Christian Stegmann; Senior Vice President, Drug Creation; Absci Corp
Kripa Devarakonda; Analyst; Truist Financial
George Farmer; Analyst; Scotiabank
Presentation
Operator
Good day, and thank you for standing by. Welcome to the Absci Q3 2024 business update conference call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alex Khan, VP, Finance and Investor Relations. Please go ahead.
Alexander Khan
Thank you. Earlier today, Absci released financial and operating results for the quarter ended September 30 2024. If you haven't received this news release or if you would 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 Relations website at investors.absci.com for at least 90 days after this call. Joining me today are Sean McClain, Absci's Founder and CEO, and Zach Jonasson, Chief Financial Officer and Chief Business Officer. Christian Stegmann, Absci's SVP of Drug Creation will also join for Q&A following prepared remarks. Before we begin, I'd like to remind you that management 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. Additional information regarding these risks, uncertainties, and factors that could cause results to differ appear in the section entitled forward-looking statements in the press release Absci issued today and the documents and reports filed by Absci from time to time with the Securities and Exchange commission. 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, November 12, 2024. With that, I'll turn the call over to Sean.
Sean McClain
Thanks, Alex. Good morning, everyone, and thank you for joining us for our third-quarter business update call. Today we are excited to discuss some of the latest progress we have made throughout our portfolio programs, both partnered and wholly owned, and share some additional information ahead of our 2024 R&D day next month. Before the end of last year, we entered into a collaboration with AstraZeneca to deliver an AI-designed antibody against an oncology target. This collaboration combines Absci's integrated drug creation platform with Astrazeneca's expertise in oncology, with the goal of accelerating the discovery of a potential new cancer treatment candidate. We are proud to have recently announced, approximately just six months after starting this program, achievement of the first milestone under our collaboration, having delivered AI De Novo antibody sequences designed using our integrated drug creation platform. In addition to the progress we have made on our collaboration with AstraZeneca and with other partners, we are pleased to be adding another new partner to our diverse list of collaborators with bioscience. As we recently announced, Absci is collaborating with Twist to design a novel antibody using generative AI. We are very excited to be working with Twist on this innovative program, and Zach will share additional details on this new partnership later in the call. One month from today on December 12, we are excited to be hosting our 2024 R&D day in New York City. At this event, you will hear from our executive leadership and our scientific team as well as a series of distinguished guest speakers. We plan to share additional information about our existing internal asset programs and unveil one new asset program. For those not attending in person, a live broadcast of the full presentation and a replay will be available on our website. But before then, I'd like to take a moment now to provide an overview of the current state of each of our proprietary programs. Starting with ABS-101, our potential best-in-class TL1A antibody. A few months ago, we shared results from our non-human primate studies of this program demonstrating 2x to 3x extended half life as compared to first-generation antibodies in clinical development and further supporting this program's potential best-in-class profile. In our studies, ABS-101 is also observed to have an increased biodistribution in NHPs as compared to first-generation TL1A antibodies in clinical development. And CMC studies verifies the ability to formulate ABS-101 at high concentrations of 200 milligrams per milliliter which supports further development of the subcutaneous formulation. And last month, at Festival of Biologics year of 2024, Abcsi has presented titled Development of an AI-designed therapeutic anti-TL1A antibody for IBD. Additional data for the ABS-101 program was shared at this event and can be found on Absci's website within our updated corporate deck and a copy of the poster shared at the conference. We continue to advance ABS-101 through IND-enabling studies as planned and our company and our program's ability to potentially demonstrate a truly differentiated product profile. We plan to initiate Phase 1 clinical studies of ABS-101 in the first half of 2025 and continue to expect an interim data readout in the second half of 2025. Turning to ABS-201, our potential best-in-class dermatology program. ABS-201 is designed from an undisclosed dermatological indication with [significant] unmet need where the efficacy of the pharmacological standard of care is not satisfactory. We believe that the target for this program is underappreciated as we could potentially be second to clinic. And as we continue to anticipate selecting a development candidate for this program this year, we look forward to sharing some additional data and information for this program, including the target and its potential markets and indications, with you all at our R&D day next month. Finally, ABS-301, our potential first-in-class immuno-oncology program. ABS-301 is a fully human antibody designed to bind against a novel target discovered through Absci's reverse immunology platform. We anticipate completion of mode-of-action validation studies for ABS-301 in the first half of 2025 with plans to share data for this program shortly after. As you can probably tell, we at Absci are all very excited about the updates that we'll be sharing next month at our R&D day. Until then, as always, we remain focused on continued innovation and execution on all aspects of our platform and portfolio, all with the mission to create better biologics for patients faster. And as always, the progress we are able to achieve is a testament to the work our team does each and every day at Absci and reflects our platform's differentiated capabilities in AI drug creation for biologics. With that, I'll now turn the call over to Zach to walk through our new partnerships, our outlook, and provide an update on our financials. Zach?
