Good morning, everybody. My name is Scott House. I am the Healthcare Technology Analyst here at KeyBank. I have the pleasure of having Sean McClain, CEO and founder of Absci, as well as Zach Jonasson, CFO. Guys, maybe I'll kick it off to you. You know, you had a business update last night. Maybe we'll start there. And maybe for anyone that's new to your story, maybe just like a brief, sort of background on Absci and how they're differentiated in the marketplace.
Yeah, absolutely. Yeah, so I'm Sean McClain, the founder and CEO. Founded Absci, is getting close to 13 years ago now. And really the idea here at Absci is to really scale, protein-protein interactions to—oh, hold on. Sorry, I lost you guys here. Hey, Zach, I'm having difficulty on my video here.
We still hear you, Sean.
Okay, perfect.
We just don't see your—we just don't see your video.
Okay, awesome. Yeah, so we essentially figured out how to scale protein-protein interactions for the training of AI. And essentially, we're to the point now where we can use these de novo design models to design antibodies to really challenging and difficult targets. You know, think of being able to go after ion channels or GPCRs to really be able to unlock new novel biology. You're essentially using design to test hypotheses that you haven't been able to test before. This is unlocking new novel biology. We're applying this de novo design platform to partnerships with Almirall, AstraZeneca, and others, including our own internal pipeline. You know, we just had an update yesterday and was able to go over some of the internal pipeline we've been building out.
The first is ABS-101, which is a potential best-in-class TL1A antibody, which is going to be entering the clinic here shortly. We plan to have an interim readout on that the second half of this year. The other asset we mentioned, which we see as our flagship asset, is ABS-201. This is an antibody going after the prolactin receptor antibody for androgenetic alopecia. Essentially, common baldness in female and male. We see this as a very large market opportunity for us. It affects over 80 million Americans. The thing we're really excited about with this is, you know, not only do you see, you know, hair regrowth in H studies, but you also see long-term durability. We see this as a really cutting-edge breakthrough in what we're calling hair regrowth.
and so we're pushing that forward. One update that we did mention is that we are planning on accelerating our timelines on that. We will be in the clinic in early 2026 with a potential interim readout on our POC next year on that. and so, we've, yeah, been really pleased with how we've been able to apply this AI de novo platform to really creating a, you know, a world-class portfolio, both internally and externally.
Great. Maybe I'll take it from there, Sean. You know, the 201 is a really interesting asset here. Maybe talk about what's in the marketplace, how your molecule is different, and maybe talk about some of the other positive. You know, I think there was the opportunity for hair to regrow at its natural color, meaning, like, if you have gray hair, you could grow back to your original hair color. Maybe talk about all the differentiation here and what, you know, what what's currently in the marketplace and why it's really not effective or why it's maybe effective, but you have to, it's a little bit more intensive. Maybe we can talk about all that.
Yeah, absolutely. What ends up happening over time is that you end up getting prolactinemia on the scalp, so a buildup of prolactin. What this does is drives the follicle from this anagen state where you have active follicle hair growth into the catagen state. This is where you start to get apoptosis and hair regression. By blocking the prolactin receptor, you're actually able to shunt the follicle back into this active growth state, the anagen state. One of the things that we're seeing, in particular in HPA studies, is that once you're in this anagen state, you actually stay in this state for anywhere from two to six years based on your genetics. That's actually the amount of time your follicle typically stays in that state.
We believe that with six months of dosing, we could achieve long, durable hair regrowth for the next two to four years based on the human genetics. We additionally did a shaving, a mouse shaving study where we compared our ABS-201 to minoxidil. We were able to show that we could achieve much more fast, or much faster, hair growth than compared to minoxidil. The reason for that is because when you shave these mice, they're actually in the catagen state.
By delivering this ABS-201 molecule to these mice, you're shunting, again, the follicle back into the anagen state, and they're able to grow their hair back much faster than minoxidil, which is, you know, one of the leading molecules right now for hair regrowth or, I guess, for hair regrowth and hair loss prevention.
Correct me if I'm wrong, but minoxidil you have to take daily. If you miss a treatment, it quickly reverses, the symptoms that go back. Is that true? You just talked about how your dosing would last a lot, you know, months.
Yeah.
You know, I think this—yeah, go ahead.
Yeah. So you're not only, you know, seeing, you know, better efficacy, but you're seeing that greater durability that you're able to essentially do six months of dosing and have, you know, the hair regrowth for, you know, potentially two to four years, compared to minoxidil, yes, that you are taking on a daily basis. And it's not effective, with every single patient. You know, you see different efficacy, kind of patient to patient.
