Absci Corporation (ABSI) Earnings Call Transcript & Summary

It's my pleasure to now introduce Sean McClain, CEO; and Zach Jonasson, CFO of Absci Corporation. Just a reminder, there will be a 20-minutes presentation following with 5 minutes Q&A. Thank you.

Thank you. I'm Sean McClain, the Founder and CEO of Absci. We are a generative design company focused on using AI to really tackle some of the hardest problems in drug discovery, being able to go after some of these undruggable targets that have known biology that traditional approaches have been struggling to ultimately drug. Now if you look at AI drug discovery over the past few years, there's been a lot of companies that have been emerging. And they talk about new model improvements and ultimately, what the efficiencies of these models are. But at the end of the day, we really need to see the translation in the clinic. And in the next 24 months, we're going to see how that translation looks with 2 of Absci's assets, ABS-201 in AGA as well as endometriosis. We'll have 2 Phase II readouts in the next 24 months. If you look at our team, we're not just AI scientists, but we're multilingual. We have an AI team, a disease biology team as well as a bunch of drug hunters that ultimately work together to leverage this technology to ultimately go after diseases that have been difficult to address in the past. Additionally, we have a data flywheel where we're constantly learning. We're able to take data from our 77,000 square foot automated wet lab and be able to use that data to ultimately train our models and rapidly learn. So in a 6-week time period, we can go from data in the wet lab to training our models and continuing to learn what AI architectures are ultimately best for generative design. And this has led to us being able to have really big breakthroughs in de novo design of antibodies. In particular, we've been able to address some really hard and challenging targets such as ion channels. In a partnership with Almirall, we've been able to actually block an ion channel that has been difficult to drug for the past 30 years. Additionally, we've been able to drug the HIV Caldera region in partnership with Caltech. And again, as I said at the beginning, we are seeing exciting translation of this technology with ABS-201. We have very exciting catalysts in the next 24 months, 2 Phase II readouts, one in androgenic alopecia. This is common odness and then additionally in endometriosis. So if we look at Absci's strategy, we are looking to apply our de novo design technology to tackle hard challenging targets that have yet to be drugged that have known biology. Again, these are GPCRs, ion channels. And how the model works is you take a target of interest, you identify the epitope you want the antibody to bind to and you're able then to generate the CDRs that can bind to that particular epitope of interest. And so now our scientists are actually able to start to test hypotheses that have -- they have been unable to attain previously. And this is where we can specifically engineer in agonism versus antagonism and turning on or off a particular pathway or, let's say, creating switches where you can bind in the tumor microenvironment, but not bind in healthy tissue. These are all ways that we are leveraging our AI platform to really create differentiated assets. And then we, as a team, figure out which of these we want to partner and then which we want to ultimately take forward ourselves. And in particular, we see a really big opportunity with ABS-201, and this is going to say wholly owned by Absci. And then the rest of the assets, we do look to partner. At the end of the day, it's the team that has gotten us to where we're at. We have incredible AI scientists and wet lab and disease biologists that work together to ultimately get these cutting-edge therapies to patients where we call ourselves unlimiters really being able to achieve the impossible roughly 140 unlimiters strong. We have a 77,000 square foot campus in Vancouver, Washington, where we're able to leverage that wet lab capability, not only for generating data for training our models, but also being able to do all of the disease biology validation for the particular targets we're going after. And currently, we -- as of Q3, we have $150 million on the balance sheet, and that gets us runway into the first part of '28. I'd like to think of this industry as a team sport. We all need each other to ultimately get these breakthrough therapies to patients. We partner with large pharma in disease areas that we are not focused in on to ultimately co-develop assets together. We've had partnerships with AstraZeneca, Merck. And then additionally, we have data and compute partnerships with NVIDIA and AMD. AMD is actually one of our top shareholders. They recently made a $20 million investment in Absci, and we're using that partnership to really drive innovation within our AI models. So today, I'll be going through one particular asset, ABS-201. This is an anti-prolactin receptor antibody. And the 2 indications that we are pursuing with this is androgenic alopecia as well as endometriosis. And as I stated previously, within the next 24 months, we'll have Phase II readouts on both these indications. Now diving into ABS-201 in androgenic alopecia. So hair is really important to individuals. If you talk to patients that are losing their hair, it is very personal. It's about their identity. It's about confidence. When patients are losing their hair, they lose their confidence. They end up becoming -- a lot of them are depressed. And by regaining their hair, they're not just getting vanity back, but they're really getting identity. And this is a condition and a disease that has been underfunded and underlooked for quite some time. And we see this as a really exciting opportunity. The patient population is extremely large. 80 million Americans alone suffer from androgenic alopecia. And the standard of care is extremely poor. The patients are ultimately not getting the efficacy they want as well as the durability. If you look at Minoxidil, Minoxidil only works on roughly 50% of patients. And the topical isn't very efficacious. And the -- an oral, you have to take that for life or you will lose your hair. There is no regenerative aspect with Minoxidil. And so this is where we see a huge opportunity for ABS-201 because we see actual durable hair regrowth with ABS-201, and it is truly regenerative, and we'll be diving into what that looks like on the following slides. So diving into the actual mechanism of action for the prolactin receptor. So if we step back and just look at the hair follicle growth cycle, it has 3 stages. First is the antigen phase. This is the active growth phase. And you stay in this phase based on your genetics for anywhere from 2 to 6 years. And then you go into the pathogen phase where you get apoptosis and regression and then ultimately, the telogen phase where you have shedding. And what happens over time is individuals, as they age, they end up building more prolactin locally on the scalp. And this drives the follicle into the catagen state, and it continues to stay there due to the high levels of prolactin. And so by blocking the receptor, you're able to ultimately shunt the follicle back into the antigen state. And we'll be sharing exciting ex vivo data at our KOL