reliable publicly available third-party data and studies.
We evaluated the Company’s forecasted revenues by comparing them to relevant and reliable third-party industry data.
−Removed: We performed sensitivity analyses and assessed the impact of possible changes to the key assumptions on the fair value of the contingent consideration and the acquired intangible assets.
−Removed: We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s discount rates by comparing them against discount rate ranges that were independently developed using publicly available market data for comparable entities.
Chartered Professional Accountants
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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of income (loss) and comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated February 25, 2022 expressed an unqualified opinion on those consolidated financial statements.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 21, 2023 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
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Consolidated Balance Sheets
−Removed: (Expressed in thousands of U.S.
−Removed: dollars except share data)
+Added: (All figures in U.S.
+Added: Amounts are expressed in thousands except share data)
Current assets:
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Operating lease liability
−Removed: Deferred revenue and grant funding
+Added: Deferred revenue
+Added: Deferred grant funding
Contingent consideration payable
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Additional paid-in capital
−Removed: Accumulated other comprehensive income
+Added: Accumulated other comprehensive income (loss)
Accumulated earnings
1 unchanged sentence
Total liabilities and shareholders' equity
+Added: Subsequent event
The accompanying notes are an integral part of these consolidated financial statements.
AbCellera Biologics Inc.
−Removed: Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
−Removed: (Expressed in thousands of U.S.
−Removed: dollars except share and per share data)
+Added: Consolidated Statements of Income and Comprehensive Income
+Added: (All figures in U.S.
+Added: Amounts are expressed in thousands except share and per share data)
Year Ended December 31,
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General and administrative (1)
−Removed: Depreciation and amortization
+Added: Depreciation, amortization, and impairment
Total operating expenses
−Removed: Income (loss) from operations
+Added: Income from operations
Other (income) expense
Interest (income)
−Removed: Interest and other expense
−Removed: Foreign exchange (gain) loss
+Added: Interest and other
Grants and incentives
Total other income
−Removed: Net earnings (loss) before income tax
+Added: Net earnings before income tax
Income tax expense
−Removed: Net earnings (loss)
Foreign currency translation adjustment
−Removed: Comprehensive income (loss)
−Removed: Net earnings (loss) per share attributable to common shareholders
+Added: Comprehensive income
+Added: Net earnings per share attributable to common shareholders
Weighted-average common shares outstanding
The accompanying notes are an integral part of these consolidated financial statements.
−Removed: 1 Exclusive of depreciation and amortization
+Added: 1 Exclusive of depreciation, amortization, and impairment
AbCellera Biologics Inc.
Consolidated Statements of Stockholders’ Equity
−Removed: (Expressed in thousands U.S.
−Removed: dollars except share data)
+Added: (All figures in U.S.
+Added: Amounts are expressed in thousands except share data)
Preferred Shares
3 unchanged sentences
Shareholders'
−Removed: December 31, 2018
−Removed: Shares issued under stock option plan
−Removed: Issuance costs
−Removed: Stock-based compensation expense
+Added: Income (Loss)
December 31, 2019
7 unchanged sentences
Conversion of convertible note
−Removed: December 31, 2020
+Added: Balances as of December 31, 2020
Shares issued under stock option plan and other
2 unchanged sentences
Foreign currency translation adjustment
−Removed: December 31, 2021
+Added: Balances as of December 31, 2021
+Added: Shares issued and restricted stock units ("RSUs") vested under stock option plan
+Added: Stock-based compensation expense
+Added: Foreign currency translation adjustment
+Added: Balances as of December 31, 2022
The accompanying notes are an integral part of these consolidated financial statements.
3 unchanged sentences
Cash flows from operating activities:
−Removed: Net earnings (loss)
Cash flows from operating activities:
Depreciation of property and equipment
−Removed: Amortization of intangible assets
+Added: Amortization and impairment of intangible assets
Amortization of operating lease right-of-use assets
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Purchase of intangible assets
−Removed: Repayment (issuance) of related party loans
−Removed: Purchase of marketable securities
+Added: Purchases of marketable securities
Proceeds from marketable securities
1 unchanged sentence
Acquisitions, net of cash acquired
−Removed: Long-term investments and other assets
+Added: Long-term investments and other
Investment in and loans to equity accounted investees
1 unchanged sentence
Cash flows from financing activities:
−Removed: Repayment of long-term debt
−Removed: Proceeds from long-term debt
+Added: Repayment of long-term debt and contingent consideration
+Added: Proceeds from long-term debt and exercise of stock options
Proceeds from convertible debentures
−Removed: Payment of contingent consideration
−Removed: Payment of liability for in-licensing agreement
−Removed: Short-term borrowings
−Removed: Issuance of common shares pursuant to exercise of stock options and other
+Added: Payment of liability for in-licensing agreement and other
Net proceeds from issuance of common shares
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Cash and cash equivalents and restricted cash, end of year
+Added: Restricted cash included within other current and other long-term assets
+Added: Total cash, cash equivalents, and restricted cash shown on the balance sheets
Supplemental disclosure of non-cash investing and financing activities:
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Nature of operations
−Removed: AbCellera Biologics Inc.’s (the “Company”) mission is to improve health with technologies that transform the way that antibody-based therapies are discovered.
−Removed: The Company aims to become the centralized operating system for next generation antibody discovery.
−Removed: 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.
−Removed: 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.
−Removed: Rather than advancing its own clinical pipeline of drug candidates, the Company forges partnerships with drug developers of all sizes, from large cap pharmaceutical to small biotechnology companies.
+Added: AbCellera Biologics Inc.’s (the “Company”) mission is to bring better antibody drugs to patients faster, solve long-standing problems, and transform how antibody drugs are discovered.
+Added: The Company aims to bring antibody therapeutics from target to clinic by combining expertise, technologies, and infrastructure to build an engine for antibody drug discovery and development.
+Added: The Company uses the engine to work with partners to build a large and diversified portfolio of royalty (and equivalent) stakes in future antibody drugs .
+Added: The Company partners with companies of all sizes - from innovative biotechnology companies to leading pharmaceutical companies - propelling programs to the clinic, together.
Basis of presentation
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The Company contributed $ 25.0 million to the segregated account, representing the Company’s maximum loss exposure under the participation agreement, for security for a letter of credit issued to a third-party insurer.
−Removed: As the funds cannot be transferred to other parts of the Company, the funds are presented as Restricted Cash.
+Added: As the funds cannot be transferred to other parts of the Company, the funds are presented in current assets on the consolidated balance sheets as Restricted Cash.
Use of estimates
The preparation of the consolidated financial statements in accordance with U.S.
−Removed: 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.
+Added: 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 consolidated 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 estimated timing of completion of performance obligations and
5 unchanged sentences
COVID-19 Pandemic
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The Company continues to closely monitor the COVID-19 pandemic as it evolves its business continuity plans and response strategy.
−Removed: As of the date of these 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.
−Removed: Actual results could differ from these estimates, and any such differences may be material to the Company’s financial statements.
+Added: The full extent to which the ongoing COVID-19 pandemic and related developments may affect the Company’s future financial results and operations will depend on future developments which are difficult to predict .
+Added: As of the date of these 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.
+Added: Actual results could differ from these estimates, and any such differences may be material to the Company’s consolidated financial statements .
Revenue recognition
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Royalty revenue is recognized in the period in which the obligation is satisfied and the corresponding sales by our corporate partners occur.
−Removed: For the licenses to our intellectual property the Company recognizes revenue from non-refundable, up-front fees when the license is transferred to the customer and the customer is able to use and benefit from the license.
+Added: For the licenses of our intellectual property the Company recognizes revenue from non-refundable, up-front fees when the license is transferred to the customer and the customer is able to use and benefit from the license.
+Added: Substantially all license revenue for the year ended December 31, 2021, related to the transgenic mouse platform.
Collaborative Arrangements
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For arrangements determined to be within the scope of ASC 808 where a collaborative partner is not a customer for certain research and development activities, the Company accounts for payments received for the reimbursement of research and development costs as a contra-expense in the period such expenses are incurred.
−Removed: If payments from the collaborative partner to the Company represent consideration from a customer in exchange for distinct goods and services provided, then the Company accounts for those payments within the scope of ASC 606.
+Added: If payments from the collaborative partner to the Company represent consideration from a customer in exchange for distinct goods and services provided, then the Company accounts for those payments within the scope of ASC 606, Revenue from Contracts with Customers (ASC 606) .
The Company applied ASC 606 to all arrangements to date.
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The Company’s focus is on the discovery and development of antibodies.
−Removed: The Company’s revenues from external customers in which the services originated were in Canada in 2019 and 2020.
−Removed: In 2021, $ 353.4 million and $ 21.8 million of revenues originated from services in Canada and the U.S., respectively.
+Added: The Company’s revenues from external customers in which the services originated were in Canada in 2020.
+Added: In 2021, $ 353.4 million and $ 21.8 million of revenues originated from services in Canada and the U.S., respectively, and in 2022, $ 484.2 million and $ 1.2 million of revenues originated from services in Canada and the U.S., respectively.
Of the Company’s long-term assets at December 31, 2021, $ 200.3 million was in the U.S.
−Removed: and $ 58.5 million was in Canada.
+Added: and $ 159.5 million in Canada and $ 28.9 million in other foreign countries.
