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VSA Capital Market Movers - Frontier IP Group plc

Published: 12:18 01 Nov 2021 GMT

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Frontier IP Group PLC (AIM:FIPP): Full Year Results

Creating Value for Growth Technology Companies

Frontier IP Group (“Frontier IP”) provides commercialisation services in return for equity in private technology companies across four high growth technology clusters comprising: artificial intelligence, robotics and big and sparse data; pathogens and cell imaging; food and agritech; and engineered particles and materials. Frontier IP’s early access to companies with leading-edge IP and the structural growth in the target clusters offers potential for strong upside. The year ending June 2021 saw the Frontier IP’s portfolio value increase by 64% to £32.0m (vs. a 47% increase to £19.4m in FY 2020).

Access to Leading Edge University IP

The Group has worked with universities including Cambridge, Heriot Watt Manchester, Plymouth and NOVA University Lisbon. Frontier IP’s relationships help to secure early access to leading edge IP, such as AI in a drug discovery that has led to a 1.7% equity holding in UK-based Exscientia (NASDAQ EXAI). Its AI is now deployed to help discover drugs for pharmaceutical majors including Bayer, Bristol-Myers Squibb, GlaxoSmithKline, Roche and Sanofi. In October 2021, Exscientia listed on Nasdaq, raising US$465m. Frontier IP’s stake in Exscientia has now grown to £29.3m in value - this growth materially contributing to Frontier IP’s overall portfolio uplift in FY 2021.

Strong Relationships with Industry Partners

Frontier IP works closely with universities, research institutes and academics to identify IP that can be commercialised. The Group then plays a main role in not only providing expertise and access to external funding but also commercialisation by taking a hands-on approach to commercial and technical development and by bringing in industry partners. This is key to increasing equity value.  For this, it secures equity stakes and fees. Industry partners include Bosch, which Frontier introduced to portfolio companies Fieldwork Robotics and Pulsiv Solar.

Recommendation

Exscientia clearly demonstrates the strength of the Frontier IP model. The portfolio also has a number of other companies at the point of acceleration in commercial development. This paves the way for a step up in valuation or a potential exit. We believe that Frontier IP represents an excellent opportunity for investors to gain exposure to early-stage technology companies, based on leading edge IP, which meets the needs and demands of international markets and despite having almost doubled since our initiation we continue to see potential for further gains.

We reiterate our Buy recommendation.

 

Phil Smith, Head of Technology | T: +44 (0)20 3617 5187 | E: psmith@vsacapital.com

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