Absci Corporation (ABSI) Earnings Call Transcript & Summary

Good afternoon. Thanks for joining us for another session at the 44th JPMorgan Healthcare Conference. I'm Brian Cheng, one of the senior biotech analysts here at the firm. On stage, we have Absci. I will now pass the mic to their CEO, Sean McClain for a short presentation, followed by a live audience Q&A. Sean, welcome. The stage is yours.

Thank you, Brian. As Brian said, I'm Sean McClain, the Founder and CEO of Absci. We're a generative AI drug creation company, and we're entering this really exciting new era where we're actually seeing the molecules that we designed in our AI, not only go into the clinic, but actually start to see proof of concept. Within the next 24 months, we will have two Phase II readouts in androgenic alopecia as well as endometriosis. We're looking to industrialize AI for drug discovery. We want to be able to leverage AI to figure out what biology we should be going after, what molecules we should be designing and this is all occurring through our wet lab in the loop. Today, we announced a brand-new model, Origin-1 that was released. And the progress we've been making on the AI has been because of this wet lab in the loop that you see here on the right. The 6-week cycle time that we have, we were able to rapidly validate our models with real-world data. And again, this is allowing us to make decisions as to which biology we should be going after and helping us to fail as quickly as we possibly can. So what is it translate into in terms of overall cost and spend. Traditionally, it takes 5.5 years to get one drug into the clinic, roughly a $50 million to $100 million investment. With ABS-101 and ABS-201, we've been able to dramatically decrease that cost and time. We've been able to show that we can get in the clinic in roughly 2 years with a total investment of $15 million. So being able to dramatically decrease the overall time it takes to get into the clinic as well as the overall cost. But cost and speed aren't everything with AI. We want to be able to leverage the technology to go after diseases that have high unmet medical need where standard of care is poor and we've been able to show this with two of our programs. This is ABS-201 for androgenic alopecia and endometriosis. And these two programs, we, again, will have Phase II readouts in the next 24 months. We have the opportunity today of releasing a brand-new manuscript describing our Origin-1 model. You can actually find out more information and actually see the manuscript with the QR code below here. And this model is focused on the de novo design of antibodies to what we are calling zero-prior epitopes. Now what do I mean by zero-prior epitopes? These are epitopes that do not have a structurally defined protein, protein interface. So these are novel interfaces where, again, there have been no known structural binders. Now why is this relevant? This allows us to actually start to go after these hard-to-drug targets where there, again, are no known binders. And this is really exciting because this allows us to start to go after exciting new biology against these GPCRs and ion channels. And this is really the first that we've seen and, to the best of our knowledge, is one of the state-of-the-art models in de novo design Origin-1. Now this ties really nicely into our overall strategy at Absci. We're not looking to develop me-too therapies at Absci. We're looking to go after hard-to-drug diseases, where we have the opportunity to be potentially first-in-class and address diseases that have high unmet medical need where standard of care is poor. And so you see that obviously with our clinical stage pipeline, but we're applying Origin-1 to the earlier-stage pipeline to really go after these hard-to-drug targets. And this is where we want to stay focused as a company, leveraging our AI design platform. Now let's dive into ABS-201, a program that I'm really excited about as well as a mechanism that is extremely interesting, the prolactin receptor. The first indication we're going after here is androgenic alopecia. So think hair regrowth. Wouldn't it be incredible in the next few years to actually have AI cure baldness? Well, that very well could be the case. This is a huge market. 80 million people in the U.S. alone suffer from androgenic alopecia. The standard of care, again, poor. You have oral, shampoos, all of these drugs don't give the efficacy patients are looking for. Additionally, they don't have the durability. They don't have that disease-modifying potential. And last but not least, I think one piece that is underlooked in this particular category. It is very cost effective and fast to run these AGA studies. And so we have a path for rapid approval in AGA, and we'll talk more about the headline trial, which we're currently running, which is a Phase I/IIa study in androgenic alopecia. So let's dive into the prolactin receptor mechanism for a second. So one of the things that's unique about prolactin production in scalp is that it isn't driven from the systemic pituitary endocrine system that you would think. It's actually driven off of a separate promoter that is completely independent from the systemic production of prolactin. And what ends up happening over time is that you get a buildup of prolactinemia, or prolactin in the scalp, that drives the STAT5 pathway. And the classic pathology that you see with AGA patients is these progenitor cell lines decrease over time. And that leads to the miniaturization of these hair follicles. And by blocking