absi-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission file number 001-40646

ABSCI CORPORATION

(Exact name of registrant as specified in its charter)


Delaware						85-3383487
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

18105 SE Mill Plain Blvd Vancouver, WA						98683
(Address of Principal Executive Offices)						(Zip Code)

(360) 949-1041

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock. $0.0001 par value

ABSI

The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had outstanding 92,710,954 shares of $0.0001 par value common stock as of July 31, 2023.

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		Page No.
Part I Financial Information (Unaudited)		6
Item 1.	Unaudited Condensed Consolidated Financial Statements	6
	Unaudited Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	6
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2023 and 2022	7
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022	8
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	10
	Notes to Unaudited Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	32
Item 4.	Controls and Procedures	32

Part II Other Information		32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	33
Signatures		35

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that may relate to our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs and other information that is not historical information. Many of these statements appear, in particular, under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Risk Factors”. Forward-looking statements can often be identified by the use of terminology such as “may,” “might,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking. In particular, these forward-looking statements include, but are not limited to:

•our expectations regarding our further development of, successful application of, and the rate and degree of market acceptance of, our Integrated Drug Creation platform, including progress towards fully in silico biologic drug discovery;

•our expectations regarding our ability to leverage our Integrated Drug Creation platform to shorten preclinical development of biologics;

•our expectations regarding the markets for our services and technologies, including the growth rate of the biologics market;

•our ability to attract new partners and enter into technology development agreements that contain milestone and royalty obligations in favor of us;

•our potential to receive revenue from the achievement of milestones and from royalties on net sales under agreements with our partners with respect to products originating from our Integrated Drug Creation platform;

•our ability to enter into license agreements for our existing Active Programs with those partners who do not have current milestone payment and royalty obligations to us;

•our ability to manage and grow our business by expanding our relationships with existing partners or introducing our Integrated Drug Creation platform to new partners and developing lead drug candidates for our internal drug discovery efforts;

•our expectations regarding our current and future partners’ continued development of, and ability to commercialize, biologic drugs generated utilizing our platform;

•our estimates of our expenses, ongoing losses, future revenue, capital requirements and our need for or ability to obtain additional funding before we can expect to generate additional revenue;

•our estimates of the sufficiency of our cash and cash equivalents and short-term investments;

•our calculations and estimates related to the valuation of our intangible assets;

•our ability to establish, maintain or expand collaborations, partnerships or strategic relationships;

•our ability to provide our partners with a full biologic drug discovery and cell line development solution from target to Investigational New Drug application (IND)-ready, including non-standard amino acid incorporation capabilities;

•our ability to obtain, maintain and enforce intellectual property protection for our platform, products and technologies, the duration of such protection and our ability to operate our business without infringing on the intellectual property rights of others;

•our ability to attract, hire and retain key personnel and to manage our growth effectively;

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•our expectations regarding use of our cash and cash equivalents and short-term investments, including the proceeds from our initial public offering;

•our financial performance and that of companies in our industry and the financial markets generally;

•the volatility of the trading price of our common stock;

•our competitive position and the development of and projections relating to our competitors or our industry;

•the impact of laws and regulations;

•our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (JOBS Act); and

•global economic conditions, including market volatility, acts of war and civil and political unrest, and our expectations about market trends and effects from inflation.

We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements we make. Moreover, we operate in a competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures, or investments we may make or enter into.

You should read this Quarterly Report and the documents that we file with the Securities and Exchange Commission, or the SEC, with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report are made as of the date of this Quarterly Report, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

Except as otherwise indicated, references in this Quarterly Report on Form 10-Q to “Absci,” the “Company,” “we,” “us,” and “our” refer to Absci Corporation and its subsidiaries.

Trademarks

This Quarterly Report on Form 10-Q contains references to our trademarks and service marks and to those belonging to third parties. Absci®, SoluPro® and SoluPure® are our registered trademarks with the U.S. Patent and Trademark Office. We also use various other trademarks, service marks and trade names in our business, including the Absci’s stylized A logo, HiPrBind, Bionic proteins, Translating Ideas into Drugs, Bionic SoluPro, Integrated Drug Creation, Unlimit with us, Creating drugs at the speed of Ai, Better biologics for patients, faster, Breakthrough therapeutics at the click of a button, for everyone, Denovium, and Denovium Engine. All other trademarks, service marks or trade names referred to in this Quarterly Report on Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Quarterly Report on Form 10-Q may be referred to with or without the ® and ™ symbols, but references which omit the ® and ™ symbols should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

Availability of Other Information about Absci

Investors and others should note that we routinely communicate with investors and the public using our website (www.absci.com) and our investor relations website (investors.absci.com) free of charge, including without limitation, through the posting of investor presentations, SEC filings (including amendments and

