This morning, a little after 7 AM Eastern Time, recent biotech recommendation, AbCellera Biologics (NSDQ: ABCL) released its readout on Phase II Clinical trials for its ABCL-635 treatment for moderate-to-severe vasomotor symptoms commonly known as “hot flashes.”
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We couldn’t have asked for a better readout on ABCL’s first treatment to be developed in-house, and the stock is up about 35% this morning on the news, trading well above $9 from our initial recommendation a little over $6 on July 16, 2026 (up about 50% since recommendation).
Here’s a quick summary of their readout:
Frequency Reduction: ABCL635 drove an 83% reduction in hot flash frequency at Week 4 (-8.8 hot flashes/day) compared to a 33% reduction in placebo (-3.5/day).
Placebo-adjusted drop: -5.3 hot flashes per day or a 50% net placebo-adjusted reduction.
Context: Benchmark targets were looking for a roughly 2.0+ net daily drop. Overperforming with a -5.3 net drop sets a compelling efficacy profile.
Severity Reduction: ABCL635 showed a 58% reduction in severity versus 12% for placebo.
Onset & Duration: Statistical significance was achieved at Week 1 and maintained continuously through Week 4 after a single dose.
Sleep & Global Impression: Demonstrated statistically significant improvements in patient sleep scores and Patient Global Impression of Change (PGI-C).
Zero Serious Adverse Events (SAEs): Well-tolerated with no severe AEs and zero dropouts due to adverse events.
No Liver Signals: Crucially, the release notes a clean safety profile without transaminase/liver enzyme elevation warnings—the exact Achilles’ heel of daily small-molecule competitors like Veozah.
Most Common AEs: Mild headache, fatigue, and minor injection-site reactions.
Historically, ABCL has partnered with larger drug companies on a fee-for service basis to identify specific antibodies on their behalf. And the company continues to pursue that business.
Indeed, just last week on their Q2 2026 earnings call, ABCL outlined two new deals to identify antibodies on behalf of Vertex Pharmaceuticals (NSDQ: VRTX) and Jazz Pharmaceuticals (NSDQ: JAZZ). In total, these two deals resulted in $110+ million of new upfront payments for ABCL and the potential for additional royalty payments should the treatments prove successful and generate sales revenue.
ABCL now has roughly $565 million in cash and equivalents on the balance sheet and $110 million in additional committed government funding.
That’s a total of $675 million with no debt, or about $2.20 per ABCL share. The company’s current cash burn rate is around $130 million annualized before accounting for any new cash inflow from partnerships with companies like VRTX and JAZZ. So, at the current burn rate, ABCL’s cash alone is enough to fund around 4 years of operations without any further royalties or partnership deals.
Of course, if ABCL continues to advance ABCL-635, or other drugs it’s developing, into later-stage trials their cash burn rate would accelerate significantly. Generally, the next step for ABCL-635 would be an End of Phase II meeting with the FDA – likely an end of 2026 or early 2027 event – followed by designing Phase III trials.
A Phase III trial would be significantly more expensive.
The Phase II trial readout just released involved 92 women, 46 who received the treatment and 46 who received a placebo. A Phase III trial, in comparison, would likely involve up to 1,000 patients and the readout would likely be a 2029 event. So, there’s a lot of risk and up-front investment still ahead for ABCL, to make this treatment commercial despite today’s positive news.
The good news is that ABCL has the cash to move forward with the treatment on its own or, alternatively, partner with a major global pharmaceutical company to provide up-front milestone payments and share the development costs in exchange for a share of the commercial rights if it’s approved.
And that’s the most important point about today’s readout.
On last week’s earnings call, CEO Carl Hansen noted:
The most important data readout this year is the top line results for ABCL635 in the treatment of moderate to severe hot flashes associated with menopause. Last quarter, we shared our interim Phase I data that showed robust and sustained target engagement in healthy male volunteers and supported quickly advancing into a Phase II study in postmenopausal women experiencing moderate to severe hot flashes. Recruitment in this study accelerated through H1, and we completed enrollment and initial dosing of patients in June, well ahead of schedule. Based on this, we expect a top line data readout very soon. If the data is positive, we believe ABCL635 will be highly derisked.
Source: ABCL Q2 2026 Conference Call August 5, 2026
Today’s readout was the most important event for ABCL this year because it helps support the company’s pivot from a fee-for-service antibody research company into a biotech that’s developing its own treatments in-house. That’s a significant de-risking event for ABCL.
Next up for ABCL this year is a Phase 1 readout for ABCL-575, which is a treatment for moderate-to-severe atopic dermatitis (eczema), which management confirmed for Q4 2026 on their Q2 call last week. The company also has two additional drugs – ABCL-688 and ABCL-386 – which it expects to advance to Phase I/II clinical trials in 2027.
Recall that my approach to identifying promising biotech stocks like ABCL for the model portfolio is to monitor and analyze 13-F filings from 5 large, well-respected biotechnology-focused hedge funds. It’s a process, and strategy, I covered at more depth in the mid-July issue “How to Piggyback on the Smartest Money in Biotech.”
The largest of these funds has owned a significant position in ABCL for a few quarters now and bumped up the size of that position back in Q1 2026, which signaled potential optimism about the company’s (now-released) clinical trial readout.
We recommended a small position size in ABCL for the model portfolio to reflect the company’s elevated risk profile and the stock is now well above our recommended buy under price of $7.50, so if you are not yet in this stock it’s now too late to jump in. For now, I’m retaining the recommended model portfolio position in ABCL as a hold as I see the potential for further upside to the $12 to $15 range over the intermediate term.
Also note that I am expecting a new batch of 13-F filings from our five favored biotech and life sciences funds by early next week. I’ll be combing those filings as soon as they’re released looking for the next ABCL, and will send out an alert or update if I identify any promising candidates for addition to the model portfolio.
For now, let’s dive into some of the other big movers in the model portfolio over the past month and a handful of changes and portfolio adjustments I’m recommending this week, including the partial sale of an artificial intelligence (AI) recommendation that’s up about 80% since recommendation a little over 3 months ago.
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