Frontier IP Group

Frontier IP (LSE:FIPP)

Frontier IP Group is a UK-based company that specialises in commercialising intellectual property (IP) developed by universities and research institutions. They act as a bridge between these institutions and industry partners, helping to transform innovative ideas and research into profitable businesses. Their core activities include identifying promising IP from partner institutions, providing funding and support to develop the technology, and facilitating its commercialisation through licensing or the formation of spin-off companies. Frontier IP Group operates across various sectors such as healthcare, engineering, environmental science, and digital technology.

I've wrote this blog post for me. I wanted to publish my thoughts and would welcome different view points and my aim is to add my thoughts on my blog as the story develop. I'd love to hear your thoughts.

Investment Case

Numerous studies and investment research have indicated that innovative companies can deliver above-average returns. Innovation often leads to the development of new products, services, and technologies that can capture market share, drive growth, and generate higher profits. Innovation and progress are seldom linear, making assessing their annual advancements challenging. However, it is worth noting that Frontier IP Group (FIPP) values its portfolio at 88.2p per share, approximately 85% higher than the current market share price. This significant disparity, in my view, illustrates the influence of short-term market concerns rather than reflecting the long-term potential and value of FIPP and its portfolio.

At the time of writing this article, LSE:FIPP has a share price of 48p or a £26.75M Market Cap. Here is a quick overview of their Financial Statement.

Equity Investments

Equity Investments represent the share holdings that FIPP has in both quoted and unquoted businesses. Estimating the value of these investments, particularly in unquoted start-ups, can be challenging and can be influenced by factors such as the overall macroeconomic climate, the ability of businesses to raise capital, and the risk appetite of investors. FIPP categorizes their equity investments based on a valuation matrix. 

The following valuation matrix is taken from their most recent annual report (FY June 22), with the exception of the Exscientia shares, which have been updated to reflect the latest information.

Latest News

15th August 2023: 

Fieldwork Robotics (Unknown stage) - The latest fundraising round values the company at £6.7M, with FIPP holding 22% or approximately £1.5M.

As of December 2022, 

Exscientia is the only company in the portfolio traded on an open market and had a value of £3.4M (I've calculated this as £3.3M at the time of writing).

As of June 2022, 

Pulsiv (Stage 4) is valued at £9.08M for FIPP (Total Market Cap implied = Circa £50M). This represents an increase of approximately £5M for the FY22 for the group.

The Vaccine Group (Stage 3) is valued at circa £5.5M for FIPP. This represents an increase of £1M for the FY22 for the group (Total Market Cap implied = £32M).

Exscientia, Pulsiv, and The Vaccine Group make up almost 50% of the Equity Investments at FY2022 in FIPP.

As of May 2022, 

Cambridge Raman Imaging (Unknown stage) raised £1.1M, with FIPP valued at circa £1.6M (Total Market Cap implied = £6.1M).

Debt Investments

Debt investments are loans to portfolio companies to fund early-stage costs, provide funding alongside grants, and bridge to an equity fundraiser. Certain debt investments carry warrants granting the option to purchase shares.

Since publishing their interim report for December 22, and RNS dated 24th July for CamGraPhIC, it states that FIPP loaned the portfolio company £1M. As a consequence, as of the date of this announcement, the total amount advanced by Frontier IP to CamGraphIC is £2.23 million. In addition, Frontier IP holds a 20.8% equity stake in CamGraphIC.

As of December 22, the significant debt investments are towards:

• CamGraPhIC - Circa £3.3M
• Nandi Proteins - £723K
• Elute Intelligence - Circa £550K

Debts in these three portfolio companies amount to approximately 90% of the debt Investments.

Conclusion to Investment Case: Frontier IP is a risky investment, but I feel it is well-positioned for long-term growth. It holds a number of exciting portfolio businesses. For a Market Cap of Circa £26M/£27M.

The above gets you close to the entire market cap for FIPP that you can pay today for the business. All the other portfolio companies mentioned outside of the above are thrown in for free, or a 'safety margin'.

If you can resist the temptation to track FIPP share price on a day to day basis, I believe longer term you can have a strong investment on your hands and is the reason why its my biggest holding. 

I've omitted The Vaccine Group from the above graph due to its high risk nature for valuing purposes. 

Portfolio 

Frontier IP Group has an impressive portfolio of innovative companies that span various sectors. These companies are at the forefront of cutting-edge technologies, driving advancements in healthcare, engineering, digital technology, and more. From groundbreaking medical solutions and sustainable energy initiatives to transformative digital platforms, Frontier IP's portfolio showcases the power of intellectual property commercialization. With a focus on bridging the gap between academia and industry, they have nurtured these ventures into promising businesses that have the potential to make a lasting impact on their respective industries.

Alusid (FIPP owns 38.9%)

Alusid is at the forefront of creating stunning, high-quality tiles, tabletops, and other surfaces through the recycling of industrial waste ceramics and glass. By repurposing materials that would typically end up in environmentally damaging landfills, the company demonstrates a commitment to sustainability. Alusid has successfully scaled its technology for mass production using standard manufacturing equipment, while also reducing energy consumption by 35% and minimizing CO2 emissions. Additionally, their innovative formulations and processes have led to a remarkable 75% reduction in water usage compared to traditional tile production methods.

Alusid has successfully secured deals with Topps Tiles, a major player in the UK market with approximately 20% market share. The UK tile market itself is valued at an impressive £1.2 billion. Alusid, with its highly premium product offering, stands out in the market. As businesses and consumers increasingly prioritize environmental considerations, Alusid's unique selling proposition (USP) becomes even more appealing. Their commitment to sustainability and the environment differentiates them from competitors, making them an attractive choice for environmentally conscious customers in the market.

