Good afternoon, everyone, and thank you for joining me on the fourth day of the Needham Healthcare Conference. My name is Gil Blum, and I'm a Senior Biotech Analyst here at Needham & Company. It is my pleasure to have with me today Absci management, Sean McClain, the CEO, and Zach Jonasson, the CFO. Absci is a very interesting company that focus in AI and, these days, a bit of a [Non-English content] Yes. Maybe you guys can start with a brief overview of the company, the main technology, and how you view your value propositions. Yeah, absolutely. I founded the company 15 years ago. Originally, we weren't focused on drug development. It was technology for scaling protein-protein interactions. We adopted AI very early on to be able to leverage AI to actually start designing the antibodies and the drugs with the attributes that we wanted. We all know that traditional drug discovery has been like searching for a needle in the haystack, and with AI, you can now start to actually create that needle, designing all the attributes that you want, and start to actually go after some of these harder-to-drug targets. We applied the technology in partnerships, and we quickly realized that we wanted to build value ourselves with exciting targets, one of those being actually the prolactin receptor, and started to build out our own pipeline. We brought on an incredible drug hunter, Andreas Busch, that really helped build out the early portfolio and have been able to explore some really exciting biology with the prolactin receptor, which we're, as you'd mentioned, targeting a derm indication, but I think it has much bigger implications than just derm. It's definitely a, I would say, very underappreciated target, and I think the reason for that is the name, prolactin, prolactation. You see it all over the body. You don't only see it in the skin and the hair. You see it in the endometrial tissue, you see it in your bones, you see it in the synovium on immune cells. It's really all over the place, and so what we're doing now is we have two programs that are in the clinic that are going after this prolactin receptor biology. First is AGA, androgenic alopecia, as well as endometriosis, and then using the AI platform then to continue to build out a very robust platform around this biology and adjacent biology, and a lot of this is focused in on inflammation and b uilding out bispecifics. One of the things that I'm really excited about in terms of just AI and where it's all headed is being able to take the de novo model that we've built with these agentic AI models and really just being able to scale individuals, kind of create a second brain and be able to not only scale yourself, scale your team, and I think you're going to start getting much better ROI. You're going to be able to get to new novel target biology, I think, faster than ever before. We're excited about what the future holds not only for AI, but also for the prolactin receptor and the prolactin biology. Maybe spending a second on the platform and the AI side of things. There were a few names out in the space, a few recent IPOs. Generate comes to mind, and ICON. What would you say is your special sauce as it relates to how you approach biology? Yeah. Absolutely. You have to take a multimodal approach to those. First off is the data. I think that the data that we've been generating has been really valuable to being able to get the results that we've had, not only for training the model, but just validating, being able to rapidly test, do the AI solutions actually give you the output that you're looking for? We've been able to leverage that to be able to go after zero- prior epitopes where there was no previous known binder. I think that that opens up exciting novel biology or at least biology that has been known but has been difficult to drug. In our partnership with Almirall, we've been able to drug an ion channel, which have notoriously hard to drug with antibodies, and we got very high specificity with the antibody that we developed there. That's the design aspect. We're really looking at integrating AI across the board. How can you use it in target discovery? How can you string everything together with agentic workflows and be able to create these very rapid cycle times? What we're seeing is that outside of the agentic AI, the data's really key to ensuring that you get the outputs that you're looking for, whether that's on the target side or the design side? Maybe a broader question for both of you. It feels like we're at the bust end of the boom-bust cycle as it relates to TechB io. What would be an aha moment for an investor here, and what are people looking for? I think the upcoming readout we have is going to be, I think, a big validation of the platform. This will be one of the first phase II readouts, proof of concept readout in humans of AI-designed antibody. We're going to get the opportunity to see not only did we get this antibody to the clinic faster and cheaper than traditional means, were we actually able to show improved efficacy or any efficacy in androgenic alopecia, and we believe that that's going to be a huge proof point. That's what I think investors are looking for, like can these AI-designed drugs, AI-discovered targets, are they able to provide value? I think the answer is wholeheartedly yes. It takes time, but we're going to have that readout this year. I would just add that there's an incredible amount of noise in this space, right? You've got preprints that fly out, a lot of marketing that's focused on in silico metrics, or a lot of marketing that's focused on a hit rate with very limited lab validation. It just creates a lot of noise. To Sean's point, I was on the investor side for 20 years. We really need to see where the value created, that's the asset, right? You need to see clinical validation around that. That's where we are 100% focused, right? We're not focused on hit rate. We're not focused on in silico metrics. We're focused on creating assets that can be differential to patients. I think