Absci Corporation (ABSI) Earnings Call Transcript & Summary

Good afternoon, and thanks for joining us to have a conversation with Zach Jonasson, Chief Financial Officer and Chief Business Officer of Absci; and Alex Khan, Corporate Vice President and Head of IR at Absci. So Absci describes itself as advancing the future of drug discovery with generative design to create better biologics for patients, faster pairing its integrated drug creation platform with synthetic biology data engine in a continuous lab-in-the-loop cycle. So the company now has 3 clinical stage programs anchored by ABS-201, an AI-designed anti-prolactin receptor antibody, which is in a Phase I/IIa HEADLINE trial for patent hair loss with an indication expansion into endometriosis. In June, Absci reported positive interim Phase I safety data -- safety and PK data showing an estimated half-life of at least 65 days and raised $100 million, including a $40 million strategic investment from Eli Lilly. So it highlights a 13-week interim proof-of-concept readout in the second half of this year, a Phase II endometriosis start in the fourth quarter and the full 26-week data, which we are expecting in early 2027. So to discuss Absci's platform, pipeline and strategy, let's get started with Zach and Alex. Zach, Alex, thank you very much for being here, and I appreciate you accepting our invitation.

Thanks, RK.

So Absci certainly has changed its strategy, starting from a platform partnership story and now to a clinical stage company with 3 clinical stage programs and a wholly owned prolactin receptor franchise. So Zach, for people who are new to Absci, can you frame the long-term strategy for us and how you decide what stays on your balance sheet versus what gets parted?

Yes, absolutely. And again, thanks for having us. I've been involved with Absci since 2016. I used to manage a venture firm. So I've been a Board member and now I'm in operations. I'd like to say I voted with my wallet and then with my feet. And I can say it's a very exciting journey we're on. Our vision is to create a portfolio of DTC therapeutics that can be direct-to-consumer leveraging telemedicine and that can really be more oriented towards partnering with the consumer to improve their own health. And our first molecule, which we think will reach approval is ABS-201 for pattern hair loss, which we think is a phenomenal market opportunity. There hasn't been innovation in that space for 30 years. And there's 80 million patients in the U.S. alone that have pattern hair loss, and they're very broadly dissatisfied with standard of care. So ABS-201 offers the kind of program that we really want to proselytize and invest in. It's a brand-new category of therapy for a market that's desperate for solutions. So rather than an oral or topical you'd have to take daily with a lot of side effects and limited efficacy, this could be a product where you take 2 to 3 injections kind of like a GLP-1 and you're set for multiple years of hair growth. So very convenient and durable. And that resonates very strongly with consumers. And our second program, as RK mentioned, is endometriosis, another area where there's a fantastic or unfortunately, a fantastic unmet medical need, where there's a really high patient burden, about 10% of women globally suffer with this disease. We think it's -- the timing for this program couldn't be better. You now have clinical guidelines for diagnosing endometriosis. So we think this program not only addresses a significant unmet need, but also could be brought to market as a DTC as well. So behind that, RK, we're using our platform, and I think you will probably have some questions around the platform, but we're using our platform today to generate additional programs that we think could fit into that broader strategy.

So talking about the platform, one of the pitch to the story is you can industrialize discovery and especially trying to bring a program into IND-enabling studies with under 2.5 years and under $15 million, which is fantastic compared to what other biotechs and large-cap pharma spend, both in terms of time and money. So what is the advantage that your platform gives that it's difficult to replicate at least in your point of view?

Yes. I mean I'll start with the metrics. Like those are metrics that we succeeded on with our prior programs, ABS-201 as an example. We think we can do better, though. And so today, we're investing heavily in an entire agentic platform that interfaces with our AI models that design the antibodies. So this agentic workflow involves disease biology, it involves selecting targets and selecting indications, and it plugs into or incorporates that AI design model, our origin model so that we can rapidly construct antibodies to different epitopes and commence testing those for proof of concept. So our goal is to cut those time lines in half and cut those costs down even further. And we have a number of means of doing that. Part of that is leveraging the agentic platform we've built, which we've called ATLAS. Part of that is leveraging some of the things we're going to be doing in China for faster, cheaper clinical trial development.

So let's start with the ABS-201 program. The June interim data showed no serious adverse events across 4 cohorts and an estimated half-life of 65 days. So walk us through what that PK profile actually does in terms of the target product profile itself. And you're also modeling 2 or 3 subcutaneous injections over 6 months, generating close to 70% bioavailability. So what's the significance of what you've seen so far? And how do you think at least for the next catalyst, which is the 13-week study data, how does that feed into that?

