The artificial intelligence technology of Exscientia has yielded drug candidates for large companies such as Bristol Myers Squibb and Sanofi. But the company also wants to develop its own drugs, including new antivirals for the next potential pandemic. Exscientia’s stock market debut raised $464 million to support those efforts.
The cash comes from a pair of deals. Exscientia went public on Friday, raising $138.5 million. The Oxford, U.K.-based company offered more than 13.8 million American depositary shares priced at $22 apiece, which was the top end of the projected price range. Concurrent with the stock sale, Exscientia sold more than 7.2 million shares to Softbank, which was an earlier investor, and the Bill & Melinda Gates Foundation. That private placement of shares at the IPO price raised an additional $160 million. Shares of Exscientia now trade on the Nasdaq under the stock symbol “EXAI.”
Exscientia’s technology is intended to speed up the discovery and development of new drugs while reducing the cost of the entire process. In its prospectus, the company described AI as being the heart of its approach, employed for generating targets for drug candidates, precisely designing the molecules that will address these targets, and running the experiments to test them. The company also uses AI for single cell analysis of tissue from individual patients, a precision medicine tack that enables the company to learn from patient data throughout the entire drug discovery and development cycle.
In the IPO filing, Exscientia said its philosophy is that every molecule should be designed by an algorithm. The company said it unlocks “the creativity of AI” to design and select the compounds that become its drug candidates. Exscientia’s tree sculpture logo (pictured above) is based on a sketch from the notebook of Charles Darwin in which he first proposed a theory of evolution and natural selection.
“Developing AI to be creative follows similar evolutionary principles in order to generate new ideas and select the fittest molecule,” the company said in the filing.
So far, Exscientia’s technology has produced seven drug candidates, three of them in Phase 1 testing. The most advanced internally developed candidate, EXS21546, is an immuno-oncology drug. Clinical testing began last December; preliminary data are expected by the end of 2022. Exscientia holds the majority of the rights to this compound, which is being developed under a partnership with Evotec. Two other Exscientia-discovered drug candidates are in Phase 1 under Sumitomo Dainippon Pharma, which holds the rights to these compounds.
Exscientia has four additional drug candidates in line for potential investigational new drug applications. The company said in its prospectus that it expects at least one of them will reach human testing by the end of next year. The company added that each of the seven drug candidates that came from its technology were generated in an average of one year from the first novel designs.
Exscientia was founded in 2012 by CEO Andew Hopkins, a 10-year Pfizer veteran. Prior to the initial stock offering, Exscientia had raised about $367 million, the company said in its filing. In addition to those equity investments, the company has received about $74 million in payments from its collaboration partners, which include Bristol Myers Squibb (BMS), Sanofi, Sumitomo Dainippon Pharma, EQRx, and the Gates Foundation.
The BMS partnership began with Celgene, which the pharma giant acquired last year. The alliance currently spans seven projects in oncology, autoimmunity, immunology, and inflammation. In August, BMS exercised its option to license the rights to an immune-modulating drug candidate, triggering a $20 million milestone payment, according to the prospectus. Depending on the progress of that program and others covered under the BMS agreements, Exscientia could earn more than $1.3 billion in payments, plus royalties from sales of drugs that reach the market.
Exscientia’s pandemic research is part of a Gates Foundation partnership on antivirals, with an initial focus on developing new broad-spectrum coronavirus drugs. The goal of the four-year agreement is to produce five small-molecule candidates, including one for SARS-CoV-2. Other virus targets include influenza and Nipah virus. As part of the partnership, the Gates Foundation is taking a $35 million equity stake in Exscientia; that investment occurred through the private placement. The research agreement calls for Exscientia to match the Gates Foundation’s investment by contributing $35 million to the alliance over the course of the four-year pact. The company will hold all commercial rights for any drugs produced by the partnership.
Following the IPO and private placement, Softbank becomes Exscientia’s largest shareholder with a 16.3% stake, according to the prospectus. Hopkins is next, owning 15.8% of the company; Evotec owns 11.9%.
Exscientia said it plans to spend between $50 million and $75 million to further develop its technology platform. Another $25 million to $50 million is planned for research and development of the company’s EXS21546 through the ongoing Phase 1 clinical trial and proof-of-concept studies. About $70 million is earmarked for the pandemic preparedness program.
Image from Exscientia IPO prospectus