Good morning, everyone. I am Sean Lyman, Head of U.S. Midcap Biotech Equity Research here at Morgan Stanley, and welcome to Morgan Stanley Global Healthcare Conference. Before we commence, to make you aware of some important disclosures, please see those disclosures at the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have the pleasure of hosting Absci with Founder and CEO, Sean McClain, and CFO and CBO, Zach Jonasson. Welcome and thank you both for your time today. Yeah, thanks for having us. Yeah. Maybe just to do me a favor and answer some macro questions before we delve into the guts of it. I guess just looking at China-originated innovation, do you have a view on that? Has it changed the way you think about your business development and R&D playbook, if at all? Yeah, obviously, there has been a lot of activity in China, and I think it is about how you utilize China. We obviously have an AI platform, and we look at China and just how we scale our infrastructure. Not necessarily going in and buying assets there, but working with China to be able to rapidly test these hypotheses, get to yes/no answers on new targets, and even looking at how we could potentially utilize them on the clinical development side. I think that, yeah it has been very interesting to see all the activity going on, but we definitely see it as a net positive for the overall space. Sure. Thank you. Next question is redundant for you guys because it is asking, are you implementing AI in your business? Yeah. The third one, which policy variable are you most focused on? I am guessing it is FDA, but thinking about FDA, Medicare negotiation, Most Favored Nation tariffs, et cetera. I would suggest it is FDA, but which policy variable are you most focused on? Yeah, I think we are most focused on FDA. We are in the middle of our phase I/II trial for pattern hair loss. We are about to initiate a phase II trial in endometriosis. So we are following all of that policy activity. As Sean mentioned, we have a strategy to leverage execution in China, not just pre-clinical execution, but to do proof of concept work in China and phase II development going forward. So we are following all the developments in Congress and policy-wise from the administration, but we do think there is a significant opportunity there to reduce cost, increase speed, and really leverage Chinese execution. Yep. Wonderful. Thank you, Zach. Now to get into it. I have got a series of questions here, obviously on ABS-201 in pattern hair loss to start with. The interim phase I across four single ascending dose cohorts in 32 volunteers showed no serious adverse events and an estimated half-life, I think of at least 65 days. That is a single dose estimate. How much could it move with multiple dosing and complete follow-up? Yeah. So far the trial is going very well. We are very happy with the progress, and we are going to be announcing the phase II efficacy data in December of this year. The recruitment has been going extremely well, and safety profile really good as well, and we are really excited to be announcing this data in December. Okay. So that is the 13-week data coming out in December? That is correct. Okay. Got you. Thank you. I guess the commercial thesis rests on two or three injections over six months. What is the minimum durability that still supports that profile? What happens to the pitch if it lands closer to monthly? Well, first off, I would say we are very pleased with what we are seeing on the half-life. It looks to us like it is going to be either 2 or 3 injections over 6 months, so once every 2 months or once every 3 months. That, at least from our consumer research, is a game changer for the market because the convenience paired with the durability of the effect based on the mechanism, I think would be a completely new premium category of therapy for pattern hair loss and resonates extremely well with customers. When we talk to consumers, we have commissioned a large survey, as you know. They are very dissatisfied with standard of care. A profile that allows for a very simple injection that infrequently with durable effect is very exciting for that population. Awesome. Thank you. We just mentioned that we are looking at the 13-week data in December. You look at width, darkness, and hair count, if I remember that correctly. I guess what is sort of the benchmark you think you need to achieve? Yeah. We have talked about all along, this is a directional readout. This is a brand new mechanism that is being explored. When we first started this study, it was really to be able to show yes, indeed, we are getting the hair regrowth. We are hoping to actually see some interesting signals. You look at the kenogen follicles, dormant follicles that have not been regrowing hair for a while. If you can actually start to show that you can regrow hair there, I think that that is very exciting. There is no other mechanism out there that is able to show that. We are going to be reporting on various different parameters. Obviously, the most important is the terminal hair growth. We will also be looking at total, so including vellus, and then obviously