Summit on December 11, where we actually are able to show by blocking the prolactin receptor, you're actually able to restimulate the follicle stem cells and actually see the stem cell or the hair shaft growth as well as melanin production as well. So we believe that -- and you'll see on the next slide here that this should lead to very efficacious hair growth, but also durable hair regrowth. So this target was actually discovered by our Chief Innovation Officer, Andreas Busch, when he was at Bayer. They were actually looking at the prolactin receptor for endometriosis. And when they dosed with the drug, they ended up finding out that the mice that were on drug regrew their hair faster than the control arm, which led them to actually investigate prolactin in AGA and hair growth. And they did a study in the stumptailed macaques state that really got him excited and got us excited as well. And so what you're seeing here is the parts of the stumptailed macaques. These stumptailed macaques naturally go bald and the treatment was over 28 weeks. And then after 28 weeks, treatment stopped and the monkeys were monitored for up to 4 years. And so you can see when the treatment started, they were completely balled and they had grey hair. And by -- after 28 weeks of treatment, they have most of their hair regrown. And not only is it regrown, it's repigmented as well. So they've gone from their grey hair to their naturally colored hair. And what really blew us away and got us really excited was the durability. So post treatment for up to 4 years, they continue to regrow their hair, which then ties back really nicely to the mechanism of action. Once you're in that antigen state, you stay there for anywhere from 2 to 6 years. And so we believe that this will be actually a condition or disease-modifying drug where you essentially have post treatment and you could get durability for 2 to 3 years by blocking the prolactin receptor. Additionally, we took ABS-201 and wanted to show the superiority versus standard of care, which is Minoxidil. And so this is a mouse shaving study. These mice are naturally in the telogen phase. And we then dosed these mice with both ABS-201 as well as Minoxidil. And you can see that the -- with ABS-201, very rapidly, you're able to see that the hair follicle is shunted into the antigen phase and you get really pretty instantaneous hair regrowth compared to Minoxidil, again, nicely validating the mechanism of action here. All right. Great. So the efficacy is there, durability, what about safety? Are there any issues? If we're going direct to consumer, we really need to make sure that this is a safe mechanism and a safe drug. So there is a really great human genetic data out there that where a few families were actually studied where they had loss of function mutations of the prolactin receptor. And these individuals were completely healthy. The only issue that the women had was the inability to lactate. And so we do see this pathway given this human genetic data as a very safe mechanism. So playing out the AGA story here. We'll end with the upcoming catalysts. So December of this year, we will start our Phase I/IIa study. And this study will start with a SAD component, which will have healthy participants. And then we will quickly go into the MAD study, where we will be looking at healthy volunteers that have androgenetic alopecia. And then the second half of next year, we'll have the first efficacy interim readout looking at the hair regrowth. So we're really excited to start this trial in December. We've actually accelerated our time lines from previous guidance, and we'll have, again, that efficacy readout in the second half of next year. All right. So diving into endometriosis. The other major indication we can go after with the prolactin receptor is endometriosis. Endometriosis and women's health in general has been underlooked, underserved, underfunded and there hasn't really been much innovation. But yet this is a disease that is prevalent in so many women. 1 out of 10 women have endometriosis and this ends up leading to pelvic and menstruation pain for these women. It's a completely debilitating disease. And the standard of care is extremely poor. It's off-the-shelf pain medication, and there are some hormonal treatments such as GnRH. But these hormonal treatments really have pretty poor side effects. And so there's not a lot of women that ultimately take these hormonal treatments. And so the opportunity for innovation in this space is huge. And we are really excited about the prolactin receptor as not only being able to treat the pain, but actually be disease modifying. So let's just take a look at how prolactin is involved in endometriosis. So what ends up happening very similar to AGA instead of building prolactin locally in the scalp, women develop prolactin within the lesion. And this prolactin is actually what drives the overall growth of the lesion as well as sensitizes the neurons, which ends up leading to the pain that they -- the pelvic pain that they experience as well as the pain during menstruation. And so by being able to block the prolactin receptor, you can actually shut down the pain as well as reduce the overall lesion development. And so this is -- there's some -- there's 2 pieces of fundamental preclinical research that got us really excited about this mechanism and was able to show both the reduction in overall pain as well as decreasing the lesion formation. The first major work is here on the left. A group was able to show by blocking the prolactin receptor in mice, they were able to dramatically decrease the overall pain that was experienced within these mice. And then additionally, there's another study that was able to show that by blocking again, the prolactin receptor, you're able to decrease the lesion size and actually bring the disease state back to a normal level. We then took ABS-201 and wanted to compare it to standard of care, the GnRHs within a mouse pain model. And we were able to show that we could indeed reduce overall pain by blocking the prolactin receptor as well as we were able to show a decrease in the inflammation cytokines as seen here on the right. So as I mentioned, this is a large addressable market, 1 in 10 women have endometriosis. There are currently no non-hormonal treatments out there for women to, again, reduce overall pain and lesion formation. And we believe based on the preclinical data and some clinical data on HMI-115 that we actually believe that this could be a disease-modifying treatment. And if this truly is disease modifying, we do believe that, that actually will increase the diagnostic rate of these women that have endometriosis. And based on all of that, we do see potential peak sales of greater than $5 billion. Again, that is due to the fact that there is an extreme -- there is very low or poor standard of care, and it's a very large unmet medical need. And to summarize, we, again, have a very exciting 24 months coming up. We have ABS-101 that we just dropped up in our Phase I. We're looking to out-license that particular asset in IBD. Additionally, we do anticipate signing one or more new partnerships with a large pharma either this year or next. And then additionally, we have 2 Phase II readouts coming in the next 24 months in AGA and Indo. And with that, I'll open it up to questions.