Of the Company’s long-term assets at December 31, 2022, $ 183.7 million was in the US, $ 300.2 million in Canada, and $ 31.5 million in other foreign countries.
4 unchanged sentences
The Company records the investment tax credits based on its estimates of amounts expected to be recovered.
−Removed: Government grants and credits received for expenditures on eligible research, development and capital expenditures are recognized ratably over the benefit period of the related expenditure for which the grants are intended to compensate in other income.
+Added: Government grants and credits received for expenditures on eligible research, development and capital expenditures are recognized ratably over the benefit period of the related expenditure for which the grants are intended to compensate in grants and incentives in other income.
Grant claims not settled by the balance sheet date are recorded as receivables provided their receipt is probable.
1 unchanged sentence
The reimbursement claims submitted by the Company are subject to review by the relevant government agencies.
−Removed: The Company has used its best judgement and understanding of the related program agreements in determining the receivable amount.
+Added: The Company has used its best estimate and understanding of the related program agreements in determining the receivable amount.
Functional currency
4 unchanged sentences
Period end balances of monetary assets and liabilities in foreign currencies are translated to the functional currency using the period end foreign currency rates.
−Removed: Foreign currency gains and losses are recognized in the consolidated statements of income (loss).
−Removed: The functional currency of the Dayhu JV and Beedie JV is Canadian dollars and are translated into US dollars using the period-end exchange rate for assets and liabilities and the average exchange rates during the period for revenues, expenses, gains and losses.
−Removed: Foreign exchange gains or losses arising from the translation of these joint ventures’ assets and liabilities are included in “Other comprehensive income”.
+Added: Foreign currency gains and losses are recognized in the consolidated statements of income and comprehensive income.
+Added: The functional currency of the Dayhu JV and Beedie JV, our equity method investments, is Canadian dollars and are translated into US dollars using the period-end exchange rate for assets and liabilities and the average exchange rates during the period for revenues, expenses, gains and losses.
+Added: Foreign exchange gains or losses arising from the translation of these joint ventures’ assets and liabilities are included in foreign currency translation adjustment in the consolidated statements of income and comprehensive income.
Cash and cash equivalents and restricted cash
Cash and cash equivalents are defined as cash on hand and deposits held with banks with maturity dates of less than three months.
−Removed: Cash and cash equivalents that are restricted as to withdrawal or usage, in accordance with specific commercial arrangements, are presented as restricted cash on the consolidated balance sheet.
−Removed: At December 31, 2020 we had $ 593.7 million cash, $ 0.4 million cash equivalents, and $ nil restricted cash.
−Removed: At December 31, 2021 we had $ 100.5 million cash, $ 375.6 million cash equivalents and $ 25.0 million restricted cash.
+Added: Cash and cash equivalents that are restricted as to withdrawal or usage, in accordance with specific commercial arrangements, are presented as restricted cash on the consolidated balance sheets.
+Added: As of December 31, 2021, we had $ 100.5 million cash, $ 375.6 million cash equivalents, and $ 25.0 million restricted cash.
+Added: As of December 31, 2022, we had $ 126.2 million cash, $ 260.3 million cash equivalents and $ 28.1 million restricted cash.
+Added: Of the total restricted cash at December 31, 2022, $ 25.0 million is presented as a current asset, $ 2.2 million is included within other current assets, and $ 0.9 million is included within other long-term assets on the consolidated balance sheets.
Marketable Securities
2 unchanged sentences
government agency securities, and asset-backed securities.
−Removed: The Company has classified and accounted for these marketable securities as held-for-trading and they are reported at fair value with unrealized gains and losses reported as other (income) expense on the consolidated statement of income (loss) and comprehensive income (loss).
+Added: The Company has classified and accounted for these marketable securities as held-for-trading and they are reported at fair value with $ 0.5 million and $ 1.7 million of unrealized fair value losses recorded as a component of interest and other on the consolidated statements of income and comprehensive income for the years ended December 31, 2021, and 2022, respectively.
+Added: Non-Marketable Securities
+Added: Non-marketable securities not accounted for under the equity method are accounted for under the measurement alternative.
+Added: Under the measurement alternative, the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.
+Added: Non-marketable securities are included as part of other long-term assets on the consolidated balance sheets.
+Added: Adjustments are determined primarily based on a market approach as of the transaction date and are recorded a component of interest and other on the consolidated statements of income and comprehensive income.
Accounts receivable
35 unchanged sentences
An impairment loss is recognized as the difference between the indefinite-lived intangible asset’s carrying amount and its fair value.
−Removed: Based on our qualitative assessment, the Company determined there were no potential indicators of impairment of our indefinite-lived intangible assets.
−Removed: The Company determines if an arrangement is a lease at its inception.
−Removed: After determination of lease arrangement, the Company identifies whether the lease arrangement consists of any non-lease component.
−Removed: The company account for lease components (e.g., rental payments) separately from non-lease components (e.g., common area maintenance costs).
−Removed: Lease component is considered in operating leases, whereas non-lease component is accounted for separately in profit and loss.
−Removed: Such non-lease component is accounted for ratably over a straight-line basis over the duration of lease period.
−Removed: Operating leases are included in operating lease right-of-use assets, accrued liabilities, and long-term operating lease liabilities in our consolidated balance sheet.
−Removed: Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
−Removed: Operating lease liabilities and right-of-use assets are recognized at commencement date based on the present value of lease payments over the lease term.
−Removed: The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments if an explicit rate is not available.
−Removed: Rent expense, included as part of general and administrative expense, for lease payments is recognized on a straight-line basis over the lease term.
−Removed: The operating lease right-of-use assets also includes any rent prepayments, lease incentives upon receipt, and straight-line rent expense impacts, which represent the differences between its operating lease liabilities and right-of-use assets.
−Removed: The initial recognition of the lease obligation and right-of-use asset excludes leases that have a remaining lease term of 12 months or less on the date of acquisition .
+Added: The lease term includes all periods covered by renewal and termination options where the Company is reasonably certain to exercise the renewal options or not to exercise the termination options.
+Added: Corresponding right-of-use assets are recognized consisting of the lease liabilities, initial direct costs and any lease incentive payments.
+Added: Lease liabilities are drawn down as lease payments are made and right-of-use assets are depreciated over the term of the lease.
+Added: Operating lease expenses are recognized on a straight-line
+Added: basis over the term of the lease, consisting of interest accrued on the lease liability and depreciation of the right-of-use asset.
+Added: Lease payments are remeasured when a contingency upon which some or all of the variable lease payments to be paid over the remainder of the lease is resolved.
+Added: Lease payments on short-term operating leases with lease terms twelve months or less are recognized on a straight-line basis over the lease term .
+Added: The Company has elected to not separate non-lease elements embedded in its lease agreements.
For the years ended December 31, 2021 , and December 31, 2022, all of our leases are classified as operating leases.
5 unchanged sentences
Royalty fees are recorded when the third-party sale occurs.
−Removed: The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) for the expected future tax consequences of events that have been included in the financial statements.
−Removed: Under this method, DTAs and DTLs are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.
−Removed: The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date.
−Removed: A valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
−Removed: The Company recognizes uncertain tax positions in accordance with Accounting Standards Codification (“ASC”) 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, they are measured as the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
+Added: The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) for the expected future tax consequences of existing differences between the financial statement and tax bases of assets and liabilities, and net operating loss and tax credit carryforwards for tax purposes.
+Added: The DTAs and DTLs are computed using enacted tax rates and the effect of a change in enacted tax rates on DTAs and DTLs is recognized in income in the period of enactment.
+Added: The Company recognizes DTAs to the extent that these assets are more likely than not to be realized.
+Added: In making such a determination, all available positive and negative evidence are considered, including, but not limited to, future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.
+Added: Valuation allowances are established for certain deferred tax assets to reduce the DTA to a level which, more-likely-than-not, will be realized.
+Added: Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in the Company’s judgement, do not meet a more-likely-than-not threshold based on the technical merits of the positions.
+Added: The Company realizes the largest amount of the tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
+Added: The Company files consolidated federal income tax returns in the United States, which includes eligible subsidiaries.
+Added: In addition, we file income tax returns in state, local and foreign jurisdictions as applicable.
+Added: The Company's income tax provision is calculated and allocated under the separate return method.
Income tax credit (“ITC”) policy
7 unchanged sentences
Equity classified awards are measured using their grant date fair value.
−Removed: Liability classified awards are initially measured using their grant date fair value and are subsequently re-measured to fair value at each balance sheet date until exercised or cancelled, with changes in fair value recognized as compensation cost for the period.
For equity classified awards, a corresponding increase in additional paid-in capital is recorded when stock-based compensation is recognized.
3 unchanged sentences
(a) the currency of a market in which a substantial portion of the Company’s equity securities traded, (b) the currency in which the individual’s pay is denominated, or (c) the Company’s functional currency, are classified as liabilities.
+Added: Liability classified awards are initially measured using their grant date fair value and are
+Added: subsequently re-measured to fair value at each balance sheet date until exercised or cancelled, with changes in fair value recognized as compensation cost for the period.
+Added: As of Dec ember 31, 20 21 , and 20 22 , there were no liability classified options outstanding.
