Absci Corporation (ABSI) Earnings Call Transcript & Summary

Welcome back, everyone, to the next session of this first day of the Leerink Partners Global Healthcare Conference here in Miami. As I said before, happy to be hosting you guys in my adopted hometown. I hope everybody enjoyed [indiscernible] this morning. It's ready. It's a little bit early, but not that early anymore. I'm lucky for this session to be hosting the team from Absci back. Alex, how are we doing?

Doing well. Happy to be in Miami.

Happy to have you guys. All are welcome. So for those a little less familiar with Absci, can you give us a very quick overview or less quick, if you'd like, of the platform and where we are in terms of clinical products arriving out of it because you're in a very interesting inflection point in the company.

Yes, sure. And I have a bit of a perspective here. I'm the Chief Financial Officer and the CBO for almost 3 years, but -- for over 10 years prior to that, I was involved with the company as an adviser, an investor when I managed a venture firm, a Board member and then really couldn't resist the gravitational pull as we moved into generating our own assets. But at a high level, we're using AI internally. We create data, we test our models, and we're using our AI engine to generate differentiated assets. And what do I mean by differentiated? We're really laser-focused on our efforts to generate assets against targets that are unaddressable or challenging for traditional methods. So we're talking about GPCRs, ion channels, creating agonism on certain types of targets where that's challenging. And that's our focus. And we just released a manuscript here in January on our Origin-1 model, showing the ability to design against these types of epitopes, these what we call 0 prior epitopes. There's no reference binder in the literature. They're on difficult targets. And if you look like a layer below that in our early pipeline, which we'll be announcing more about later this year, you'll see assets that are targeting these types of targets. So very differentiated, we think it will be well positioned for partnering. On the other side of the coin, we're developing our own internal pipeline as well using that platform. And our flagship program is ABS-201, as you know, which we're developing in AGA or androgenetic alopecia as well as endometriosis. And we're selectively choosing which programs to take forward. And I think that AGA program, which we'll talk about more, is very unique in terms of its potential ROI given the size of the market and the low cost of development. So it's a really great place to allocate our resources.

So this is not a video. So the audience won't appreciate how much more personal experience I have with AGA than you guys but you'll have to take my word on it -- word for it. So let's talk a little bit about that market, the present therapies that are available and how you see yourselves fitting in with a very different MOA.

Yes. So I mean just to level set, androgenetic alopecia is just common hair loss, pattern hair loss that affects about 80 million people in the U.S. and even more globally. And when you think about the standard of care today, it's things like minoxidil, finasteride, which are Rogaine, Propecia, things like that. And the standard of care is really lacking in terms of efficacy, convenience and sometimes safety and adherence is a big issue, too. And we'll talk to a lot of practicing dermatologists and clinics will tell us that even when they do try to prescribe these kinds of things, adherence is a big issue if you're trying to take a pill or a topical once or twice a day, even if you're someone who does have an actual effect on it, which a lot of people don't actually see that effect. And what the dermatologists will tell us, too, is that the patients are highly dissatisfied with these options and the ones that do try to take them, oftentimes will fall off after a certain point. And the patients that are seeing are coming in more and more asking about hair and then also skewing younger and younger. So the market is really ripe for something that can be potentially a game changer if it has a better effect on efficacy, convenience, durability and safety, which is something that we think the ABS-201 product could fit into.

And just to summarize that, there's really 2 categories of therapy today. Either you're doing a daily or twice daily topical or oral and they all have side effects. They have great variability in how well or if they even work at all or you can go with a hair transplant, which is very invasive, painful, very expensive. But even if you do a hair transplant, you have to take the maintenance therapy of an oral or a topical. And so what we're looking at with ABS-201 is a completely new category where you could have an administration, a simple subcu injection, maybe 3 times every 6 months and be able to set it and forget it and have durable long-lasting hair growth over multiple years. There's nothing like that in the market, brand-new category. When we test it with patients, there's a significant amount of interest in that.

So I think one of the conversations that we have with people who are a little less familiar with underlying biology is there's a little bit of head scratching about where prolactin fits into the biological pathway towards hair loss. Can you walk us through a little bit of the mechanistic rationale here?