Let's talk about the—you know, you talked about the market size, over 80 million people, but let's talk about the distribution, right? You can do these at health spas, right? These injections would be available for, you know, brick-and-mortar distribution platform, really, that you really wouldn't have in a normal, you know, drug network, right? Maybe talk about that kind of distribution network there.
Yeah, Zach, do you want to take that?
Yeah, I mean, Scott, we're really excited about the potential go-to-market here. The provider network is, in the U.S., substantial and growing rapidly. It would cover everything from dermatology offices to med spas. I think when we've looked at some of those numbers, I mean, there's more of these facilities, these providers than there are Starbucks in the U.S. I think the go-to-market and the provider network is already in place for a product like this. We're excited that it would be also a cash-pay market. This will not require reimbursement.
Yeah. And then, Zach, I guess a follow-up question for you. You know, how far do we plan to take this into the clinic? It's a huge opportunity, obviously. Maybe walk us through your rationale or strategy, on what you're thinking right now and maybe if you get really positive data into next year, how you're thinking about monetizing this asset.
Yeah, look, this is the kind of program that excites a CFO as well, Scott, because the trials are manageable. They're also very inexpensive relative to other indications, and the recruitment should be very fast. Our plan today, and we talked a little bit about this yesterday, is to be in the clinic early next year. We believe we should be in a position to have an interim proof-of-concept readout sometime in 2026. That's in a phase I setting because we can recruit patients that have healthy patients that have androgenetic alopecia for those trials. Our view is that we can advance this program into deep clinical trials, phase III. We think there could be a potential for a very significant partnership, a commercial partnership down the road.
Okay, let's move on to 101, the TL1A molecule. Maybe talk about the competitive environment, you know, maybe how you're differentiated in the market with your molecule, when the next readouts are coming, both from your internal readouts and then maybe from the mark, you know, the other players doing TL1A.
Yeah, absolutely. ABS-101 is going to be entering the clinic here shortly. As I mentioned, and you mentioned, we're going to have an interim phase I readout in the second half. Really what we're looking to show in that readout is that we are able to achieve an extended half-life for patient convenience. I was actually just at this event where Lilly was talking about the GLP-1s. What really shocked me was that after one year of treatment, only 35% of patients continue GLP-1s. They were indicating that the rationale to this was that patients just don't want to be taking drugs on, you know, on a weekly basis or just, you know, constantly.
If you're able to get it, you know, down to, you know, potentially a year, one year per dose, that would make a huge difference. We do think in this type of market where, you know, patients are going to be the, you know, be on this likely for life, patient convenience is super important. Being able to extend, you know, the half-life from one month to potentially three months, we see that as a big advantage. Another area is, you know, we are seeing better biodistribution, and we're hoping to see really nice target engagement compared to the competitor molecules. We will, yeah, see how that all pans out in the second half of this year. Zach, is there anything else you would add to ABS-101?
I would just say we think we have a very strong profile here, Scott. I mean, if you saw the NHP data that we released here a few months ago, you can see the PD looks fantastic. We've got prolonged target engagement, and we've got a really good biodistribution around the molecule. In addition to half-life, we think we have a number of other differentiating features versus the first-gen programs.
Yeah.
Oh, Scott, I think you're on mute.
Yeah. And then, Zach, I guess a follow-up. How do you think about the—and maybe Sean too—how do you think about the exit strategy of 101 versus 201?
Yeah, Sean, you want me to take that one?
Yeah, go for it.
Yeah, look, Scott, I would say we have active discussions today around that program. I think we're really looking forward to that phase I interim readout. We believe that if that looks like what we showed in NHPs, we're going to be in a very good position with a highly differentiated program.
Great. I guess let's move to ABS-301 now. It's a potential first-in-class antibody. It's undisclosed, but it's an oncology target. You know, maybe where—what—let's talk about the next readouts and advancements in the clinic for that one. And, yeah, any more color you might like to share on 301.
Yeah, so, ABS-301 came from a reverse immunology platform, based on tertiary lymphoid structures. What we've been able to see is that the antibody repertoire in tertiary lymphoid structures is very different than what you see in peripheral blood. We've been able to take patient samples and, in the case of ABS-301, discover a new novel IO target. We actually just released data yesterday, showing really nice target validation. When you take the activator or the agonist in this particular pathway and you overexpress it in these in vivo models, you are able to show that you can get a very, very strong anti-tumor response. We believe that, again, this is a really strong validation of this particular target as well as the overall path.
