Absci Stock Jumps in Market Debut | Protein Discovery Platform

Absci Corp. Enters Public Market Amidst Rising Interest in Innovative Drug Development

Absci Corp., a Vancouver-based company pioneering a comprehensive drug development platform, launched its initial public offering on Thursday. This event signifies the escalating enthusiasm surrounding novel approaches to pharmaceutical creation – a field historically characterized by substantial risk.

Accelerating Preclinical Drug Development

Absci’s core focus lies in accelerating the drug development process during the preclinical phases. The company has both developed and acquired a suite of tools designed to forecast promising drug candidates, pinpoint potential therapeutic targets, and rigorously test therapeutic proteins across billions of cells. This allows for the identification of the most viable options for further investigation.

“We are delivering a completely integrated, end-to-end solution for pharmaceutical drug development,” explains Absci founder Sean McClain to TechCrunch. “Consider this as a search index, akin to Google’s, specifically tailored for protein drug discovery and biomanufacturing.”

IPO Details and Stock Performance

The initial IPO price was set at $16 per share, establishing a pre-money valuation of approximately $1.5 billion, as detailed in the S-1 filings. The company offered 12.5 million shares of common stock, aiming to generate $200 million in capital. However, as of the time of writing, Absci’s stock value has already increased significantly to $21 per share. Shares are currently being traded under the ticker symbol “ABSI.”

Strategic Rationale for Going Public

McClain states that the decision to become a publicly traded company was made to enhance the organization’s capacity to attract and retain top-tier talent. “As we continue to experience rapid growth and expansion, access to exceptional talent is crucial, and the IPO provides us with increased visibility for talent acquisition and retention,” McClain emphasizes.

Company History and Evolution

Founded in 2011, Absci initially concentrated on protein manufacturing utilizing E. coli. By 2018, the company had introduced its first commercial product, SoluPro – a bioengineered E. coli system capable of constructing complex proteins. In 2019, the company expanded this process through the implementation of a “protein printing” platform.

Since its inception, Absci has expanded its workforce to 170 employees and secured $230 million in funding. The most recent funding round, a $125 million crossover financing, was finalized in June 2020 and was led by Casdin Capital and Redmile Group. This year, two key acquisitions have broadened Absci’s capabilities, extending from protein manufacturing and testing to AI-driven drug development.

Strategic Acquisitions Enhance Capabilities

In January 2021, Absci acquired Denovium, a company specializing in deep learning AI for protein categorization and behavior prediction. Denovium’s “engine” had been trained on a dataset exceeding 100 million proteins. Subsequently, in June, the company also acquired Totient, a biotechnology firm focused on analyzing the immune system’s response to various diseases. At the time of acquisition, Totient had already reconstructed 4,500 antibodies derived from immune system data collected from 50,000 patients.

While Absci already possessed protein manufacturing, evaluation, and screening capabilities, the Totient acquisition enabled the identification of potential targets for novel drugs. The Denovium acquisition integrated an AI-powered engine to facilitate protein discovery.

“We are now integrating our proprietary data into deep learning models, which is why we acquired Denovium. Before Totient, we were focused on drug discovery and cell line development. This acquisition allows us to become fully integrated, enabling us to perform target discovery as well,” McClain explains.

A Competitive Landscape

These acquisitions position Absci within a particularly dynamic segment of the drug development industry.

There has been considerable financial interest in developing new drug development approaches, even after decades of modest returns on pharmaceutical R&D investment. Evaluate reported that new drug developers secured approximately $9 billion in IPO funding on Western exchanges during the first half of 2021. This occurs despite the inherent high-risk nature of drug development. Biopharmaceutical R&D returns reached a record low of 1.6% in 2019, and have only partially recovered to around 2.5%, as highlighted in a 2021 Deloitte report.

Within drug development, artificial intelligence is playing an increasingly significant role. The same Deloitte report indicates that “the majority of biopharma companies are attempting to integrate AI into drug discovery and development processes.” Furthermore, drug discovery projects received the largest share of AI investment dollars in 2020, according to Stanford University’s Artificial Intelligence Index annual report.

Recent progress in applying AI to drug development has been demonstrated by companies successfully advancing candidates through preclinical stages.

In June, Insilico Medicine, a Hong Kong-based startup, announced that it had guided an AI-identified drug candidate for idiopathic pulmonary fibrosis through preclinical testing, a milestone that facilitated a $255 million Series C funding round. Founder Alexander Zharaonkov informed TechCrunch that clinical trials for the drug are anticipated to commence later this year or early next year.

Business Model and Future Outlook

With expertise in both AI and protein manufacturing, Absci has established itself in a competitive, yet promising, space. However, the company must still refine its business model moving forward.

Absci is adopting a partnership-based business model with pharmaceutical manufacturers. This means the company does not intend to independently conduct clinical trials. Instead, it anticipates generating revenue through “milestone payments” – contingent upon achieving specific stages of drug development – or, upon drug approval, through royalties on sales.

This approach offers certain advantages, according to McClain. The company can mitigate the risk of drug candidates failing after substantial R&D investment and can simultaneously invest in the development of “hundreds” of drug candidates.

Currently, Absci has nine “active programs” underway with drug manufacturers. Its cell line manufacturing platforms are being utilized in drug testing programs at eight biopharmaceutical companies, including Merck, Astellas, and Alpha Cancer Technologies (with the remaining partners remaining undisclosed). Five of these projects are in the preclinical phase, one is in Phase 1 clinical trials, one is in a Phase 3 clinical trial, and the last is focused on animal health, as stated in the company’s S-1 filing.

Astellas is currently leveraging Absci’s discovery platforms. However, McClain notes that Absci has only recently launched its drug discovery capabilities this year.

Notably, none of these partners have yet formally licensed Absci’s platforms for clinical or commercial use. McClain clarifies that the nine active programs include milestone and royalty “potential.”

Financial Performance and Future Investments

Absci has some progress to make regarding profitability. The company has generated approximately $4.8 million in total revenue so far this year, an increase from $2.1 million in 2019. However, costs have remained high, and S-1 filings indicate net losses in the past two years. The company reported net losses of $6.6 million in 2019 and $14.4 million in 2020.

These losses are attributed to expenditures related to research and development, intellectual property portfolio development, personnel hiring, capital raising, and support for these activities, according to the company’s S-1 filing.

Absci has recently completed construction of a 77,000-square-foot facility, McClain notes. Consequently, the company anticipates the potential to scale its operations in the future.

In the near term, the company intends to utilize the funds raised from the IPO to expand the number of programs utilizing Absci’s technology, invest in R&D, and continue refining its new AI-based products.