Yes. it's really exciting. Most people think of prolactin as an endocrine hormone systemic. And if you really look into the literature, you'll see that quite a while ago, it's been covered that's actually in addition to being an endocrine hormone, it's also secreted locally and regulated locally in the peripheral tissue. And it's run off of a distinct promoter that's dopamine independent. And so what we see when we look into the hair follicle biology is we see prolactin really driving hair miniaturization. So really pushing follicles into an antigen or a catagen phase, which is regression and over time, diminishing that cell -- the stem cell compartment. And we recently did a study with Professor Paus who's actually based at the University of Miami. He's a world expert in hair biology, hair follicle biology where we looked at taking ex vivo biopsies from patients, multiple hair follicles, treating those with a control with our antibody, which is blocking the prolactin signaling as well as introducing exogenous prolactin to really flood the system with prolactin and then doing a rescue where we do our antibody plus exogenous prolactin. Long story short is what we found in that study is not only does blocking prolactin with our antibody produce or push the follicles into the antigen or growth phase, it upregulates all the growth factors we wanted to see IGF-1, FGF-7, for example, and it replenishes that stem cell compartment as well as the progenitor cells. And we think that stem cell component is what's really driving this long-term durable effect, and that's an effect that's been seen in NHP studies.

So I think one of the questions we're going to ask because we have data coming soon, and we'll talk about that timing momentarily. One of the questions investors are going to ask is what to look for in this relatively early data set? And how to think about this quantitatively, evaluating where it fits, how great the effect size is? And help us level set on where that is versus competitors.

Yes, it's a great question. So when we talk to KOLs and talk to patients, if we achieve anything commensurate with even topical minoxidil, there's a nice product there. But our aim is really to have something that's at least as good as the high end of minoxidil in an effect size. So that's where we're looking to see results at 26 weeks in our study, but with a durable component on that simple administration profile, 3 injections, for example. That's a home run product. We think when we test that with consumers, that's a TAM that's north of $25 billion. So as we look across this year, in the first half, we're going to release some top line data around safety and PK. We think this mechanism is abundantly safe and we can have a whole discussion about that. And then in the second half, we'll have a 13-week interim readout. And in that readout, we're looking to see a signal that's showing that we're moving in the right direction because we expect to see the full effect at 26 weeks. And when I say effect, the nice thing here with FDA is you're really looking at an objective measurement, which is target area hair count. So you're measuring in a square centimeter on the patient's head in the transition zone between where there's hair and where there's quite a bit of balding, you're measuring from baseline the amount of new hair growth that's there. And so that's a quantitative measure. It's done in all the AGA studies. So we'll do that measurement at 13 weeks as well as at 26 weeks. And I think also interesting, we're looking at a couple of secondary exploratory endpoints that we think are commercially interesting as well, one of which is the restoration of pigmentation. And we think that's a whole other market in and to itself, and we've seen that result in NHP studies where you treat monkeys that have natural balding and you see the hair regrowth, but you also see the return of the pigmentation. And we saw that in our ex vivo study, where we saw promotion of melanocytes and increased melanin production. So we're going to be looking for that as well in the trial.

Let's talk a little bit about the other side of this asset. We're going to bounce back and forth, that's okay. So the other application that you're looking to for the same asset is endometriosis, one of the larger unmet needs in women's health, obviously, a source of a lot of misery. Talk about that opportunity, how you see the opportunities in that disease. Obviously, it's a very different clinical development path. So just walk us through the strategy there and how you plan to balance the two.

Yes. I mean it's interesting because our research team when they were at Bayer actually were working on prolactin inhibition for endometriosis. And there's a rich literature in animal studies showing that prolactin signaling is -- or expression of prolactin is upregulated in the lesion formation, but also in the nociceptor so pain sensitization. So dual mechanism there and there's quite a bit of animal work there. We've done our own animal studies as well with a collaborator in Valencia that shows the increase of pain sensitization. So there's quite a bit of underlying biology that really points out the role of prolactin in that disease pathology. So our focus there is to start a Phase II trial in Q4 of this year. The primary endpoint is likely going to be focused on pain, so dysmenorrhea. And we think that there's quite a bit of proof of concept there. There's a competitor molecule that our team at Bayer worked on when they were at Bayer that just put out results from a Phase II study in endometriosis and showed a significant reduction in dysmenorrhea at the high dose. So we think there's quite a bit of derisking around that program. And so we'll be looking to advance that starting in Q4. And I think one other thing I would mention there is we just announced the addition of a new CMO to Absci, a former VP -- SVP of Clinical at Vertex, who has direct experience running pain trials. So we think we're really set up to execute that trial well.