Business combinations and goodwill
7 unchanged sentences
If this qualitative assessment indicates that it is more likely than not that the fair value of the reporting unit that includes the goodwill is less than its carrying value, then a quantitative impairment test would be prepared to compare this fair value to the carrying value and record an impairment charge if the carrying value exceeds the fair value.
−Removed: At October 1, 2021, the Company performed a qualitative assessment for its annual impairment test of goodwill after concluding that it was not more likely than not that the fair value of the reporting unit was less than its carrying value.
+Added: As of October 1, 2022, the Company performed a qualitative assessment for its annual impairment test of goodwill after concluding that it was not more likely than not that the fair value of the reporting unit was less than its carrying value.
Consequently, the quantitative impairment test was not required.
−Removed: The Company concluded that there were no impairment indicators related to goodwill during the remainder of 2021.
+Added: The Company concluded that there were no impairment indicators related to goodwill as at December 31, 2021 and 2022.
Equity method investments
4 unchanged sentences
The Company evaluates its investments in joint ventures for impairment when events or circumstances indicate that the carrying value of such investments may have experienced an other-than-temporary decline in value below carrying value.
−Removed: If the estimated fair value is less than the carrying value, the carrying value is written down to its estimated fair value and the resulting impairment is recorded in the Company’s consolidated statements of income (loss).
−Removed: Net earnings (loss) per share
−Removed: The Company follows the two-class method when computing net earnings (loss) per share as the Company has issued shares that meet the definition of participating securities.
−Removed: The two-class method determines net earnings (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings.
+Added: If the estimated fair value is less than the carrying value, the carrying value is written down to its estimated fair value and the resulting impairment is recorded in the Company’s consolidated statements of income and comprehensive income.
+Added: Net earnings per share
+Added: The Company follows the two-class method when computing net earnings per share as the Company has issued shares that meet the definition of participating securities.
+Added: The two-class method determines net earnings per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings.
The two-class method requires income available to common shareholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.
−Removed: Basic net earnings (loss) per share attributable to common shareholders is computed by dividing the net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding for the period.
−Removed: Diluted net earnings (loss) attributable to common shareholders is computed by adjusting net income (loss) attributable to common shareholders to reallocate undistributed earnings based on the potential impact of dilutive securities.
−Removed: Diluted net earnings (loss) per share attributable to common shareholders is computed by dividing the diluted net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding for the period, including potential dilutive common shares.
−Removed: For purpose of this calculation, outstanding stock options and convertible preferred shares and notes are considered potential dilutive common shares.
+Added: Basic net earnings per share attributable to common shareholders is computed by dividing the net earnings attributable to common shareholders by the weighted-average number of common shares outstanding for the period.
+Added: Diluted net earnings attributable to common shareholders is computed by adjusting net earnings attributable to common shareholders to reallocate undistributed earnings based on the potential impact of dilutive securities.
+Added: Diluted net earnings per share attributable to common shareholders is computed by dividing the diluted net earnings attributable to common shareholders by the weighted-average number of common shares outstanding for the period, including potential dilutive common shares.
+Added: For purpose of this calculation, outstanding stock options, restricted share units (RSUs), and convertible preferred shares and notes are considered potential dilutive common shares.
The Company’s convertible preferred shares, all of which converted prior to the completion of our IPO in 2020, contractually entitle the holders of such shares to participate in dividends but do not contractually require the holders of such shares to participate in losses of the Company.
−Removed: Accordingly, in periods in which the Company reports a net loss attributable to common shareholders, such losses are not allocated to such participating securities.
−Removed: In periods in which the Company reported a net loss attributable to common shareholders, diluted net loss per share attributable to common shareholders is the same as basic net loss per share attributable to common shareholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
Changes in significant accounting policies
3 unchanged sentences
The Company has reviewed recent accounting pronouncements and concluded that they are either not applicable to the Company or that no material impact is expected in the consolidated financial statements as a result of future adoption.
−Removed: Net earnings (loss) per share
−Removed: Basic and diluted net earnings (loss) per share attributable to common shareholders was calculated as follows:
+Added: Net earnings per share
+Added: Basic and diluted net earnings per share attributable to common shareholders was calculated as follows:
Year Ended December 31,
−Removed: Basic earnings (loss) per share
−Removed: Net earnings (loss)
+Added: Basic earnings per share
earnings allocated to Preferred Shareholders ( 1)
−Removed: Net earnings (loss) attributable to common shareholders - basic
+Added: Net earnings attributable to common shareholders - basic
Weighted-average common shares outstanding - basic
−Removed: Net earnings (loss) per share attributable to common shareholders - basic
−Removed: Diluted earnings (loss) per share
−Removed: Net earnings (loss) attributable to common shareholders - diluted
+Added: Net earnings per share attributable to common shareholders - basic
+Added: Diluted earnings per share
+Added: Net earnings attributable to common shareholders - diluted
Weighted-average common shares outstanding - basic
2 unchanged sentences
Weighted-average common shares outstanding - diluted
−Removed: Net earnings (loss) per share attributable to common shareholders - diluted
+Added: Net earnings per share attributable to common shareholders - diluted
1 The Company’s preferred shares were all converted prior to the IPO in 2020.
−Removed: The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net earnings (loss) per share attributable to common shareholders for the periods indicated because including them would have had an anti-dilutive effect:
−Removed: Year Ended December 31,
−Removed: Options to purchase common shares and RSUs
−Removed: Convertible preferred shares
−Removed: Total potential common shares excluded
+Added: The Company excluded nil, 908,409 , and 11,824,006 potential common shares for the years ended December 31, 2020, 2021, and 2022, respectively, from the computation of diluted net earnings per share attributable to common shareholders for the periods indicated because including them would have had an anti-dilutive effect.
+Added: Other current assets
Other current assets consisted of the following:
3 unchanged sentences
Total other current assets
−Removed: Other long-term assets consisted of the following:
−Removed: Investments - other
−Removed: Prepaid expenses
−Removed: Security deposit
−Removed: Deferred tax asset
−Removed: Total other long-term assets
Property and equipment, net
6 unchanged sentences
Property and equipment, net
−Removed: At December 31, 2020 and December 31, 2021, leasehold improvements include tenant improvements in progress that have not commenced depreciation in the amount of $nil and $ 19.8 million, respectively.
+Added: As of December 31, 2021 and December 31, 2022, building and leasehold improvements include construction and tenant improvements in progress that have not commenced depreciation in the amount of $ 19.8 million and $ 25.6 million, respectively.
Depreciation expense on property and equipment for the years ended December 31, 2020, 2021 and 2022 was $ 2.3 million, $ 4.4 million and $ 9.0 million, respectively.
4 unchanged sentences
December 31, 2022
−Removed: There was no balance of intangible assets, or related amortization expense, for the year ended 2019.
−Removed: Amortization expense related to intangible assets was $ 2.5 million and $ 10.1 million for the years ended December 31, 2020 and 2021, respectfully, and is reflected within Depreciation and amortization expense on the consolidated statement of income (loss) and comprehensive income (loss).
−Removed: At December 31, 2021, amortization expense on intangible assets is estimated to be as follows for each of the next five years:
+Added: Amortization expense related to intangible assets for the years ended December 31, 2020, 2021 and 2022 was $ 2.5 million, $ 10.1 million and $ 10.5 million, respectively.
+Added: Depreciation and amortization expense is reflected on the consolidated statements of income and comprehensive income.
+Added: For the year ended December 31, 2022, the Company recorded a full impairment charge of the carrying value of $ 8.4 million (or $ 6.3 million, net of deferred income tax) associated with one of the next-generation transgenic humanized mice that was acquired through the 2020 Trianni acquisition.
+Added: The impairment was a result of the discontinuance of the validation and development of this specific rodent line.
+Added: Impairment expense is reflected within Depreciation, amortization, and impairment expense on the consolidated statements of income and comprehensive income.
+Added: The Company concluded that there were no impairment indicators from the remaining intangible assets.
+Added: Amortization expense on intangible assets subject to amortization is estimated to be as follows for each of the next five years ended December 31 :
In March 2020, the Company entered into an agreement with Alloy Therapeutics (Alloy) to use the ATX-Gx™ humanized mice platform to enable in vivo human antibody discovery for its partner programs.
−Removed: Under the terms of the agreement, the Company will offer its biotech and pharma partners access to ATX-Gx™, Alloy’s proprietary suite of immunocompetent transgenic mice, for use in any antibody discovery program and against any therapeutic target.
+Added: Under the terms of the agreement, the Company will offer its biotechnology and pharmaceutical partners access to ATX-Gx™, Alloy’s proprietary suite of immunocompetent transgenic mice, for use in any antibody discovery program and against any therapeutic target.
The agreement provides for future alternative use to the Company and as such the corresponding value has been recorded as an intangible asset.
The asset will be amortized on a straight-line basis over the 10 -year term of the license agreement with Alloy.
−Removed: The acquisition of $ 14.1 million consists of an initial cash payment of $ 5.0 million, with two additional $ 5.0 million installment payments paid in twelve and twenty-four months , respectively.
+Added: The acquisition of $ 14.1 million consisted of an initial cash payment of $ 5.0 million, with two additional $ 5.0 million installment payments paid in twelve and twenty-four months , respectively.
The estimated fair value of the non-current portion of the financial obligation was determined by discounting future principal and interest amounts at estimated interest rates expected to be available to the Company with an interest rate of 10.98 %.