the darkening as well. I think it is going to create, I think a really nice picture as to what the potential 26-week readout could look like. Again, everything is going quite well, and we are excited to be able to share that in December. Sure. Thank you. When we get to the 26-week data, what sort of head count are we hoping for? I think it is kind of 30 to 35 would be best in class. Maybe talk a little bit about that. What if you sit in that 20 to 30 range? Is there still benefit in providing a drug that delivers that? Maybe just talk through that a little bit, Sean. Yeah. I will let Zach dive into that a bit more. If you look at how we came to that 30 to 35, that was actually based off a consumer quant study, and that is where we saw a very large TAM, and there was high demand at 30 to 35. I think that there is the opportunity, from a biology standpoint, to even be higher than that. I think with even recent minoxidil studies, even being at 30 to 35 could even be not only best in class, but first in class as well. So we are really excited about the overall opportunity. I will let Zach talk more about that. Yeah. I mean, I will just add that when we did the survey of 610 consumers that have pattern hair loss, we had to present them with a target product profile. So we presented them with a profile that was an efficacy similar to high dose oral minoxidil, so call it 30 hairs per square centimeter growth in terminal hair count. Then the durability of a couple of years based on three injections over six months. The response to that TPP was enormous. We saw broad based response from both men and women saying they would seek out that product, they would choose it as first line. When we tested some pricing, the feedback we got is we could price this at a significant premium. Taking that all together, we estimate at least at that TPP with that effect size, that is north of a $25 billion TAM in the U.S. alone. Sure. Now, if the effect size is higher, I think that TAM goes up. We can price even higher. Sure. Thank you. Maybe remind us of the TAM in the U.S., but the percentage that you view as women. Then I understand that finasteride is essentially unavailable to women of reproductive age, leaving topical minoxidil as the only option. Do you think that the bar is different or lower for an outcome in women versus men? I mean, I do. Fundamentally, I do. You saw Veradermics's readout recently, sort of in the low 20s for women. Then a pretty significant portion of those women in their study experienced hypertrichosis, and that's common for minoxidil, right? You get unwanted hair growth. So the side effect profile and efficacy of minoxidil for women is by far less than ideal, and we see that in our surveys, too. Women are very dissatisfied with standard of care, and we think that's a very underappreciated market in pattern hair loss. I think that the TPP that we're bringing, this new category of therapy, I think, is going to resonate with that market. Sure. When you talk to the dermatologists too, they're seeing actually more women coming in with hair loss problems than men. I think it just goes to show that standard of care is just really, really poor. So there is a massive opportunity in the female market in addition to males. Sure. Just go off piste a little bit, but are you aware of studies that show hair loss associated with GLP-1 uptake, and is that another sort of complementary angle you could sell? Yeah, 100%. There's published literature that's coming out. Then again, you just talked to the anecdotal evidence with these derms, and they're saying like, look, 10%, 20%, even more on GLP-1s are experiencing hair loss. I think it's due to the stress of the body when you're losing that amount of weight so rapidly. I think being able to pair ABS-201 with the GLP-1s, I think is a real opportunity and a big overall synergy. Sure. 13 weeks might seem a little early to get a decent response in hair growth. I think minoxidil and finasteride take 24-48 weeks to see a decent outcome. What's the risk if you get to the 26-week data and you get a false negative, and how would you frame potentially ambiguous data? Yeah. As we've said all along, I guess first off, you hit the nail on the head. We do think that 13 weeks is probably the earliest time point that you could actually start to see hair regrowth, given the growth of hair. I think you're going to just continue to see a linear increase from there. Again, we think that the 13 weeks is directional. I think that there's a real opportunity to see some new mechanisms emerge that other standard of care aren't able to address. We're quite excited about what that looks like. Again, so we're not putting any sort of firm numbers on there, but we are going to get very quantitative with the overall readouts at the 13 week. Cool. Thank you. Maybe a little bit on the science, so prolactin receptor antagonism is the first new mechanism in androgenetic alopecia for three decades or so. I guess, beyond the ex vivo scalp work, what human evidence supports prolactin as a driver of pattern hair loss? Yeah. We actually just released some genetic data in the last earnings, which