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Here's Why AbCellera Biologics Stock Gained 10.6% Last Month

By Keith Noonan – Sep 4, 2021 at 11:12AM

Key Points

  • AbCellera's second-quarter report arrived with some encouraging commentary and guidance from management.

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Even with its recent gains, the biotech stock is down roughly 53.4% in 2021's trading.

What happened

Shares of AbCellera Biologics (ABCL -3.67%) climbed 10.6% in June, according to data from S&P Global Market Intelligence. The biotech company published its second-quarter earnings release on Aug. 12 and held a conference call to discuss its results and outlook, and the market liked what it heard. 

ABCL Chart

ABCL data by YCharts

AbCellera posted revenue of $28 million in the period and a net loss of $0.01 per share. The company ended the quarter with 138 programs under contract, up 82% year over year. Sales were up roughly 154.5% year over year, but the business slipped into a loss after recording earnings per share of $0.03 in the prior-year period. 

A 3D imaging of proteins and antibodies.

Image source: Getty Images.

So what

AbCellera Biologics provides antigen discovery and engineering services for pharmaceutical companies. Sales and earnings have soared over the last year thanks to royalties it received for discovering Eli Lilly's  bamlanivimab antibody COVID-19 treatment. However, the Emergency Use Authorization (EUA) for bamlanivimab was withdrawn in June, and investors have been worried that revenue and profits would tumble and take a long time to recover. 

AbCellera generates revenue from R&D and milestones, but it gets the majority of its sales from royalties. Comments from management in the company's second-quarter call suggested that the business could soon enjoy another royalties windfall. 

While EUA has been withdrawn for bamlanivimab, the company also has another antibody-based treatment in in phase 2 clinical testing with Lilly. Early testing suggests that the bebtelovimab antibody is a potent antibody capable of effectively binding to spike proteins, and it could provide a significant new revenue source if the treatment makes it to market. Even better, things appear to be looking up on the bamlanivimab front. 

Now what

AbCellera Biologics stock has continued to gain ground early in September's trading. The company's share price is up roughly 11.7% in the month so far. 

ABCL Chart

ABCL data by YCharts

The stock is gaining ground in response to federal officials paving the way for bamlanivimab to start being used as a COVID-19 treatment again. Lilly's combination of the bamlanivimab and etesevimab antibodies has demonstrated efficacy in treating delta variant cases, and it's set to be shipped to over 20 states.

AbCellera Biologics has a market capitalization of roughly $5.2 billion and remains a somewhat risky investment. However, its ability to quickly identify the bamlanivimab antibody reflects well on the value of the company's platform, and the stock could serve up big wins for risk-tolerant investors. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends AbCellera Biologics Inc. The Motley Fool has a disclosure policy.

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Stocks Mentioned

AbCellera Biologics Inc. Stock Quote
AbCellera Biologics Inc.
ABCL
$12.87 (-3.67%) $0.49
Eli Lilly And Stock Quote
Eli Lilly And
LLY
$371.08 (1.96%) $7.13

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