We are planning now, now that we have those in vivo target validation studies done, progressing that into in vivo efficacy studies with ABS-301. You know, we are going to be progressing towards a drug candidate on that. We are very excited about this particular mechanism. You know, unlike ABS-201, this is one that, you know, we think that, you know, large pharma that are in IO would be really good for partnering this early. We do not plan on taking this to the clinic ourselves. We really want to flush out the biology, show some nice in vivo efficacy studies preclinically, and then ultimately out-license that to a large pharma partner. Again, every target is and every asset we work on is different.
Again, we're going to, you know, potentially partner these anywhere from, you know, preclinical stage all the way, in the case of ABS-201, you know, likely taking that all the way ourselves.
Yeah, that is super helpful to put it all in context. I guess, I want to switch away from the internal pipeline to collaborations. You completed the first milestone with AstraZeneca in your collaboration for de novo design antibody sequences against an oncology target. Maybe just talk about how quickly—I mean, you announced that at the end of 2023, and you really—your turnaround time was really rapid. Maybe talk about that and how that was like a kind of a proof point for your de novo platform here.
Yeah, absolutely. So, you know, two and a half years ago, we came out with exciting work where we were able to show that we could redesign or design the HCDR3 of an antibody, the most variable region of an antibody, with our de novo design platform. This was really the first time anybody showed that you could use an AI model to de novo design an antibody. Shortly thereafter, that caught the attention, interest of Almirall and AstraZeneca. You know, by the end of 2023, we were able to sign both of those partnerships, and they were going after two very challenging targets: Almirall, an ion channel, and AZ, a membrane-bound target that they were struggling to drug. We started on the AZ partnership the first part of 2024.
Within six months, we were able to deliver antibodies that bound to the target of interest. We successfully completed the first milestone of that program. This was the first time that we, in a collaboration with any partner, applied the model. Not only applied the model, but we were able to go after a target where there was no known binder, and, you know, successfully drug the epitopes that the partners were interested in. We saw this as a really strong proof point that the technology was working. We were, you know, able to deliver differentiated biology and do it in a very, very rapid, you know, time.
I mean, being able to get to leads within six months is, you know, pretty astonishing for a difficult target, like the ones we've worked on with AstraZeneca and Almirall.
Maybe remind us of the partnerships and the collaborations you have currently, Zach, just to give a broad sense of, like, like all the large pharma that you're partnering with and maybe talk about if you could give some color on the projects too.
Yeah, absolutely. We have partnerships that range from companies like Merck and Almirall, but also to companies like Twist and Owkin and Vertex. We also have collaborations with Memorial Sloan Kettering. I think the diversity of these partnerships kind of highlights the diversity of the kinds of targets we can attack with our platform. We've taken a very strategic approach to who we partner with as well. You'll see this past year, we announced, for example, collaboration with Memorial Sloan Kettering. There we find some really large synergies based on the novel target work they're doing and their ability to help execute phase I trials. We apply our AI platform to design molecules that we think could be differentiated for those targets. Just as an example, as well as the large pharma partnerships.
I think we're really excited by some of the recent progress with Almirall. We're not at liberty, as you know, Scott, to share details about progress points inside those partnerships. I would refer you to the R&D day, and you can see the head of R&D at Almirall made some nice comments at R&D day. I would just say we're very pleased with the progress in that partnership, as well as the others. On the other side of the table, we've got some partnerships on the compute side, including with NVIDIA, and then a recent partnership we announced with AMD at the beginning of the year.
Yeah, actually, Sean, go ahead. Yeah.
Oh, I was just going to mention, one partnership we're also really excited about is the collaboration we have with Caltech and the Gates Foundation. The Gates Foundation funded a HIV program. And it was based on the work that doctors Steve Mayo and Pamela Bjorkman had done, where they had discovered this region in the HIV virus, the Cold Air region, this kind of deep crevice within the HIV virus, that is highly conserved amongst all different strains or clades of HIV. Because of the kind of the depth and crevice of this Cold Air region, it's been very difficult to drug, actually impossible. No one has been able to drug this. We were able to apply our de novo model to actually drug this Cold Air region.