Let's talk about the right patients for that drug. Endometriosis is certainly a highly variable disease. There's surgical approaches. They often result in an outcome that's not that much better than what you started, maybe worse, depending on the adhesions you get. Who is the right patient to at least early on the study in the endometriosis spectrum?

It's a great question. We had a KOL meeting in January focused explicitly on that question. We'll be having a pre-IND meeting with the FDA here pretty shortly, exploring our views on that. But I would say, at a high level, we want to find patients that have the right amount of baseline pain because at the end of the day, the primary is going to be a pain reduction endpoint so we need to make sure that we're bringing in patients with the right amount of pain. We are actively looking at how we diagnose the patients coming into the trial. As you may have seen, the new guidelines are really much more focused on clinical diagnosis, but there is an imaging component. Sometimes imaging misses superficial endometriosis, which we do not want to miss. And then there's always surgical confirmation. So we're looking at entrance requirements, but -- and I think we'll announce more about the trial design later this year. But I would say our North Star is to make sure we get patients that have the right type of pain profile to come into the trial.

On what time horizon will be getting that clarity? Just as we think about the sort of the tempo of that data, AGA, what are we getting when? And sort of which questions are we answering what time horizon?

Yes. Yes. I mean if you look out over the next 18, 24 months, as Zach mentioned, the first half of this year, we do expect to have some safety tolerability and PK data for the AGA trial that's currently ongoing. It's a Phase I/IIa headline trial that kicked off in Australia this past December. In the second half of this year, that's when we would have the 13-week interim efficacy readout that Zach mentioned, looking into the end of the year in Q4, kick off the Phase II for endometriosis and then into 2027, have the 26-week readout for the AGA hair growth. And then finally, later in the year, second half of ' 27, the Phase II interim efficacy readout for endometriosis. So really in this next 24 months, having those 2 Phase II readouts on the horizon.

And talk to me a little bit before we go diving back into details about, talk about where you guys are on OpEx, where you guys are on balance sheet, cash burn position, where do we get relative to the data sets based upon where you are on your runway and the assumptions baked into that, of course.

Yes. So I think at the beginning of the year, we announced our balance sheet at roughly $143 million, which gives us runway into the first half of 2028. So that would bring us through the full readout on AGA as well as an interim readout on endometriosis within that runway. In parallel to investments in those programs, we are generating assets out of the platform with the goal of partnering those assets. And we think that the value created by partnering even early-stage assets is much more significant than doing platform deals. So we'll be focused on looking for partners for a number of assets over the course of this year, and we'll announce some more about some of our pipeline programs. And then I guess you mentioned -- in OpEx, too. One other thing I'll mention is we're consistently finding ways to cut our OpEx spending. And you saw that probably starting in July, we did some reorganization of the company. We'll be continuing to look at ways to do that, including by using some more agentic approaches. We're actively building agentic AI workflows at Absci today and piloting and validating those. So we expect to see significant savings from those over the course of this year as well.

That's helpful. I want to dive back into the pipeline here and talk about how to balance 2 very different product profiles. The analogy that I've heard in the past from other investors is well, Botox once upon a time was a really severe migraine drug, and now it's used for other purposes, including in the city that we're in right now. There is some being used somewhere, I'm sure. So talk a little bit about how that influences the development of both. I know we talked about it earlier, how that influence the development plan for each of 2 indications, how they inform one another? And to what extent are they almost a little bit separate?

Yes. I'm going to even go a step higher, which is we think there are other interesting indications for prolactin, and we're bringing along other molecules early in the pipeline as we think through some of those. But you're right, the 2 -- these 2 indications are very different in some key ways. For AGA, that's a mass market drug. It's going to be cash pay. We think it's going to be very well priced if we hit anywhere close to our TPP based on the consumer research we've done. We think that it'd be more like north of a $25 billion TAM in the U.S. just for the AGA indication, which is why we're allocating resources to that. For endometriosis, as you mentioned, it's overlooked. There's nothing disease-modifying in that space. GnRHs have some pretty negative side effects that prevent them from being used for more than 12 months typically. So we think that market is multibillion dollar as well, but that's going to be a very different clinical reimbursement path.