FRONTIER IP GROUP PLC

T T O C i r c l e

October 2019

www.frontierip.co.uk

Frontier IP develops and manages a

portfolio of equity stakes in and licence income

from companies founded on strong,

commercially-focused Intellectual Property

(“IP”).

Who we are

2

Opportunity: Large investment in university research

spending

There is significant investment in research spending…

UK

• Total UK University research spending £8bn FY 16 (66% from Government)

• UK: 206,870 academic staff (2017) in 162 Higher Education Institutes

• Much is highly rated - 15% of top journal papers globally

• But not always replicable - perhaps 25% replicable by industry

PT:

• Total PT University research spending €1.1bn FY 17

• PT: 41,000 researchers (2017) in 117 Higher Education Institutes

… But universities struggle to know what they have got and whether it is

relevant and capable of validation. They also have limited industry networks,

but need to demonstrate the impact of research activities to maintain core

funding

3

Opportunity: But exploitation is most of the times not

the best

The ecosystem of potential industry partners/exploiters is large… • 7,995 UK businesses with £50m+ turnover March 2018

• A recent report analysed nearly 6,000 of the world’s largest public and private firms, each with

annual revenues greater than $1 billion, which together make up 65 percent of global

corporate pre-tax earnings (McKinsey October 2018)

…But most universities don’t know where to look or whether it is worth

engaging

4

Challenge: Current models for exploiting IP have not

worked effectively

Stepwise development process is ineffective

• Creates distinct funding steps (and gaps)

• Is time and capital inefficient

Most academics do not make strong business leaders

• Strong focus on academic to develop and build the business (both from

university and investors)

• Parties have conflicting priorities

Lack of access to the right skill and mind sets at the right time

5

Idea/first results Prototype Alpha-

product

Engagement with

customer

Redesign to focus on customer issues

A Typical Technology Route to Market

Current core portfolio: Strong growth potential in a diversified

portfolio with companies at varying stages of maturity

Incr

eas

ing

mat

uri

ty

6

Portfolio Company Company business Industry partners FIPP stake Planned Next steps

Exscientia AI-based drug discovery Evotec, GSK, Sanofi, Roche 3.3% Continued scale up

Molendotech Water testing Palintest (Halma), G’s Group

14.1% Full Palintest launch, industry partnerships

Alusid Building materials from recycled industrial waste

Panaz, SACMI, waste suppliers 35.6% Major retail launch, scale up, potential IPO

PoreXpert Porous materials analysis EDF, oil and gas major 15% Industry validation

Nandi Proteins Proteins to reduce sugar, fat and additives in food

AB Foods, Devro 20.7% Commercial order, scale up, further industry partnerships. IPO

Fieldwork Robotics Agricultural robots Hall Hunter Partnership 27.5% Industry validation, grant funding

PulsiV Energy efficient micro-inverters Energy Utility, Bosch 18.9%

Industry validation through engineering company development work, funding

Tarsis Technology Active ingredient delivery Leading crop protection group 18.0% Industry validation

The Vaccine Group Zoonotic vaccines Governmental 19.2% Funding, research, industry partner

NTPE Printable electronics Not disclosed 31.6% Industry validation, funding

Amprologix New classes of antibiotics Ingenza, IBM Watson 10% Scale up, funding

Cambridge Simulation Software to model discontinuous processes Relationships to be developed 40.0% Industry partnerships

Cambridge Raman Imaging Graphene-based high speed lasers Relationships under development 33% Funding, industry validation

Des Solutio Non-toxic solvents Relationships under development 25% Industry validation, funding

Not Announced Graphene based Not yet disclosed 33% Not yet disclosed

Insignals Parkinson Relationships under development 33% Clinical Trials

Ref. Paul, S. et al (2010) How to improve R&D Productivity: the pharmaceutical industry’s grand challenge. Nature Reviews Drug Discovery, 9,

203-214.

(Industry benchmarks and data from Eli Lilly and Company)

Challenge: In the case of Pharma only 4% of candidates

succeed with a capitalized cost of almost $2bn

Portfolio: Exscientia

SHAREHOLDING

3.32%

KEY FACTS

• Spun out of Dundee University

• Commercialising work of chief executive Professor Andrew

Hopkins

• Artificial Intelligence based drug discovery

• Self-funding/profitable from foundation

• Recent deals announced with Evotec, Sanofi and GSK help

validate technology and are a route to delivering substantial

value

PROGRESS

• September 2017 - €15 million investment from Evotec AG

• October 2017 - Wins Best Emerging Biotech Company Award

• January 2019 - $26m investment including Celgene

• January 2019 - CHF 67m collaboration with Roche

• Company continues to make strong progress

www.exscientia.co.uk

"Our investment in Exscientia represents Evotec's single

biggest equity placement to date and in, what we feel, is

the world leading AI technology company. Working with

Exscientia on a joint immuno-oncology project over the

past year, we have experienced first-hand how its AI

approaches, along with our medicinal chemistry platform,

can positively and radically impact drug discovery. We

are very excited about the joint potential to leverage AI in

chemistry.”