the prolactin receptor, you're actually able to build up all the machinery that's necessary, regain the progenitor stem cells and ultimately reverse the miniaturization or regrow that hair follicle. What got us really excited initially about this program was actually the work that our Chief Innovation Officer, Andreas Busch did prior to his time at Absci. He was studying prolactin receptor for endometriosis, and it was a very serendipitous discovery. The mice that he was studying with -- for endometriosis, they were shaved and the ones that were on drug actually regrew their hair faster than the ones that didn't, which led him to commission this stump-tailed macaque study here. And what you see here are the tops of the bald stump-tailed macaque and the beautiful part about this particular model is these are naturally occurring bald monkeys. So there are no modifications to these monkeys. And they had 28 weeks of treatment with a anti-prolactin receptor antibody and by 6 months, you can see they go from a bald head to a full head of hair. And not only did they get the hair regrowth, they were able to repigment their hair as well. So you see their gray hair, so they're jet black. And then shockingly, post treatment for up to 4 years, they continued to have their hair. You don't see this with anything else. And we'll talk more about why we see that durability on the subsequent slide here with the ex vivo data. So we recently had a KOL seminar in December with some of the leading experts in hair. And we presented this data. We were able to collaborate with Professor Ralph Paus, a world-leading expert in hair. And he had developed a technology and an assay to actually take human scalp biopsy samples and study the effects of various different molecules. And what we did in this particular study was we looked at the effects of ABS-201 on the hair follicle as well as prolactin and additionally, prolactin plus ABS-201. And what you can see here is that ABS-201 does indeed drive the follicle into the active growth state. So by blocking the prolactin receptor, you're shunting it into the active growth state. And then as you would expect, with prolactin, you get the STAT5 pathway activated and that drives the follicle into the catagen state. And then when you have ABS-201 plus prolactin, you're able to rescue that follicle and have that follicle stay in that anagen or active growth state. And additionally to this data, we were able to show actual further hair shaft production. And when you add prolactin, you actually see a decrease in the hair shaft production. So additionally, what we found -- and all this data is available on our website from the KOL day, I'm just going to highlight it here at a high level, but we start to paint a picture of what's going on with these ex vivo samples. So first, what we saw was the progenitor cells CD34 and CD20 actually were able to regrow. And we saw the K15 stem cells actually prevent apoptosis. So you have the K15 stem cells that remain. The progenitor cells increase. And not only that, we saw key growth factors that drive the follicle into the anagen state, which are IGF-1 and FGF-7. Additionally, we saw the catagen drivers, TGF-beta decreased. And so you get the full picture of that the prolactin receptor is the master regulatory switch for the hair follicle. It essentially gives it all the machinery that's needed to actually reverse the miniaturization. So blocking the prolactin receptor reverses the miniaturization and ultimately allows you to regrow your hair. This was really exciting translational work from that Stump-tailed macaque to actually now seeing this in human ex vivo samples, and we can kind of see the full mechanistic picture of what is going on here. And going back to the durability, we believe that the stem cell regeneration is what is giving the durable effect that you see in the stump-tailed macaque data. We -- so going on to the human trials we have ongoing now. We have a lot of confidence given the stump-tailed macaque data as well as the ex vivo data that we hopefully will see that translate into humans in the headline trial. This is a Phase I/IIa study looking at safety, tolerability and also efficacy. We have the single ascending dose arm that's already started. We have filled our first two cohorts. And in this particular study, we are looking at healthy volunteers and looking at safety and tolerability. We plan to complete that in the first half and then transition to our multiple ascending dose, which will be 26 weeks. Here, we'll be looking at not only safety and tolerability, but also the efficacy as well. The total trial size is 227 participants, both male and female. And the primary efficacy end points that we have here are target area hair count width as well as darkness. The first readout we will have on this will be our safety readout the first half of this year. And then we'll have a 13-week efficacy readout in the second half of -- sorry, first half of this year, we'll have safety and then the second half of this year, we will have the 13-week efficacy readout. And then the study will complete early next year. So we've had the opportunity to build a target product profile for ABS-201 through talking with KOLs, patients and we believe a target product profile that is able to achieve durability of 2 to 3 years with the ability to achieve the high end of oral Minoxidil will give us a home run product. And we built a consumer quant study based off of this TPP. Now we do believe we could potentially achieve what a hair transplant