Earnings Call - EXSCIENTIA PLC

Explicit Guidance:

• Reduced 2026 cash operating expense guidance from $390 million to $375 million.
• Forecasted 2027 cash operating expenses to decline further to under $360 million.
• Extended cash runway to 2029 following a $200 million oversubscribed financing completed in October and partnership cash inflows.
• Total partnership cash inflows reached $535 million (over $100 million in milestones in the last two years).
• Specific milestone payments secured: $144 million total from Sanofi ($10 million upfront triggering the option, plus up to $343 million potential per program plus double-digit royalties).

Business-Segment Outlook:

• REC-4881 (FAP): Targeting initiation of registrational Phase 3 studies in the second half of 2027, pending regulatory alignment. Primary focus on post-colectomy patients (approx. 37,000 in US/EU5) with potential to explore pre-colectomy. Addressable market estimated at $15 billion.
• REC-1245 (Oncology): Phase 1 dose escalation complete; 45 mg once daily selected for expansion cohorts. Expansion cohorts in endometrial cancer currently enrolling; preliminary data expected in second half of 2027. Exploring additional tumor types (HCC, ovarian, pediatric).
• Sanofi Partnership: First development candidate (oral INI inhibitor) expected to enter Phase 1 in 2027; potential for additional partner milestones in 2027.
• Roche/Genentech Partnership: Small molecule discovery underway for the first neuroscience target optioned; multiple additional programs expected to emerge from shared reusable biological maps.
• Productivity Gains: Molecule design targeting 80–90% fewer compounds synthesized relative to industry benchmarks; clinical trial enrollment rates 30–60% faster than industry benchmarks.

Market and Competitive Outlook:

• FAP Sector: Addresses a significant unmet need with zero approved drug therapies; demand driven by lifelong surveillance needs and high morbidity associated with repeated surgeries (e.g., Whipple procedures, duodenectomies).
• Oncology Sector: REC-1245 targets hard-to-treat tumors (endometrial, HCC) in heavily pretreated, late-line populations, including patients who have progressed on ADCs (e.g., TROP2).
• Platform Advantage: Competition in AI/drug discovery is viewed as high; differentiation relies on the "closed-loop" system of proprietary data generation, model building, and clinical validation, rather than data volume alone.
• Pipeline Strategy: Shifting focus to "high conviction" programs with clear regulatory pathways; accelerating fully funded assets (REC-4881, REC-1245) while maintaining capital discipline.

Macro / Industry Outlook:

• Capital Markets: Access to new pool of healthcare-dedicated investors driven by demonstrated pipeline repeatability and operational efficiency; balance sheet strength supports long-term execution.
• Regulatory Environment: Active ongoing discussions with the FDA regarding the design of the REC-4881 registrational study; targeting alignment to facilitate Phase 3 start.
• Disease Burden Trends: FAP patient diagnoses and management needs expected to increase over time due to population growth and improved genetic testing.
• AI in Biotech: Industry shift towards applications where proprietary, high-quality experimental data is critical, distinguishing AI-native firms from those relying solely on public historical data.

Strategic Initiatives:

• Board Leadership: Appointment of Fred Hassan as non-executive Chair to guide the company from clinical proof through commercialization.
• Capital Allocation: Concentration of capital on highest-value operations to lower OPEX while aggressively investing in core pipeline and AI engine.
• Partnership Expansion: Leveraging reusable biological maps to generate multiple programs from single data sets (e.g., Genentech neuroscience, Sanofi immunology).
• Operational Efficiency: Continued reduction in cash operating expenses while increasing spend per dollar on R&D outcomes.

Risks and Headwinds to Outlook:

• Clinical Outcomes: Phase 3 results for REC-4881 and expansion data for REC-1245 are required to confirm that polyp burden reduction translates to meaningful clinical endpoints (cancer prevention, surgical avoidance).
• Dosing Uncertainty: Chronic dosing strategies for REC-4881 (e.g., treatment holidays vs. continuous) remain undetermined pending Phase 3 data.
• Safety Profiles: REC-1245 showed dose-limiting toxicities at 65 mg; expansion relies on tolerability at 45 mg.
• Regulatory Path: Registrational study design and initiation timing for REC-4881 depend on FDA alignment.
• Execution Risk: Ability to maintain the "repeatability" of the AI engine across new targets and partners while scaling operations.

Management Tone on the Future:

• High Confidence: Management expresses strong conviction in the platform's "repeatability," citing the successful progression of multiple programs (Sanofi, Genentech, internal REC-4881/1245) as proof of the "one engine" capability.
• Data-Driven Discipline: Tone emphasizes "operational discipline" and "capital discipline," highlighting the lowering of OPEX guidance despite increased ambition.
• Strategic Pivot: Shift from pure R&D spending to value-driven investment, prioritizing programs with the clearest path to commercialization and milestone generation.
• Optimism on Repeatability: Explicit belief that the ability to consistently move from novel biology to differentiated molecules to clinical evidence distinguishes the company in a crowded AI-biotech landscape.

Miscellaneous:

• Patient Impact: Patient testimonials highlight the desire for oral medications to reduce the frequency of life-altering surgeries and invasive endoscopies.
• Geography: Immediate focus on US and EU5 markets for FAP; global expansion considerations for oncology.
• Internal Capability: Utilization of in-house supercomputer to control compute expenses while accelerating model iteration.
• Competitive Landscape: Recognition of competitors in ADCs (TROP2) and CDK12 inhibition, but positioning REC-1245's distinct RBM39 MOA as a complementary or synergistic option, particularly in ADC-resistant settings.