Absci(ABSI) - 2025 Q2 - Quarterly Report

Risk Factor Summary This section highlights the speculative nature of investing in common stock due to development uncertainties, limited operating history, and intense market competition - Investment in common stock is speculative due to uncertainties in program development, limited operating history, and expected future losses[7] - The company will need to raise additional capital to fund operations and platform improvements, with potential adverse effects if unsuccessful[7] - Biologic drug development is inherently uncertain; product candidates may not achieve regulatory milestones or commercial viability, impacting revenue[7] - The biopharmaceutical platform technology market is highly competitive, posing risks to revenue and profitability if the company cannot compete successfully[7] Special Note Regarding Forward-Looking Statements This section provides a cautionary note regarding forward-looking statements, their inherent uncertainties, and potential material differences from actual results - Forward-looking statements relate to plans, objectives, future events, revenue, and performance, often identified by terms like "may," "expects," "plans," "anticipates," "believes," "estimates," and "potential"[9] - Actual results may differ materially from forward-looking statements due to a competitive and rapidly changing environment, and new, unpredictable risks[12] - Key forward-looking statements include expectations for internally developed and partnered programs, clinical trials, regulatory approvals, platform adoption, market growth, ability to attract partners, and financial estimates[9][10][11] Part I. Financial Information (Unaudited) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the interim period Item 1. Unaudited Condensed Consolidated Financial Statements This section presents Absci Corporation's unaudited financial statements, covering balance sheets, operations, equity, and cash flows Unaudited Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 This table presents the company's unaudited condensed consolidated balance sheets, detailing assets, liabilities, and equity as of the specified dates | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Assets | | | | | Cash and cash equivalents | $38,024 | $41,213 | $(3,189) | | Restricted cash | $16,209 | $15,947 | $262 | | Short-term investments | $79,434 | $71,212 | $8,222 | | Accounts receivable, net | $700 | $0 | $700 | | Prepaid expenses and other current assets | $3,037 | $5,459 | $(2,422) | | Total current assets | $137,404 | $133,831 | $3,573 | | Operating lease right-of-use assets | $3,457 | $3,968 | $(511) | | Property and equipment, net | $24,063 | $29,167 | $(5,104) | | Intangibles, net | $43,198 | $44,883 | $(1,685) | | Restricted cash, long-term | $1,054 | $1,054 | $0 | | Other long-term assets | $716 | $705 | $11 | | TOTAL ASSETS | $209,892 | $213,608 | $(3,716) | | Liabilities | | | | | Accounts payable | $8,206 | $3,529 | $4,677 | | Accrued expenses | $5,715 | $6,842 | $(1,127) | | Contingent consideration | $12,750 | $12,750 | $0 | | Long-term debt (current) | $1,986 | $2,733 | $(747) | | Operating lease obligations (current) | $1,705 | $1,608 | $97 | | Financing lease obligations (current) | $7 | $78 | $(71) | | Deferred revenue | $954 | $1,116 | $(162) | | Total current liabilities | $31,323 | $28,656 | $2,667 | | Long-term debt, net of current portion | $161 | $1,257 | $(1,096) | | Operating lease obligations, net of current portion | $3,553 | $4,429 | $(876) | | Other long-term liabilities | $1,482 | $133 | $1,349 | | TOTAL LIABILITIES | $36,519 | $34,475 | $2,044 | | Stockholders' Equity | | | | | Common stock | $13 | $12 | $1 | | Additional paid-in capital | $739,565 | $688,726 | $50,839 | | Accumulated deficit | $(566,516) | $(509,601) | $(56,915) | | Accumulated other comprehensive income (loss) | $311 | $(4) | $315 | | TOTAL STOCKHOLDERS' EQUITY | $173,373 | $179,133 | $(5,760) | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $209,892 | $213,608 | $(3,716) | Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2025 and 2024 This table provides the company's unaudited condensed consolidated statements, outlining financial performance and cash flow activities for the specified periods | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Partner program revenue | $593 | $1,270 | $1,772 | $2,168 | | Research and development | $20,458 | $15,261 | $36,822 | $27,497 | | Selling, general and administrative | $8,528 | $9,346 | $18,000 | $18,090 | | Depreciation