−Removed: Amortization expense is reflected within Depreciation and amortization expense on the consolidated statement of income (loss).
Goodwill consisted of the following:
4 unchanged sentences
Investments in and loans to equity accounted investees
−Removed: The Company has entered into two joint ventures as part of the construction of future office and laboratory headquarters.
+Added: The Company has entered into two separate 50% joint ventures, Dayhu JV and Beedie JV, as part of the construction of future office and laboratory headquarters.
+Added: To date, the Company has recorded immaterial amounts of proportionate income or loss with respect to either venture.
During 2020, the Company entered into a joint venture with Dayhu (Dayhu JV).
−Removed: At December 31, 2021, the equity investment balance of $ 19.6 million represents the contributions made since inception.
+Added: At December 31, 2021 and December 31, 2022, the equity investment balance was $ 19.6 million and $ 18.7 million, respectively.
+Added: In March, 2021, th e Company made a commitment of up to CAD $ 82.7 million ($ 61.1 million at December 31, 2022) to the Dayhu JV (Dayhu JV Loan) to fund the construction at a rate referenced to a Canadian bank prime rate adjusted for applicable margins as defined in the agreement, 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.
+Added: The loan is secured by the underlying land and future assets of the Dayhu JV.
+Added: At December 31, 2021, and December 31, 2022, the outstanding related party loan balance was $ 18.0 million and $ 38.1 million, respectively, to the Dayhu JV.
+Added: In July 2022, the Company entered into an agreement of up to CAD $ 46.0 million ($ 34.0 million a t December 31, 2022) with Dayhu (New Dayhu Loan) to replace Dayhu’s portion of the outstanding Dayhu JV L oan balance as at January 1, 2023, at a rate referenced to a Canadian bank prime rate adjusted for applicable margins as defined in the agreement.
+Added: The agreement has a maturity of December 31, 2025 , with a call provision, callable by the Company after September 30, 2023, including customary make whole provisions.
+Added: The loan is secured by the underlying land and existing and future assets of the Dayhu JV .
+Added: Subsequent to December 31, 2022, the Company issued CAD $ 46.0 million ($ 34.0 million at December 31, 2022) to Dayhu from the New Dayhu loan, which was used to repay, in part, Dayhu’s 50 % portion of the Dayhu JV Loan.
In March, 2021, the Company entered into the Beedie joint venture (Beedie JV).
−Removed: To date the equity investment balance of $ 12.7 million represents contributions made since inception into the Beedie JV.
−Removed: To date, the Company has recorded immaterial amounts of proportionate income or loss with respect to either venture.
−Removed: In March, 2021, th e 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.
−Removed: The loan is secured by the underlying land and future assets of the joint venture.
−Removed: At December 31, 2021, the outstanding related party loan balance was $ 18.0 million to the joint venture.
+Added: At December 31, 2021 and December 31, 2022, the equity investment balance was $ 12.7 million and $ 15.7 million, respectively.
+Added: In June 2022, the Company made a commitment to our partner Beedie for a land loan of up to CAD $ 7.5 million ($ 5.5 million at December 31, 2022) plus a construction loan for up to 80 % of Beedie’s share of construction costs.
+Added: The commitment is at a rate referenced to a Canadian bank prime rate adjusted for applicable margins as defined in the agreement, and repayment on the earlier of thirty months from the date of initial advancement of the construction loan and five years from the initial advancement of the land loan, or upon the triggering of certain repayment events as defined in the agreement.
+Added: The loan is secured by the underlying land and existing and future assets of the Beedie JV.
+Added: The loan receivable balance, which was solely relates to the land loan to date, was $ 5.5 million as at December 31, 2022 and is included in other long-term assets.
Accounts payable and other liabilities
2 unchanged sentences
Liability for in-licensing agreement
−Removed: Operating lease liability
−Removed: Liability classified options
+Added: Current portion of operating lease liability
Payroll liabilities
1 unchanged sentence
Total accounts payable and other liabilities
−Removed: Other long term liabilities
−Removed: OrbiMed Debt Facility
−Removed: In March 2020, the Company entered into a senior secured credit agreement (the “Credit Agreement”) with OrbiMed Royalty & Credit Opportunities III, LP (“OrbiMed”), which provided for term debt in an aggregate amount of $ 30.0 million, which matures on March 23, 2025 (a 5 year term).
−Removed: As of June 30, 2020, the Company had $ 15.0 million of borrowings outstanding under the Credit Agreement.
−Removed: Borrowings under the Credit Agreement bear interest at a rate per annum equal to an applicable margin of 6.00 % plus the higher of (a) the London Inter-bank Offered Rate (LIBOR) for the applicable interest period and (b) 1.75 %.
−Removed: In July 2020, the outstanding loan was repaid in full, the Credit Agreement retired, and all associated security with the Credit Agreement was released.
−Removed: The Company incurred approximately $ 3.7 million in combined cancellation fees and legal fees on early retirement of the Credit Agreement which has been classified in interest and other (income) expense on the consolidated statements of income (loss) and comprehensive income (loss).
−Removed: The Company was in compliance with all covenants under the Credit Agreement up to the date of retirement.
Shareholders’ Equity
13 unchanged sentences
Through December 31, 2022, no cash dividends had been declared or paid by the Company.
−Removed: Series A1 Preferred shares
+Added: Series A1 and Series A2 Preferred shares
On August 3, 2018, the Company entered into an investment agreement with DCVC Bio, L.P.
−Removed: for gross proceeds of CAD $ 10.0 million ($ 7.7 million) in exchange for 2,105,264 shares.
+Added: for gross proceeds of CAD $ 10.0 million ($ 7.7 million) in exchange for 2,105,264 Series A1 preferred shares.
Total proceeds received net of financing costs were $ 7.6 million.
−Removed: The Series A1 preferred shares are voting and are convertible, at any time and from time to time at the option of its holder, into fully paid and non-assessable common shares at a 1:10 ratio, subject to appropriate adjustment for splits, dividends, other similar recapitalization and the like.
−Removed: Conversion of preferred shares to common shares is mandatory in the event of a Qualified Initial Public Offering with proceeds of at least $ 70.0 million.
−Removed: The holders of the Series A1 preferred shares are entitled to vote, together with the holders of common shares, as a single class, on all matters submitted to the shareholders for a vote and are entitled to the number of votes equal to the number of common shares into which the Series A1 preferred shares could convert on the record date for determination of shareholders entitled to vote.
−Removed: The holders of the Series A1 preferred shares are entitled to receive noncumulative dividends, as and if declared by the board of directors (the “Preferred Dividend”).
−Removed: The Company may not pay any dividends on common shares of the Company unless the holders of Preferred Shares then outstanding first receive, or simultaneously receive, the Preferred Dividend on each outstanding Series A1 preferred share and a dividend on each outstanding Series A1 preferred share in an amount at least equal to the product of the dividend
−Removed: payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into common shares.
−Removed: To the date of conversion , no cash dividends had been declared or paid by the Company.
−Removed: In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or Deemed Liquidation Event, the holders of Series A1 Preferred Shares then outstanding are entitled to a 1x non-participating liquidation preference.
−Removed: Due to the various rights and privileges within the existing Series A1 Preferred and Common shareholder agreements, the Company concluded triggering a deemed liquidation event is within the control of the Company, and therefore the Series A1 Preferred Shares are classified as permanent equity.
−Removed: Series A2 preferred shares
−Removed: On March 23, 2020, the Company entered into an investment agreement with certain shareholders for gross proceeds of $ 75.0 million in exchange for 6,017,784 shares.
+Added: On March 23, 2020, the Company entered into an investment agreement with certain shareholders for gross proceeds of $ 75.0 million in exchange for 6,017,784 Series A2 preferred shares.
Total proceeds received net of financing costs were $ 74.7 million.
−Removed: The Series A2 preferred shares are voting and are convertible, at any time and from time to time at the option of its holder, into fully paid and non-assessable common shares at a 1:10 ratio, subject to appropriate adjustment for splits, dividends, other similar recapitalization and the like.
−Removed: Conversion of preferred shares to common shares is mandatory in the event of a Qualified Initial Public Offering with proceeds of at least $ 70.0 million.
−Removed: The holders of the Series A2 preferred shares are entitled to vote, together with the holders of common shares, as a single class, on all matters submitted to the shareholders for a vote and are entitled to the number of votes equal to the number of common shares into which the Series A2 preferred shares could convert on the record date for determination of shareholders entitled to vote.
−Removed: The holders of the Series A2 preferred shares are entitled to receive noncumulative dividends, as and if declared by the board of directors (the “Preferred Dividend”).
−Removed: The Company may not pay any dividends on common shares of the Company unless the holders of Preferred Shares then outstanding first receive, or simultaneously receive, the Preferred Dividend on each outstanding Series A2 preferred share and a dividend on each outstanding Series A2 preferred share in an amount at least equal to the product of the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into common shares.
+Added: The Series A1 and A2 preferred shares were voting and were convertible, at any time and from time to time at the option of its holder, into fully paid and non-assessable common shares at a 1:10 ratio, subject to appropriate adjustment for splits, dividends, other similar recapitalization and the like.
