BioNTech AI deal for UK's InstaDeep: Machine learning for cancer treatments
By Jenal Mehta
13:21, 11 January 2023
BioNTech (BNTX) announced it will be purchasing UK artificial intelligence (AI) start-up InstaDeep. Pharmaceutical companies have been known to partner with AI companies, but an acquisition is rare.
The £562 mn deal is the first ever in the sector, with £363 mn being in cash as BioNTech uses some of the fortune it earned from the Covid-19 vaccine.
This move by the German pharma company showcases the changing landscape in the pharmaceutical industry, where AI has become the heart of efficient drug development.
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It has been common in recent years for Pharmaceutical companies to team up with AI to help develop their bio-technology to aid and speed up the developments of drugs.
For example Pfizer (PFE) announced in 2016 it intends to ramp up its AI investments and collaborated with MIT and XtaliPi, an AI powered R&D company. Johnson & Johnson (JNJ) and Novartis (NOVN) both partnered with IBM’s Watson Health. Roche (ROGz) partnered with Owkin, another AI start-up.
Efforts in biotech developments such as these have been responsible for many scientific breakthroughs, including the Covid-19 vaccine.
Sebastian Mallaby, Venture Capital expert, told capital.com in an interview that he thinks the developments in bio-tech may even rival tech companies. He believes this “partly because IT has matured, so much has been done with software, maybe it'll be slowing down a little bit, but also because there have been these breakthrough fundamental technologies, the first one was just the ability to sequence the genome. Then secondly, the ability to sequence the genome super cheaply.”
He adds “And then you've got the ability to manipulate MRNA, as we've seen with the Moderna and the Pfizer vaccines. And that could be applied to other technologies”
This vaccine was particularly significant in the speed at which it was developed.
Mallaby says “artificial intelligence has cracked the code for protein shapes, and that is revolutionary. Used to take a Ph.D. scientist four or five years to figure out the shape of a protein so that you could design a drug that would bind on top of that shape.”
While Covid-19 vaccine was developed in less than half of that time frame.
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The collaborations between AI firms and pharma companies have always remained at the point of a partnership.
The outright take-over of InstaDeep by BioNTech (BNTX) has never been seen before in the industry, and this is likely to be the first of many more as the pharma sector leans into AI developments.
As the sector comes out from the pandemic with large amounts of pent up cash, the timing is perfect for the sector to see an increase in such takeovers.
Pharmaceutical Technology reports that AI related deals have in fact been growing at a fact rate in recent times. Their research finds that such deals have grown 47.8% during the first half of 2022, as compared to the same period of 2021.
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In 2021, BioNTech (BNTX), along with its partner Pfizer (PFE) , found massive success within the development of Covid-19 vaccine. BioNTech alone has earned more than £25 bn from the sales of the vaccine so far, achieving a 77% profit margin.
Pharma companies usually have periods of high R&D investments, when profits are low, followed by a period of high profitability and growth once their research is successful.
After the boom of the Covid vaccine, BioNTech appears to be again shifting its focus on R&D using the cash it generated in the past two years.
BioNTech’s aim with this partnership is to develop an early warning system to predict future variants of the Sars Cov-2 virus.
Prof. Ugur Sahin, M.D., CEO and Co-founder of BioNTech said in a statement “The acquisition of InstaDeep allows us to incorporate the rapidly evolving AI capabilities of the digital world into our technologies, research, drug discovery, manufacturing, and deployment processes. Our aim is to make BioNTech a technology company where AI is seamlessly integrated into all aspects of our work.”
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