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British A.I. drug discovery startup Exscientia buys Austrian cancer cell screening company

June 15, 2021, 8:00 AM UTC

Exscientia, a U.K. biotech startup that earned accolades as the world’s first company to take a drug designed by artificial intelligence through to human clinical trials, is buying Allcyte, a young Austrian company that uses an A.I.-based screening technique to match patients with effective cancer treatments.

Andrew Hopkins, Exscientia’s founder and chief executive officer, said that his company is buying Allcyte because of the data its technology can provide about whether drug candidates are likely to be successful prior to human clinical trials.

Exscientia, based in Oxford, England, is paying 50 million euros ($60.6 million) in a combination of cash and shares for the Vienna-based Allcyte, according to a company press release. The exact split between cash and stock was not disclosed.

Allcyte’s method, which is called pharmacoscopy, involves taking live tumor samples from patients and then using high-speed, robotic laboratory equipment to test a wide array of different drugs against those tumor samples. The company uses computer vision, a type of A.I. that can analyze images, to assess how the patient’s cells are responding to each potential therapy. This data allows the three-year-old startup to help select the treatment that is most likely to be effective for that particular patient’s cancer.

The two companies previously collaborated on a study, presented at this year’s conference of the American Association for Cancer Research, in which Allcyte’s technology was used to assess the effects of an anti-cancer immunotherapy drug Exscientia is developing in collaboration with German pharmaceutical company Evotec. That drug entered human clinical trials in April, becoming the second of Exscientia’s A.I.-designed therapies to reach that stage of development.

While there are dozens of companies around the world applying machine learning techniques to drug discovery, in January 2020, Exscientia made history by becoming the first company to get one of its A.I.-designed therapies into early stage human clinical trials. The drug is a treatment for obsessive compulsive disorder that Exscientia is developing with Japan’s Sumitomo Dainippon Pharma. Those trials are ongoing. In May, a third Exscientia-designed drug, a treatment for psychosis caused by Alzheimer’s disease entered human trials. That drug is also being developed with Sumitomo Dainippon Pharma.

All of these drugs were developed in record time, taking just 12 months to go from initial A.I.-generated lead to the start of human testing, Hopkins said.

He said that Exscientia would ultimately like to be able to take its drug candidates from initial idea all the way through to market. The more of this process Exscientia can control itself, without having to rely on a large pharmaceutical company as a partner, the more money it can potentially command for the therapies it develops.

Portrait of Exscientia CEO Andrew Hopkins
Exscientia CEO Andrew Hopkins
Courtesy of Exscientia

Allcyte’s technology will help Exscientia to reduce the risk that the drugs it is developing will fail in human clinical trials by enabling the company to essentially preview how the drug is likely to perform with different patient groups.

“We are bringing real patient data into preclinical R&D,” Nikolaus Krall, the cofounder and CEO of Allcyte, said.

Some studies have indicated that 90% of drugs being developed through traditional methods fail in clinical trials. The failure rate contributes to the high costs—estimates range between about $1 billion and $2.3 billion per drug—as well as the decade-long time frame that it now takes to bring a new drug to market using conventional methods.

The data from Allcyte’s screening processes will also give Exscientia insights into the biology of patients who respond to particular treatments, helping to guide its A.I. algorithms toward promising new drugs, Hopkins told Fortune.

“We want to revolutionize the whole process of discovering new molecules,” he says. “We want to move away from the artisanal approach that currently dominates to an A.I.-centric approach.”

Its acquisition of Allcyte comes less than a month after Exscientia announced a major partnership with Bristol Myers Squibb to help the pharmaceutical giant discover new drugs. BMS paid Exscientia $50 million upfront, with $120 million more tied to Exscientia achieving certain milestones. Further potential payments could eventually total as much as $1.2 billion, the companies said in May.

The deal also comes shortly after Exscientia announced it had received $225 million in additional venture capital funding from investors that include, among others, SoftBank’s Vision Fund 2, funds managed by BlackRock, and Mubadala Investment Co., Abu Dhabi’s sovereign wealth fund. SoftBank said it was making another $300 million in funding available to Exscientia that the company could draw down as needed.

Allcyte itself only recently raised new venture capital funding. In March, the company said it had received $6 million from a group of early stage investors that included London-based Air Street Capital, 42Cap and Amino Collective from Germany, VP Venture Partners from Switzerland, and Push Ventures from Austria.

The Allcyte team, which currently consists of about 30 employees in Vienna, will continue to operate from that city, Krall said, with Exscientia helping to build out its lab there as part of a new European Union–focused operation. Exscientia employs more than 200 people, most of them in Oxford, although it has offices in the U.S. and Japan as well.

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