Business Context and Reporting Period
Company: Absci Corp (ABSI)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and nine months ended September 30, 2024
Business Overview: Absci is a data-first generative AI drug creation company utilizing an Integrated Drug Creation platform to design biologics. The company operates through partnerships for drug candidate creation and maintains an internal pipeline of wholly-owned assets.
Key Financial Metrics
| Metric (in thousands) | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenue | $1,701 | $744 | $3,869 | $5,380 |
| Net Loss | $(27,398) | $(21,994) | $(74,123) | $(87,021) |
| Operating Loss | $(28,895) | $(23,303) | $(79,114) | $(90,776) |
| R&D Expenses | $17,985 | $11,029 | $45,482 | $35,798 |
| SG&A Expenses | $9,256 | $9,505 | $27,346 | $28,508 |
| Cash & Equivalents | $38,195 | $72,362 | $38,195 | $72,362 |
| Short-term Investments | $88,873 | $25,297 | $88,873 | $25,297 |
| Total Liquidity (Cash + ST Inv) | $127,068 | $97,659 | $127,068 | $97,659 |
| Long-term Debt | $2,155 | $4,660 | $2,155 | $4,660 |
| Accumulated Deficit | $(480,618) | $(382,950) | $(480,618) | $(382,950) |
Note: Figures in thousands. Q3 2023 and 9M 2023 data included a $21.3 million non-cash goodwill impairment charge in the prior year.
Material Changes vs. Prior Period
- Revenue: Q3 2024 revenue increased 129% ($1.0M) year-over-year due to milestone achievements. However, 9M 2024 revenue decreased 28% ($1.5M) compared to 9M 2023, driven by the timing of project-based milestones.
- Net Loss: Q3 2024 net loss widened to $27.4M from $22.0M in Q3 2023. The 9M 2024 net loss improved to $74.1M from $87.0M in 9M 2023, primarily because the prior year included a $21.3M goodwill impairment charge.
- Operating Expenses: R&D expenses increased 63% in Q3 and 27% in 9M 2024. Increases were driven by higher lab operations costs (including IND-enabling studies for internal candidate ABS-101), a $1.1M asset impairment charge, and increased stock-based compensation. SG&A expenses remained relatively flat, decreasing slightly in both periods.
- Liquidity: Total cash, cash equivalents, and short-term investments increased to $127.1M as of September 30, 2024, up from $97.7M at the end of 2023. This increase was bolstered by a $80.8M net proceeds from a public equity offering in March 2024.
Guidance, Outlook, and Risks
- Outlook: Management expects to continue incurring significant expenses to develop the internal pipeline, scale platform activities, and drive business development. The company believes current liquidity is sufficient to fund operations for at least the next 12 months.
- Internal Pipeline: Three wholly-owned programs are highlighted: ABS-101 (inflammatory bowel disease, IND-enabling studies initiated, Phase 1 expected H1 2025), ABS-201 (dermatology), and ABS-301 (immuno-oncology).
- Partnerships: As of September 30, 2024, the company has 25 cumulative partners and 22 active programs. Revenue concentration is high; two partners represented 100% of revenue for the three and nine months ended September 30, 2024.
- Risks:
- Capital Needs: Future success depends on raising additional capital, which may not be available on acceptable terms.
- Partner Dependency: Future revenue relies on partners advancing drug candidates and electing to license technology, over which Absci has limited control.
- Development Risks: No assurance that internal or partnered candidates will succeed in preclinical or clinical trials.
Investor Verification Checklist
- Cash Burn Rate: Verify the sustainability of the $127.1M liquidity position against the $55.4M cash used in operating activities for the first nine months of 2024.
- Revenue Concentration: Confirm the stability of the two partners representing 100% of recent revenue and the terms of their agreements.
- Internal Pipeline Progress: Monitor the timeline for ABS-101 Phase 1 initiation (expected H1 2025) and the results of IND-enabling studies.
- Stock-Based Compensation: Review the impact of increasing stock-based compensation ($14.4M for 9M 2024 vs $8.2M for 9M 2023) on future operating expenses.
- Asset Impairments: Note the $1.1M write-down of lab equipment classified as held-for-sale in Q3 2024 and assess if further impairments are likely.