actually showed from the UK Biobank men that had increased levels of, or SNPs that drove increased levels of prolactin receptor, actually had more severe patterned hair loss. We are seeing that increase in receptor within the actual follicle is driving pattern hair loss from a population genetics level, which is actually really quite interesting to see. Our team was able to publish that work just recently. I think that that's pretty strong genetic evidence in addition to the mouse study, the primate study we did, and as well as the human ex vivo data. Okay. Thank you. The scalp data point to follicle regeneration and stem cell restoration. Is durability off treatment part of the claim, and would you expect to see it at 26 weeks? We're really excited about the regenerative effect that this drug could have. If you looked at the stump-tailed macaques, some of the things that got us most excited was not only did you get full hair regrowth at 6 months, you also got repigmentation. Then 4 years post-treatment, they continue to regrow their hair. One of the phenotypes that you see in individuals that are losing their hair as it miniaturizes, they're actually losing the stem cells within the follicle niche, and you get a decrease as well in collagen 17A1, which attaches the stem cell to the niche. What we've seen is blocking the prolactin receptor actually replenishes that stem cell niche, increases collagen 17A1, and once you have that, you have the ability to kind of rebuild all that machinery. Once it is rebuilt, and you are off drug, it is obviously going to slowly decrease over time. Balding takes quite a bit of time to actually see the full effects. That is why we believe we are going to get this regenerative effect because we are affecting the stem cell niche. Again, there is no other drug out there, minoxidil, finasteride, that touches the stem cell niche and is able to replenish it. Sure. Thank you. I will just add to that, too. In the clinical trial, in the headline trial, we are going to follow each of these patients a full year after their final dose, and we will be taking hair measurements. We are actually going to be able to track this durability post-treatment. Got you. Thank you, Zach. This is a systemic antibody in an injection where I guess the other options are pretty inexpensive generics. What is the bar for safety here, and what do you think you need on the label to be commercially viable? I think we're in a great position with respect to safety. You saw we released the interim data from the SAD portion looking at safety back in June. Looked clean. More to the point, too, human genetics supports the safety. There are case reports in the literature of individuals who have loss-of-function mutations in either the ligand or the receptor, the prolactin ligand or the prolactin receptor. Those individuals are perfectly healthy. They only present to clinicians because the females can't lactate, but otherwise completely healthy, no sexual dysfunction, including they've done family tree analysis, males also fully healthy. This looks to be a very attractive mechanism. We don't see any mechanistic reason to think there's a safety issue. The molecule we have based on the SAD data looks to be safe as well. We think we're in a good position. Wonderful. Pattern hair loss is largely a cash pay market. So how do you think about potential reimbursement and what sort of pricing assumptions do you think about? Yeah. We think this is an enormous cash pay market. We don't plan on having reimbursement, although I think it will qualify under HSAs in the U.S. In terms of pricing, we have tested some pricing in the field with consumers. We can't comment on the exact numbers, and we probably won't announce, obviously, the actual price till the day we launch. But I can say that we believe based on the TPP we think we're tracking towards, that we'll price this at a premium, and that consumers are very interested in this TPP and will seek it out at a premium price. Sure. How do you frame your position against potential emerging competition like Veradermics, for example? Yeah. At the end of the day, Veradermics is hitting on a mechanism that is well-known. If you go to Hims & Hers, you can get oral minoxidil. That is current standard of care, and this is something that is brand new. I think it is, again, talking about the regenerative effect, being able to potentially meet or exceed efficacy of minoxidil, having the durability. I think that there is a ton of upside to current standard of care. Additionally, I think patients are going to likely do combos as well, given that how cheap minoxidil is. You could see someone taking 201 plus minoxidil. I think these patients are just so desperate to get any sort of hair regrowth, and the market is so massive that I think patients are going to be using all the tools out there and all the drugs to be able to regrow their hair. Sure, okay. So we have 13-week data in December. 