with ABS-201, that's what we're going to see this year, clinical readouts showing efficacy, showing that we created molecules that are stable, easy to formulate, showing that they're safe, but also showing that we could do it in very fast turnaround time at a low cost. I think that'll validate the entire AI pipeline for what we're doing, at least. It comes back to that focus. Like, you have to be focused on where the value is. AI is a tool, and it's a tool to design assets that can create value for patients. I think that gets lost in a lot of the noise. Agreed. Very closely related question. Clearly, you guys are spending and focusing resources more on your lead program, which makes a lot of sense. Is there still capital being invested in the platform more broadly? Yes, absolutely. To Sean's point, I think what we're finding is we're seeing efficiency gains in the platform, and this is by leveraging data in those active learning cycles. We're also seeing opportunities where we can reallocate some of that investment into building these agentic pipelines. That's something we're implementing across the company today, where we think not only will we see more efficiency gains on an FTE basis and other bases, but we'll also see better outcomes around choosing the right targets, understanding the target biology. Gil, you can imagine how focused we are on prolactin. We're deploying those workflows on prolactin and have been doing so for the past six to 12 months. I think that's. I would confidently say to you today, we are a leader in understanding that biology. To Sean's point, I think there are other indications in that space that are quite interesting for us. Excellent. I do want to spend a significant portion of our time on alopecia. Lots of excitement on this asset. You mentioned the development history briefly. Maybe you can provide a bit more detail there, where it came from, and. Yeah How have you upgraded it? Yeah, absolutely. It actually started a while back in the early 2000s with the work from Professor Ralf Paus, a really world-renowned hair expert, and they had some interesting work that came out showing that prolactin may be involved in driving the miniaturization. It wasn't fully baked at that point in time, but there was definitely strong leading indicators. Interestingly enough, Andreas Busch, our former Chief Innovation Officer, just retired, had looked at this for endometriosis, and it was kind of a serendipitous discovery where the mice that were on drug regrew their hair faster than the control arm. It was like, "Oh, wow, prolactin seems to be involved in hair regrowth." It matched up to the work that Ralf Paus had done earlier. They went on and did a stumptail macaque study. This stumptail macaque model, it's a naturally occurring AGA model. They naturally bald and lose their hair. Actually, early minoxidil studies actually used this to validate minoxidil could be used as a therapy for AGA. Lo and behold, these monkeys that were very bald completely regrew their hair, and they also repigmented their hair. They went from gray to jet black. What was additionally remarkable was the regenerative nature of what you saw. Four years post-treatment, so they treated for six months and then continue to follow them. They continued to grow their hair four years post-treatment, which actually shows from a mechanistic standpoint that they were able to rebuild the stem cell niche and truly regenerate the follicle and the machinery necessary to reverse the miniaturization of those hairs. Bayer at the time didn't want to pursue either of those indications. They ended up out-licensing that molecule to Hope Medicine, molecule's HMI-115, though there were some, I would say, fundamental issues both on the molecule as well as how the phase I was done. The first with the phase I, they shot themselves in the foot a little bit in terms of being conservative on the dose escalation. They didn't dose high enough and the issue with that is, in this particular mechanism, we know achieving 90% receptor occupancy is very crucial. If you're not able to dose high enough, you're just going to have to have more doses that are needed to achieve the 90% receptor occupancy. Additionally, it's formulated at 70 mg/mL. With that they couldn't achieve, I think, good subq dosing. What we're modeling is, I think, roughly two to three doses over six months and that achieves 90% receptor occupancy with what we modeled from them to achieve that, I think they'd have to have 20-25 doses. That's just not commercially viable. Essentially what we did was used our AI model to ensure that we could get the half-life that was needed, the high potency, and be able to have the dosing frequency that's needed for a direct-to-consumer play. The more we dove into the biology, the more we became super fascinated with what was going on. I mean, the similar mechanism you saw in hair, this fibroblast macrophage cross-talk that drives inflammation and drives miniaturization is a very similar mechanism to what you see in the endometrial tissue and the synovium. It does seem to sit on this stress inflammatory axis that really wasn't well-known. There's evidence of it in different places, but it hasn't really been well characterized and well talked about. The one comment we get from investors when we discuss specifically this mechanism of action is that, if it's so good, why haven't you never heard of it before? Which I know. Yeah It's a very circular question. Yeah just bringing that up. Yeah, 100%. I think the number one reason why it has not been brought up is because it's been looked at as a women's health reproductive hormone. It's in the name, prolactin, prolactation. Everyone thinks of it from a lactation standpoint, and so when you see it in immune cells or you see it in the synovium, an immunologist may just say, "Oh, well. That's interesting, but it's a women's health hormone for lactation," and push it to the side. I would say, it's not highly expressed either. It's almost like an ion channel or GPCR. Even in