+Added: Conversion of preferred shares to common shares was mandatory in the event of a Qualified Initial Public Offering with proceeds of at least $ 70.0 million.
+Added: The holders of the Series A1 and A2 preferred shares were entitled to vote, together with the holders of common shares, as a single class, on all matters submitted to the shareholders for a vote and were entitled to the number of votes equal to the number of common shares into which the Series A1 and A2 preferred shares could convert on the record date for determination of shareholders entitled to vote.
+Added: The holders of the Series A1 and A2 preferred shares were entitled to receive noncumulative dividends, as and if declared by the board of directors (the “Preferred Dividend”).
+Added: The Company may not pay any dividends on common shares of the Company unless the holders of Preferred Shares then outstanding first receive, or simultaneously receive, the Preferred Dividend on each outstanding Series A1 and A2 preferred share and a dividend on each outstanding Series A1 and A2 preferred share in an amount at least equal to the product of the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into common shares.
To the date of conversion, no cash dividends had been declared or paid by the Company.
−Removed: In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or Deemed Liquidation Event, the holders of Series A2 Preferred Shares then outstanding are entitled to a 1x non-participating liquidation preference.
−Removed: In addition, holders of the Series A2 Preferred Shares are eligible to demand redemption of their shares in the event of certain deemed liquidation events, as defined the agreement.
−Removed: Due to the various rights and privileges within the existing Series A2 Preferred and Common shareholder agreements, the Company concluded triggering a deemed liquidation event is within the control of the Company, and therefore the Series A2 Preferred Shares are classified as permanent equity.
+Added: In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or Deemed Liquidation Event, the holders of Series A1 and A2 preferred shares then outstanding were entitled to a 1x non-participating liquidation preference.
+Added: Due to the various rights and privileges within the existing Series A1 and A2 Preferred and Common shareholder agreements, the Company concluded triggering a deemed liquidation event was within the control of the Company, and therefore the Series A1 and A2 preferred shares were classified as permanent equity.
Immediately prior to the completion of our IPO, all Series A1 and A2 preferred shares converted to an equal number of common shares.
2 unchanged sentences
We maintain the AbCellera Biologics Inc.
−Removed: Sixth Amended and Restated Stock Option Plan, our Pre-IPO Plan, which was most recently approved by our board of directors on November 18, 2020.
+Added: Sixth Amended and Restated Stock Option Plan, our Pre-IPO Plan, which was approved by our board of directors on November 18, 2020.
The Pre-IPO Plan allows for the grant of options (and for U.S.
participants, either incentive stock options and/or nonstatutory stock options) to employees, directors, and consultants, subject in each case to compliance with applicable tax laws.
−Removed: Our 2020 Plan became effective on the date immediately prior to the date on which our initial S-1 registration statement was declared effective by the SEC on December 10, 2020.
+Added: Our 2020 Share option and Incentive Plan, or 2020 Plan became effective on the date immediately prior to the date on which our initial S-1 registration statement was declared effective by the SEC on December 10, 2020.
As a result, we do not expect to grant any additional awards under the Pre-IPO Plan following that date.
5 unchanged sentences
2020 Share Option and Incentive Plan:
−Removed: 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, and became effective on the date immediately prior to the date on which our initial S-1 registration statement was declared effective by the SEC on December 10, 2020.
−Removed: The 2020 Plan replaced our Pre-IPO Plan, as our board of directors will not make additional awards under the Pre-IPO Plan following our IPO.
−Removed: The shares we issue under the 2020 Plan will be authorized but unissued shares or shares that we reacquire.
+Added: Our 2020 Plan was approved by our board of directors on November 18, 2020 and approved by our shareholders on December 1, 2020, and became effective on the date immediately prior to the date on which our initial S-1 registration statement was declared effective by the SEC on December 10, 2020.
+Added: The 2020 Plan replaced our Pre-IPO Plan, as our board of directors will not make additional awards under the Pre-IPO Plan.
+Added: The shares we issue under the 2020 Plan will be authorized but unissued shares or shares that we reacquire and typically vest over four years .
The common shares underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without any issuance of shares, expire or are otherwise terminated (other than by exercise) under the 2020 Plan and the Pre-IPO Plan will be added back to the common shares available for issuance under the 2020 Plan.
1 unchanged sentence
As of December 31, 2022, the number of shares available for issuance under the 2020 Plan was 21,329,770 which includes awards granted and outstanding under the Pre-IPO Plan that are forfeited after December 10, 2020.
−Removed: Restricted Share Units
−Removed: During the year ended December 31, 2021, the Company granted Restricted Share Units (RSUs) to certain employees that vest over a period of four years , in the amount of one-quarter each year on the anniversary of the grant date.
−Removed: RSUs are equity-settled on each vesting date, subject to the grantee’s continued employment with the Company on the vesting date.
−Removed: The fair value of RSUs granted was calculated by using the Company’s closing stock price on the grant date.
The following table summarizes the Company’s stock options granted under the Pre-IPO Plan:
4 unchanged sentences
Options exercisable as of December 31, 2022
−Removed: 1 Pre-IPO plan options were historically granted in CAD.
−Removed: In 2021, all Pre-IPO employee option holders converted the currency of their option exercise price from Canadian dollars to U.S.
−Removed: dollars for administrative convenience.
The following table summarizes the Company’s stock options granted under the 2020 Plan:
3 unchanged sentences
Options exercisable as of December 31, 2022
−Removed: The weighted average grant date fair value per share of options granted during 2019, 2020, and 2021 was $ 0.26 , $ 3.95 and $ 12.31 , respectively.
−Removed: The intrinsic value of options exercised during 2019, 2020, and 2021 was $nil, $ 6.8 million and $ 295.6 million, respectively.
+Added: The intrinsic value of options exercised during 2020, 2021, and 2022 was $ 6.8 million, $ 295.6 million and $ 34.4 million, respectively.
As of December 31, 2022, there was $ 113.4 million of unrecognized compensation cost related to unvested stock options granted under the Plans, which is expected to be recognized over a weighted average period of 2.88 years.
+Added: Restricted Share Units
+Added: T he Company grants Restricted Share Units (RSUs) to certain employees that vest over a period of four years , in the amount of one-quarter each year on the anniversary of the grant date.
+Added: RSUs are equity-settled on each vesting date, subject to the grantee’s continued employment with the Company on the vesting date.
+Added: The fair value of RSUs granted was calculated by using the Company’s closing stock price on the grant date.
The following table summarizes the Company’s RSUs granted under the 2020 Plan:
3 unchanged sentences
Outstanding as of December 31, 2022
+Added: The intrinsic value of RSUs vested and settled during 2020 and 2021 was nil, and $ 2.5 million in 2022.
As of December 31, 2022, there was $ 44.9 million of unamortized RSU expense that will be recognized over a weighted average period of 3.25 years.
−Removed: Stock-based compensation expense was classified in the consolidated statements of income (loss) and comprehensive income (loss) as follows:
+Added: Stock-based compensation expense was classified in the consolidated statements of income and comprehensive income as follows:
Year ended December 31,
26 unchanged sentences
Management estimated the fair value of its common shares based on a number of objective and subjective factors, including internal valuations, external market considerations affecting the biotechnology industry and the historic prices at which the Company sold common shares.
−Removed: At December 31, 2020, there were 1,012,000 liability classified options outstanding, of which $ 4.3 million was included in other liabilities.
−Removed: At December 31, 2021 there were no liability classified options outstanding.
−Removed: The disaggregated revenue categories are presented on the face of the statements of income (loss) and comprehensive income (loss).
+Added: The disaggregated revenue categories are presented on the consolidated statements of income and comprehensive income.
Deferred Revenue
−Removed: Deferred revenue represents payments received for performance obligations not yet satisfied and are presented as current or long-term in the accompanying balance sheets based on the expected timing of satisfaction of the underlying goods and/or services.
+Added: Deferred revenue represents payments received for performance obligations not yet satisfied and are presented as current or long-term in the accompanying consolidated balance sheets based on the expected timing of satisfaction of the underlying goods and/or services.
Deferred revenue outstanding at each respective period is as follows:
5 unchanged sentences
For the year ended December 31, 2021, the Company received an additional $ 1.7 million in payments, for total payments received in respect of this agreement of $ 28.4 million.
+Added: For the year ended December 31, 2022, the Company received $ 0.8 million in additional payments.
The Company recognized $ 6.9 million of revenue in the year ended December 31, 2022.
1 unchanged sentence
Of the remaining deferred revenue balance of $ 26.9 million, which is related to various other agreements, approximately $ 20.2 million is expected to be recognized in revenue in the next 12 months.
−Removed: License Revenue
−Removed: For the years ended December 31, 2020 and December 31, 2021, the Company recognized $nil and $ 20.8 million, respectively, from license revenue relating to license of the Trianni platform.
Government Funding
−Removed: In 2020 the Company received a funding commitment from the Government of Canada under Innovation, Science and Economic Development’s (ISED) Strategic Innovation Fund (SIF) for a total of CAD $ 175.6 million ($ 125.6 million) which is intended to support research and development efforts related to the discovery of antibodies for use drugs to treat COVID-19, and to build technology and manufacturing infrastructure for antibody therapies against future pandemic threats.