Dr Werner Lanthaler, Chief Executive Officer of Evotec

8

SHAREHOLDING

14.1%

KEY FACTS • Spin out from University of Plymouth

• Commercialising work of Professor Simon Jackson of

University’s faculty of Medicine and Dentistry

• Developing IP to test for harmful bacteria in water

• First product commercially launched by Palintest, subsidiary of

FTSE 100 group Halma. Kits test for faecal matter in bathing

water – produces a result in less than 30 minutes compared

with up to two days previously because testing can be done on

site, not sent to a lab

• Collaboration agreement with leading fresh produce grower G’s

Group to develop tests for E.coli in irrigation water

• Palintest deal and subsequent funding completed less than a

year after incorporation – commercialising IP need not take

years

FRONTIER IP – KEY CONTRIBUTION

• Handled commercial negotiations with Palintest and the recent

investment

• Introduction to G's Group – handled commercial negotiations

“For many years we sought opportunities to deliver

simple, real-time microbiological risk screening at the

point of use and I’m excited to say we are finally at that

point now.”

Ian Leahy, open innovation project manager, Palintest

Portfolio: Molendotech

9

SHAREHOLDING

27.5%

KEY FACTS • Spin out from University of Plymouth

• Commercialising work of Dr Martin Stoelen, lecturer in robotics at

the University’s School of Computing, Electronics and

Mathematics

• Developing soft robotic technology and artificial intelligence to

harvest soft fruits, vegetables and other crops

• Initial targets raspberries – soft, delicate and easily damaged

fruit. Once these can be successfully picked in field, then system

can be easily adapted to other crops

• Collaboration agreement signed with Hall Hunter Partnership,

UK’s largest raspberry grower. Field trials start this year

• Participating in a number of grant-funded projects, including

cauliflower and, in China, tomato harvesting

FRONTIER IP – KEY CONTRIBUTION

• Hands-on support to accelerate technology development

• Introductions to and handling negotiations with industry partners

• Support for grant applications; will coordinate funding rounds

“This partnership with Fieldwork Robotics is an exciting

new development to pioneer the harvesting of

raspberries robotically at a commercial scale. We are

looking forward to our first human-free hectare to be

picked together.”

David Green, chief operating officer of Hall Hunter

Partnership

Portfolio: Fieldwork Robotics

10

www.frontier ip.co.uk

11

• TTO has limited resources to deal with all industries

• Data generated might not map directly with industrial interest

• Business development has limited resources

(limited business development staff covering several

universities)

• High noise to opportunity ratio (e.g., less than 25% of top peer

reviewed academic papers are replicable by industry)

• Interest in technologies that improve business or

create new business

Industries

Universities

• TTO struggle to keep track of all academics

• Academics might not be aware of industrial interest of their work

• Academics lack industrial input to their work

• Academics might not “speak” the same language as

industry

There is a gap between Industry and Academia

GAP

To overcome this gap academics will need a good team, with a good

network and good information on which decision makers can act.

Mind the GAP: drivers and mindsets are very different

Challenge: Pharma companies tend to shift to later

stage deals due to risk, even if they have to pay more for

a candidate

In the past decade

• Forecast of potential peak sales for new drugs are falling from $816M to $407M

• R&D returns dropped from 10.1% to 9% for big pharma

• And from 17.4% to 9.3% for smaller companies – with the latter being well below

their cost of capital

• Oncology (that accounts for almost 40% of big pharma’s pipeline) has success

rates of 5.1% against and average of 9.6%

Frontier IP article to be published at the UK drug licensing group

Series A Series B

Median round size by series:

14.3

22.8 22.0

28.7 28.6

46.0

25.5

28.5

44.0 42.2

44.9

58.0

*Most active biopharma investors by indication defined as Top 42 venture and corporate investors calculated as new (first-time) investments into companies. Crossover investors defined as public-minded investors who opportunistically invest in private deals. Numbers denote median values. Financing data through 15/6/18. Source: Pitchbook and SVB proprietary data