achieves and what you saw in the monkey study. But that is not needed to have a home run product based on the consumer quant study which we conducted. And all of this research, again, is in our KOL day, if you'd like to dive into more detailed information. I'm just going to highlight a few points from the consumer Quant study. Again, we took our target product profile and did a consumer quant study with 610 participants. And it was pretty striking. Up to 97% of men and 88% of men were extremely or very likely to ask their health care professional about ABS-201. Additionally, 37% of men and 36% of women would try ABS-201 as a first-line therapy. Now this may seem low, but if you look at the standard of care that's out there right now, it's extremely cheap. You have shampoos, you have orals, and they don't cost a lot, but they don't give you the efficacy. Patients and the participants of this study said that they would forgo those and try a premium-priced product that gave them the durability and the hair regrowth. That's pretty significant as a first-line therapy when everything else out there is cheap. I mean it really goes to show that these participants want hair regrowth and they want that durability. The last piece I'll mention is that the psychological impact of this disease is huge. 80% of men and 81% of women report negative psychological impact. This isn't just about vanity. This is really about giving individuals their identity back. They want to feel that confidence again, they want to be themselves and being able to be able to give them their hair back, we'll give them that confidence and that identity back. So we then took the consumer quant study and wanted to look at how big this market is. So we took the individuals that had the strongest interest in the TPP with -- that we're willing to pay a premium price, which was roughly 15 million to 18 million individuals. And we assumed a 2- to 3-year durability and that narrowed down the patient population to 5 million to 9 million patients treated per year. And that got us to a total addressable market per year within the U.S. at greater than $25 billion and greater than $40 billion worldwide. So obviously, this is a massive market, no matter how you slice it or dice it. So going on quickly to endometriosis for ABS-201. Women's health for far too long has been underfunded, underappreciated and we're excited at Absci to actually be pursuing women's health, and in particular, endometriosis. Endometriosis affects 1 in 10 women. The standard of care is extremely poor here, and there are currently no disease-modifying therapies on the market. And additionally, this particular mechanism got -- had really nice proof-of-concept Phase II data with the HMI-115 study, really derisking this from a clinical standpoint, and we're really excited to be pursuing this. Just to quickly highlight the mechanism. What ends up happening is you have, again, local prolactin that drives the lesion growth and additionally, there are prolactin receptors on the sensory neurons, which drive the pain that women experience in endometriosis. And so by blocking the prolactin receptor, we believe that we can stop the lesion growth as well as decrease the overall pain. The two preclinical studies. I'll just highlight that demonstrate this. One is on the left-hand side. There is a study that was done that showed that blocking the prolactin receptor in mice decreased overall lesion formation and then on the right-hand side is actually data from ABS-201 looking at pain, and we were able to show in an endometriosis mouse model that we were able to decrease overall pain experience with ABS-201, the mice were able to walk further, overall showing that pain was alleviated in this endometrial model with ABS-201. The market for this is large, as I said, 1 in 10 women suffer from this. Current standard of care is poor. You have the GnRHs. Women can't stay on these for very long. They actually put a lot of women into a postmenopausal state. You have bone density, mineral loss and there is a dire need for a drug that could provide disease-modifying potential. And we believe ABS-201 could ultimately do this. We have a very innovative pipeline outside of ABS-201. We -- our next-gen pipeline is focused on leveraging Origin-1 to design drugs to hard-to-drug targets, and we'll be announcing some more drug candidates likely later this year that have been developing in our pipeline over the past year or so. We have an amazing team here that make this all possible, amazing drug hunters, disease biologists and AI scientists that are really helping us progress this technology forward. We wouldn't be here without them. We have 140 employees at Absci, 3 clinical stage programs, an amazing wet lab in the loop in Vancouver, over 10 partners and currently, our balance sheet as of the end of this year is $143 million, and we have runway into the first half of '28. And all in here, we have a very exciting 2024 or sorry, we have a very exciting 24 months ahead, I should say, with ABS-201. In androgenic alopecia, we have the Phase I interim readout in the first half or the Phase I readout in the first half of this year. And then the 13-week interim efficacy readout in the second half of this year. And with endometriosis, we plan to start that trial in Q4 of this year, and we'll have a Phase II proof-of-concept readout a year later. So the next 24 months are going to be very exciting for Absci and we're excited to see these AI designed molecules actually make a difference in patients' lives. Thank you.