26-week data is guided to 1H 2027, or no later? Yes. For early 2027. Early 2027. So beyond those data points, what sort of guiding factors do we have? What are the signposts for further clinical trials and ultimately the regulatory path to market? Yeah, look, as soon as we have the 26-week readout and the safety data, we will go to the FDA with the filing IND to begin registrational studies. What is really interesting about this program and the headline trial is even as we start to initiate registrational studies, that is our plan, in 2027, we will still be collecting this follow-up durability data from the headline trial. There is a lot of data readouts we can provide to investors along the way, and we think this program is really exciting because we will be showing durability, we will be showing effect size, and then we will be starting the registrational campaign. Sure. Thank you. Any sense that you are willing to provide of how big the clinical trial might have to be and any sense on cost? We have not released guidance around the size of the trial. We know that we will need roughly 1,500 patients for a safety database across all of the clinical trials. I cannot comment specifically on cost other than to say that pattern hair loss trials, the per-patient cost is quite attractive relative to other large indications. We have internally estimated that on a per-patient basis, it is in the neighborhood of $60,000-$70,000 per patient, which as you know, is probably a third of what an IBD trial would be. They recruit very quickly. The ROI on the clinical development program here is enormous. It is not like anything I have ever seen. The trials recruit quickly, they are inexpensive, and they have objective endpoints that are accepted by FDA, and then there is a huge market with very dissatisfied patients. Sure with standard care. Sure. Assuming all goes well and ultimately FDA approval, how do you envisage the drug gets into patients' hands? Yeah. We think that it's ultimately going to be the patient seeking out the dermatologist or seeking out telehealth companies. You see that with the GLP-1s, that it is the patients seeking out the physicians and wanting to get on these GLP-1s. I think that same type of demand you're going to see with ABS-201. So, whether you want to call it direct to consumer or a patient-first focus, we see that as being critically important and I think being able to partner with these telehealth companies and really also learning from what Lilly has been doing with LillyDirect and being able to get access to patients in the most efficient way. I think access is changing. I also think that AI plus the GLP-1s is really allowing patients to come along with the journey. Patients can start to become their own scientists and become more engaged with the science and the biology and their own health, and I think that that drives a different type of patient engagement. The HCPs are going to be extremely important. But in addition, being able to partner through telehealth companies and have this DTC model is going to be, I think, very important as well. Sure. Is this a physician-administered therapy? No. So this will be, at the end of the day, at home. Now, some patients may actually want to go in to their physician or their dermatologist, so that is definitely an option. But what we're planning on is having ultimately an auto-injector that could be sent to the patient, and it could be, again, an experience where they're able to do this at home. They can go have a virtual telehealth appointment with their doctor and have ABS-201 sent to their house and administer it there. I think that convenience factor, I think is critically important. Sure. Thank you, Sean. Before I move on to endometriosis, is there anything I didn't ask about the androgenetic alopecia side of the equation that I should have? I think we covered all of the important topics for pattern hair loss. I guess I'll just end with, yeah, we're excited for the upcoming data release in December. Awesome. Thank you. Moving on. The phase II for endometriosis starts this quarter with proof of concept data in the second half of 2027. What is the design, primary endpoint, and trial size? We're going to release more about the trial design in the coming weeks, but you can think of it as being a very robust trial. I think as you know, our CMO at Absci comes from Vertex, and he executed the Vertex pain trial. Fundamentally, the endometriosis studies or all endometriosis clinical studies are pain trials. We'll be constructing a trial that's well designed and well powered. Sure. I guess looking historically in this area, multiple programs have struggled to separate on pain endpoints. What makes a non-hormonal mechanism more likely to work? With this particular mechanism, we have already seen in the clinic with HMI-115 phase II data at the highest dose that did show efficacy. Now, we think that they left a lot of efficacy on the table. Based on our profile, having the receptor occupancy that we have, we do believe that we will be able to, I think, achieve not only the efficacy that HMI-115 saw, but I think a greater decrease in overall pain. Just to really emphasize what Zach was saying, we do have Ron Zay, who ran the VX-548 late-stage clinical development, which was a really important pain study. I think