+Added: In 2020, the Company received a funding commitment from the Government of Canada under Innovation, Science and Economic Development’s (ISED) Strategic Innovation Fund (SIF) for a total of CAD $ 175.6 million ($ 129.7 million as of December 31, 2022) which is intended to support research and development efforts related to the discovery of antibodies to treat COVID-19, and to build technology and manufacturing infrastructure for antibody therapeutics against future pandemic threats.
Since inception, the Company incurred $ 79.3 million in expenditures in respect of the SIF grant funding.
−Removed: $ 37.9 million relates to spending under phase 1 of the agreement and such amounts are not repayable, and $ 21.6 million was claimed in respect of phase 2 of the funding commitment.
−Removed: Repayment on phase 2 of the funding is conditional on achieving certain revenue thresholds over a specified period of time as prescribed in the agreement.
+Added: $ 46.1 million relates to spending under phase 1 of the agreement and such amounts are not repayable, while $ 33.2 million was claimed in respect of phase 2 of the funding commitment, where repayment is conditional on achieving certain revenue thresholds in seven years starting a year following the completion of the funded project.
+Added: Repayment will be calculated as a percentage rate of the Company’s revenue, with payment made on an annual basis during the repayment period of fifteen years .
The funding and its associated conditional repayment is not and will not be secured by any of the Company’s assets, and includes certain non-financial covenants and restrictive covenants on dividend payments or other shareholder distributions that would prevent the Company in satisfying its obligations under the arrangement.
As of December 31, 2022, no amounts have been accrued related to the repayment terms as the conditions are estimated to be non-probable at December 31, 2022.
−Removed: For the year ended December 31, 2021, the Company incurred $ 47.1 million in expenditures in respect of the SIF grant funding.
−Removed: Of the total spend during the year, $ 13.8 million relates to research and development expenditures and is reflected in other income on the consolidated statements of income (loss) and comprehensive income (loss).
−Removed: The remaining $ 33.3 million is attributable to capital asset expenditures and is amortized into other income over the average asset life of five years .
−Removed: Unamortized amounts are included in other liabilities and other long-term liabilities on the consolidated balance sheets.
−Removed: The balance of SIF grant funding included in the balance of accounts and accrued receivable is $ 12.9 million and $ 14.8 million at December 31, 2020 and 2021, respectively.
+Added: For the year ended December 31, 2020, 2021 and 2022, the Company incurred $ 12.4 million, $ 47.1 million, $ 18.9 million in expenditures in respect of the SIF grant funding, respectively.
+Added: For the year ended December 31, 2020, 2021 and 2022, $ 5.3 million, $ 13.8 million, $ 3.9 million, respectively, relates to research and development expenditures and is reflected in grants and incentives on the consolidated statements of income and comprehensive income.
+Added: The remaining $ 15.0 million is attributable to capital asset expenditures and is amortized into other income over the average asset life of seven years .
+Added: Unamortized amounts are included in accounts payable and other liabilities and long term deferred grant funding on the consolidated balance sheets.
+Added: The balance of SIF grant funding included in the balance of accounts and accrued receivable is $ 14.8 million and $ 6.9 million as of December 31, 2021 and 2022, respectively.
For financial reporting purposes, income before income taxes includes the following components:
7 unchanged sentences
Reconciliation between the expected tax rate on income from operations and the statutory tax rate was as follows:
−Removed: Net earnings (loss) before income taxes
+Added: Net earnings before income taxes
Combined statutory tax rate
2 unchanged sentences
Change in valuation allowance
−Removed: Change for under accrual
+Added: Tax rate differential
+Added: Prior year tax assessments and adjustments
Change due to SR&ED
9 unchanged sentences
Net operating losses carried forward
−Removed: Research and development deductions and credits
+Added: Capitalized research and development costs for tax purposes
Deferred tax liabilities:
7 unchanged sentences
Net deferred tax assets (liability)
−Removed: Amounts recognized in the Company's consolidated balance sheet as of December 31, 2020 and 2021 comprise of $ 5.9 and $ 7.4 million, respectively, included in other long-term assets and $ 26.2 and $ 37.4 million, respectively, as deferred tax liability.
+Added: Amounts recognized in the Company's consolidated balance sheets as of December 31, 2021 and 2022 comprise of $ 7.4 million and $ 5.3 million, respectively, included in other long-term assets and $ 37.4 million and $ 33.2 million, respectively, as deferred tax liability.
Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing DTAs.
−Removed: A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2021 in the United States.
+Added: A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2022, in foreign subsidiaries.
Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.
1 unchanged sentence
The amount of the DTA considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is longer present and additional weight is given to subjective evidence such as our projections for growth.
−Removed: The Company does not have any Canadian non-capital loss carried forward and has utilized all investment tax credits from the prior taxation years in 2020.
+Added: As of December 31, 2022 the Company has Canadian a non-capital loss of approximately $ 58.2 million and we generated federal and provincial investment tax credit of approximately $ 7.2 million.
+Added: The non-capital loss and investment tax credits are available to be carried back up to three years against taxable income.
The Company had no unclaimed tax deductions for scientific research and experimental development.
The Company had operating losses carried forward related to foreign operations of approximately $ 1.5 million, $ 18.2 million and $ 19.4 million as of December 31, 2020, 2021 and 2022 respectively.
−Removed: Certain tax attributes are subject to an annual limitation as a result of the acquisitions of Lineage and TetraGenetics which constitute a change of ownership as defined under IRC Section 382.
+Added: Certain tax attributes are subject to an annual limitation as a result of the acquisitions of Lineage and TetraGenetics which constitute a change of
+Added: ownership as defined under IRC Section 382.
Certain operating losses available for the foreign subsidiary deferred tax assets can be carried forward indefinitely while the rest expire ranging from 2034 to 2037.
12 unchanged sentences
Under the Coronavirus Aid, Relief, and Economic Security Act, losses incurred effective 2021 can only be used to offset 80% of taxable income.
−Removed: The Company is subject to taxation primarily in Canada and the United States.
+Added: The Company is subject to taxation primarily in Canada, the United States, and Australia.
Further, while the statute of limitations in each jurisdiction where an income tax return has been filed generally limits the examination period, as a result of loss carry-forwards, the limitation period for examination generally does not expire until several years after the loss carry-forwards are utilized.
Tax years ranging from 2018 to 2022 remain subject to Canadian income tax examinations.
−Removed: Tax years ranging from 2017 to 2021 remain subject to U.S.
−Removed: income tax examinations.
+Added: Tax years ranging from 2018 to 2022 remain subject to the foreign income tax examinations.
Other than routine audits done by tax authorities for tax credits and tax refunds that the Company has claimed, management is not aware of any other material income tax examination currently in progress by any taxing jurisdiction.
−Removed: The Company leases office and laboratory facilities in Vancouver, Canada and Sydney, Australia, and Cambridge, United Kingdom and Boston, USA.
−Removed: The majority of the Company's operating leases have a fixed term with a remaining life between one month and 20 years, with renewal options included in the contracts.
+Added: The Company leases office and laboratory facilities in Vancouver, Canada and Sydney, Australia, Cambridge, United Kingdom and Boston, USA.
+Added: The Company's operating leases have a fixed term with a remaining life between fourteen months and 15 years, with renewal options included in the contracts ranging from one to ten years .
The leases have varying contract terms, escalation clauses and renewal options.
Generally, there are no restrictions placed upon the lessee by entering into these leases, other than restrictions on use of property, sub-letting and alterations.
−Removed: At the inception of a lease, the Company determines whether it is reasonably certain to exercise a renewal option and includes the options in the determination of the lease term and the lease liability where it is reasonably certain to exercise the option.
−Removed: If the Company's intention is to exercise an option subsequent to the commencement of the lease, the Company will re-assess the lease term.
T he balance sheet classification of the Company's lease liabilities was as follows:
4 unchanged sentences
At December 31, 2022, the future minimum lease payments of the Company’s operating lease liabilities were as follows:
−Removed: As of December 31, 2021, the weighted-average remaining lease term is 9.3 years and the discount rate used to determine the operating lease liabilities was approximately 3.3 %.
−Removed: The Company incurred total operating lease expenses, including fixed lease payments and non-lease components, of $ 0.6 million, $ 1.1 million and $ 4.1 million during the years ended December 31, 2019, 2020 and 2021, respectively.
+Added: As of December 31, 2022, the weighted-average remaining lease term is 12.1 years and the weighted-average discount rate used to determine the operating lease liabilities was approximately 4.9 %.
+Added: The Company incurred total operating lease expenses, including fixed lease payments, of $ 0.8 million, $ 3.7 million and $ 7.1 million and variable lease payments, of $ 0.3 million, $ 0.4 million and $ 1.8 million during the years ended December 31, 2020, 2021 and 2022, respectively.
Financial Instruments
5 unchanged sentences
and Level 3 inputs are not observable in the market.
−Removed: The Company’s financial instruments consist of cash and cash equivalents, restricted cash, marketable securities, accounts receivable, loans to related parties, accounts payable and accrued liabilities and royalties payable, and contingent consideration payable.
−Removed: The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities, royalties payable, and related party loans approximate their fair values.
+Added: The Company’s financial instruments consist of cash and cash equivalents, restricted cash, marketable securities, accounts receivable, loans receivable, loans to equity accounted investees, accounts payable and accrued liabilities and royalties payable, and contingent consideration payable.
