Conference Transcript - ABSI 2026-09-15

Operator

Good afternoon, and thanks for joining us to have a conversation with Zach Yonason, chief financial officer and chief business officer of APSI, and Alex Kahn, corporate vice president and head of IR at APSI. So APSI describes itself as advancing the future of drug discovery with generative design to create better biologics for patients, faster pairing its integrated drug creation platform with synthetic biology data engine in a continuous lab-in-the-loop cycle. So the company now has three clinical stage programs anchored by ABS-201, an AI-designed antiprolactin receptor antibody, which is in a phase one to a headline trial for patent hair loss with an indication expansion into endometriosis. In June, ABSAI reported positive interim phase one safety data, safety and PK data, showing an estimated half-life of at least 65 days and raised 100 million, including a 40 million strategic investment from Eli Lilly. So I had lies at a 13 week interim proof of concept readout in the second half of this year, a phase two endometriosis start in the fourth quarter and the full 26 week data, which we are expecting in early 2027. So to discuss ABSAI's platform, pipeline and strategy, let's get started with Zach and Alex. Zach, Alex, thank you very much for being here and I appreciate you accepting our invitation.

Zachariah Jonasson, Ph.D., CFO

Thanks, RK. Okay.

Operator

So, I'd say, you know, suddenly has changed its strategy, you know, starting from a platform partnership story and now to a clinical stage company with three clinical stage programs and a wholly owned prolactin receptor franchise.

Zachariah Jonasson, Ph.D., CFO

So, Zach, for people who are new to APSA, can you frame the long-term strategy for us and how you decide what stays on your balance sheet and you know versus what gets partner yeah absolutely and again thanks for having us um i've been involved with abcide since 2016 i used to manage a venture firm so i've been a board member and now i'm in operations i like to say i voted with my wallet and then with my feet and i can say it's a it's a very exciting journey we're on. Our vision is to create a portfolio of DTC therapeutics that can be direct to consumer, leveraging telemedicine, and that can really be more oriented towards partnering with the consumer to improve their own health. And our first molecule, which we think will reach approval, is ABS-201 for pattern hair loss, which we think is a phenomenal market opportunity. There hasn't been innovation in that space for 30 years, and there's 80 million patients in the U.S. alone that have pattern hair loss, and they're very broadly dissatisfied with standard of care. So ABS-201 offers the kind of program that we really want to proselytize and invest in. It's a brand new category of therapy for a market that's desperate for solutions. So rather than an oral or topical, you'd have to take daily with a lot of side effects and limited efficacy, this could be a product where you take two to three injections, kind of like a Glyp1, and you're set for multiple years of hair growth. So very convenient and durable. And that resonates very strongly with consumers. And our second program, as R.K. mentioned, is endometriosis, another area where there's a fantastic or unfortunately a fantastic unmet medical need, where there's a really high patient burden. About 10% of women globally suffer with this disease. We think the timing for this program couldn't be better. You have clinical guidelines for diagnosing endometriosis. So we think this program not only addresses a significant unmet need, but also could be brought to market as a DTC as well.

Operator

So behind that, RK, we're using our platform, and I think you will probably have some questions around. platform but we're using our platform today to generate additional programs that we think could fit into that broader strategy so talking about the platform you know one of the pitch to the story is um you can industrialize discovery and and especially trying to bring a program into ind enabling studies you know with under two and a half years and uh under 15 million dollars which is fantastic, you know, compared to what other biotechs and large-cap farmers spend, both in terms of time and money. So what is the advantage that your platform gives that it's difficult to replicate, at least in your point of view?

Zachariah Jonasson, Ph.D., CFO

Yeah, I mean, I'll start with the metrics. Like, those are metrics that we've succeeded on with our our prior programs, ABS-201 is an example. We think we can do better though. And so today we're investing heavily in an entire agentic platform that interfaces with our AI models that design the antibodies. So this agentic workflow involves disease biology, it involves selecting targets and selecting indications, and it plugs into or incorporates that AI design model, our origin models so that we can rapidly construct antibodies to different epitopes and commence testing those for proof of concept so our goal is to cut those timelines in half and cut those costs down even further and we have a number of means of doing that part of that is leveraging the agentic platform we've built which we've called atlas part of that is leveraging some of the things we're going to be doing in china for faster cheaper clinical trial development So let's start with the ABS-201 program.