single-cell sequencing, it's very low abundance. Maybe you have it on 1%-2% of cells. It definitely goes, I think, under the radar in single-cell sequencing. I think, again, the number one reason is the name has completely thrown it off. I think we're seeing that these quote unquote "women's health hormones" or reproductive hormones actually have a much bigger role, not only in women, but in men as well. Even like progesterone, I think a lot of people think of that as a women's health hormone, but it's in men as well, and I think that there's bigger roles that these hormones are playing than I think we previously understood. I think if anything, the prominence of hormones should be increasing all the time, just given what's going on with GLP. That is a hormone. Yeah. Yes. Yes. Exactly. Yeah. I think one of the other aha moments for us, and look, the literature started on this in the '90s, but there's a different promoter in the peripheries. Yeah. The promoter everybody thinks about is the pituitary promoter. That's what people think about as the classic endocrine hormone that's systemic. In tissue, in the periphery, it's regulated through a different promoter that's completely dopamine independent. You've got the systemic prolactin, but then you have prolactin signaling that's regulated, expressed in local tissue, including the skin and including in the hair follicle. Maybe talk a bit about the AGA market, that this is something that I think on the sell side, we have trouble with. It's too big, and we have to handicap that somehow. If there's any way to realistically view this. Yeah, look, that's a problem we want to have, right? We're happy to have that problem. The way we've looked at the market, first off, we started with interviewing derms, KOLs, and then moved to interviewing patients, so we had a better understanding of what drives patients. That led us to commission a consumer research study. We surveyed 610 patients. I know you guys have run an interesting survey, too. We asked those patients a lot of questions in the survey, including what were the psychological social impacts of AGA, and those are very pronounced, and they're also very similar to what you see with weight loss. Just again, the analogy to the GLP-1s. When we looked at that market, we dug into, at least with this survey, standard of care, what motivates patients, how patients think about standard of care, and what their response would be to new categories of medicine that could treat the condition. I think what we found at a high level, and we can go into some of the data if you want, is that by and large, patients are not satisfied with standard of care. You really have two categories of treatment. You really, when you boil it down, you have one category, which is you either use a topical or oral every day or twice a day. Even if you get a transplant, you have to use some maintenance therapy. Every option today looks like that, and it's almost like a gun to your head, right? If you start taking minoxidil, oral or topical, you can see a lot of patients, not all, there's a lot of variability, but if you see hair growth, you have to stay on that for the rest of your life. As soon as you go off, you shed your hair, and you go back to the baseline you would've been at. Not the baseline where you started, but the baseline you would've been at. A lot of patients don't like that profile. They don't like being locked in like that. When we've tested the TPP for ABS-201, we presented a fairly modest efficacy to patients, so high end of oral minoxidil, think 35-40 terminal area hair count addition, but with a dosing frequency that's about three doses over six months with another 2.5 years of durability. Set it, forget it, and see that efficacy over that durability. It really tests through the roof for us. We see a huge number, percentage of patients, male and female, who say they would go out and seek to take this product if it were available today. In fact, when we zero in on those patients who are currently using oral minoxidil, those percentages go up even higher. Then the other thing that we thought was very instructive and exciting is we asked patients, "What would you use as first line?" You've got shampoos, conditioners that are cheap, supplements. None of them work very well, but they're dirt cheap. Then you've got minoxidil, oral, also cheap, and you've got premium product like this that would be priced much higher. Over a third of patients said they would want to use ABS-201 if we hit the TPP as first line. We think there's a huge market opportunity here, and even factoring in the durability and the pricing, we've come to a place where we think, if we're successful here, we could be treating 5 million-9 million patients a year in the U.S., and with a TAM that's north of $25 billion. Those are some big numbers. Well, now you see why we're focused on executing this program. Priority one. Let's talk a little bit about the clinical development because this is the key focus for most investors. Starting with a single ascending dose, pretty soon we're going to see some level of data from there. Maybe give some guidance on that and then talk about the efficacy data readouts. [uncertain] You got it. Yeah, I'm happy to give a high-level overview of kind of where we sit. First half of this year, we are going to be coming out with the top-line safety data, along with what the PK looks like to ensure that we can fit in that to that two to three doses over a six-month period. In the second half of this year, we'll have the 13-week interim. The full study is 26-week. 13-week, we will be showing likely responder data with the total area hair count. We do, however, want to be clear that we see this as directional. We do see the 26-week readout being in that 30 hairs-40 hairs per sq cm that we continue to guide to. We just want to be clear that we do not know at 13 weeks exactly what hair count is going to be there. We see this as an important directional readout, but are not setting any guidance to that 13-week. What