Absci Corporation (ABSI) Earnings Call Transcript

Thank you. Good day and thank you for standing by. Welcome to the Absci Second Quarter Business Update. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, [ Alex Khan ], Corporate Vice President and Investor Relations. Please go ahead.

Thank you. Earlier today, Absci released financial and operating results for the quarter ended June 30, 2026. If you haven't received this news release or if you'd like to be added to the company's distribution list, please send an email to investors@absci.com. An archived webcast of this call will be available for replay on Absci's investor website at investors.absci.com for at least 90 days after this call. Joining me today are Sean McClain, Absci Founder and CEO; Zach Jonasson, Chief Financial Officer and Chief Business Officer; and Ransi Somaratne, Chief Medical Officer, Head of R&D. Before we begin, I'd like to remind you that managers will make statements during this call that are forward-looking within the meaning of the federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements. These include statements regarding the development and clinical progress of our pipeline programs, including ABS-201; the design, enrollment, conduct, and timelines of our ongoing Phase 1/2a headline trial of ABS-201; the anticipated timing of an interim proof of concept data readout for ABS-201 in the second half of 2026 and full proof of concept data in early 2027; the potential advancing of ABS-201 [ into a pivotal ] Phase 3 development; the anticipated initiation of a Phase 2 clinical trial of ABS-201 for endometriosis in the fourth quarter of 2026, and potential proof of concept readout in the second half of 2027. Anticipated characteristics and product profile of ABS-201 as a drug product, our target product profile and its attributes, the potential for an expedited development pathway, including the possibility of advancing directly from Phase 1 [ into a pivotal ] Phase 3, our planned engagement with the FDA regarding development strategy, our partnership with Eli Lilly including anticipated benefits thereof, and Eli Lilly's participation on our Endometriosis Advisory Board. Capabilities and anticipated benefits of our platform technology such as ATLAS and potential market opportunity and commercial prospects for ABS-201. Certain statements may also include projections regarding potential market opportunity. These estimates are based on various assumptions, including potential regulatory approval, final approved label, and the evolving competitive landscape, any of which could cause our actual addressable market to differ materially from these projections. In addition, certain research findings discussed today reflect participant responses to a hypothetical product profile and do not represent clinical results for ABS-201. Additional information regarding the risks and uncertainties that could affect our forward-looking statements is set forth in the press release Absci issued today, our most recent annual report on Form 10-K, and subsequent documents and reports filed by Absci from time to time with the SEC. Except as required by law, Absci disclaims any intention or obligation to update or revise any financial or product pipeline projections or other forward-looking statements, either because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast August 11, 2026. With that, I'll turn the call over to Sean.

Thanks, [ Alex ]. Good afternoon, everyone. Thanks for joining us today. Absci continues to execute, and I'll walk you through recent highlights, including key progress on our ongoing headline trial, our new partnership with Eli Lilly, and our $100 million financing completed at the end of June. Starting with headlines. In June, we released positive interim Phase 1 data. The data suggests the study drug was well tolerated with favorable safety and tolerability. And based on interim PK data, ABS-201's half-life supports the potential for just 2 to 3 injections over 6 months. This is exactly why we built our AI platform, to design molecules that meet our target product profile we set out from day 1. You've heard us say the prolactin mechanism is underappreciated. Everything we've learned has only strengthened that conviction, and we believe targeting the prolactin receptor has the potential across numerous diseases. And we are also excited to have a partner who shares in that vision. As you saw in June, we announced that Eli Lilly made a $40 million strategic investment in Absci. Our partnership with Eli Lilly is tailored around the clinical development strategy for ABS-201. And as a part of this collaboration, we are happy to be welcoming a representative from Lilly onto our Endometriosis Advisory Board. Zach will provide more details of this partnership later in the call. In addition to Lilly, we've seen elevated interest from the investment community in prolactin biology. In June, we completed a $100 million financing, including the $40 million investment from Lilly, from a group of blue-chip investors. We're grateful for this support, which enables the continued development of our existing programs as well as future expansion of our pipeline. ABS-201's progress is a testament to the platform and the team that created it. Building on that leadership in de novo antibody design with ORIGIN, we've now extended the platform upstream with ATLAS, Absci's target-to-lead autonomous science. ATLAS is an agentic discovery engine built to remove the bottleneck ahead of design, rapidly identifying and validating the right targets. ATLAS integrates literature, genetics, and single-cell sequencing data to surface and triage novel target hypotheses. These flow directly into ORIGIN for epitope-specific de novo design and then into our in-house wet lab for characterization and pathway validation. This process closes a hypothesis-to-molecule loop and turns discovery into a high-throughput, fail-fast engine by having more shots on goal and better ones. We're already seeing this at work. ATLAS has surfaced potential new indications for our prolactin receptor franchise and independently recovered genetic evidence linking this pathway to Pattern Hair Loss and endometriosis. This is a powerful new tool that every drug hunter at Absci can now leverage. We'll continue deploying this AI-native platform to create therapeutics like ABS-201 with the potential to change the treatment paradigm for patients. With that, I'll turn it over to Ransi to walk through the ABS-201 clinical program.

