Thank you for standing by, and welcome to Absci's First Quarter 2025 Business Update and Financial and Operating Results Conference Call. At this time all participants are in a listen-only-mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions] I would now like to hand the call over to Alex Khan, VP, Finance and Investor Relations. Please go ahead.

Thank you. Earlier today, Absci released financial and operating results for the quarter ended March 31, 2025. 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 e-mail to investors@absaci.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 appears in the section titled 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, May 13, 2025. With that, I'll turn the call over to Sean.

Good afternoon, everyone. Thank you for joining our Q1 2025 business update call. Today marks a significant milestone for Absci. We have initiated our first-in-human clinical trial for ABS-101, officially making Absci a clinical stage biotech company. It's incredible to see how far we've come in just a short time. About 2.5 years ago, Andreas Busch, an experienced drug hunter, joined Absci as our Chief Innovation Officer. Under Andreas' leadership and with the talented team he assembled, we quickly leveraged our AI platform to create a robust pipeline of potential best-in-class and first-in-class therapeutics. Today, I'm proud to announce the start of our Phase I clinical trial for ABS-101, our potential best-in-class anti-TL1A antibody. This randomized, double-blind, placebo-controlled trial of single ascending doses of ABS-101 will evaluate its safety, tolerability, pharmacokinetics and pharmacodynamics in approximately 40 healthy adult volunteers. The primary focus is safety and tolerability with PK, PD and immunogenicity as secondary endpoints. We expect interim results later this year from this ongoing study in Australia. As a reminder, ABS-101 is a potential best-in-class TL1A antibody, demonstrating high affinity, potency, ability to bind both TL1A monomer and trimer, anticipated low immunogenicity and high bioavailability shown in nonhuman primates. Additionally, it's formulated for convenient sub-Q administration with an anticipated dosing interval of 8 to 12 weeks. Recent data indicates ADS-101 may have a lower chance of developing antidrug antibodies in clinical settings compared to a competitor molecule with high clinical ADA rate. Our recent NHP studies confirm prolonged dose-dependent target engagement with a clear ceiling effect, and ADS-101 was well tolerated in a 13-week GLP study in NHP. Interest from potential partners remains high for this program. Additionally, we are progressing on a bispecific program with a novel arm in conjunction with our TL1A antibody. We'll share more details on…

Thanks, Sean. As Sean mentioned, we continue to execute across all aspects of our business. This includes progressing our internal and partner programs, as well as advancing discussions with prospective new high-quality partners. As our business development discussions remain robust, we continue to anticipate signing one or more drug creation partnerships, including with a large pharma company this year. We also plan to continue providing material updates when possible about ongoing internal and partnered programs as they advance through development. As we think about the growing capabilities of our AI platform, we believe our greatest value proposition is designing novel and differentiated therapeutic assets that address unmet medical needs. Accordingly, in addition to leveraging our platform to reduce drug design time lines and costs, we are increasingly focused on applying the platform design therapeutics addressing disease targets for which legacy drug discovery approaches have been unsuccessful. The HIV Caldera case study, which we have shared previously, as well as recent successes in several of our partnerships give us confidence in our ability to design therapeutics addressing challenging target classes, both in our own internal programs and in our partnerships. We are pleased to note a growing number of discussions with industry participants who recognize the potential unique value we can bring to drug creation collaborations. As Sean discussed earlier, we recently achieved a key milestone in our evolution as we officially became a clinical stage biotech with ABS-101 entering the clinic. We are also excited to see ABS-201, our hair regrowth program, accelerating toward the clinic as we anticipate initiation of a first-in-human trial in early 2026. As a reminder, our business model is focused on out-licensing or selling our internal programs and co-developed programs following value inflection proof points. These potential transactions could occur as early as preclinical proof…

Thanks, Zach. Today is a deeply gratifying day, not just for me as a founder, but for all of Absci and the dedicated Unlimiters who bring our mission to life. 14 years ago, when we started this journey, we knew nothing would come easy. From the beginning, we've relied on drive, tenacity, innovation and perseverance, not just to survive, but to thrive in the face of uncertainty. As we complete our transition to a clinical stage company, I think back to those early days in the basement lab, our mission hasn't changed to harness technology and science to improve the lives of patients everywhere. And today, I'm proud to see our continued execution bring us closer to that goal. Looking ahead, ABS-101 is now in the clinic, and we expect to share interim data in the second half of this year. ABS-201, our hair regrowth program, is also gaining momentum as it moves towards the clinic. We plan to begin first-in-human studies in early 2026 with an interim efficacy readout expected later that year. Beyond our internal programs, and as Zach mentioned, we have a clear line of sight to bring one or more new large pharma partners into our growing ecosystem of collaborators this year. None of this would be possible without the incredible work of our Unlimiters. To everyone at Absci, thank you for your continued dedication to our mission. With that, I'll turn the call back over to our operator to begin Q&A. Operator?