and amortization | $3,000 | $3,384 | $6,072 | $6,800 | | Total operating expenses | $31,986 | $27,991 | $60,894 | $52,387 | | Operating loss | $(31,393) | $(26,721) | $(59,122) | $(50,219) | | Interest expense | $(56) | $(150) | $(135) | $(326) | | Other income, net | $1,011 | $2,121 | $2,469 | $3,832 | | Total other income, net | $955 | $1,971 | $2,334 | $3,506 | | Loss before income taxes | $(30,438) | $(24,750) | $(56,788) | $(46,713) | | Income tax benefit (expense) | $(131) | $0 | $(127) | $(12) | | Net loss | $(30,569) | $(24,750) | $(56,915) | $(46,725) | | Net loss per share: Basic and diluted | $(0.24) | $(0.22) | $(0.45) | $(0.44) | | Weighted-average common shares outstanding: Basic and diluted | 127,592,948 | 112,934,086 | 126,035,844 | 106,163,709 | | Comprehensive loss | $(30,277) | $(24,732) | $(56,600) | $(46,802) | Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024 This table provides the company's unaudited condensed consolidated statements, outlining financial performance and cash flow activities for the specified periods | Metric | Balances - Dec 31, 2024 | Balances - June 30, 2025 | | :------------------------------------ | :---------------------- | :---------------------- | | Common Stock (Shares) | 115,362,265 | 127,677,180 | | Common Stock (Amount) | $12 | $13 | | Additional Paid-In Capital | $688,726 | $739,565 | | Accumulated Deficit | $(509,601) | $(566,516) | | Accumulated Other Comprehensive Income (Loss) | $(4) | $311 | | Total Stockholders' Equity | $179,133 | $173,373 | - Issuance of common shares (net of costs) contributed $39.16 million to additional paid-in capital for the three months ended March 31, 2025[21] - Stock-based compensation expense totaled $4.91 million for the three months ended March 31, 2025, and $4.75 million for the three months ended June 30, 2025[21] Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 This table provides the company's unaudited condensed consolidated statements, outlining financial performance and cash flow activities for the specified periods | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(38,712) | $(34,706) | | Net cash used in investing activities | $(6,005) | $(75,426) | | Net cash provided by financing activities | $41,790 | $81,050 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $(2,927) | $(29,082) | - Operating cash outflow increased by $4.0 million year-over-year, primarily due to increased research and development costs[112] - Net cash provided by financing activities in 2025 included $41.7 million from common stock issuance (PIPE with AMD and ATM) and $1.9 million from employee equity plans[115] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed notes to the unaudited condensed consolidated financial statements, offering context and additional information on key financial items 1. Organization and nature of operations This section describes the company's core business as a clinical-stage biopharmaceutical company leveraging generative AI for antibody therapeutics - Absci Corporation is a clinical-stage biopharmaceutical company that uses generative AI to advance breakthrough antibody therapeutics[26] - The company's Integrated Drug Creation platform utilizes AI models to design improved antibody therapeutics, including for challenging targets[26] 2. Revenue recognition This section details the company's revenue recognition policies and highlights the concentration of partner program revenue - Contract liabilities (deferred revenue) decreased from $1.1 million at December 31, 2024, to $1.0 million at June 30, 2025[30] - For the three and six months ended June 30, 2025, two partners represented approximately 99% and three partners represented 100% of total partner program revenue, respectively, indicating high revenue concentration[31] 3. Collaborative arrangements This section outlines the company's collaborative arrangements for joint research and development, including cost-sharing mechanisms - Absci has collaborative arrangements with PrecisionLife, Memorial Sloan Kettering Cancer Center, Twist Bioscience, and Owkin for joint research and development[32] - These arrangements involve co-development of product candidates, sharing potential value and costs, with cost-sharing payments recorded as R&D expense[32] - No cost-sharing payments related to collaborative arrangements were made during the three or six months ended June 30, 2025, and 2024[32] 4. Investments This section details the company's investment portfolio, including money market funds and U.S. treasuries, and their fair