Operator

The June interim data showed no serious adverse events across four cohorts and an estimated half-life of 65 days. So walk us through what that PK profile actually does in terms of the target product profile itself. And you're also modeling two or three subcutaneous injections over six months generating close to 70% bioavailability. What's the significance of what you've seen so far? And how do you think, at least for the next catalyst, which is the 13-week study data, how does that feed into that?

Zachariah Jonasson, Ph.D., CFO

Yeah, let me comment on the PK and I'll let Alex comment a little bit about what we're looking for at 13 weeks. We're very happy to see the PK profile, 65 days and counting. We think that that's going to enable, at a minimum, every two-month dosing, which is very convenient for patients. But there's a potential upside to be something more like every three months. We'll see as we collect more data on PK as the trial moves forward. But think about the convenience factor for patients. And we've tested this in consumer studies. What they have today in standard of care is a daily application of minoxidil or finasteride and if they stop they lose their hair think about a product where you have maybe two injections over six months and you don't have to worry about it for two years that's a game-changer in this market so this PK profile is going to enable this convenience whether it's one or two or two doses or three doses over six months we'll find out but either one of those tests extremely well with consumers the other thing that this gives us which we're really happy about is flexibility as you recall we're taking abs 201 into a second indication endometriosis and we want to have a different dose and dose frequency

Alexander Khan, Head of Investor Relations

across those two indications so we have a lot of flexibility now and so we couldn't be couldn't be happier with the pk profile and alice do you want to comment on the 13 week yeah and then in terms of what we're hoping to show in terms of the efficacy so everything we've seen from the preclinical model, particularly that stump-tell macaque data we've talked about, and then just all the literature on the underlying biology gives us strong confidence that we'll see some good efficacy at the full 26-week readout, but even at the interim. So the interim, the 13-week readout they're hoping to have in the near term, we want to have, obviously, the most robust, comprehensive, and informative data set as possible. So as we're collecting all that data, we'll be sharing that, you know, probably in the December timeframe for the 13-week readout. So that'll be people who have had two doses from the MAD portion already. So they will have had people in the 300 milligram, 600 milligram, and 1200 milligram cohorts, each having had a baseline dose and another dose eight week later. And then in the first half of next year, we'll have the 26 week readout, which will be that full proof of concept.

Operator

Okay. So you have framed the mechanism as actually regenerative in the sense, you know, protecting follicle stem cells, restoring CD34 progenitors, raising IGF-1 and FGF-7. So two questions. What in the 13 or the 26-week data actually could demonstrate that regeneration rather than just a symptomatic effect?

Zachariah Jonasson, Ph.D., CFO

And when do investors get a real read on the two to three year durability you know that you're talking about because it it will underpin the pricing eventually yeah well so to your first question i don't think there's anything that's going to be symptomatic for results at 26 week recall we've looked at this transitional translational model in the stump tail macaque which is a gold standard minoxidil and finestradide have been run in that model and you see the same phenotype that you see in patients and what you see with a with a prolactin blocking antibodies you see at this durable effect that lasts multiple years we took that as a impetus to go run a study in human biopsies and that's where we elucidated the mechanism that really revolves around repopulating the stem cell niche so that's the progenitor cells as well as the k-15 positive stem cells so that is the mechanism in human tissue so we see growth at 26 week i think we can be confident that's the mechanism that's underlying it to your second question though we're going to be following the patients in these trials a year a full year after their final dose and by follow them I mean we're going to be taking hair measurements so we're going to collect data on the durability we actually expect they'll probably see additional hair growth the second six months that's what you saw on the stump tail macaque model and longer term we're looking at doing an open label trial extension now we haven't announced what that'll look like but that's something we're looking at right now and so the strategy is to achieve endpoints that the fda accepts so looking at the 26 week for approval but ultimately to establish the durability through a meta fare strategy where we commission publications and we share data from these follow-up studies and i think that sort of helps us with the pricing okay so recently you changed changed your expectations on the label from androgenic alopecia to patent hair loss, actually which added quite a bit of a tam on it, going from 30 million to 80 million U.S. patients.