Thank you. [Operator Instructions] Our first question comes from the line of Arseniy Shabashvili of Guggenheim Securities. Please go ahead, Arseniy.

Hi. This is Arseniy on for Vamil. Thank you for taking our questions. And congrats on all your progress. Regarding ABS-101, what are you hoping to see in the Phase I top line in the second half of the year in terms of PK and immunogenicity endpoints, as well as any other metrics you may be looking at?

Yes. Thanks, Arseniy. First off, we're looking to see a really nice safety profile looking at immunogenicity. The second is looking at target engagement. We're hoping to see similar target engagement data as what we saw and presented at the JPMorgan Healthcare Conference earlier this year. And Christian, is there anything else that you'd like to add in terms of what we'd like to see for ABS-101?

Yes, absolutely. We would like to - in addition to what Sean mentioned, we would like to validate the extended half-life to really demonstrate that in humans, we can potentially support dosing of every 2 months to every 12 weeks. And then as Sean mentioned, we will continue to observe and hopefully validate expected low immunogenicity, and overall good tolerability and safety profile and then demonstrate target engagement as measured by the elevation of total soluble TL1A. And note that the elevation of total soluble TL1A will also be measured over an extended period of time, really then demonstrating not only an extended half-life in terms of the PK of the antibody, but also the pharmacodynamics, meaning we see an elevation of total soluble TL1A in - over an extended period of time, really demonstrating target engagement and confirming the overall target product profile.

Thank you. And one more, if I may, regarding 201. Obviously, it is the early days, but based on what you now know, do you think this product can potentially be self-administered in the future?

Yes. We do believe this can be self-administered. Right now, though, we are working - we want to work with dermatologists on being able to make sure that this is effectively administered. And so we do think, over time, it could be self-administered, but we do think working with the providers initially is likely the best route to go.

Thank you.

Our next question comes from the line of Brendan Smith of TD Cowen. Please go ahead, Brendan.

Great. Thanks for taking my questions, guys. Congrats on all the progress. Maybe just a quick one from us on 201. As you look at the data today and think about a potential clinical trial ahead, I guess, how are you thinking about potential market segmentation here? And I guess maybe just among that 80 million to 90 million patient figure that I think you flagged in the past, I guess, who among them do you think would maybe be lowest hanging fruit to target first and just kind of how you're thinking about that rollout?

Zach and Christian, do you want to take that?

Yes. This is Zach. I'd be happy to. It's a great question, Ben. We spent a lot of time with our KOL network evaluating that. At this point, we think this mechanism could be efficacious in almost all of those segments for androgenic alopecia. So we are looking at a Phase I trial design where we'll see some breadth in terms of age, both male and female. We'll put out more data around that trial design later this year. But as of today, just looking at the mechanism and the strong translational data, including the human genetics that support safety, we don't see any particular segment of that population that could not be treated, but it's certainly something we're going to have to evaluate in the human clinical trial setting. And Christian, I don't know if you want to add anything?

Yes. Great point, Zach. Not much to add. As you correctly pointed out, we will observe as we go into clinical development, how this product is best administered, how it is best served in different populations. And I think this will inform our commercialization strategy. I will flag that beyond androgenic alopecia, there is potential for this mechanism as well. So beyond the market segmentation in androgenic alopecia, it will also be interesting to look in indications such as endometriosis where this mechanism has a potential, and we are actively exploring that as well.

Got it. Okay, great. Thanks, guys.

Our next question comes from the line of Gil Blum of Needham & Company. Please go ahead, Gil.

Good afternoon, everyone and allow me to add my congrats to the progress here. So maybe a couple of questions on 201. Now that we have some pharmacokinetics from the nonhuman primate model, maybe kind of initial thoughts on the type of dosing you're going to first look at in humans? And kind of as a follow-on, so I remember the idea was to inject the compound to the target site. How much systemic exposure did you observe in the NHP model? Thank you.

Christian, do you want to take that?

Yes. So we will disclose the full pharmacokinetic data set at a later point in time at a scientific venue. I will say that we have as we've shown, a very attractive pharmacokinetic profile in nonhuman primates. We think it is conducive based on the pharmacokinetic, pharmacodynamic modeling we've done to a dosing of every 8 to 12 weeks, as Sean mentioned earlier. We think this is overall a very attractive profile, in particular, for an aesthetic indication as androgenic alopecia. And we anticipate that this product will be dosed every - over a 6-month treatment period. So you could imagine that we can achieve this treatment regimen in just 2 or 3 doses. So we think that's attractive. And with regards to the total exposure, stay tuned. We will disclose the full data at a scientific venue at a later point in time. Does that answer your question?

