Frontier IP PLC’s (LON:FIPP) aim is to act as the commercial cocoon around the growing amount of intellectual property being spun out of universities.
So far, its portfolio includes spinouts from six of the UK’s uni’s including Cambridge, Plymouth and Dundee.
It trades its commercial expertise for stakes in the spin outs and has a core portfolio of six firms.
They include PulsiV Solar (20%), out of Plymouth University, which has come up with a technology that improves the energy generation of photovoltaic panels.
There’s Nandi Proteins (21%), which could revolutionise food production with ingredients developed at Heriot Watt.
In the traditional model, the intellectual property company would make a direct financial investment that gives a fairly accurate valuation of its stake in the business.
Frontier is a little different. Because it has bartered its own services for a share of the company it is included on the balance sheet at a nominal value - sometimes just tens of thousands of pounds.
The uplift comes when the investee company receives funding that precipitates a revaluation and it is Exscientia (5%) where the next uplift may well come from.
In the space of two months, the company has tied down collaboration deals with two of the world’s largest pharma companies for its artificial intelligence-based drug research.
Exscientia and French ginat Sanofi will focus on metabolic diseases such as diabetes and use the AI technology to identify molecules that can be compatible with two distinct drug targets (bispecific).
The collaboration will start with a thousand disease-relevant target combinations that Exscientia will sift using its AI design expertise to identify bispecific-small-molecule compounds that may develop into full products for Sanofi.
Exscientia will be responsible for all compound design, while chemistry synthesis will be delivered by Sanofi.
Payment will be through research funding, milestones covering both non-clinical and clinical and recurrent sales milestones if any product makes it to market.
The total amount potentially payable by Sanofi to Exscientia on achieving these milestones is €250mln.
Early in July, the company also landed a smaller but similar deal with Glaxo.
This will see Exscientia use its artificial intelligence enhanced platform to identify pre-clinical drug candidates for up to 10 disease-related targets nominated by GSK across multiple therapeutic areas.
If all ten targets produce positive results, Exscientia can receive a total of £33mln in milestone and stage payments.
Andrew Hopkins, Exscientia’s chief executive, said: "Applying our approach to client discovery projects has already delivered candidate-quality molecules in roughly one-quarter of the time, and at one-quarter of the cost of traditional approaches.”
Frontie,r meanwhile, is looking at building up its own expertise by going further afield.
A first deal in Portugal was struck recently with Universidade NOVA de Lisboa’s Faculty of Science and Technology.
“There is a similar dynamic to the UK,” said the Frontier chief executive Neil Crabb.
“There are strong pressures on universities to diversify their income streams and to show more impact. But there is a lack of local equivalents to us to helps support them.”
The share price
The shares trade at 40.5p, valuing the business at £14.6mln up slightly on the start of the year.
Net assets per share were just shy of 26p at December.