Great. Let's start the question-and-answer session. We're joined by Sean and also CFO and CBO, Zach Jonasson. For those who are in the audience, if you have any questions, feel free to raise your hand. For those who are joining us virtually, you can also submit questions on the portal.

First of all, thank you for sharing such exciting progress of your pipelines, including 201 and 101. Could you please share some more color about how do you use AI to develop these wonderful compounds? And how do you compare your AI method with other competitors, for example, like Recursion on the market? Like what's the differentiator of your AI methodology?

Yes Absolutely. So we just put out a manuscript today describing Origin-1. And what this is focused in on is actually the generation of these molecules to zero-prior epitopes. We think that this is a major differentiation. This allows us to go after targets that have no known complexes to them. These are ion channels, GPCRs. And we're leveraging this technology, again, to go after these hard-to-drug targets earlier in our pipeline. And this is a design platform. It's focused on antibodies. And a company like Recursion actually uses a very similar approach that we do at wet lab in the loop. They're focused more on the small molecule side, the target biology and we see it as kind of analogous to what we're doing just in a different area.

How do we think about, I guess, just the Origin-1 model, I think it's the new piece that I have not seen before. So maybe just how do we think about the capability of it? And how far can it go? Can you talk about when it comes to the ability to spin out different modalities? Is it only limited to biologics? Is there also a capability to expand into bispecifics, small molecule? Like how do you think about just the expansion potential of Origin-1?

Yes. So Origin-1 is all protein-based or antibody-based -- we do see this expanding to bispecifics. We actually have bispecifics in our own pipeline, and we're going to continue to advance that. And we do -- again, we see that the potential here being able to go after those hard-to-drug epitopes. And this is really a state-of-the-art model actually demonstrating this capability, which is really exciting.

And how does that incorporate -- get incorporated into the current portfolio when it comes to discovering new products? At what time in your time line in the next couple of years, could we start to see products spinning out from the Origin-1 model?

I think you're already seeing products spun out of our earlier versions of our model, and those are the programs Sean pointed to. I think what's really exciting about what we do at Absci is we see advances in the AI platform quarter-on-quarter, sometimes monthly. And so when we think about targeting new drugs, we're looking for disease areas that have high unmet need where we could really create a differentiated therapeutic based on where the platform is today. And again, the platform is always improving. So if we look at what we've done with Origin, this really opens up the druggable space. We can go after these really challenging targets. We can go after epitopes that don't have any known information about them to really design in biology that you couldn't do before. And so we're really excited to apply that to new preclinical compounds that we're working on today. And I can't tell you what they are, but I think we look forward to telling you a little bit more next year.

Switching gears to 201, your AGA program. What is your level of confidence when you look at the preclinical data to showing proof of concept in the near term. Can you just kind of talk about the translatability of your preclinical work so far? And also just going back to the level of confidence?

What gave us a lot of confidence going into this trial was the ex vivo data. Obviously, we all got excited by the stump-tailed macaque, but you always wonder how is that going to translate to humans. And when we're able to take human scalp biopsies and be able to show that you could drive the follicle into the active growth state, you saw the stem cells increase the growth factors, decreased TGF beta. You got to kind of see that full picture that gave us a very, very strong confidence that we believe that this is going to translate into humans. And additionally, it showed us that the receptor occupancy is extremely important. We need to be able to achieve greater than 90% receptor occupancy, which is what you saw on the stump-tailed macaque and we -- from a modeling perspective, looking at the dosing, there are mini doses that get us above that 90% receptor occupancy, we're going to hit it hard. And if we do that, we do believe that, that will translate and we are, I'd say, very confident going into the readout in the second half.

Looking into the headline readout later this year, what are some of the items that are important to watch in a SAD portion?

Yes. I mean in the SAD portion, and we'll report some of this data later in the first half, we're looking at safety and tolerability, primarily, but we're also going to have an eye for PK that's going to guide us a little bit as we look at future development plans for Phase III registrational studies. And I should mention, we've engineered a longer half-life into this molecule. So really for convenience of dosing. And so we're looking to see that effect in the PK profile.

Okay. Maybe just, I guess, looking into the MAD portion to, how much hair growth or what are you specifically looking for? And can you talk about maybe perhaps just kind of establish a baseline. What do you see in terms of the hair growth among the currently available options? And then you can kind of lay out kind of a win scenario out of the MAD portion.

Yes. So we're going to be looking at the target area hair count, width as well as pigmentation. Those are going to be the end points on overall efficacy. And the 13 week, we believe we're going to see nice hair regrowth and an increase in the target area hair count. But based on what we saw in the stump-tailed macaque, we do expect continued increase in that target area hair count into the 26-week readout and potentially past that. So the 13 week is going to be a very strong indicator of where the trend is going, and we do expect more hair growth from there. And in terms of what we see as a win, it's what I mentioned in the presentation. We believe a TPP that delivers 2 to 3 years of durability with the efficacy of the upper end of oral Minoxidil, we see that as a home run. But if you look at the stump-tailed macaque data, that's well north of a hair transplant of 80-plus hairs per square centimeter. And so we do think that the upside to what the home run would be potentially a hair transplant, but you don't need that to have a strong, viable product here.