we're really set up for success here. Given the preclinical work as well as the clinical data so far, we're very excited about this mechanism and the upcoming readout here. Sure. Thank you, Sean. Lilly recently took a $40 million stake, and they're placed a rep on your endometriosis advisory board. Does that carry an option right of first negotiation or governance rights? No, it does not. This was a $40 million investment, what I will call tickets to the game. They have no rights to the asset on both pattern hair loss as well as endometriosis. This was an opportunity for us to get to know each other. I think we had very much mutual respect for what each of us was building. I think Lilly's interest was in both pattern hair loss as well as endometriosis. Given the extensive work that they have done in pain and the women's health franchise that they are building out, we thought having them sit on the endometriosis ad board would be really beneficial for us. It has been a great relationship and partnership so far. Again, I think it is great for us because we get to build that relationship, but there is no strings attached at all in that. Wonderful. Thank you. Moving on to the platform and the partnering model. You cite two programs from AI design to R&D in about two years at roughly $15 million each. Against industry benchmarks of four to six years and more than $50 million, what is included and excluded from the $15 million? The $15 million includes all the work to generate a DC, so a drug candidate, and then to take that through R&D enabling studies, so to make it phase I ready. Sure. Thank you. Atlas is described as an agentic discovery engine. Where has it already changed a decision rather than accelerated a step you would have taken anyway? Yeah, it's really fascinating where things have gone over the last 9 months. I remember when the first agents came out in December of last year, and 9 months later, I feel like it's 10-plus years of development. We've developed out Atlas, this co-scientist. We're looking at new novel targets, and it's looking at literature, single-cell sequencing data, all of the genomics data out there, all of our internal data. What we're seeing is that it's extremely good at being able to propose new hypotheses on targets. Again, this is all data that has been out there, and I look at it very similarly how we look at prolactin. Prolactin data and biology has been out there. No one actually acted on it. The more and more we dig into this, the more we're like, "Wow, there's so many different aspects that prolactin affects, and it's not just a women health hormone for lactation. It's involved in so much more. There's got to be other low-hanging fruit out there." That's what we're seeing these agentic AI workflows actually being able to do is, what are those low-hanging fruits that are out there that we should be pursuing? We're seeing for different indications 5-plus targets emerge that are really quite exciting. You have this alpha, this insight, and other companies are going to have these insights as well. What we really focused in on is, how do you actually execute on those insights? How do you scale the biology to get to yes/no answers of those 5 to 10 targets in that indication? Which of those should we be taking into the clinic? Additionally, how do we actually scale and industrialize the clinical development? I think that's where China has really come into play for us. Being able to run trials at a tenth of the cost, you can now start to take more risk in the clinic. You can, instead of one target, you can do 5 to 10 targets, and you can actually start to collect that data and start to build these world models. Even if you assume a success rate of 10%-20%, you still have one to two targets progressing. I think this is the exciting piece is figuring out tying AI with China to really industrialize biotech. I see it, everyone sees it. We're hitting a data bottleneck, and we have to figure out ways to get human data to find the next new targets for these diseases. I think that that's going to be really where the frontier lies, and that's why we're so focused on how do we scale clinical development to be able to get that data and start to build some of these world models for other indications that we're excited about and age-related and anything direct to consumer. Thank you, Sean. That's a wonderful answer. In the interest of time, just skip forward to a couple of balance sheet questions. Cash of around $200 million funds operations into the second half of 2028, but the phase II endometriosis start will push burn above the current $27 million a quarter. Does that runway hold through both ABS-201 readouts? Yeah. It's going to take us all the way through the headline readout. We'll see the 26-week data as well as the year follow-up. Then as you know, our goal is to start an endometriosis phase II study this year. That would bring us through the interim readout at least. Awesome. In the interest of time, did I not ask anything I should have? I think we covered everything. Okay. All right. Wonderful, gentlemen. Thank you, Sean. Thank you, Zach. Appreciate your time.