value measurements | Asset Type | Amortized Cost (June 30, 2025) | Fair Market Value (June 30, 2025) | Amortized Cost (Dec 31, 2024) | Fair Market Value (Dec 31, 2024) | | :----------------- | :----------------------------- | :------------------------------ | :----------------------------- | :------------------------------ | | Money market funds | $8,404 | $8,404 | $2,134 | $2,134 | | U.S. treasuries | $79,459 | $79,434 | $71,151 | $71,212 | | Total | $87,863 | $87,838 | $73,285 | $73,346 | - Investments held as of June 30, 2025, have a remaining maturity of less than one year[34] - Proceeds from maturities of available-for-sale securities were $51.0 million for the six months ended June 30, 2025, compared to $89.1 million for the same period in 2024[34] 5. Fair value measurements This section describes the fair value measurements of assets and liabilities, particularly contingent consideration, categorized by valuation levels | Category | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 3 (June 30, 2025) | Total (June 30, 2025) | | :---------------------- | :---------------------- | :---------------------- | :---------------------- | :---------------------- | | Assets: | | | | | | Money market funds | $8,404 | $0 | $0 | $8,404 | | U.S. treasuries | $5,000 | $74,434 | $0 | $79,434 | | Total assets | $13,404 | $74,434 | $0 | $87,838 | | Liabilities: | | | | | | Contingent consideration | $0 | $0 | $12,750 | $12,750 | | Total liabilities | $0 | $0 | $12,750 | $12,750 | - The contingent consideration liability of $12.75 million, related to the Totient, Inc. acquisition, is a Level 3 fair value measurement based on a probability-weighted approach[40] - There was no change to the value of Level 3 liabilities for the six months ended June 30, 2025[40] 6. Commitments and contingencies This section outlines the company's contractual commitments and potential contingencies, including future payment obligations | Year | Commitment | | :--- | :--------- | | 2025 | $1.4 | | 2026 | $4.6 | | 2027 | $8.3 | | 2028 | $2.3 | 7. Common stock This section details common stock activities, including shelf registration, at-the-market offerings, and private investment in public equity (PIPE) transactions - The company has a shelf registration statement on Form S-3 for up to $250.0 million in securities, effective September 2, 2022[43] - During the six months ended June 30, 2025, 5,269,192 shares were issued under an "at the market offering" program, generating $21.7 million in net proceeds[44] - In January 2025, AMD invested $20.0 million through a PIPE for 5,714,285 shares, including a $2.5 million premium recognized as a credit to R&D expense[45] 8. Stock-based compensation This section provides an overview of stock-based compensation expenses and unrecognized compensation for stock options and restricted stock units | Expense Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Research and development | $2,015 | $1,913 | $4,038 | $3,567 | | Selling, general and administrative | $2,737 | $3,383 | $5,659 | $5,326 | | Total | $4,752 | $5,296 | $9,697 | $8,893 | - As of June 30, 2025, unrecognized stock-based compensation for stock options was $25.2 million, expected to be recognized over 2.2 years[48] - As of June 30, 2025, unrecognized compensation expense for restricted stock units was $6.6 million, expected to be recognized over 2.0 years[50] 9. Net loss per share This section presents the calculation of net loss per share, including basic and diluted figures and the treatment of potentially dilutive securities | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net loss per share: Basic and diluted | $(0.24) | $(0.22) | $(0.45) | $(0.44) | | Weighted-average common shares outstanding: Basic and diluted | 127,592,948 | 112,934,086 | 126,035,844 | 106,163,709 | - Potentially dilutive securities (stock options, RSUs, ESPP) totaling 25,915,175 shares as of June 30, 2025, were excluded from diluted EPS calculations because their effect would be anti-dilutive[52][53] 10. Segment reporting This section clarifies that the company operates as a single reportable segment and provides a breakdown of operating expenses by category - Absci Corporation operates as a single reportable segment, managed on a consolidated basis by the Chief Executive Officer[56][57] | Expense Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Drug creation programs and platform | $5,290 | $3,862 | $9,295 | $7,491 | | External preclinical and clinical development | $5,370 | $2,299 | $8,054 | $2,326 | | Personnel | $10,283 | $9,398 | $20,148 | $19,324 | | Stock-based compensation | $4,752 | $5,296 | $9,697 | $8,893 | | General & administrative | $3,291 | $3,752 | $7,628 | $7,553 | | Depreciation and amortization | $3,000 | $3,384 | $6,072 | $6,800 | | Total operating expenses | $31,986 | $27,991 | $60,894 | $52,387 | 11. Subsequent events This section discloses significant events occurring after the reporting period, including additional common stock sales and public offerings - Subsequent to June 30, 2025, the company sold 5,108,560 shares of common stock for $14.0 million net proceeds via an "at the market offering."