Home Money How Benevolent AI helps drugmakers speed up development: SMALL CAP INVESTING

How Benevolent AI helps drugmakers speed up development: SMALL CAP INVESTING

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Benevolent AI received third-party validation for its approach and technology through partnerships with AstraZeneca and Merck

Fail fast, fail cheaply. It’s an oft-sung mantra in drug development, born from decades of experience.

Let’s explain what this means with the help of two key facts provided by the Wellcome Trust, the UK’s leading health research charity.

He estimates that it takes an average of 12 to 15 years and $2.5 billion to bring a drug to market. He also notes that the discovery process is “an increasingly expensive, risky and time-consuming proposition.”

What the phrase “fail fast” suggests is that it is better to take your medicine (pardon the pun) from the start when only a small amount has been invested in R&D, rather than fail objective of phase III, when tens of millions of dollars were spent.

Benevolent AI received third-party validation for its approach and technology through partnerships with AstraZeneca and Merck

Benevolent AI received third-party validation for its approach and technology through partnerships with AstraZeneca and Merck

It must be said from the outset that this idea of ​​detecting potential defects in a new treatment very early, before an active ingredient arrives in the clinic, requires something akin to a crystal ball.

Benevolent AI, which while not practiced in the art of clairvoyance, does something interesting to help mitigate the costs, risks, and time involved in drug discovery. It uses artificial intelligence to refine the process.

Benevolent has received third-party validation for its approach and technology through partnerships with AstraZeneca and Merck. The usefulness of its data and algorithms was proven during the pandemic when they identified an Eli Lilly arthritis drug as a treatment for acute Covid, which is now FDA approved.

And, in recent years, it has also developed a pipeline of internal discoveries that it develops before licensing them.

The foundation of this success is the Benevolent platform, which ingests over 85 different data sources relevant to drug discovery. These are integrated and cross-referenced to break down the “silos” that develop around disease types, disciplines or scientific methodologies.

In doing so, AI generates results that help predict drug targets, molecules to create drugs, and patient subtypes that may respond best to those drugs (rewritten in what I think could be simpler English).

It also offers what is called “in silico” experimentation, which takes place on a computer rather than in a laboratory, as well as an assessment of biomarkers and information that could allow a pharmaceutical company to reuse one of its products.

From there, Benevolent created three clear business streams. End-to-end drug discovery – that is, collaborating with Big Pharma; the preclinical and development pipeline mentioned above; and knowledge mining revenues from what is essentially a SaaS platform.

The first of these three (end-to-end discovery) was validated through its collaborations with AZ and Merck in research areas such as chronic kidney disease, heart failure, lupus, fibrosis, oncology, neurology and immunology.

These partnerships are wrapped in upfront fees, milestone payments, and royalties on any products brought to market. BenevolentAI has already generated tens of millions of dollars in revenue from AZ.

Meanwhile, the Merck partnership is potentially worth up to $594 million, with Benevolent having received a double-digit upfront payment of $1 million.

Its internal pipeline includes potential first-in-class drugs for ulcerative colitis and glioblastoma (a deep brain cancer), as well as a potential first-in-class treatment for ALS, the degenerative disease that killed Scottish rugby. awesome Doddie Weir.

Unwilling to back down from a challenge, she is also working on a ‘neuroprotectant’ that could one day help treat the 153,000 people with Parkinson’s in the UK, while her fibrosis research targets non-fatty liver disease. alcoholic.

Its accumulated data and learning also allowed Benevolent to create a potentially very sticky suite of exploration tools. BenAI-Q allows users to study, visualize and analyze data in real time using an extensive language and in-house technologies.

Its research assistant BenAI speeds up the tedious and time-consuming process of reading scientific literature, while also creating a platform that helps scientists develop a plan to bring a drug candidate to market.

A major milestone for the company occurred at the end of 2021 when British company Benevolent listed on Euronext following its transformation into the Odyssey acquisition, becoming Europe’s largest SPAC transaction.

More importantly, it received Odyssey’s €300 million war chest, as well as €135 million from existing backers such as Singapore government-backed Temasek, via private fundraising in public shares (Pipe). Other renowned healthcare investors have joined this financing, alongside AstraZeneca.

A simple look at the share price reveals that things haven’t been easy for the group – at least from a capital markets perspective. Management would likely argue that the investment received has been transformational.

Still, with a discounted valuation of just €100 million, it’s fair to say that IPO investors aren’t really seeing a return on their initial investment.

To a large extent, the reasons for falling valuations are beyond Benevolent’s control.

Since the start of the conflict between Russia and Ukraine, growing companies like Benevolent have tended to be risk-averse.

The flight to safe haven instruments was exacerbated by the search for higher-yielding assets, which emptied European equity markets of risk capital reserves intended for expansion.

The corollary has been a rapid and indiscriminate decline in valuations across the mid- and small-cap sectors over the past 24 months.

Against this backdrop, Benevolent has made tough decisions to conserve cash, meaning it has a head start until mid-2025 (assuming no new revenue).

It’s fair to say that if the company were listed on Nasdaq, the high-tech exchange, its market capitalization would likely be much larger than it is today.

In the United States, access to capital is much easier than on this side of the Atlantic, while the investment community is patient and tends to have a greater appetite for risk because they understand the process of growing a medtech/life sciences company. .

A good example is Recursion Pharmaceuticals, valued at $2.3 billion, which is a good US bellwether for Benevolent.

After a difficult period for small and mid-cap healthcare stocks, here in the UK and mainland Europe, where markets are frozen, there are signs of a thaw.

If so, then Benevolent, with two blue-chip partnerships, a strong internal pipeline, and a proven technology bulwark, should be on the watch list.

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