Zachariah Jonasson
Thanks, Sean. As Sean mentioned, we recently entered into an exciting new partnership with Twist Bioscience. This collaboration brings together Absci's generative AI drug creation platform with Twist's DNA synthesis platform to accelerate the design and pre-clinical development of a novel therapeutic antibody for a biological target implicated in multiple disease areas. For this collaboration, Twist's silicon-based synthesis platform will help power early-stage R&D, including testing and validation of antibody candidates designed using Absci's generative AI technology platform. Following the planned early development of this program, Twist and Absci intend to seek a partner for further human clinical development and commercialization. We are proud to add another great partner to our list of collaborators, which includes AstraZeneca, Merck, Almirall, NVIDIA, Memorial Sloan Kettering Cancer Center, and others. And we look forward to working together with Twist on this important program. Looking to the remainder of this year and into 2025, we continue to see a robust and diverse pipeline of potential partners for new drug creation programs. Hence, we continue to anticipate signing partnerships with two more partners in addition to our previously announced partnerships with MSK and Twist this year. As Sean discussed, our portfolio of proprietary programs includes three diverse wholly owned assets: ABS-101, ABS-201, and ABS-301, all of which were generated using our integrated drug creation platform. We continue to advance each of these internal programs according to plan. We also continue to make progress on new internal programs and expect to advance at least one additional internal therapeutic program to the lead stage this year. As a reminder, our business model is focused on out licensing or selling our internal programs and co-develop programs following value inflection proof points, anywhere from pre-clinical proof of concept to Phase 2 clinical proof of concept. Turning now to our financials. Revenue in the third quarter of 2024 was $1.7 million as we continue to progress our partner programs. Research and development expenses were $18 million for the three months ended September 30, 2024, compared to $11 million for the prior year period. This increase was primarily driven by increased lab operations, including approximately $3 million in direct costs associated with IND-enabling studies for ABS-101 and an increase in stock compensation expense. Selling, general, and administrative expenses were $9.3 million for the three months ended September 30, 2024, compared to $9.5 million for the prior year period. This decrease was due to lower personnel costs and continued reductions in administrative costs, offset by an increase in stock compensation expense. Turning to our balance sheet, we ended the quarter with $127.1 million in cash, cash equivalents, and short-term investments compared to $145.2 million as of June 30, 2024. We continue to enhance our focus on high-value proprietary internal programs while also seeking high-quality code development and drug creation partnerships with industry leaders who bring synergistic expertise and technology. We believe this strategic and balanced approach will provide us with the best ROI rather than simply pursuing a higher volume of programs and best positions us for further success in the future. For 2024, we now expect the gross use of cash, cash equivalents, and short-term investments of approximately $75 million, which is approximately $5 million below our previous expectation of $80 million. This estimate includes the expected costs associated with advancing the IND-enabling studies for ABS-101, with a third party CRO. Based on our current plan, we believe our existing cash, cash equivalents, and short-term investments will be sufficient to fund our operations into the first half of 2027. Altogether, we are very pleased with the progress we have made on our internal programs and we are confident in our ability to execute on these and on our partner programs over the rest of this year and beyond. With that, I'll turn it back to Sean.
Sean McClain
Thanks, Zach. Over the course of this year, we have demonstrated solid execution across all aspects of our business and throughout our portfolio of proprietary and partner programs. As we continue to execute on our strategic objectives and ultimate mission, we see a number of potential catalysts in the next 6 to 12 months and beyond and look forward to sharing additional updates with you all at our R&D day next month on December 12. With that, I'll turn it back to the operator to begin Q&A. Operator?