+Added: The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities, royalties payable, loans receivable, and loans to equity accounted investees approximate their fair values.
Contingent Consideration
3 unchanged sentences
Further information related to the Trianni and TetraGenetics contingent consideration is disclosed in Note 20.
−Removed: There were no changes to the valuation technique and inputs used in these fair value measurements since acquisition.
+Added: There were no changes to the valuation technique or significant changes to the inputs used in these fair value
+Added: measurements since acquisition .
+Added: The discount rate applied increased to 10.7 % (from 8.0 % since acquisition date) associated to the TetraGenetics contingent consideration at December 31, 2022.
The following table presents the changes in fair value of the liability for contingent consideration:
−Removed: December 31, 2021 (in thousands)
−Removed: (decrease) in fair
+Added: December 31, 2021
+Added: Increase in fair
value of liability
4 unchanged sentences
TetraGenetics
−Removed: Contingent consideration balance as of December 31, 2020 was $ 22.6 million with immaterial fair value changes for the year ended December 31, 2020.
+Added: December 31, 2022
+Added: Increase in fair
+Added: value of liability
+Added: for contingent
+Added: consideration 1
+Added: Repayment of contingent
+Added: consideration
+Added: TetraGenetics
+Added: (1) Increase in fair value of liability for contingent consideration is included within interest and other in other income on the consolidated statements of income and comprehensive income.
Marketable Securities
−Removed: In the third quarter of 2021, the Company purchased high credit quality marketable securities as part of the Company’s cash management strategy, as these securities are viewed as being available to support the Company’s current operations.
+Added: As part of the Company’s cash management strategy, the Company holds a diversified portfolio of high credit quality marketable securities that are available to support the Company’s operations.
Level 2 marketable securities in the fair value hierarchy were based on quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs to determine fair value.
9 unchanged sentences
Asset backed securities
+Added: Fair Value Measurements at December 31, 2022:
+Added: Marketable securities
+Added: government agencies
+Added: Certificate of deposit
+Added: Commercial paper
+Added: Corporate bonds
+Added: Asset backed securities
Commitments and contingencies
1 unchanged sentence
At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.
−Removed: The Company does not have contingency reserves established for any litigation liabilities and any the costs related to such legal proceedings are expensed as incurred.
+Added: The Company does not have contingency reserves established for any litigation liabilities and any of the costs related to such legal proceedings are expensed as incurred.
The Company may enter into certain agreements with strategic partners in the ordinary course of operations that may include contractual milestone payments related to the achievement of pre-specified research, development, regulatory and commercialization events and indemnification provisions, which are common in such agreements.
Pursuant to the agreements, the Company may be obligated to make research and development and regulatory milestone payments upon the occurrence of certain events and upon receipt of royalty payments in the low single-digits to mid-twenties based on certain net sales targets.
−Removed: During 2020, the Company expensed approximately $ 27.1 million related to such obligations, of which $ 27.1
−Removed: million is included in current liabilities.
−Removed: For the year ended December 31, 2021, the Company expensed $ 45.5 million related to such obligations, of which $ 22.5 million is included in current liabilities.
−Removed: There were no such payments prior to 2020.
−Removed: Excluding the lease arrangements as accounted for in Note 16 – Leases, the Company has the following additional commitments in respect of several leased facilities where the lease commencement dates are subsequent to December 31, 2021:
+Added: For the years ended December 31, 2020, 2021, and 2022, the Company expensed approximately $ 27.1 million, $ 45.5 million, and $ 66.4 million, respectively, related to such obligations, of which $ 27.1 million, $ 22.5 million, and $ 19.3 million, respectively, is included in current liabilities as accued royalties payable.
+Added: Excluding the lease arrangements as accounted for in Note 15 – Leases, the Company has the following additional commitments in respect of leased facilities where the lease commencement dates are subsequent to December 31, 2022:
Financial Risk Management
Concentration of Credit Risk
−Removed: Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, and accounts and accrued receivable.
−Removed: Cash and cash equivalents and restricted cash are invested with the primary objective being the preservation of capital and maintenance of liquidity.
−Removed: The guidelines on the quality of financial instruments that the Company believes minimizes the exposure to concentration of credit risk.
−Removed: The Company limits its exposure to credit loss by placing its cash and cash equivalents with multiple high credit quality financial institutions.
+Added: Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents, marketable securities, restricted cash, and accounts and accrued receivable.
+Added: Cash and cash equivalents, marketable securities, and restricted cash are invested with the primary objective being the preservation of capital and maintenance of liquidity.
+Added: The guidelines on the diversification of the marketable securities portfolio and credit quality of financial instruments that the Company holds minimizes the exposure to concentration of credit risk.
+Added: The Company further limits its exposure to credit loss by placing its cash and cash equivalents with multiple high credit quality financial institutions.
The Company’s exposure to credit risk for accounts and accrued receivables is indicated by the carrying value of its accounts receivable and accrued receivables.
1 unchanged sentence
Any adjustments made to our historical loss experience reflect current differences in asset-specific risk characteristics and current economic conditions.
−Removed: At December 31, 2020 and 2021, accounts and accrued royalty receivable amounts were due from seven and thirteen customers, respectively.
−Removed: For the year ended December 31, 2020, we recognized milestone and royalty revenue totaling $ 213.3 million, exclusively from our partnership with Lilly, of which $ 198.3 million was receivable at December 31, 2020.
−Removed: For the year ended December 31, 2021 we recognized milestone payments of $ 7.0 million and royalty revenue totaling $ 327.3 million, exclusively from our partnership with Lilly, of which $ 138.4 million was a receivable at December 31, 2021.
+Added: At December 31, 2021 and 2022, accounts and accrued royalty receivable amounts were due from thirteen and twenty-one customers, respectively.
+Added: For the year ended December 31, 2021, we recognized milestone payments of $ 7.0 million and royalty revenue totaling $ 327.3 million, exclusively from our partnership with Lilly, of which $ 138.4 million was receivable at December 31, 2021.
+Added: For the year ended December 31, 2022, we recognized royalty revenue totaling $ 443.0 million, exclusively from our partnership with Lilly, of which $ 9.3 million was a receivable as of December 31, 2022.
Interest Rate Risk
−Removed: The Company’s interest rate risk is primarily attributable to its cash and cash equivalents, restricted cash, marketable securities, long term contingent consideration payable and long term operating lease liability.
−Removed: As of December 31, 2021, the Company had cash and cash equivalents of $ 476.1 million, restricted cash of $ 25.0 million, and marketable securities of $ 246.8 million, a majority of which was maintained in high credit quality and liquid held for trading marketable securities, bank accounts and term deposits.
−Removed: The Company’s interest rate risk is affected by changes in the general level of interest rates, particularly because the majority the Company’s investments are short-term in nature.
−Removed: Due to record low interest rates and the short-term duration of the Company’s cash and cash equivalent holdings and marketable securities and the low risk profile of the marketable securities, a 10 % change in interest rates would not have a material effect on the fair market value of cash, cash equivalents, restricted cash, and marketable securities.
+Added: The Company’s exposure to interest rate risk is primarily attributable to its cash and cash equivalents, restricted cash, marketable securities, long-term contingent consideration payable and long-term operating lease liability.
+Added: As of December 31, 2022, the Company had cash and cash equivalents of $ 386.5 million, restricted cash of $ 28.1 million, and marketable securities of $ 500.0 million, a majority of which was maintained in high credit quality and liquid bank accounts, term deposits, and held for trading marketable securities.
+Added: The Company’s interest rate risk is affected by changes in the general level of interest rates, particularly because the majority of the Company’s investments are short-term in nature.
+Added: Due to interest rates available to the Company, the short-term duration of the Company’s cash and cash equivalent holdings and marketable securities, and the low risk profile of the marketable securities, a 100 basis points change in interest rates would not have a material effect on the fair market value of cash, cash equivalents, restricted cash, and marketable securities.
The Company also has the ability to hold the marketable securities until maturity, and therefore, the Company would not expect the Company’s operating results or cash flows to be affected to any significant degree by the effect of a sudden change in market interest rates.
−Removed: The Company does not enter into investments for trading or speculative purposes and has not used any derivative financial instruments to manage interest rate exposure.
+Added: The Company does not enter into investments for speculative purposes and has not used any derivative financial instruments to manage interest rate exposure.
The Company is further exposed to the risk that the fair value of the contingent consideration payable and operating lease liability will vary as a result of changes in market interest rates.
In order to manage funding needs or capital structure goals, the Company may enter into arrangements that are subject to either fixed market interest rates set at the time of issue or floating rates determined by ongoing market conditions.
−Removed: Debt subject to variable interest rates exposes the Company to variability in interest
−Removed: expense, while debt subject to fixed interest rates exposes the Company to variability in the fair value of debt.
−Removed: To manage interest rate exposure, the Company accesses various sources of financing and manages borrowings in line with debt ratings, liquidity needs, maturity schedule, and currency and interest rate profiles.
+Added: Debt subject to variable interest rates exposes the Company to variability in interest expense, while debt subject to fixed interest rates exposes the Company to variability in the fair value of debt.
+Added: To manage interest rate exposure, the Company may access various sources of financing and manages borrowings in line with debt ratings, liquidity needs, maturity schedule, and currency and interest rate profiles.