Maybe I'll just add to that. Like, it's important to step back and look at the landscape. Patients are very dissatisfied with their treatment options. I think that's been reported only 9% of patients are satisfied with the options they have today. And that's because they give very limited efficacy, but also very variable efficacy. A lot of patients don't even respond to Minoxidil. And then a lot of those treatments have side effects that you really don't want. So this market is wide open. And what we're bringing to market here is a brand-new category that delivers efficacy, durability and convenience. Imagine the 3 doses over 6 months and being able to sort of set and forget, and then you get 2 to 3 years of efficacy without having to do anything.

Is -- are the patients that go into the MAD portion, are they allowed to go on background finasteride or Minoxidil?

No, they are not. And there's a 4-month washout period for those that are on Minoxidil or finasteride. So you have that washout period and they're not allowed to take any additional medications.

Okay. Just on pricing, I think this is one of the key question around how we think about the market opportunity, right? This is an interesting indication where you start to see a lot of translation from the GLP space. This is one of the out-of-pocket indication. So how do you think about pricing? I know -- I'm sure you've done some consumer work here. Where do you think a potential profile like this could land?

I loved that you asked the question, and you know I can't give you a price until the day we launch, but I can say we tested some pricing in the consumer survey and it tests very well. That's how we get to some of those big market numbers in terms of the TAM. The point is patients are dissatisfied. They're willing to pay for convenience and performance and durability. And so I think the pricing capability could be anywhere from multiple years of PRP all the way up to hair transplant depending on where the efficacy is.

And it's really interesting with the GLP-1s, we're entering this like new interesting era of like what I call it, total vitality, consumers are wanting weight loss. They're wanting their hair. They're wanting their wrinkles removed and they're willing to pay out of pocket for this. And it also goes along the lines of shifting towards preventative care. The consumer wants to take drugs now that will keep them healthy instead of sick care once -- finding drugs once they have a disease. And so I think this is going to continue to be a cash pay market and people are willing to pay for this. I mean you look at supplements out there. I mean, you look at the Chinese peptides that people are taking that aren't approved. People are wanting to keep themselves healthy. They want that total vitality. And we think that this fits into exactly what the consumer wants.

Maybe just on the endometriosis side. We have seen some data on that indication proving that the MOA will work there. What do you expect there to see? I guess, will there be any translation coming from read-through, coming from the upcoming MAD data later this year. How much do you see as a read-through from AGA from alopecia to endometriosis?

Yes. Look, the safety readout further derisk both programs. So there's that element from the SAD study that's ongoing. But I don't think we'll see a lot of translation from the AGA side because endometriosis is a very specific disease. But to your prior question, what do we expect to see relative to what HMI saw? We expect to see much better efficacy and that's for a couple of reasons. The molecule we have is much better designed and it will have a longer half life, and we can go to a much higher dose. They're very limited on the dose they can give to 240-milligram based on the safety work that Bayer did. So we will be able to test the dose response. And you know this, if you look into their trial results, there was a dose response there, and they capped out. So that's another area where we should be able to see more efficacy. And then the third point I'll make is we're very happy to see that result, but I think we also recognize that their trial was not designed very well. We will run a very well-designed trial, and we will execute it.

Okay. Any questions?

Can you guys give an overview of -- back on the origin sort of the technology and infrastructure and some of your partners, just looking on your website, I see you list some of the names, but I'm just Kind of curious as to who you're working with there for the model and the build-out and the ongoing use?

I can talk a little bit about some of the tech partnerships that we have. We recently, about a year ago, closed a partnership with AMD where they made a $20 million investment, and we are working with them to scale up their compute in protein design, both on the training and the inference side, which has been great to be able to work with them on that. And Zack can talk a little bit about the pharma partnerships that we have.

Yes. I mean what we're seeing in the pharma partnerships is they all want to work on these challenging targets, I mean, which makes perfect sense, and that's where we want to work. So Origin not only really enables our next-generation pipeline but it's really enabling these partnerships. And I'll give you an example. The models we're working on just prior to Origin were successful already in designing against an ion channel with 1 of our partners and we did put some press out around that in July. And that's fantastic work, a very difficult target, not addressable before by an antibody. So that's the kind of things we're doing with our partners is defining those types of projects where we can create something truly differentiated.

Great. Well, that's a lot of time we have. Thank you so much for your time. Thank you.

Thank you.