We presented this at R&D day in December and released actually some new data on this yesterday. I think that this is a really strong proof point of tackling a really challenging problem for an area that has an extremely high unmet medical need. We're continuing to progress this program. This has been a case study that has generated lots of interest from pharma. It's definitely helping drive our pipeline and, again, showing how de novo design can truly unlock differentiated and novel biology to hard targets and epitopes that just have never been drugged before.
Yeah, that's a good, I'd just add to that, like, this is the kind of proof points the industry is looking for, right? Like, we can't share the work we do under our partnership with Almirall, for example, but this is the kind of project where we can share the data publicly. And I, to Sean's point, this has been really a catalyst for a lot of our discussions with pharma. As you'll know, we're giving guidance that we'll sign at least one large pharma partnership this year. I would say this is an exciting catalyst for some of those discussions. Great. Zach, you did mention about your collaboration with AMD, and maybe talk about your relationship with AMD.
I don't know how much you want to go into detail here, but, like, maybe talk about cost savings, maybe talk about anything that you want on the AMD relationship.
Yeah, I'm going to turn that one back to Sean. He was just in Austin doing a podcast with the CTO of AMD, so he has the most recent perspective.
Yeah, we're really excited about the AMD partnership. If you just look at, like, the chips, they're extremely solid, and they have actually higher memory than what you see on the equivalent NVIDIA chip. And, you know, why are we excited about higher memory? This actually allows us to get higher training resolution. And what do I mean by training resolution? Essentially, you know, we're training on either protein sequences or the structures. A lot of times on these protein structures we're training on, we actually have to crop the structures themselves, due to the limited memory. By cropping the protein, you're actually giving the model less information.
Therefore, if you can increase the memory, you can avoid the cropping and therefore provide more context and more information to the model, actually being able to increase the overall efficiency and generalizability of your models. We saw this as a really exciting area for our training to get that increased training resolution and improve model accuracy. Additionally, the increased memory allows us to do batch processing, which allows us to parallelize the work we're doing, which ultimately leads to better price performance. We do believe over time, both on inference and training, we're going to get to the point where, you know, we're able to be, you know, probably, you know, double our efficiency on AMD chips compared to other competitors.
I'll just mention AMD is extremely competitive in the space. They're hungry. They have really, really strong hardware. I think they recognize too that their software needs to change, and they're partnering with us to get those software solutions to have a big unlock for not only us, but, you know, I think the whole AI drug discovery space. We're really excited about this partnership and what it can do for us in the future.
Yeah, that's super interesting color, on the software side. I guess we're getting closer to the time here. Maybe, Zach or Sean, talk about, you know, the balance sheet uses of capital, you know, how much funding it takes out, how long that takes you out to with all your projects. Maybe talk about which is the most capital-intensive project. It seems like 201 obviously can be done a little bit more cheaply, but, yeah, walk us through on the balance sheet here.
Sure. End of year 2024, we had about approximately $112.4 million on the balance sheet. Post-end of year, you'll note, Scott, that we raised an additional $41 million, approximately $41.7 million. Twenty of that was through the AMD partnership, where they made an investment in Absci at a premium. Subsequent to that, we ended up accessing our ATM facility to raise another approximately $21.7 million. We're really happy with those transactions. Ninety percent of the transactions on the ATM came from very large mutual fund complexes, so long onlys. We were very happy to have them join or come into the shareholder base in a more meaningful way. I think with the cash on hand, we're comfortable having, executing on plan and running our operations into the first half of 2027.
I think that additional capital is also really helpful in allowing us to accelerate the development of ABS-201. As we mentioned, we're looking to be in first in human trials early next year with the potential for a proof of concept readout, interim readout sometime in 2026. We think that's going to be immensely value creating. We talked about in the front end of this conversation, the market size here just in the U.S. alone is over 80 million patients. I think moving that program forward at an accelerated pace is very value creating for the company. That's the big focus. We will also be prosecuting our phase I trial for ABS-101. That trial will start here shortly, with an expected interim readout in the second half of this year. Some nice catalyst here and coming up.
In addition to that, we have the earlier stage programs we talked about, 301 and 501 that we're moving along.
Great. I think we'll end it here. Sean and Zach, thank you so much for doing this fireside chat with me. A lot of exciting developments on the way, and looking forward to the readouts. I think everyone's focused on 201. It's an amazing molecule. So, yeah, stay tuned, I guess, right?
Yeah, absolutely. It's going to be an exciting, next 12 to 18 months.
Absolutely. All right. Thank you, guys.
Awesome. Thanks.