Hey, guys. Thank you so much for taking my question, and congrats on all the progress this year. I had a question about the AstraZeneca milestone that you mentioned. First of all, congrats on delivering another AI De Novo design antibody sequence. Can you remind us of the economics of this partnership and when we can expect further updates from it? I know you're probably partly restricted. And also, does this -- you said that this is an oncology target, but does this in any way validate the potential of what Absci's platform can do, not just in terms of De Novo design but also targeting different classes of targets? Thank you.
Sean McClain
Yeah, absolutely. Thanks, Kripa. Yeah. So we think that this is a really great validation of the platform. We're able, in six months, to deliver on a binder that could bind to a target where there was no binder. And we see this as, again, I think really great validation. And Zach, I'll hand it over to you to talk a little bit about the economics of the deal.
Zachariah Jonasson
Thanks, Sean. Yeah, as you may recall the partnership with AstraZeneca, the one target deal at $147 million bio deal value, including all the upfront research fees, milestones, there's a royalty associated, but that's not disclosed. And so it's a fairly traditional structure for a partnership at the drug creation stage.
Operator
Brendan Smith, TD Cowen.
Hi, this is Jackie on the line for Brendan. Thanks so much for taking my question. I guess just looking at both your R&D day and the upcoming updates that you have for the first half of '25, can you give us any expectations on what we can reasonably expect data-wise? What kind of data, which assets will be involved, and how much data do you plan on discussing?
Sean McClain
Yeah, absolutely. So with ABS-201 at R&D day, this will be a very similar data package to what we presented for ABS-101, our TL1A asset. And so that will be a robust pre-clinical data package. And we plan to, with this, announce a drug candidate on that. And then later in the first half, we do plan on presenting efficacy data on ABS-301. And so those are kind of the, I would say, two major data readouts at R&D day and in the first half.
Great, that's super helpful. And then just one more. As you near IND stage for your ABS-201, are you also planning on using the same manufacturers for the second asset as you did for ABS-101? And when we're looking at expected R&D, should we kind of picture that ramping similar to 101 over 2025?
Sean McClain
Yes, we are using the same manufacturer, WuXi, for ABS-201. And in terms of overall expense, I would assume similar expenses.
Operator
(Operator Instructions)
Zachariah Jonasson
Just before the next question, just a quick correction. I think, I believe, I gave the wrong number in the prior answer around AstraZeneca partnership. It's a $247 million deal. I believe I misspoke and said $147 million, but just a correction to that.
Operator
George Farmer, Scotiabank.
George Farmer
A couple more partnerships you're expecting this year, can you say anything more about that? Are these large pharma partners or on the smaller side?
Sean McClain
Zach, do you want to take that question?
Zachariah Jonasson
Sure. Thanks, George. What I can say, George, is we continue to advance several discussions with prospective partners here in Q4. It's a mix of different types of companies and sizes. That's probably all I can say at this point.
George Farmer
Okay. And just noticed with ABS-301 -- is that a slight delay? I think you've been -- had been guiding to provide a little bit more insight into that program by the R&D day, but now it looks like it might be delayed.
Sean McClain
That is correct. We are seeing a slight delay on ABS-301 and where we're running at our CRO. This has nothing to do with the actual efficacy of the study itself, but the studies have been delayed just slightly on that.
Operator
Vamil Divan, Guggenheim Securities.
Good morning. This is [Arshay] on for Vamil. Thank you for taking our question. Our question is on the planned healthy volunteer study for ABS-101 next year. Understanding that you may be providing additional detail about that program at your R&D day next month and may be limited in what you can share today, what would you like to see from that study in terms of antibody half life? What do you believe that the bar is there?
Sean McClain
Yeah, thank you, Christian. Do you want to take that question?
Christian Stegmann
Sure. Thank you for the question. Indeed, as you say correctly mentioned, this will be a healthy volunteer study. And our, our intention is to measure pharmacokinetics in the study as is usual in such a healthy volunteer setting. In terms of our expected half-life, we expect to achieve a profile that is similar for half-life engineered antibodies. At a minimum case, we expect to have dosing levels that allows once-monthly dosing, potentially up to once quarterly.
Operator
Thank you. I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.