Thanks, Sean, and good afternoon, everyone. In June, we released positive interim Phase 1 data from the ongoing headline trial of ABS-201. We continue to be encouraged by the emerging safety, pharmacokinetic, and immunogenicity profile observed to date. As we said in June, blinded aggregate interim data suggests study drug was well tolerated and exhibited a favorable safety and tolerability profile. Additionally, based on available interim pharmacokinetic data across all 4 single ascending dose cohorts, half-life for ABS-201 is estimated to be at least 65 days. These results support the potential for dosing 2 or 3 times over a 6-month period, pending confirmation through continued follow-up across all cohorts. Additionally, new modeling continues to suggest that 2 to 3 doses of ABS-201 over 6 months would be able to achieve greater than 90% receptor occupancy, which we believe is a key driver of meaningful clinical efficacy for hair growth. These new data are available in the updated corporate deck published on our website today. We are very eager to share our clinical data with you once it's available. Today, we are pleased to share that the multiple ascending dose portion of the study continues to enroll according to plan. We continue to anticipate an interim proof of concept readout in the form of 13-week data later this year. Then, we anticipate our full proof of concept data in the form of 26-week data in early 2027. As a reminder, the headline trial is a randomized, double-blind, placebo-controlled study. Primary endpoints are safety and tolerability, while secondary endpoints include PK, PD, immunogenicity, target area hair count, target area hair width, and target area darkening pigmentation. We will also collect patient-reported outcomes data in this study. The prolactin receptor mechanism for hair growth is unique. Unlike minoxidil, finasteride, or nutraceuticals, the mechanism underlying ABS-201 is regenerative for the hair follicle, protecting and promoting hair follicle stem cells, restoring CD34+ progenitor cells, and stimulating key growth factors IGF-1 and FGF-1, while decreasing the catagen-driving TGF-beta 2. This regenerative mechanism is unique to the anti-prolactin receptor pathway and supports the significant durable effects with potential to grow new hair in dormant follicles. Our clinical study is designed to showcase this unique mechanism with our 13-week assessment, which is interim in nature, intended to provide a directionally positive signal. Has the mechanism begun to take hold? And is it building all the machinery and building blocks we see responsible for regenerating the hairs? A directionally positive signal of hair growth at 13 weeks would give us even further confidence in seeing more robust hair growth at 26 weeks and beyond, as is supported by preclinical data in the stump-tailed macaque. Altogether, the preclinical stump-tailed macaque data, as well as our human ex vivo data from skin biopsies of both male and female donors, provide robust support for this mechanism and its ability to provide durable hair growth. We are also excited to be progressing our ABS-201 program for endometriosis. As Sean mentioned earlier, we are pleased to be welcoming Axel Haupt, M.D., Senior Vice President, Clinical Investigation at Eli Lilly and Company onto our Endometriosis Advisory Board. And with the safety, tolerability, and PK data generated in the SAD portion of the headline trial, we anticipate initiating a Phase 2 study for endometriosis in the fourth quarter of this year. With that, I'll pass it over to Zach to discuss our business strategy and to provide an update on our financials. Zach?

