Frontier IP soars amid $525m Exscientia investment

Frontier IP CEO Neil Crabb

Shares of Edinburgh-based Frontier IP, a specialist in commercialising university intellectual property, rose about 9% on Wednesday after it published an update on its trading for the year ending June 30, 2021, saying “the group anticipates that the outcome for the year … will be materially ahead of management expectations.”

Frontier IP, which also has offices in Cambridge and London, said its portfolio company, AI-driven drug discovery firm Exscientia, has announced an investment of up to $525 million led by SoftBank Vision Fund 2.

It said Exscientia closed a Series D funding round of $225 million and “can access a further $300 million from SoftBank at its discretion.”

Exscientia was originally a spinout company from the University of Dundee and now has offices in Dundee, Oxford, Miami and Osaka.

As outlined in the group’s interim results statement released on 24 March 2021, the group enjoyed a strong first half to the financial year with the group’s portfolio continuing to show strong commercial and technical progress,” said Frontier IP.

“A growing number of the group’s portfolio companies are approaching inflection points, reflected by the increased flow of equity fundraisings across the portfolio.

“As outlined in the interim results statement, this progress has continued in the second half of the group’s financial year with further fundraising and commercialisation activity across the portfolio.

In addition, Frontier IP announced earlier today that Exscientia, a clinical stage pharmatech company using artificial intelligence to design patient-based drugs, has raised US$225 million through a Series D funding round led by SoftBank Vision Fund 2.

“This is expected to result in an uplift in Frontier IP’s book value for its holding which will be reflected in the group’s results to 30 June 2021.

As a result of overall trading across the portfolio in the year to date, the group anticipates that the outcome for the year ending 30 June 2021 will be materially ahead of management expectations with a significant contribution to the outcome being the increase in the book value of the group’s interest in Exscientia.”

Frontier IP CEO Neil Crabb said: “We are delighted with the news released by Exscientia as well as the progress across the portfolio during the financial year to date.

“Whilst it is not possible for the board to be certain on what the overall portfolio valuation will be at 30 June 2021,we expect it to be positively impacted by the material progress made at a number of companies, including Exscientia, Camgraphic and The Vaccine Group.

“As a result, we anticipate that the outcome for the year will be materially ahead of management expectations and we look forward to the remainder of the financial year and beyond with optimism.”

On the Exscientia investment, Frontier IP added: “SoftBank Vision Fund 2 led the Series D and was joined by previous round lead investors, Novo Holdings and funds managed by Blackrock.

“Other investors included Mubadala Investment Company, Farallon Capital, Casdin Capital, GT Healthcare Capital, Marshall Wace, Pivotal bioVenture Partners, Laurion Capital, Hongkou and Bristol-Myers Squibb …

“Exscientia uses AI across its platform from target identification through drug design and patient selection in order to precision engineer new medicines.

“The company has advanced the first two fully AI-designed drugs into clinical trials and now has over 20 active programs in its pipeline.

“Funding from the Series D round will be used to advance Exscientia’s proprietary pipeline through clinical testing as well as to continue expanding the technology platform toward autonomous drug design.”

Eric Chen, Managing Partner of SoftBank Investment Advisers, said: “We believe Exscientia’s innovative use of AI to discover and design better quality drugs with greater efficiency has the potential to create important medicines faster than ever before.

“With the convergence of technology and biology, drug discovery is rapidly evolving in ways that will reshape the industry.

“The Exscientia team have been leaders in AI-based drug discovery since the field’s inception and we believe they will continue shaping its future.”

Exscientia CEO Andrew Hopkins said: “All of our investors share Exscientia’s vision to discover better drugs, faster, through AI and automation.

“Our patient-first AI platform has repeatedly demonstrated its ability to precision design drugs that address patients’ needs.

“With the Series D completed, the quality and depth of our shareholder base allows us the freedom to continue to scale both our platform and pipeline.”