Exscientia tees up an IPO for its AI drug discovery platform, likely not willing to settle for just $100M
The biotech IPO market awoke from its summer hibernation on Friday morning with a small ADHD drug developer seeking a modest raise, but late Friday night saw another company file its SEC paperwork, one that will likely shoot for the stars.
Exscientia, the UK-based AI outfit with bold claims about its platform, submitted its F-1 on Friday, penciling in an initial $100 million raise estimate. That figure will almost certainly end up much higher, as Exscientia has spent most of 2021 racking up huge fundraising sums thanks to a Series C extension headed by BlackRock, and an up to $525 million Series D that included a $300 million equity investment from SoftBank.
AI biotechs have proven largely successful at drumming up hype around their technology, and Exscientia is no different. Promising to cut down on the lengthy process that is drug development by months, if not years, Exscientia will seek to join one of its main competitors in Recursion on Nasdaq.
Both companies claimed to be the first to put an AI-developed drug into the clinic. Recursion did so in July 2019, even though CEO Chris Gibson readily conceded the program originally came out of Dean Li’s lab at Merck.
Exscientia followed up with its announcement in January 2020, though its candidate — developed in partnership with Sumitomo Dainippon — emerged after the pair synthesized 350 compounds and tested them in a lab before deciding on one to move forward. Whether either program truly came from AI is largely beside the point, however, as both biotechs continue to enlist major partners and significant investment.
In particular, Exscientia expanded a Celgene-era deal with Bristol Myers Squibb in May, one that could see more than $1.2 billion paid out when all is said and done. The biotech followed that up with a small acquisition for the molecule-screening biotech Allcyte in June, and less than two weeks later joined forces with EQRx.
Following its own massive fundraising rounds, Recursion went public in April to the tune of a $436.4 million raise, a figure that could prove a useful barometer for Exscientia’s Nasdaq ambitions. There’s also the machine learning biotech insitro, which hasn’t announced plans to go public just yet but raked in $400 million in a Series C this past March.
Though it helped Sumitomo advance two additional programs into Phase I, one of which brought about Exscientia’s “first AI” claims, the biotech has just one in-house candidate in human studies: an A2a receptor antagonist co-developed with Evotec. This candidate entered the clinic in April, and Exscientia plans to funnel a good chunk of its IPO raise toward the program.
The biotech hasn’t specified how it plans to divvy up its new cash, only listing the “development” of its platform and the in-house compound as the main beneficiaries. There will also be $70 million set aside for Exscientia’s Gates Foundation-partnered pandemic preparedness program.
As the calendar approaches the fourth quarter, the biotech IPO market remains on pace to eclipse last year’s record raise of $16.5 billion. Through nearly nine months, the sector has combined to raise nearly $13 billion per the Endpoints News tally, and two more biotechs in DiCE Therapeutics and Tyra Biosciences are expected to land nine-figure raises later this week.
Passing 2020’s figure may ultimately require an end-of-year boost, given the slowdown of pricings over the summer. If Exscientia comes anywhere close to Recursion’s total, the industry may be well on its way to another phenomenal IPO year.