Foreign Currency Risk
1 unchanged sentence
and Canadian dollars.
−Removed: The Company had Canadian denominated cash and cash equivalents of CAD $ 0.9 million and CAD $ 8.2 million at December 31, 2020 and 2021, respectively.
+Added: The Company had Canadian denominated cash and cash equivalents of CAD $ 8.2 million and CAD $ 44.9 million as of December 31, 2021 and 2022, respectively.
The Company incurs certain operating expenses and accounts payable in currencies other than the U.S.
4 unchanged sentences
The fluctuation of the U.S.
−Removed: dollar relative to the Canadian dollar will have an impact on the reported balances for net assets, net earnings (loss) and shareholders’ equity in the Company’s consolidated financial statements.
−Removed: Counterparty Risk
−Removed: For the year ended December 31, 2020, three of our partners accounted for 35 %, 25 % and 14 % of our research fees revenue.
+Added: dollar relative to the Canadian dollar will have an impact on the reported balances for net assets, net earnings and shareholders’ equity in the Company’s consolidated financial statements.
+Added: Partner Program Counterparty Risk
+Added: For the year ended December 31, 2021, four of our partners accounted for 29 %, 17 %, 11 % and 10 % of our research fees revenue.
Our partnership with Lilly constituted one of the partnerships that generated 10 % or more of our consolidated revenues.
−Removed: For the year ended December 31, 2021, four of our partners accounted for 29 %, 17 %, 11 %, and 10 % of our research fee revenue.
+Added: For the year ended December 31, 2022, three of our partners accounted for 29 %, 17 % and 11 % of our research fee revenue.
Our partnership with Lilly constituted one of the partnerships that generated 10 % or more of our consolidated revenues.
Related party transactions
−Removed: Other than the related party loan between the Company and the Dayhu JV disclosed in Note 9, the Company had the following transactions with related parties:
−Removed: Chief Executive Officer (“CEO”) of the Company was the recipient of a personal loan of CAD $ 2.0 million ($ 1.5 million) from the, Company during the year ended December 31, 2019 for the purposes of financing the purchase of a residential property.
−Removed: The loan is interest bearing at an annual interest rate of 3.54 %.
−Removed: The loan was repaid in full in 2020 .
−Removed: The General Counsel of the Company was the recipient of a loan of $ 0.2 million during the year ended December 31, 2019.
−Removed: The loan is interest bearing at an annual interest rate of 3.95 % and has a term to maturity of 3.33 years.
−Removed: The loan was repaid in full in 2020 .
−Removed: In June 2020, the Company acquired rights to the OrthoMab bispecific platform from Dualogics, LLC for $ 4.0 million.
−Removed: The acquisition represents a group of similar assets sourced from the agreement.
−Removed: All the fair value associated with the agreement is concentrated in a group of similar assets and is not considered a business in accordance with ASC 805-10-55-5A.
−Removed: The Company does not reasonably expect the platform acquired will be used to receive economic benefit in an alternative manner, nor does the acquisition agreement provide for any future economic benefit to the Company from the rights retained by Dualogics, LLC.
−Removed: The Company therefore accounted for the right to the Dualogics, LLC platform acquired under the agreement as an acquisition of an asset and recognized $ 4.0 million as research and development expenses under ASC 730 .
+Added: In addition to the Dayhu JV Loan disclosed in Note 9, the Company had the following related party transaction s :
+Added: During 2022, the Company engaged advisory services with a firm co-founded by a director of the Company.
+Added: For the year ended December 31, 2022, $ 0.3 million was included in general and administrative expenses, of which $ 0.2 million was included in accounts payable at December 31, 2022.
On November 3, 2020 , the Company completed a business combination with Trianni, Inc.
2 unchanged sentences
Issuance costs associated with the convertible notes was immaterial.
−Removed: The convertible notes mature five years from the date of issuance and bear no interest for the first twelve months and bear five percent ( 5 %) interest per annum thereafter.
+Added: The convertible notes mature five years from the date of issuance and bear no interest for the first twelve months and bear five percent
+Added: ( 5 %) interest per annum thereafter.
Interest is payable annually starting twenty-four months from the date of issuance until maturity .
−Removed: Upon a liquidity event, such as an IPO, if occurred within 6 months of the issue date, then immediately prior to the liquidity event, noteholders may convert the principal amount of the note into common shares of the company at 85 % of the IPO issue price of
−Removed: common shares.
+Added: Upon a liquidity event, such as an IPO, if occurred within 6 months of the issue date, then immediately prior to the liquidity event, noteholders may convert the principal amount of the note into common shares of the company at 85 % of the IPO issue price of common shares.
The convertible notes are also convertible at the option of the holders on the interest commencement date, which is 12 months after the issuance date.
3 unchanged sentences
The convertible note was fully extinguished upon conversion and the carrying value of the convertible note was reclassified into common shares.
−Removed: The acquisition date fair value of the final purchase price consideration transferred consisted of the following:
Estimated Purchase Price Consideration
3 unchanged sentences
Represents the estimated fair value of the earn-out payments related to the specific customer license ending on April 9, 2024.
−Removed: T he estimated fair value was categorized within Level 3 of the fair value hierarchy and determined by estimating the payout of 85 % of the expected future net cash flows associated to the specific customer license during the earn-out period ending on April 9, 2024.
+Added: The estimated fair value was categorized within Level 3 of the fair value hierarchy and determined by estimating the payout of 85 % of the expected future net cash flows associated to the specific customer license during the earn-out period ending on April 9, 2024.
The significant assumptions inherent in the development of the value include the amount and timing of projected future net revenues received by us from the specific customer license, and the discount rate selected to measure the risks inherent in the future cash flows, which was approximately 22 %.
4 unchanged sentences
Goodwill also reflects the requirement to record deferred tax balances for the difference between the assigned values and the tax bases of assets acquired and liabilities assumed in the business combination.
−Removed: Total transaction costs expensed in the statement of income (loss) and comprehensive income (loss) was immaterial.
−Removed: During the period ended December 31, 2021, the Company has recorded immaterial adjustments to the preliminary allocation of the purchase price for the finalization of working capital adjustments, income taxes, and the resulting impact to goodwill.
+Added: Total transaction costs expensed in the consolidated statements of income and comprehensive income was immaterial.
+Added: During the period ended December 31, 2021, the Company has re corded immaterial adjustments to the preliminary allocation of the purchase price for the finalization of working capital adjustments, income taxes, and the resulting impact to goodwill.
The following table summarizes the final purchase price allocation for the Trianni transaction:
18 unchanged sentences
Goodwill is not deductible for tax purposes.
−Removed: Net earnings (loss) for the period in the Consolidated Statement of Income and Comprehensive Income includes immaterial amount of Trianni revenue and net loss of approximately $ 1.8 million from the acquisition date to the year ended December 31, 2020.
+Added: Net earnings for the period in the consolidated statements of income and comprehensive income includes immaterial amount of Trianni revenue and net loss of approximately $ 1.8 million from the acquisition date to the year ended December 31, 2020.
Unaudited Pro Forma Financial Information
1 unchanged sentence
Years Ended December 31,
−Removed: Net income (loss)
TetraGenetics
5 unchanged sentences
The Company deposited an additional $ 12.5 million in escrow included as part of other long-term assets subject to release to the former shareholders of TetraGenetics upon the achievement of certain technical milestones.
−Removed: The estimated fair value of the potential milestone payouts have been included in the preliminary purchase price consideration.
−Removed: The acquisition date fair value of the preliminary purchase price consideration consisted of the following:
+Added: The estimated fair value of the potential milestone payouts have been included in the final consideration.
+Added: The acquisition date fair value of the final purchase price consideration consisted of the following:
Closing consideration
8 unchanged sentences
The goodwill balance represents the assembled workforce acquired, the combined company’s expectations of the strategic opportunities available as a result of the merger, and other synergies that will be derived from the merger.
−Removed: As of December 31, 2021, the Company had not yet fully completed the analysis to assign fair values to all assets acquired and liabilities assumed, and therefore the purchase price allocation is preliminary.
−Removed: The remaining items include the finalization of working capital adjustments, income taxes, and resulting impacts to goodwill.
−Removed: The preliminary purchase price allocation will be subject to further refinement as the Company continues to refine its estimates and assumptions based on information available at the acquisition date.
−Removed: These refinements may result in material changes to the estimated fair value of assets acquired and liabilities assumed.
−Removed: The purchase price allocation adjustments can be made throughout the end of the Company’s measurement period, which is not to exceed one year from the acquisition date.
−Removed: Total transaction costs expensed in the statement of income (loss) and comprehensive income (loss) were immaterial.
−Removed: During the three-months ended December 31, 2021, the Company has refined immaterial adjustments to the preliminary allocation of the purchase price for finalization of intangible assets, working capital adjustments, income taxes, and the resulting impact to goodwill.
−Removed: The following table summarizes the preliminary purchase price allocation for the TetraGenetics transaction as of September 10, 2021:
+Added: Total transaction costs expensed in the consolidated statements of income and comprehensive income were immaterial.
+Added: During the year ended December 31, 2022, no adjustments were made to the preliminary allocation of the purchase price .
+Added: The following table summarizes the final purchase price allocation for the TetraGenetics transaction:
Fair value of assets and liabilities acquired
17 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.