would be a win, in your view, for 13 week? I believe being able to show that you have hair growth at 13 weeks, I think is going to be a win. Lots of excitement on the investor side around Veradermics recent IPO. This is a reformulation for minoxidil, just extending its effectiveness. How does this help or hurt you as you're looking forward to your readout? Look, the more wins that we can get in this space, the better. I think it really shows investors that this is an exciting space. It is as big as the GLP market. There's huge demand out there, and I think having even something like a reformulated minoxidil that could show similar or potentially better efficacy than oral minoxidil, I think goes to show the need is there, and even any small incremental change could be a home run. I think just really hits home how the standard of care is so poor and people are really wanting to figure out, how can I get something that's more efficacious that could actually be regenerative? I think that that's something that we give with our product is not only potentially oral minoxidil level efficacy or better, but the fact that you could do two to three injections over six months and have durability for the next couple of years. I think that's really exciting for patients, and I think that we all can play. In terms of synergy, I think the one thing that's nice about minoxidil is that it's super cheap. We're obviously going to have a premium product here, and so if you have a premium product with something that's cheap, like oral minoxidil, I think you are going to see people combining these and seeing what effects that they could get through combo. I think there's reason to believe, actually, from just a mechanistic standpoint, how you could have oral minoxidil synergize with the prolactin receptor. I mean, the biology, you're able to essentially get the stem cell niche built back up. Then if you have oral minoxidil, that's ensuring more blood flow, in theory, it could be additive. All in all, I think it's great for the space. Okay. Looking forward, let's assume everything goes well as it relates to the proof of concept. Any thoughts on what a pivotal study potentially looks like, especially on there are some requirements for the FDA for you to have enough patients dosed, basically. Yeah. We're having our dialogue with the FDA right now, both around the endometriosis study design, which we intend to initiate a phase II study there in Q4, as well as what registrational trials will look like for AGA. We do assume we'll need about 1,500 patients exposed over all of the clinical trials, so that would include the numbers in this trial right now. The nice thing about this is these registrational studies in particular are going to recruit very quickly, and the cost per patient is significantly lower than other indications. The all-in cost and the faster speed with this very large market at the other end creates a very attractive ROI, and that's, again, why we've prioritized this program. Right. I know we're getting way ahead of ourselves, but do you think there's a similar path for ABS-201 to what we've seen with GLPs? Think about direct-to-consumer strategies, partnering with Hims & Hers. We've seen some interesting things in this space. I think that that's one of the most exciting pieces here is being able to have a relationship with the consumer, with the patient, and being able to go direct to consumer. One of the things that you saw with BOTOX was BOTOX was able to build a really robust brand due to the patient interaction and post patent cliff LOE. They retained 80+% of the market share. Yeah. I think that you can see a similar thing happening here. If you build a robust brand that patients trust and you continue to provide assets and drugs that give them that total vitality that they're looking for, I think they're going to continue to come back, and you're going to be able to maintain that market share past LOE and past the patent cliffs. I think that that's actually quite exciting. Additionally, we do have follow-on programs, follow-on best in class to continue to be able to provide further benefits to what ABS-201 already has. We're looking at those strategies as well. I think it's a really exciting opportunity that we have here. Again, getting ahead of ourselves about if everything works out, what do you think your go-to-market strategy is going to look like? I think it's very different than traditional pharma commercialization. First off, I think partnering with the derms is going to be incredibly important, and I think we're building really great relationships with the derms. I think launching with them is going to be great. Additionally, having the direct-to-consumer play alongside that or after that, I think is going to be a key part to this overall commercialization strategy. Zach, if you want to add anything else to that. No, I think you nailed it. There's very good incentive alignment with derms and other practitioners. To Sean's point, I think it's a very different marketing exercise where you develop that brand and that relationship with the patient. I think what we find, again, just taking the GLP-1 space as an example for weight loss, doctors don't need to go find patients and prescribe GLPs for weight loss t he patients are finding the doctors. I think we're going to see the same kind of phenomenon here. We're several years away. We think we're likely to be in a position to go out and get approval by 2030. It's not that far out. Our belief is we'll be able to do something really creative here that's very customer-focused. Yeah. It's going to be so much driven by the social media, the influencers. You already see that with the peptides and these lip plumpers. Much of this is all being driven by social media for good or for bad. We really do think being able to drive it through those channels is ultimately going to get, I think, the fastest uptake here. I would venture to say that's very accurate, specifically for GLPs, because that's an old drug. Yeah. Yeah. It was