Yes. Let me comment on the PK, and I'll let Alex comment a little bit about what we're looking for at 13 weeks. We're very happy to see the PK profile, 65 days and counting. We think that, that's going to enable at a minimum every 2-month dosing, which is very convenient for patients. But there's a potential upside to be something more like every 3 months. We'll see as we collect more data on PK as the trial moves forward. But think about the convenience factor for patients. And we've tested this in consumer studies. What they have today in standard of care is a daily application of minoxidil or finasteride. And if they stop, they lose their hair. Think about a product where you have maybe 2 injections over 6 months and you don't have to worry about it for 2 years. That's a game changer in this market. So this PK profile is going to enable this convenience, whether it's 1 or 2 doses or 3 doses over 6 months, we'll find out. But either one of those tests extremely well with consumers. The other thing that this gives us, which we're really happy about is flexibility. As you recall, we're taking ABS-201 into a second indication, endometriosis. And we want to have a different dose and dose frequency across those 2 indications. So we have a lot of flexibility now. And so we couldn't be happier with the PK profile. Alex, do you want to comment on the 13-week?

Yes. And then in terms of what we're hoping to show in terms of the efficacy. So everything we've seen from the preclinical model, particularly as stumptailed macaque data we've talked about and then just all the literature on the underlying biology gives us strong confidence that we'll see some good efficacy at the full 26-week readout, but even at the interim. So the interim, the 13-week readout that we're hoping to have in the near term, we want to have obviously the most robust, comprehensive and informative data set as possible. So as we're collecting all that data, we'll be sharing that probably in the December time frame for the 13-week readout. So that will be people who have had 2 doses from the MAD portion already. So they will have had people in the 300-milligram, 600-milligram and 1,200-milligram cohorts, each having had a baseline dose and another dose 8 week later. And then in the first half of next year, we'll have the 26-week readout, which will be that full proof of concept.

Okay. So you have framed the mechanism as actually regenerative in the sense, protecting follicle stem cells, restoring CD34 progenitors, raising IGF1 and FGF7. So 2 questions. What in the 13 or the 26-week data actually could demonstrate that regeneration rather than just a symptomatic effect. And when do investors get a real read on the 2- to 3-year durability that you're talking about because it will underpin the pricing eventually.

Yes. So to your first question, I don't think there's anything that's going to be symptomatic for results at 26 week. Recall, we've looked at this translational model in the stumptailed macaque, which is a gold standard. Minoxidil and finasteride have been run in that model and you see the same phenotype that you see in patients. And what you see with the prolactin blocking antibodies, you see this durable effect that lasts multiple years. We took that as an impetus to go run a study in human biopsies, and that's where we elucidated the mechanism that really revolves around repopulating the stem cell niche. So that's the progenitor cells as well as the K15 positive stem cells. So that is the mechanism in human tissue. So if we see growth at 26 week, I think we can be confident that's the mechanism that's underlying it. To your second question, though, we're going to be following the patients in these trials a year -- a full year after their final dose. And by following them, I mean, we're going to be taking hair measurements. So we're going to collect data on the durability. We actually expect they'll probably see additional hair growth in the second 6 months. That's what you saw in the stumptailed macaque model. And longer term, we're looking at doing an open-label trial extension. Now we haven't announced what that will look like, but that's something we're looking at right now. And so the strategy is to achieve endpoints that the FDA accepts, so looking at the 26-week for approval, but ultimately to establish the durability through a med affairs strategy where we commission publications and we share data from these follow-up studies. And I think that sort of helps us with the pricing.

Okay. So recently, you changed your expectations on the label from androgenic alopecia to pattern hair loss actually, which added quite a bit of a TAM on it, going from 30 million to 80 million U.S. patients. And how do you -- one, what made you think about that change? And two, how are investors reacting to that framing? And is there any expectations in terms of including females as well into that cohort?

Yes. I mean a few things. I mean, to take a step back, it's purely a terminology matter, right? Our assumptions around the market size, the population size, the community size is wholly unchanged, still 80 million Americans, 50 million men, 30 million women within the population. But a few reasons we decided to make that change is we've been getting a lot more attention from the broader community, including the medical community, investor community and just general population. I think there had been in the broader market, some confusion about, well, what does androgenetic alopecia mean, right? Everyone knows they can look at themselves in the mirror and think I have pattern hair loss, I'm losing my hair. Some people might not understand that, that could be one and the same with androgenetic alopecia for themselves. It almost sounds a little too clinical for a general consumer to want to admit and diagnose it themselves. So that was one reason. It's also the biological rationale. We do think that prolactin sits upstream of androgen. We do think there's a little more to the story than just the androgen component. And then just from a consumer-facing standpoint, we think it's just a more consumer-friendly, well-understood terminology there. But there's been -- it's been well understood that the population we're talking about is the same as it has been all along.

Okay. So regarding the second indication, which is endometriosis, you have guided to start the study in the fourth quarter of this year. And the expectation is to have some initial proof-of-concept data in the second half of 2027. So just trying to understand the start of the study. Is that because you want to see the 13-week data from the pattern hair loss study before you get started? Or these are totally 2 different events and independent of each other?

Yes. So we're -- our goal is to start that study at the end of this year. And what we want to see is the safety and the PK data. We're not -- the efficacy data for pattern hair loss isn't as germane to endometriosis, but we'd like to see the PK data so we can select our dose and dose frequency for that study.

Okay.

And as you can imagine, the safety portion of that study will be part of what is submitted to FDA.