Alexander Khan, Head of Investor Relations

And how do you, one, what made you think about that change, and two, how are investors reacting to that framing and you know is there any expectations in terms of uh including females as well into that cohort yeah i mean a few things i mean to take a step back it's it's purely a terminology matter right our assumptions around the market size the population size the community size is wholly unchanged still 80 million americans 50 million men 30 million women within the population but a few reasons we decided to make that change is we've been getting a lot more attention from the broader community including the medical community investor community and just general population i think there had been in the broader market some confusion about well what does androgenetic alopecia mean right everyone knows they can look at themselves in the mirror and think i have pattern hair loss i'm losing my hair some people might not understand that that could be one of the same with androgenetic alopecia for themselves it almost sounds a little too too clinical for you know a general consumer to want to admit and diagnose it themselves so that was one reason. It's also the biological rationale. We do think that prolactin sits upstream of androgen. We do think there's a little more to the story than just the androgen component. And then just from a consumer-facing standpoint, we think it's just a more consumer friendly, well-understood terminology there. But it's been well understood that the population we're talking about is the same as it has been all along.

Operator

Okay. So regarding the second indication, which is endometriosis, you have guided to start the study in the fourth quarter of this year. And the expectation is to have some initial proof of concept data in the second half of 2027. So just trying to understand the start of the study, is that because, you know, you want to to see the 13 week data from the patent hair loss study before you get started, or these are totally two different events and independent of each other?

Zachariah Jonasson, Ph.D., CFO

The, yeah, so we're, our goal is to start that study at the end of this year. And what we wanna see is the safety and the PK data. We're not, the efficacy data for pattern hair loss isn't as germane to endometriosis, but we'd like to see the PK data so we can select our dose and dose frequency for that study.

Operator

Okay.

Zachariah Jonasson, Ph.D., CFO

And as you can imagine, the safety portion of that study will be part of what is submitted to FDA.

Operator

In terms of the Lilly investment, you know, there's been a little bit of a conversation going on around that. So what is the Lilly investment about? And, you know, do they have an option to do more than just the investment? or what else is included?

Zachariah Jonasson, Ph.D., CFO

So we've been in discussions and dialogue with Lilly for over a year and they have a strong interest in prolactin biology. I think we, as a company at the forefront of prolactin biology, they're interested in parent pattern hair loss and endometriosis and some other indications. We tried to find a good solution for how we could work together. Our goal was to not encumber the program with any rights. And so I think we were able to strike a really great partnership with EITLU, whereby they invested $40 million, anchored $100 million financing, and took a seat on our advisory board for endometriosis. And I think for us, this is a big win because we welcome their advice on endometriosis. They get front row seats. They bought tickets to the game is the analogy we use. But we did not encumber the program in any way. no preferential information rights, no rights of first refusal or negotiation, so that program is wholly owned and unencumbered.

Operator

When we started talking about 201, you were saying that you wanted to look at the DTC market as the first market to enter into. Is there a certain reason and what's the real strategy behind it, you know, so that you don't have a huge commercial team or, you know, what is it that made that decision?

Zachariah Jonasson, Ph.D., CFO

So we still are going to work with practitioners. I think the DERMs have a big role to play. They're very excited about this program. I think they'll help us establish it as the premium new category of therapy. But if you think about the long-term vision for this program, it really belongs in a DTC channel, we think. We're talking about 80 million potential consumers, right? And with the rise of telemedicine and DTC, if you think about this product and the way it works, it's a really perfect fit. And if you think about how we can structure the pricing through DTC, I think it gives us even more flexibility on pricing and to keep a higher margin. So long term, I think this is a huge opportunity to take this DTC. But, again, I would say we're still planning to work with practitioners, particular dermatologists, when we launch.

Operator

Okay. So, regarding the AI platforms that you have, you unveiled ATLAS on the second quarter call. It's a target discovery engine, pulling literature, human genetics data, and also single cell data that feeds into the origin. So it reportedly, you know, helped in the prolactin receptor, understanding the prolactin receptor genetics, and also the indications that you're currently on. So can you highlight for us what ATLAS can do, and also, you know, what sort of targets Is it more like finding a new target, sort of a missionary, or is it something that can actually improve whatever is currently out there in the market?