Thanks, Ransi. We continue to focus our strategy on creating and advancing high-value pipeline programs like ABS-201. The primary objective today is the successful execution of our clinical trial for ABS-201 in male and female Pattern Hair Loss and in endometriosis. We are also advancing a preclinical pipeline focused on immunological and inflammatory indications that fit into our broader strategy, including programs that can ultimately be commercialized direct-to-consumer. The clinical trial for ABS-201 continues to progress according to plan. We believe this program offers an outsized ROI based on its relatively capital-efficient clinical development plan and significant market opportunity. Based on our market research, we estimate a potential total available market greater than $25 billion in the U.S. alone. In addition to Pattern Hair Loss, we also see a significant multi-billion dollar market for endometriosis with potential peak sales of over $4 billion. These programs are emblematic of how we prioritize and allocate our resources to programs that offer high ROIs based on addressing large underserved patient populations. We are leveraging our leadership in prolactin biology by advancing ABS-201 towards proof of concept in both Pattern Hair Loss and endometriosis, and by progressing our preclinical anti-prolactin receptor program, ABS-202, in an undisclosed I&I indication. We are also actively exploring other potential underserved indications for which prolactin receptor inhibition could offer a differentiated therapeutic mechanism. We look forward to sharing our interim proof of concept data in Pattern Hair Loss later this year and our full proof of concept data early next year. As a reminder, our consumer research survey, as well as input from leading KOLs, inform our view that a 26-week increase in target area hair count of 30 to 35 hairs per centimeter squared, roughly on par with high-dose oral minoxidil, would enable a home-run product. Our consumer and KOL research support an estimated $25 billion TAM associated with such a hair growth effect size, given ABS-201's expected unique durability and administration convenience. We believe a target area hair count result above that level would expand the market further, and that a less robust result would still unlock a multi-billion dollar market opportunity. ABS-201, with its novel prolactin receptor mechanism, is positioned to become a new premium category of Pattern Hair Loss therapy, offering consumers convenient, durable, regenerative hair growth. Continuing to execute the development of this program remains our top strategic priority. Our platform continues to evolve and deliver new capabilities and efficiency gains. As you will recall, our first programs were advanced through IND-enabling studies in under 2.5 years and under $15 million in total cost. Based on our current ORIGIN model improvements in combination with our agentic ATLAS platform, we believe we can significantly improve on these metrics. For example, our latest ORIGIN models allow for a 1,000x reduction in library size for identification of high-quality leads. We are also finding ways to reduce IND-enabling study timelines based on the quality of our AI-designed drug candidates, which, for example, are well-suited to high-concentration formulation development. We anticipate additional efficiency and capability improvements as we further advance our platform. We are grateful for our partners, new and existing, for their support. As discussed, we are excited to be collaborating with Eli Lilly and to welcome a member of their leadership team onto our Endometriosis Advisory Board. Our partnership with Eli Lilly is tailored around the clinical development strategy for ABS-201 and does not confer rights to the program, which we plan to develop ourselves. We appreciate Eli Lilly's support as well as their interest in prolactin biology within Pattern Hair Loss, women's health, and beyond. Turning now to our financials. Research and development expenses were $22.6 million for the 3 months ending June 30, 2026, as compared to $20.5 million for the prior year period. This increase was primarily driven by advancement of Absci's internal programs, including direct costs associated with external preclinical and clinical development of ABS-201, offset by a decrease in personnel-related costs. Selling, general, and administrative expenses were $9.2 million for the 3 months ending June 30, 2026, as compared to $8.5 million for the prior year period. This increase was primarily due to stock-based compensation and other administrative costs. Cash, cash equivalents, and marketable securities as of June 30, 2026, were $201.1 million as compared to $125.7 million as of March 31, 2026. In June, we completed an underwritten offering of common stock. The net proceeds from the offering were approximately $93.6 million. Our current balance sheet, including this additional capital, supports our execution of key upcoming catalysts and continued progress of our early-stage pipeline, as well as an expansion of our planned endometriosis clinical trial. As we finalize our clinical trial design, we anticipate sharing additional details of the endometriosis clinical development plan later in the third quarter. Based on our current projections, we now believe our cash, cash equivalents, and marketable securities will be sufficient to fund our operating plan into the second half of 2028.

