Absci Corporation — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This annual filing reports full-year results; the provided text does not give a separate Q4 income statement.
Business context
Absci is a drug and target discovery company combining synthetic biology and deep-learning AI to create biologic drug candidates and production cell lines for partners. Revenue primarily comes from partner-funded technology development; potential future milestone and royalty income depends on partners licensing, developing, and commercializing resulting candidates.
At year-end, Absci reported 12 Active Programs across eight partners, including eight cell-line-development programs and four Discovery programs. Five partner candidates were preclinical, one was in Phase 1, one in Phase 3, and one was in animal health. The company cautioned that partners may not advance or license these programs. Cumulative partners increased to 18 from 16, programs to 34 from 29, and Active Programs to 12 from 8.
Key financial metrics
| Metric | FY2021 / Dec. 31, 2021 | FY2020 / Dec. 31, 2020 |
|---|---|---|
| Revenue | $4.8 million | $4.8 million |
| Operating expenses | $80.0 million | $18.1 million |
| Operating loss | $75.2 million | $13.3 million |
| Net loss | $101.0 million | $14.4 million |
| Net loss per share, basic and diluted | $2.08 | $3.19 |
| Net cash used in operating activities | $60.6 million | $11.0 million |
| Net cash used in investing activities | $67.4 million | $2.2 million |
| Cash and cash equivalents | $252.6 million | $69.9 million |
| Total assets / total liabilities | $426.2 million / $60.1 million | $88.6 million / $21.6 million |
Technology development revenue was $4.0 million, down 3%; collaboration revenue was $0.8 million, up 17%. The filing does not provide a clear gross-margin figure. Two partners generated 73% of technology development revenue, versus 77% in 2020. Four partners accounted for 84% of year-end development-arrangement receivables.
Operating cash outflow was partly offset by $336.2 million of financing cash inflow, mainly from the $210.1 million net IPO proceeds and $125.0 million of convertible notes issued before the IPO. The notes converted into common stock at the IPO. Investing outflow included $38.0 million of property and equipment purchases and $28.1 million for acquisitions. Year-end cash and cash equivalents exclude restricted cash; cash, cash equivalents, and restricted cash together were $279.9 million.
Year-end long-term debt principal was approximately $3.4 million. The balance sheet also reported $6.0 million of finance-lease obligations and $10.5 million of operating-lease obligations. The company reported an accumulated deficit of $191.0 million. Management said available cash was expected to fund working capital and capital expenditures for at least 12 months after filing.
Material changes and unusual items
- Revenue was essentially unchanged year over year, while operating expenses rose 343%, primarily due to higher staffing and compensation, expanded laboratory operations, platform development, public-company costs, and acquisition-related amortization.
- Net loss widened to $101.0 million. Other expense included a $30.7 million fair-value adjustment to convertible notes and $4.1 million of warrant-liability expense; a $0.6 million PPP-loan forgiveness gain partly offset these charges. An $8.9 million income-tax benefit reduced the reported net loss.
- Absci acquired Denovium in January 2021 and Totient in June 2021. Totient consideration included $40.0 million cash at closing, shares, and up to $15.0 million of additional cash contingent on milestones; the recorded contingent-consideration fair value was $12.0 million.
- The July 2021 IPO raised $210.1 million net. Preferred stock and convertible notes converted into common stock at the offering. Common shares outstanding were 92.6 million at year-end.
- The company moved into an expanded Vancouver facility in 2021 and recorded $0.9 million of impairment related to discontinued use of prior facilities.
Outlook, risks, and controls
Management expects continued significant spending on research and development, platform expansion, hiring, business development, and public-company operations. It provided no specific revenue or earnings guidance. Future milestone and royalty revenue is uncertain, may take years, and depends on partner decisions and clinical, regulatory, and commercial outcomes outside Absci’s control.
Key risks include the company’s limited commercial history; sustained losses and cash use; dependence on a small number of partners and suppliers; competition and unproven adoption of its platform; clinical and regulatory failure of partner candidates; execution and integration of acquisitions; COVID-related supply and operating disruption; and intellectual-property, cybersecurity, and talent risks. The company relied on single-source equipment and consumables from Sartorius and Hamilton and had no supply contracts with those vendors.
Management concluded disclosure controls were not effective at December 31, 2021 because a material weakness in financial-reporting controls had not been fully remediated. The weakness concerned insufficient accounting and finance personnel with technical expertise for complex or non-routine transactions. Management reported remediation efforts underway; the auditor did not audit or opine on internal-control effectiveness. The financial-statement audit opinion was unqualified. Absci reported no material litigation.
Important facts for investors to verify
- Whether Active Programs convert into partner licenses and whether agreed downstream milestone and royalty terms are secured; no partner had yet licensed platform-generated intellectual property for clinical or commercial use as of the filing discussion.
- Cash burn, restricted-cash availability, capital spending, and the runway implied by management’s at-least-12-month liquidity assessment.
- Partner concentration, program progress, and any changes in partner priorities or candidate development status.
- Progress remediating the material weakness and establishing effective disclosure and financial-reporting controls.
- Totient contingent consideration, acquisition integration, lease commitments, and reliance on critical single-source suppliers.