Challenge: Whilst risks increase with lower potential

peak of returns, valuations have been soaring

Defunct Automobile Companies (Started by A; US Only) ABC (1906–1910)

Abbott-Detroit (1909–1916; Abbott 1917–1918)

Able (1917–1919)

Ace (1920–1922)

Acme (1903–1911)

Adams-Farwell (1899–1912)

Adria (1921–1922)

A.E.C. (or Anger) (1913–1915)

Aerocar (1905–1908)

Aero Car (1921)

Aerocar (1946)

Aero-Type (Victor Page model)

Ahrens-Fox (1913)

Airscoot (1947)

Airway (1949–1950)

Ajax (1914–1915)

Ajax (1920–1921)

Ajax (1925–1926)

Ajax Electric (1901–1903)

Aland (1916–1917)

Albany (1907–1908)

Albatross (1939)

ALCO (1909–1913)[3]

Alden-Sampson (1904, 1911)

Aldo (1910–1911)

Alena Steam Car (1922)

All-Steel (1915–1916)

Allen (1913–1922)

Allen (1913–1914)

Allen Kingston (1907–1910)

Allis-Chalmers (before 1919)

Allstate (1952–1953)

Alpena (1910–1914)

Alsace (1920–1921)

Alter (1914–1917)

Altham (1896–1899)

Altman (1901)

Aluminum (1920–1922)

Amalgamated (1917–1919)

Ambassador (1921–1925)

Amco (1917–1922)

America (1911)

American (1899)

American (1902–1903)

American (1906–1914)

American (1911–1912)

American (1914)

American (aka American (Balanced) Six) (1917–1924)

American Austin (1929–1934; American Bantam 1938–1941)

American Beauty (1918–1920)

American Berliet (1906–1908)

American De Dion (1900–1901)

American Electric (1896–1902)

American Electric (1913–1914)

American Fiat (1910–1918)

American Gas (1902–1904)

American Junior (1916–1920)

American Juvenile Electric (1907)

American Mercedes (1904–1907)

American Mors (1906–1909)

American Motors (or AMC) (1966–1987)

American Napier (1904–1912)

American Populaire (1904–1905)

American Power Carriage (1899–1900)

American Simplex (1906–

1910; Amplex 1910–1913)

American Steam Car (1924–1931)

American Steamer (1922–1924)

American Tri-Car (1912)

American Underslung (1905–1914)

American Waltham (1898–1899)

American Wheelock

Ames (1910–1915)

Ams-Sterling (1917)

Anahuac (1922)

Anchor Buggy (1910–1911)

Anderson (1907–1910)

Anderson (1906)

Anderson (1916–1925)

Anger

Angus

Anheuser-Busch (1905)

Anhut (1909–1910)

Ann Arbor (1911–1912)

Anna (1912)

Ansted (1926–1927)

Ansted-Lexington (1922)

Anthony (1899–1900)

Apollo (1906–1907)

Apollo (1962–1964)

Apperson (1902–1926)

Apple (1917–1918)

Aptera (2005–2011)

Arabian (1915–1917)

ArBenz (1911–1918)

Ardsley (1905–1906)

Argo (1914–1916)

Argo Electric (1912–1916)

Argonne (1919–1920)

Ariel (1905–1907)

Aristos

Armstrong Electric (1885–1902)

Arnolt (1953–1954)

Arrow Cyclecar (1914)

Artzberger (1904)

Astra (1920)

Atlas (1906–1907)

Atlas (1907–1911; Atlas-Knight 1912–1913)

Auburn (1900–1936)

Auburn (1912–1915)

Aultman (1901)

Aurora (1905–1906)

Aurora (1907–1909)

Aurora (1957–1958)

Austen

Austin (1901–1921)

Auto-Bug (1909–1910)

Auto Cub (1956)

Auto Cycle (1906–1907)

Auto Dynamic (1900–1902)

Autoette (1910–1913)

Autoette (1948–1970)

Automatic (1921)

Automobile Fore Carriage (1900)

Automobile Voiturette

Automotor (1901–1904)

Auto Parts

Auto Tricar (1914)

Auto Two

Auto Vehicle

15

Source: Wikipedia

Defunct Automobile Companies

• Almost 2,000 defunct automobile companies in the US alone

• High concentration around 1910’s

• Other useful information:

– In 1900 there were 2,370 automobiles in NY, Boston and Chicago

– In that year 4,192 cars were produced in the US (of which electric cars had a 28% market share)

– There were 300 cars in the United States in 1895, 78,000 in 1905, 459,000 in 1910 and 1.7

million in 1914

16

Source: Alliance of Automobile Manufacturers