Merck And Absci: AI-Driven Drug Development Deal Has Promise, But May Take Years To Pay Out


  • Absci, a Vancouver-based drug discovery company that IPOd in July last year, has seen its market cap fall from >$2bn, to $665m at the time of writing.
  • This isn’t unusual for a drug discoverer/developer – Abcellera, also based in Vancouver, has seen its stock fall >80% while even Ginkgo Bioworks stock is -30% since IPO.
  • Absci has recently announced a partnership with Merck for up to three candidates which could be worth up to $640m, if all milestones are met.
  • That’s not necessarily likely but it does serve as validation of the young company’s technology and approach. Merck is revamping its R&D and Absci could make itself an indispensable part of that.
  • The deal will not do much for Merck in the short term, but it may help push Absci’s valuation higher – shares were 44%-plus on the news. Investing with a five-year investment horizon may offer a good ROI.

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Investment Thesis – Market Has Depressed AI Drug Discovery Firms’ Valuations

Absci (NASDAQ:ABSI) is a biotech focused on early stage drug development that IPO’d in July last year, raising ~$230m via the issuance of 12.5m

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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