EXAI - Exscientia: Drug Discovery Platform Attracting Partners And Cash

2024-05-22 00:03:06 ET

Summary

• Exscientia plc's stock has underperformed the biotechnology and IT sectors, despite owning a tech platform attracting big pharma.
• The company uses AI to accelerate drug development and reduce time to market, potentially improving success rates.
• The partnerships with major pharmaceutical companies are generating cash inflows and the potential for future royalties.
• The company differentiates itself using its tech platform, which also uses LLMs (large language models) and Generative (Gen) AI.
• It is trading at about half its February 2023 peak as the AI hype has deflated but remains vulnerable to interest rate-related risks if the Federal Reserve adopts a hawkish tone.

As Generative AI impacts drug research, this thesis aims to uncover the opportunities for Exscientia plc ( EXAI ) and show it is a buy based on the strength of its technology platform. Noteworthily, I was again bullish when covering the stock in April 2022 priced at $12. It did rise to $15.21, but, subsequently, slid to $4.28 as the Federal Reserve hiked interest rates at such an aggressive pace only seen in the Paul Volcker Era....

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