Absci Corporation — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This annual filing reports full-year results, not a standalone fourth-quarter income statement. Absci is a generative-AI and synthetic-biology company developing biologic drug candidates and production cell lines through partnerships and its own platform.
Financial performance and liquidity
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Revenue | $5.7 million | $4.8 million | Up 20% |
| Research and development expense | $58.9 million | $44.6 million | Up 32% |
| Selling, general and administrative expense | $40.6 million | $28.8 million | Up 41% |
| Depreciation and amortization | $13.0 million | $6.7 million | Up 96% |
| Operating loss | $(106.8) million | $(75.2) million | Loss widened |
| Net loss | $(104.9) million | $(101.0) million | Loss widened |
| Net loss per share, basic and diluted | $(1.15) | $(2.08) | Improved |
| Net cash used in operating activities | $(81.3) million | $(60.6) million | Use increased |
Technology-development revenue was $4.5 million and collaboration revenue was $1.2 million. Revenue remained small relative to operating costs; the filing does not report a conventional gross margin. R&D expense growth reflected higher personnel and laboratory costs and continued platform investment. SG&A rose with personnel, stock compensation and public-company expenses. Depreciation and amortization increased with laboratory and facility investment and amortization of acquired intangibles.
At year-end, cash and cash equivalents were $60.0 million, short-term investments $104.5 million, and restricted cash $16.9 million, including $15.0 million current and $1.9 million long-term. The company reported $164.4 million of cash, cash equivalents and short-term investments. Total assets were $321.0 million; total liabilities $46.6 million; and stockholders’ equity $274.4 million. Equipment-financing debt was approximately $10.9 million outstanding. The prior Bridge Bank loan was paid off in June 2022. Management said available cash and investments should fund operating, working-capital and capital-expenditure needs for at least 12 months following the filing date.
Investing cash outflow was $127.0 million, primarily reflecting $108.6 million of short-term investment purchases, $16.2 million of equipment purchases and $8.0 million paid for the Totient acquisition, partly offset by investment maturities. Financing provided $5.2 million, mainly from $12.0 million in equipment financing, offset by debt and finance-lease principal payments.
Business developments and comparison with prior year
- Revenue increased by $1.0 million, primarily due to program progress and milestone timing, including progress under the Merck partnership involving non-standard amino-acid technology. Collaboration revenue also increased; the KBI marketing agreement ended in October 2022.
- Active Programs rose to 16 from 12, across five current partners; cumulative programs increased to 47 from 34, and cumulative partners to 19 from 18. Active Programs include work in development and do not mean that partners have licensed or will advance the candidates.
- As of December 31, 2022, no partner had licensed Absci-generated intellectual property for clinical or commercial use, and the company had received no milestone or royalty revenue. It had negotiated, or expected to negotiate, downstream licenses for its Active Programs.
- Operating expenses increased 41% overall. Net loss was broadly similar to 2021, despite a wider operating loss, partly because 2021 included substantial non-cash fair-value expense on convertible notes and preferred-stock warrants. FY2022 other income was $2.4 million, primarily interest income, compared with $31.2 million of other expense in 2021.
- The company raised no IPO proceeds in 2022; it had raised $210.1 million net in its July 2021 IPO. It used $157.8 million of IPO proceeds by year-end 2022 and had an effective $250 million shelf registration statement but had not issued securities under it.
Outlook, risks and notable items
Absci expects continued significant spending on R&D, platform expansion, partnerships, personnel and public-company operations. Revenue growth depends on securing and expanding partnerships, completing technical programs, obtaining licenses, and partners advancing and commercializing resulting candidates. The company does not control partners’ clinical, regulatory or commercial decisions, and timing and amount of downstream revenue remain uncertain. The filing provides no specific revenue or earnings guidance.
- Funding and losses: Absci has a limited commercial operating history, accumulated deficit of $295.9 million and recurring losses. Management’s 12-month liquidity assessment is not a guarantee; additional financing may be needed and could dilute shareholders or impose restrictive terms.
- Revenue concentration and dependence: Three partners represented 98% of technology-development revenue in 2022; two partners represented about 100% of year-end receivables under development arrangements. Program delays, termination or nonpayment could materially affect results.
- Technology and development risk: The platform’s performance, partner adoption, discovery results, manufacturing readiness and ability to shorten timelines are not assured. No platform-generated candidate had been submitted by a partner for an IND or BLA, according to the filing.
- Execution and costs: An August 2022 reorganization prioritized technical initiatives and streamlined teams; anticipated savings may not be fully achieved and reductions could disrupt operations. The company also cited competition for skilled staff, supplier concentration and reliance on third-party cGMP manufacturers.
- Acquisition contingency: The Totient acquisition includes contingent consideration; its fair value was $12.8 million at year-end, with a $0.75 million increase recognized in 2022. The filing describes potential additional cash payments tied to specified milestones.
- Other exposures: Risks include intellectual-property protection and litigation, partner clinical failures, reimbursement and drug-price regulation, inflation, cybersecurity, and reliance on a primary Vancouver facility. No material litigation was reported. Management said a previously identified internal-control material weakness was remediated and controls were effective at year-end; the auditor did not audit internal control effectiveness.
Investor facts to verify
- Review the latest cash, short-term investment, restricted-cash and debt balances, along with quarterly operating cash burn, to assess the stated liquidity runway.
- Track new partnerships, program activity, license execution, and whether any candidates advance into clinical development or produce milestone or royalty payments.
- Monitor partner and customer concentration, receivables collection, and the timing and composition of technology-development revenue.
- Assess whether the August 2022 reorganization delivers durable cost savings without impairing research, staffing or program execution.
- Check the Totient contingent-consideration balance and milestone status, equipment-financing obligations, and any use of the $250 million shelf registration.