Thank you. Our next question comes from the line of Vikram Purohit of Morgan Stanley. Please go ahead, Vikram.

Hi, everyone. This is Morgan on for Vikram. Thanks for taking our question. And again, I wanted to extend our congratulations on all the progress this quarter. I wanted to ask a quick question on ABS-301 and when we can expect that development candidate to be shared? Thank you so much.

Thanks, Morgan. We are continuing to advance it. We recently showed some recent target validation data last quarter, and we are still progressing towards a DC. We have not disclosed at this point in time when that DC will be ready, but we are doing in vivo validation or in vivo studies currently and after that, should be ready to nominate a drug candidate.

Okay. Appreciate it. And then one last question on ABS-201 for that interim data readout, I know it's still very early days, but do you have a sense of what kind of data will be shared there and what could be expected based on what you're seeing right now?

Yes. We are looking to have that be an interim proof-of-concept readout from both - potentially both from the SAD portion as well as the MAD portion of that study, which would be in the second half of this year. And as we get closer to that study, we will be disclosing more of the study design of that. But again, we do expect a potential efficacy readout in the second half of next year on that trial.

Excellent. Thank you very much.

Thank you. Our next question comes from the line of George Farmer of Scotiabank. You question please, George.

Hi, good afternoon. Thanks for taking my question. Sean, can you elaborate a little bit more on this combo strategy that you have with 101? That sounds pretty intriguing. And regarding the partnership that you have with AstraZeneca, I recall that there was a big milestone that you guys had hit with them. Can you give us an indication of like whether you may be getting any milestones in the near future, maybe just on a qualitative basis, how substantial those could be? And then number three, regarding 501, how do you see this drug fitting into the competitive landscape? It's a pretty crowded area. And how is this really differentiated? Thanks.

Yes. So first off, on the combo, what we're seeing, especially as we're engaging with large pharma on this. There is a push into combo-based approaches. You're seeing J&J really lead the way on this. And you're starting to see also combo-based approaches coming from AbbVie as well. And so we do think that a TL1A combo-based strategy is likely to help increase overall efficacy and durability. And that's a direction that potential partners are thinking of with regards to ABS-101. And then we also have a bispecific strategy with a novel arm, so BTL1A with a novel arm. And this is not the typical IL-23 or alpha4beta7 arm. This is a novel target we are pursuing with that bispecific strategy. And I'll let Zach take the AZ question, and then Christian can take 501.

George, it's Zach. Unfortunately, we can't give any specific commentary around any of those partnerships. As you'll appreciate, they're all under NDA provisions. I can share like more generally, I think we've mentioned publicly about some more recent successes in some of our other partnerships, including applying our platform to develop antibodies that actually effectively block an ion channel. That's been one of these targets that's been very challenging to address. So I can make some general comments like that, but I can't give you anything specific.

This is Christian. Answering your question on ABS501. Yes, obviously, you're correct. The HER2 space is indeed a very competitive space. We have currently ongoing a number of preclinical studies that will help us to position ABS501 in this space. Among them could also be combination approaches, and we are exploring actively where that potential niche is. These studies are currently ongoing. We may have a drug candidate this year, but potentially also next year depending on the timing of the studies and the data as they emerge.

Okay. And Sean, again, back to the combo approach. This bispecific that you're referring to, is this one of an in-house bispecific that you're making? Or is it somebody else's?

This is an in-house bispecific that we have developed. And so we're -- in addition to that bispecific, we're also developing the other arm of this novel target as well as a mono-based therapy. But this is all developed in-house.

Okay. Thanks.

Thank you. Our next question comes from the line of Kripa Devarakonda of Truist Securities. Please go ahead, Kripa.

This is Alex on for Kripa. First, congrats on the progress and becoming commercial stage. That's fantastic. And a question from our side. As the assets continue in development, ABS-101 and ABS-202, as they progress, is there also an updated sentiment on how you think about future partnerships? Namely, do you think you can command improved economics? Is there any change to that? Or any key differences that you see how your business might evolve given the success in the clinic? And then another one from us on your cost structure. Could you speak to how flexible it is with fixed and variable costs? And namely, as many people are concerned about the state of the markets, biotech markets specifically at the moment, are you able to run any more leanly if you need to? Thanks.

Yes. Thanks, Alex. I'll let Zach take both those questions.