AI platform, do you guys also have -- is this your own platform? And then second question would be, do you have molecular dynamics that you can see that you can test.

Yes, absolutely. So this is our own model that we have developed in-house. And generally the molecular dynamics is a great question. So we are obviously using structure-based data along with sequence and function data. But one of the things that we are seeing as an exciting area of development is actually using in the simulation to generate synthetic data. And so actually combining both the synthetic data along with the wet lab data that's generated is definitely a key part of our overall strategy. That is a great question. I don't believe that has been studied, but that's definitely something I can follow up with the team on. Yes. So that is a great question. So that molecule, first off, the safety that was done or the Phase I safety study, they only went up to 280 milligrams, which we believe based on the data that they saw both in AGA as well as endometriosis, that they're severely underdosing and they're not reaching greater than 90% receptor occupancy. And so in order to do that, they'd have to repeat their Phase I study. And then additionally, they have a poor formulation and a poor half-life. And in order to be commercially viable in AGA, they'd have to have 24 doses to ultimately achieve the efficacy in the monkey versus we would have 2 to 3 doses over that 6-month period, which we see being commercially viable. And so we do believe being able to actually get to that 90% receptor occupancy is ultimately going to be key for overall development. And so we do believe that we have a superior drug that has been developed compared to the HMI-115 molecule. So again, it has been studied with the human genetic data of the women that have had prolactin receptor knockout. They have been fertile and they have had children. They just have not been able to lactate. So I think that there is strong human genetic data that supports that this should not affect fertility within women.

I'm thinking about the alopecia program. You mentioned that the prolactin is localized mainly in the scalp.

Yes.

In your nonhuman primate data, are you seeing mostly just hair growth in the scalp? Or do you also have -- are you also seeing hair growth in other regions of the [indiscernible] .

So the hair growth was specific to the overall scalp. There wasn't hair growth seen elsewhere. And again, that's just driven by the fact that you -- again, over time, you see the prolactinemia on the scalp, but that doesn't necessarily occur elsewhere in the body. And then the other thing I'll mention is that you're not going to grow hair in unwanted places. It's essentially just restimulating follicles that have already been created. It's not creating new ones.

Great. Well, thank you all.