Thanks, Zach. As always, I want to thank the Absci team for making all this possible. I'd also like to thank Eli Lilly for their partnership and all of our investors, both new and existing, for their support. We're fast approaching pivotal moments for Absci. The first look at interim POC data for Pattern Hair Loss is anticipated later this year. Our full 26-week POC data should follow early next year, where we anticipate showing robust hair regrowth from our regenerative prolactin mechanism. I'm incredibly excited for both of these readouts. We're energized for what we're building in our early-stage pipeline. We see a huge opportunity to capitalize on the interest in total vitality, combined with consumer shift towards more direct-to-consumer and cash-pay products. Our current and future pipeline focuses squarely on these emerging trends. We continue to fire on all cylinders, and I can't wait for everyone to see the results of our hard work in the coming months. Operator, let's open the call for questions.

[Operator Instructions] And our first question comes from Brian Cheng of JPMorgan. Your line is open.

We noticed that your indication on your press release is now defined as Pattern Hair Loss. And I think in the prior communication, you have been indicating that the lead indication has androgenetic alopecia. So is there any read or in terms of how you're defining the target indication today? Is there any change in terms of the lead indication for ABS-201? And then we have a quick follow-up. Thank you.

Yes, thanks, Brian. It's a great question. So we decided to change the name for 2 reasons. First, if you think of androgenetic alopecia, you know, it implies the androgen receptor, and we know that targeting the androgen receptor, such as, you know, finasteride or other androgen receptor antagonists, do not fully regrow hair. And we do have evidence that does support that, you know, prolactin looks to sit upstream of the androgen receptor and actually drives androgen receptor expression. And so, based on the underlying biology and the importance of prolactin within Pattern Hair Loss, we decided to, you know, switch the name from androgenetic alopecia to Pattern Hair Loss. Additionally, we had gotten feedback from other KOLs that they thought that this was a more appropriate name. And the last piece is on the consumer front. We think that Pattern Hair Loss is much better understood amongst consumers than androgenetic alopecia. And so we, you know, for all of these reasons, you know, we have changed the name, but not the indication itself. And Ransi and Zach, please chime in if there's anything else I missed there.

Yes, thanks, Sean. I think the term Pattern Hair Loss also encompasses the entire population. Like we're still studying the same population or indications encompass the same population. But really, when you think about the disease state in the U.S., there's 80 million people and 30 million of those are women, so we think the term Pattern Hair Loss is more appropriate to describe who it is that we are targeting.

I was just going to add to the change in name does not have any impact on how we've assessed the market opportunity. It's still fundamentally the same market opportunity, number of patients. Our consumer surveys were focused on identifying that, so this does not have any effect on those estimates.

Thank you. That's very helpful. And as a follow-up, I think, you know, in our prior discussions, we all have a pretty good sense of what we want to see in terms of non-vellus hair counts at week 13 and week 26 from your MAD portion. And just looking at other metrics, I think you have mentioned that the terminal to vellus ratio metric is also super important in terms of giving you a directional insight of whether ABS-201 is giving you some benefits towards the goalposts. Can you help us think about what is the magnitude that you want to see in terms of T to V ratio? And I'm also curious if you have a sense of what some of the current standard of care can offer in terms of the ratio changes at around week 13. Thanks for your help.

Yes, Ransi, do you want to take that one?

Yes, so it's an interesting question. I think we're, at least for the interim, we're interested in a broad set of data. I'm particularly not focused on a specific V to T ratio. And I honestly, Brian, I'm not sure I've seen specific V to T ratios from other programs. So, can't really answer that one for you.

Yes, and I think how we're thinking about the 13-week is really looking at not only the terminal, also V to T, but also the potential to regrow hair in dormant follicles, whether that comes up as a terminal hair, a vellus hair, or you have more V to T transition. I think the key point with this readout is being able to show potentially new mechanisms other drugs do not show, and I think regrowing that dormant follicle where you've been bald for many years, we start to see changes there, again, whether it's on the vellus hair or the terminal hair. We think that that's really exciting and could be a big game changer for this particular mechanism in addition to the regenerative aspect.

And, Brian, that's why we talked about total hair count in the past, and that encompasses what Sean was just talking about.

Thank you. And our next question comes from Brendan Smith of TD Cowen. Your line is open.