[60] - On July 28, 2025, the company sold 16,670,000 shares in a public offering at $3.00 per share, with expected net proceeds of approximately $46.7 million[61] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, discussing the business overview, key factors influencing performance, detailed analysis of revenue and operating expenses, liquidity and capital resources, critical accounting estimates, and its status as an emerging growth company. It highlights the company's focus on its AI-driven Integrated Drug Creation platform and its evolving business model Overview This overview describes Absci's AI-driven drug creation platform, its business model, and key financial highlights for the reporting period - Absci's Integrated Drug Creation platform uses generative AI to design antibody therapeutics, aiming to shorten time to clinic and increase success probability[62] - The business model focuses on monetizing the platform through internally developed programs (partnered after value inflection points) and collaborations with third parties for early discovery[63] - For the six months ended June 30, 2025, revenue was $1.8 million (down from $2.2 million in 2024), and net loss was $56.9 million (up from $46.7 million in 2024)[68] - Research and development expenses increased by $9.3 million (34%) for the six months ended June 30, 2025, compared to the same period in 2024[68] Key factors affecting our results of operations and future performance This section identifies critical factors influencing the company's operational results and future prospects, including program development and partnerships - Key factors include developing internally developed programs (ABS-101 for IBD, ABS-201 for AGA), establishing partnerships, successfully completing drug creation and licensing, and continued R&D investment[70][71][74] - ABS-101 (IBD) initiated Phase 1 clinical trial in May 2025, with an interim readout anticipated in H2 2025 and Phase 1b/2a by H1 2026[64][76] - ABS-201 (androgenetic alopecia) anticipates an IND filing in H1 2026 and an interim Phase 1 readout in H2 2026[64][77] - A strategic collaboration with AMD in January 2025 aims to optimize AMD accelerators for Absci's AI drug creation, supported by a $20.0 million PIPE investment[78] Components of Results of Operations This section breaks down the key components of the company's results of operations, including revenue, operating expenses, and other income/expense Revenue This section explains the sources of revenue, primarily from partner drug creation agreements, and factors influencing its fluctuation - Revenue primarily consists of fees from partner drug creation agreements, paid upfront, upon project-based milestones, and throughout the program[79] - Revenue is expected to fluctuate due to timing of partnerships and milestones, but is anticipated to increase long-term as licenses are granted and product candidates advance[80] Operating Expenses This section details the various categories of operating expenses, including research and development, selling, general, and administrative, and depreciation - Research and development expenses include personnel, contract services, lab supplies, and technology costs, expected to increase with program advancement and technology enhancements[81][82] - Selling, general, and administrative expenses cover executive, business development, legal, finance, HR, IT, professional services, and intellectual property costs[83][85] - Depreciation and amortization expense relates to property, equipment, and intangibles, expected to fluctuate with growth and compute demands[86] Other income (expense) This section describes the components of other income and expense, primarily interest expense and net interest income - Interest expense primarily relates to term debt and financed laboratory equipment[87] - Other income, net, mainly comprises interest income from cash, cash equivalents, and short-term investments, and foreign currency