Zachariah Jonasson, Ph.D., CFO

I'll pull Alex into this too, but I would say that it's a platform that leverages, and in agentic workflows, it leverages omics data, genetics data. It also helps us design experiments to answer questions for identifying new targets and indications. So a lot of it is novel targets for an indication, but we have seen its capability in finding new indications for a known target. And that's something that we've used for prolactin. So we initially used it to validate what we were doing in endometriosis and in pattern hair loss. and you'll see some updates in our corporate deck that show you some of the MR work we've done that comes out of Atlas. But we've also used it to identify some new indications. As you may recall, we announced two quarters ago that we have another anti-prolactin antibody program. Maybe it's 202. That is going to be focused on an indication we haven't announced, but that indication came out of the Atlas workflow.

Alexander Khan, Head of Investor Relations

And I don't know if you want to comment. yeah and even internally we see it as a tool that our scientists and our scientific team are able to use to really scale themselves to be able to do more with fewer resources and find those greater efficiencies so it's a great addition to our end-to-end platform to do that target discovery experiment design and then feed into our de novo design model which as you know kind of feeds our loop so you initially started off with the origin one right and then origin one actually generated created quite a few partnerships for you folks over the time period.

Operator

Now that you have Atlas, is Atlas also going to be used in generating partnerships or is Atlas more for proprietary work but Origin is for partnerships?

Zachariah Jonasson, Ph.D., CFO

So just to make sure we run the flow diagram, Origin is incorporated in Atlas. Origin, once you, Origin helps you define a target and an indication, or sorry, when Atlas helps you define a target and indication, then Origin can immediately go to work at helping you design antibodies to specific epitopes that then you can go test in the lab. So it's all part of an integrated agentic workflow. And to Alex's point, we're seeing a compression of time and we think better quality as well. Sorry. Go ahead.

Alexander Khan, Head of Investor Relations

And as for who's actually benefiting in this and utilizing it, I mean, our business model has really evolved in a way such that programs that we initiate now, we intend to take forward ourselves. We do preserve optionality to find partnerships along the way. But as you've seen over the years, the business model of finding outside partners alongside our programs has really kind of shifted to now our internal programs are the key focus and strategic priority of the platform or of the company. And that's where we see the origin and Atlas parts of the platform really being utilized by the AppSci team.

Operator

So talking about partnerships, looking at your pipeline, outside of 201, you have quite a few programs, but you also stated that some of these programs are up for partnerships.

Zachariah Jonasson, Ph.D., CFO

So when you are having these conversations with potential partners, are they waiting for abs 201 data to come out to to move to the next stage of uh conversations or abs 201's data does not really matter in those conversations i i mean i wouldn't say it doesn't matter because it's further validation i mean if you look at all the companies trying to are talking about at least there's a lot of ai sprinkled on top but trying to use ai to design molecules most of them don't have any clinical validation so it's important in that sense right it validates what the model's producing even though it's looking back two years to when the current molecules were designed but it nonetheless validates the approach we're taking so i think it's important in that in that sense but in another sense it's really always all about the asset right for any partnership and our focus to alex's point is not renting out the platform around tying up capacity. That way, the probability of partnerships, if we design a great molecule in a partnership, it still gets killed in portfolio review half the time. You just take on all these unknown risks and timeline. The better strategy, and we've put numbers around this internally, is to build assets. And then some of those we'll take forward, some of them we may partner. And the partnership around assets is always based on the merits of the asset.

Operator

OK. So in the interest of time, just to close out on the financials, what's your current cash position and, you know, the runway that you can get out of it?

Alexander Khan, Head of Investor Relations

Yeah, so we ended the quarter of June with a little over $200 million on the balance sheet, and that's runway into the second half of 28. So that, with our current plan, should get us past all the upcoming readouts that we have. So that would be the interim 13-week analysis for the pattern hair loss coming in December, the full 26-week POC coming in the the first half of next year. And then endometriosis phase two POC shortly after that, potentially end of next year as well. So really excited times over that first data cut coming in December. I'm really excited to share that with everyone.

Operator

Okay, thank you very much. Thanks for being here and appreciate it.

Alexander Khan, Head of Investor Relations

Thanks, Dr.