on the market for many, many years. Yeah. All right. I do want to spend a minute or two at least on endometriosis. Again, interesting that there's a commonality here. What do you guys think the MOA is? Maybe for those who are unfamiliar in this space, just to give people an idea of the unmet need in this particular indication. Yeah. This has been an indication that I think has been overlooked and definitely underfunded for quite some time. It's a huge unmet medical need with a large patient population. Right now, it's estimated one in 10 women have endometriosis. Since we don't have great ways to diagnose these patients, we do believe that this is an under-representation of the amount of women that have this. Right now, standard of care is really poor. You have GnRHs that are out there. This is a hormonal drug that does lead to some serious adverse events, and women can only stay on these for six months. It's not a long-term solution at all. Essentially what happens is you get these lesion formations in the endometrial tissue, and that drives overall pain during menstruation. Again, nothing out there right now is disease-modifying or even being able to address the pain that effectively. If you look at the mechanism of prolactin and its role, it does look like from the animal studies that were done, as well as actually the HMI-115 phase II study, what you see is that prolactin drives the lesion formation, and it also looks to drive the pain sensitization as well. By blocking it, you're essentially reducing or eliminating lesion formation as well as eliminating the overall pain that's associated with it. I think that the piece that we're excited about, as well as the recent clinical validation from Hope, the HMI-115, they were able to show overall pain reduction in dysmenorrhea, so pain during menstruation. We feel like that is actually really strong evidence that this will work. It's not published, but we do have very strong genetic evidence of this as well. All in all, we do think that this could be disease-modifying, and we are going to be going after the pain piece of this, the pain during menstruation. I think one of the things we're really excited about is having Ransi on the team as our Chief Medical Officer. He worked on the NaV1.8 that recently got approved at Vertex. He was the SVP of Clinical Development there, so he knows pain really well, and I think we're set up well to, I think, have a potentially successful readout on this. I think it's a space that has huge unmet medical need, and standard of care is just really poor. Great. Maybe a last couple of general questions. You guys had a TL1A asset, you still do. Should there be any expectation set for investors on likely monetization of this, just given its older generation tech? Yeah. I'd say, look, we're completing that phase I trial by the end of this quarter. What we have said publicly is we are not going to invest in developing that asset. I think those reasons should be clear. IBD is a very challenging space for development. Patient recruitment is extremely slow, and it's very competitive. Whereas you look at us allocating resources in the right way, we're allocating towards ABS-201, where we have really no competition on the mechanism for AGA. We think, based on what we've seen Hope doing, they're basically retreated to only develop their molecule in China for endometriosis. We think we could be first to market in endo as well. Those are significant opportunities with less competition and certainly with AGA, very rapid recruitment and low cost for trial. We have discussed that publicly for ABS-101, the anti-TL1A program. We are looking to potentially partner that and looking at other new indications with partners, but not ones where we would invest capital in. We are also derivatizing that into some bispecifics that could be synergistic with some of our other targets in our pipeline. That would not be aimed towards IBD, be aimed towards other indication. Cash position, cash runway? Yeah, you probably saw we recently released an update on cash. We had $144 million, just about that, end of Q1, and that gives us runway into the first half of 2028. Essentially allows us to get our full readout here on this ABS-201 AGA trial, as well as we believe an interim readout on the endometriosis study that we're going to start in Q4. That's very helpful. Kind of a last summary from you guys. Lots to unpack overall, but what do you think investors are missing about your story? I think first it's the prolactin. I think people are still understanding how is this mechanism going to work. Why hasn't anybody looked at prolactin? I think that it's new biology that's been out there, and I think people are just kind of wrapping their heads around the actual mechanism of action. I think when you dive into the science, I think you see that there's very, very strong evidence of this working in not only endometriosis, but actually other indications as well. To me, I think that's probably the biggest hurdle. It's kind of similar to anti-TL1A. That was a target off the beaten path that I think folks didn't know if it was going to work and they got a great readout. I think it's a very similar type of story here. Again, it's just an underappreciated target that I think has a lot of very strong data backing it. Gil, I would add too that I think there's a lot of investors, at least till recently, categorized this as an AI platform and didn't really look at the assets. I think what we're seeing now on the IR front is a lot of investor engagement and a lot of focus around ABS-201 for both indications, but predominantly in AGA right now since that trial is running. We're seeing some recent initiation from investors and a lot of diligence going on. I think that dynamic of sort of somehow being kind of miscategorized and not understood in terms of the true assets we're creating using the platform is starting to change. All right. We're at time. I want to thank you both again for attending today. Yeah. Thank you, Gil. Thanks. Thanks, Gil.