Frontier IP Group Plc has announced that its portfolio company, Exscientia, has entered into a collaboration with Merck KGaA, Darmstadt, Germany. The collaboration will focus on the discovery of novel small molecule drug candidates in the fields of oncology, neuroinflammation, and immunology. Under the agreement, Exscientia will receive an upfront cash payment of $20 million from Merck and will be eligible for milestone payments of up to $674 million if all milestones for three initial programs are achieved. Frontier IP holds a 0.4% equity stake in Exscientia.

The collaboration will leverage Exscientia's AI-driven precision drug design and discovery capabilities, as well as Merck's disease expertise in oncology and neuroinflammation, clinical development capabilities, and global footprint. Three potential first-in-class or best-in-class targets have been identified as the initial focus of the partnership, with the possibility of identifying additional targets in oncology and immunology or other mutually agreed disease areas.

Professor Andrew Hopkins, founder and CEO of Exscientia, expressed his pleasure at being chosen for the collaboration and stated, "We look forward to complementing their outstanding scientific acumen with our integrated technology platform and ability to generate novel data in order to address some of the hardest drug design challenges in cancer and immunology."

The upfront cash payment of $20 million is expected to be reflected in Exscientia's second-half 2023 results and will be recognized as revenue over the duration of the agreement.