transaction gains/losses[88] Results of Operations (Comparison of the Three and Six Months Ended June 30, 2025 and 2024) This section provides a comparative analysis of the company's financial performance for the three and six months ended June 30, 2025 and 2024 Revenue This section compares revenue performance for the current and prior periods, highlighting changes and underlying drivers | Period | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------- | :----- | :----- | :--------- | :--------- | | Three Months Ended June 30, | $593 | $1,270 | $(677) | (53)% | | Six Months Ended June 30, | $1,772 | $2,168 | $(396) | (18)% | - Revenue decrease was driven by the timing of project-based milestones and the mix of ongoing program activity[90] - Revenue concentration remained high, with two partners representing ~99% of revenue for the three months and three partners representing 100% for the six months ended June 30, 2025[90] Operating expenses This section compares operating expenses across periods, detailing changes in research and development, SG&A, and depreciation | Expense Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | $ Change | % Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Research and development | $20,458 | $15,261 | $5,197 | 34% | | Selling, general and administrative | $8,528 | $9,346 | $(818) | (9)% | | Depreciation and amortization | $3,000 | $3,384 | $(384) | (11)% | | Total operating expenses | $31,986 | $27,991 | $3,995 | 14% | | | | | | | | Expense Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | $ Change | % Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Research and development | $36,822 | $27,497 | $9,325 | 34% | | Selling, general and administrative | $18,000 | $18,090 | $(90) | —% | | Depreciation and amortization | $6,072 | $6,800 | $(728) | (11)% | | Total operating expenses | $60,894 | $52,387 | $8,507 | 16% | - R&D expenses increased primarily due to advancement of drug creation programs ($4.6 million for 3 months, $7.7 million for 6 months) and personnel costs[92][93] - SG&A expenses decreased for the three months due to lower stock-based compensation and administrative costs, and remained relatively flat for the six months[94][95] - Depreciation and amortization decreased due to disposals of lab equipment[96] Other income (expense) This section compares other income and expense items, including interest and net other income, explaining period-over-period changes | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | $ Change | % Change | | :---------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Interest expense | $(56) | $(150) | $94 | (63)% | | Other income, net | $1,011 | $2,121 | $(1,110) | (52)% | | Total other income, net | $955 | $1,971 | $(1,016) | (52)% | | | | | | | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | $ Change | % Change | | :---------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Interest expense | $(135) | $(326) | $191 | (59)% | | Other income, net | $2,469 | $3,832 | $(1,363) | (36)% | | Total other income, net | $2,334 | $3,506 | $(1,172) | (33)% | - The decrease in other income, net, was primarily due to fluctuations in foreign currency transactions[98][99] - Interest expense decreased due to reduced finance lease and long-term debt obligations[97] Liquidity and Capital Resources This section discusses the company's financial liquidity, capital resources, and future funding requirements, including cash position and financing activities Overview This overview summarizes the company's cash position, accumulated deficit, and ongoing need for additional capital to fund operations - As of June 30, 2025, cash, cash equivalents, and short-term investments totaled $117.5 million[100] - Subsequent to June 30, 2025, the company raised an additional $60.6 million in net proceeds from common stock sales[100] - The company has an accumulated deficit of $566.5 million as of June 30, 2025, and expects to continue incurring significant expenses[101] - Future capital requirements depend on internally developed programs, partnerships, and technology advancements, potentially requiring additional equity or debt financing[102] Sources of liquidity This section details the primary sources of the company's liquidity, including equity issuances, debt, and revenue from drug creation agreements - Operations are primarily financed by equity issuances, debt, and revenue from drug creation agreements[103] - As of June 30, 2025, the outstanding balance on equipment financing agreements was $2.1 million[104](index=104