Absci's recent earnings call was filled with positive news: a successful capital raise, robust preclinical data for their lead program, and a seemingly unstoppable pipeline of new partnerships. But tucked away in the Q&A lies a detail that could have massive implications, one that appears to have slipped under the radar of most analysts.

The company revealed that they are currently using WuXi Biologics, a leading Chinese contract research organization (CRO), for their ABS-101 IND-enabling studies. While seemingly innocuous, this choice carries significant weight in the current geopolitical climate, where bipartisan discussions about biosecurity are raising concerns about US reliance on Chinese CROs.

Why is this significant?

Because Absci also stated that they are actively engaging with other CROs and have backup strategies in place to mitigate potential risks associated with new legislation regarding collaborations with Chinese companies. This implies a few key things:

This combination of awareness, proactivity, and confidence suggests a compelling scenario. Absci is not merely responding to political pressure; they are strategically positioning themselves for a potential game-changer.

Imagine this: biosecurity legislation passes, limiting US companies’ access to Chinese CROs. Many biotech companies find themselves scrambling to find new partners, delaying crucial studies and potentially jeopardizing their programs.

Absci, however, calmly announces that they have already secured alternative partnerships with non-Chinese CROs, seamlessly transitioning their IND-enabling studies without missing a beat. Suddenly, their proactive approach transforms from a defensive maneuver into a competitive advantage.

This scenario is not just speculation; it aligns perfectly with Absci's core philosophy. Their entire platform is built on doing more with less, on revolutionizing the economics of biotech. They've already demonstrated this with ABS-101, developing the drug candidate in just 14 months for less than $5 million – a fraction of the typical industry cost.

Their choice to use WuXi Biologics likely reflects the same cost-effective mindset, leveraging the competitive pricing of Chinese CROs to further reduce expenses. But their foresight in securing backup plans demonstrates a calculated risk, a willingness to adapt and capitalize on potential disruptions in the market.

Potential Payoff

The potential payoff for Absci is enormous. A successful transition to non-Chinese CROs in the face of regulatory changes would solidify their position as a leader in AI-driven drug discovery, highlighting their ability to navigate complex challenges and deliver on their promises, even in a volatile environment.

Beyond the immediate impact on their internal programs, such a move could significantly bolster their partnership pipeline. Pharma companies, witnessing Absci's agility and resilience, would be further incentivized to leverage their platform, knowing that their programs are in safe hands, insulated from geopolitical uncertainties.

Hypothetical Scenarios and Numerical Estimations

Let's quantify the potential impact of this scenario. Assuming Absci secures four new partnerships in 2024, each with a conservative risk-adjusted program value of $10 million, that's a potential $40 million in additional value. If even one of those partnerships stems directly from their demonstrated ability to navigate potential biosecurity restrictions, it would represent a significant return on their proactive CRO diversification strategy.

Furthermore, a successful transition to non-Chinese CROs could attract the attention of larger pharma companies seeking to de-risk their own programs from geopolitical uncertainties. If Absci secures even a single multi-program partnership with a company like Merck or AstraZeneca, the potential value could easily exceed $100 million.

These are, of course, hypothetical scenarios. But they highlight the substantial upside potential tied to this seemingly minor detail in Absci's earnings call. The company's foresight in securing backup CRO partnerships might be the key to unlocking a wave of new partnerships and catapulting their growth to new heights.

"Fun Fact: Absci's founder, Sean McClain, started the company in his basement at the age of 20. This highlights the entrepreneurial spirit and innovative drive at the heart of this rapidly growing biotech company."