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exhibits to such filings as soon as reasonably practicable after filed with or furnished to the SEC), press releases, public conference calls and webcasts on these websites, as well as on Twitter, LinkedIn and YouTube. The information that we post on these websites and social media outlets could be deemed to be material information. As a result, investors, the media, and others interested in Absci are encouraged to review this information on a regular basis. The contents of our website and social media postings, or any other website that may be accessed from our website or social media postings, shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

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Part I. Financial Information

Item 1. Financial Statements

ABSCI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS



	June 30,		December 31,
(In thousands, except for share and per share data)	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	61,048	$	59,955
Restricted cash	15,066		15,023
Short-term investments	63,539		104,476
Receivables under development arrangements, net	3,157		1,550
Prepaid expenses and other current assets	5,227		5,859
Total current assets	148,037		186,863
Operating lease right-of-use assets	4,886		5,319
Property and equipment, net	47,850		52,723
Intangibles, net	49,938		51,622
Goodwill	—		21,335
Restricted cash, long-term	1,902		1,864
Other long-term assets	1,540		1,282
TOTAL ASSETS	$	254,153	$	321,008
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,851	$	2,412
Accrued expenses	16,713		20,481
Long-term debt	3,145		2,946
Operating lease obligations	1,734		1,690
Financing lease obligations	1,541		2,296
Deferred revenue	500		445
Total current liabilities	25,484		30,270
Long-term debt - net of current portion	6,378		7,984
Operating lease obligations - net of current portion	6,423		7,317
Finance lease obligations - net of current portion	246		750
Deferred tax, net	223		238

Other long-term liabilities	—		35
TOTAL LIABILITIES	38,754		46,594
Commitments (See Note 8)
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value; 10,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022	—		—
Common stock, $0.0001 par value; 500,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 92,590,593 and 92,411,103 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	9		9
Additional paid-in capital	576,492		570,454
Accumulated deficit	(360,956)		(295,929)
Accumulated other comprehensive loss	(146)		(120)
TOTAL STOCKHOLDERS' EQUITY	215,399		274,414
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	254,153	$	321,008

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ABSCI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In thousands, except for share and per share data)	2023		2022		2023		2022
Revenues
Technology development revenue	$	3,367	$	636	$	4,636	$	1,090
Collaboration revenue	—		366		—		731
Total revenues	3,367		1,002		4,636		1,821
Operating expenses
Research and development	12,112		16,241		24,769		32,068
Selling, general and administrative	9,410		10,507		19,003		21,396
Depreciation and amortization	3,498		3,141		7,002		6,047
Goodwill impairment	21,335		—		21,335		—
Total operating expenses	46,355		29,889		72,109		59,511
Operating loss	(42,988)		(28,887)		(67,473)		(57,690)
Other income (expense)
Interest expense	(256)		(211)		(577)		(406)
Other income, net	1,583		148		3,041		273
Total other income (expense), net	1,327		(63)		2,464		(133)
Loss before income taxes	(41,661)		(28,950)		(65,009)		(57,823)
Income tax (expense) benefit	(11)		270		(18)		(351)
Net loss	$	(41,672)	$	(28,680)	$	(65,027)	$	(58,174)




Net loss per share: Basic and diluted	$	(0.45)	$	(0.32)	$	(0.71)	$	(0.64)

Weighted-average common shares outstanding: Basic and diluted	91,827,780		90,669,499		91,654,578		90,471,950

Comprehensive loss:
Net loss	$	(41,672)	$	(28,680)	$	(65,027)	$	(58,174)
Foreign currency translation adjustments	(42)		(40)		(56)		(50)
Unrealized (loss) gain on investments	(9)		2		30		2
Comprehensive loss	$	(41,723)	$	(28,718)	$	(65,053)	$	(58,222)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ABSCI CORPORATION

UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY



(In thousands, except for share and per share data)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss			Total Stockholders' Equity
						Shares			Amount
Balances - December 31, 2022			92,411,103	$	9		$	570,454	$	(295,929)	$	(120)	$	274,414
Issuance of shares under stock plans, net of shares withheld for tax payments			171,899	—			229		—		—		229
Stock-based compensation			—	—			2,652		—		—		2,652
Forfeiture of common stock			(101,030)	—			—		—		—		—
Foreign currency translation adjustments			—	—			—		—		(14)		(14)
Unrealized gain on investments			—	—			—		—		39		39

Net loss			—	—			—		(23,355)		—		(23,355)
Balances - March 31, 2023			92,481,972	$	9		$	573,335	$	(319,284)	$	(95)	$	253,965
Issuance of shares under stock plans, net of shares withheld for tax payments			108,621	—			116		—		—		116
Stock-based compensation			—	—			3,041		—		—		3,041

Foreign currency translation adjustments			—	—			—		—		(42)		(42)
Unrealized loss on investments			—	—			—		—		(9)		(9)

Net loss			—	—			—		(41,672)		—		(41,672)

Balances - June 30, 2023			92,590,593	$	9		$	576,492	$	(360,956)	$	(146)	$	215,399