Hey, Alex, great questions. In terms of the platform and the kind of deal terms that we think we'll see in the future and going forward, I would answer your question by saying, yes, but due to two reasons, I mean, we do hope to see enhanced deal terms, certainly with some success with ABS-101 and that interim data readout. I think that's an important milestone for the company and helps provide additional validation of the platform. But the other really exciting developments on the platform is that now that we're in version 3 of our models moving into version 4, we've shown an ability to address these very challenging target classes. And as an example of that is the HIV Caldera case study that we've put out publicly at the end of last year. But also more recently, some successes in various partnerships that we have ongoing. And so we feel like that is a really significant value proposition that differentiates us from many other players really in the field. And so we're seeing a lot of engagement from pharma around how they could potentially leverage our platform to address some of these targets that they struggled with. So we're looking forward to advancing these discussions and negotiations over the next year to see what kind of terms we can reach on drug creation partnerships. But we do expect to see them increase materially versus what we've done in prior years. And then on your question pertaining to cost structure, I would say we continually look for ways to leverage more efficiencies out of the AI platform. And I just mentioned we've made some advances there, and we continue to make advances year-on-year really on a quarterly basis with the platform. So we do see opportunities to reallocate resourcing and also to reduce certain areas of resourcing as we leverage more and more of our AI capability. And that's - for Absci, that's an ongoing process that we evaluate each and every quarter.

Thank you.

Thank you. Our next question comes from the line of Debanjana Chatterjee of Jones. Your question, please, Debanjana.

Hi. Thanks for taking my questions. So I have two. The first one is that assuming that you see optimal results as you expect in the Phase I readout for ABS-101, as you think about the Phase II, will the study include both open-label and randomized arms similar to the design in one of the competitor trials?

Thanks. That's a great question. At this time, we have not disclosed what the Phase Ib/IIa is going to look like. As the interim data comes out, we'll be sharing more information on what those studies are going to be looking like in the future.

Okay. Great. And one follow-up. So this is broader. As the FDA shifts towards minimizing animal use for safety testing and emphasizes AI-based safety predictions, can you leverage Absci's data first AI-driven platform to model toxicity and predict safety? And is Absci better positioned than its non-AI-driven peers to navigate this shift?

Yes, absolutely. We're really excited to see the FDA wanting to leverage AI models to help reduce toxicity and immunogenicity. And as we mentioned on the call, one of the models that we've developed that we released in 2022 was our naturalness model and being able to ensure that the antibodies are as human-like as possible. And we see this as a big advantage for us moving forward, in particular, in being able to reduce overall immunogenicity and ensure favorable developability and manufacturability, but also helping to align with the FDA on where they're going. And so we see this definitely as a big advantage for us moving forward. And Christian, please added anything else.

Yes, very well said, Sean. Indeed, I think the developments at the administration are very exciting for us. We will continue to engage and continue to follow the FDA's process and advisory relationships to observe what the next steps are. These things will usually also result in revised globally harmonized guidelines. And this is indeed a very exciting opportunity as these efforts towards reducing usage of animals are taking - these measures are taking place, we will see a much more broad adoption of AI models. And clearly, this is a very interesting opportunity for Absci.

Okay. That's very helpful;. Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Li Chen of H.C. Wainwright. Your question please, Lee.

Hello. Hello, everyone. Congratulations on the quarter. So to expand on the TL1A questions a little bit. So can you give us some understanding of the strategy behind going after the novel target of the bispecific instead of your competitor strategy of going for the clinical approved targets? So what's the advantage of this novel target?

Yes. Thank you, Li Chen. So this is a known target with known biology. It's been difficult to drug both from an antibody standpoint as well as a small molecule. And we have figured out a way to drug it with an antibody. And we do think that it has really strong synergy with our TL1A asset. And I'll hand it over to Christian to maybe go in a little bit more depth on some of the biology.

Yes, 100%. So this target, we have - as Sean mentioned, we have not disclosed this target. So we have to tread a little bit lightly in terms of what I can tell you in terms of the details here. But what I can say is that just like TL1A, the mechanism is a pro-inflammatory mechanism that is clinically highly relevant in autoimmune diseases. Hence, we believe there is a very good rationale for combining it with an anti-TL1A antibody. As Sean mentioned, we are actively working on a bispecific on this combination. And we think this particular combination could indeed be very differentiating from other combinations that others are pursuing, for example, what is already out there, TL1A alpha4beta7 or TL1A IL-23. We thought rather than following these paths that others have already taken, we are exploring a novel combination here with a difficult-to-drug target at least historically and thereby potentially really have a very differentiated and potentially highly efficacious bispecific antibody in our hands.

Got it. Thanks for the color. And if I may, a quick follow-up. So, for example, when should we expect to see some go/no-go decision about prioritizing the monomeric TL1A versus the bispecific?

So at this point in time, we are planning on pursuing both of these assets. And in terms of partners, partners are both interested in the TL1A monotherapy, as well as the bispecific. And so we, again, continue to develop both of these in parallel and see value in both of those. And I think it's important to have both of these from a partnering perspective as well.

Okay. Thanks for taking the questions.

Thank you. That does end our Q&A session and concludes today's conference call. Thank you for participating. You may now disconnect.