What happened
Shares of AbCellera Biologics (ABCL +8.15%) closed 7.1% higher today following news of a new partnership with Moderna (MRNA +4.47%), one of the first names to develop an effective COVID-19 vaccine.
So what
Moderna has been given much of the credit for coming up with its vaccine. But at least some of that credit is displaced. AbCellera Biologics was developing other know-how needed to make effective treatments since well before COVID. Although one of its top coronavirus-therapy efforts with Eli Lilly (LLY 0.18%) was suspended over safety concerns late last year, the underlying artificial intelligence-powered technology still has its place.
Indeed, AbCellera and Lilly went on to successfully co-create bamlanivimab, which for a short while was an approved treatment in the U.S. for COVID, driving a massive revenue surge for AbCellera.
Image source: Getty Images.
Now Moderna is tapping into this know-how. On Wednesday, AbCellera announced it will partner with Moderna to create as many as six new drugs using AbCellera's AI-powered antibody identification platform. The two parties specifically hope to advance the effectiveness of mRNA-encoded antibody therapeutics.
Now what
It's great news to be sure. Aside from up-front payments to AbCellera for access to its intellectual property, the agreement also calls for developmental-milestone payments and even royalties on sales of any new therapies stemming from the partnership. As a provider of drug-development services, this is the very sort of dealmaking AbCellera seeks.
On the other hand, this is a company with more to prove about its drug-development technology than it's already proved.
While the pandemic brought mRNA therapies into the spotlight, it also exposed some of their weakness. Namely, the earliest and most prolific COVID vaccines demonstrated efficacy, but they don't completely prevent re-infection with the virus, nor do they prevent a re-infected individual from being able to spread the disease. They're also less effective as a defense against the new delta variant. While that's not necessarily an indictment of the mRNA approach to drug development (a COVID vaccine in a short period of time is a tall order), the results thus far don't quite live up to the hype of RNA-based therapies.
Still, with AbCellera's stock currently priced below its December IPO of $20 and after falling more than 70% from its post-IPO high, the prospective reward here seems to outweigh the risk for new investors -- even after Wednesday's pop.