Amprologix (FIPP owns 10%)

Set up In 2018, Amprologix emerged through collaboration with the University of Plymouth. This innovative program has taken the lead in the field of drug discovery by relentlessly pursuing the identification of the next wave of antibiotics. One of the key advantages of Amprologix' work is the use of Artificial Intelligence to accelerate research.

The need is clear. According to a review conducted by the UK government in 2015, the projected global cost of antibiotic resistance by 2050 is estimated to skyrocket to a staggering $100 trillion. This alarming forecast is coupled with a grim prediction that drug-resistant infections will be responsible for ten million deaths annually, surpassing the combined toll of cancer and diabetes. Even in the UK alone, approximately 5,000 deaths occur each year due to the ineffectiveness of antibiotics against certain infections. To exacerbate the situation, there has been a dearth of newly introduced antibiotics for the past three decades, and the efficacy of those currently in use is steadily dwindling.

AquaInSilico (FIPP owns 29%)

AquaInSilico is an innovative company dedicated to the development of advanced software tools for optimizing wastewater treatment across various industries. Their software solutions are designed to enhance processes in municipal wastewater treatment, oil refining, brewing, pulp and paper making, steel production, food processing, and waste recovery sectors. By leveraging mathematically modeled biological approaches and a deep understanding of the intricate variables involved in biological and chemical processes, AquaInSilico's software algorithms can effectively identify and address issues even before human diagnosis. This proactive approach enables industries to detect and resolve problems swiftly, enhancing overall wastewater treatment efficiency.

One noteworthy initiative in Cape Verde stands out and deserves recognition. By leveraging their digital twin technology, the team at AquaInSilico played a crucial role in upgrading the nation's wastewater treatment facility to meet the stringent standards set by the European Union. This accomplishment was achieved in a cost-effective manner, providing immense value to a developing nation. Moreover, the team went a step further by training over 100 local staff members, equipping them with industry best practices. The impact of this project extends beyond addressing water scarcity; it also contributes to improvements in public health, sanitation, and the overall ecosystem.

Cambridge Raman Imaging (FIPP owns 26.8%)

Cambridge Raman Imaging (CRI) is at the forefront of developing advanced Raman imaging technology with artificial intelligence (AI) support. Their primary focus is on creating medical devices that can aid in the diagnosis and treatment of diseases, including cancer. By utilizing graphene-based ultra-fast fiber lasers, the technology enables the generation of digital images of patient tissues. These digital images are then analysed by AI algorithms. Notably, this approach eliminates the need for invasive chemical staining of tissues and allows for remote viewing. The efficiency gains this brings are especially crucial in regions and countries facing a shortage of qualified histopathologists. Additionally, in the long run, there is potential for this technology to support more personalized cancer treatments, marking a significant step forward in the field of healthcare.

In May 2022 it raised £1.1M, valuing the company at £6.1M. Considering in July 2020, the company raised £250K valuing the company at £1.5M, that shows some excellent development within the company. 

CamGraPhIC (FIPP owns 20.8%)

When it comes to connecting many processors and memories in high-performance computing systems for running large artificial intelligence workloads, a more efficient approach is to link them together through effective interconnects. As technology evolves, the electrical signaling links that were limited by the loss in copper traces are now becoming shorter as the bandwidth increases. However, these shorter copper links require additional complex electronics, such as FECs, ADCs, and DSPs, to compensate for the higher bandwidth. This leads to increased costs and energy consumption.

CamGraPhIC specializes in the design, development, and manufacturing of cutting-edge photonic circuits for telecoms and datacoms. The unique use of graphene in CamGraPhIC's photonics enables faster transmission of digital data and communications compared to other similar technologies. What sets CamGraPhIC apart is its ability to achieve this enhanced performance while consuming at least 70 percent less energy than equivalent alternatives. This positions CamGraPhIC's graphene-based photonics as a next-generation solution for efficient and high-speed data transfer in the telecom and data communication industries.

Company recently raised £1.26M in fund raising and in the half year report, FIPP stats the valuation of the company increased by £1.8M during the 6 months to December 2022. 

Celerum (FIPP owns 33.8%)

Celerum introduces cutting-edge Transport Logistics System, harnessing the power of advanced technologies such as artificial intelligence (AI), machine learning, and automation. Their state-of-the-art software empowers customers with enhanced efficiency, improved decision-making capabilities, and significant cost savings. Celerum looks to revolutionise the transportation and logistics industry.

It has launched its first commercially available software in the last year.

Elute Intelligence Holdings (FIPP owns 41.2%)

Elute has developed sophisticated software tools that enable users to intelligently search, compare, and analyze complex documents by emulating human reading patterns. The potential applications for these tools are vast, ranging from searching patents and contracts to detecting instances of plagiarism, collusion, and copyright infringement. By utilizing Elute's software, researchers and professionals can enhance their investigative efforts, improve technological capabilities, and foster innovation within their respective fields. These powerful tools bring advanced research and analysis capabilities to the fingertips of users, unlocking new possibilities for knowledge discovery and informed decision-making.

In August 2022 - Steve Cable was announced as CEO. He comments;

After the benefit of working in two of the UK's leading SaaS search software providers, I immediately recognised the power of the core engine within Elute's technology. The SIA engine forms the the centre of innovative offerings like Investor Insights and CopyCatch.

SIA is based on encoding forensic linguistic principles in software. The core competency enables documents to be read in a manner similar to humans, but by a computer at great speed. It is possible for the system to ‘read’ millions of documents in seconds and identify the documents that are of greatest relevance. The software can clearly show the user why documents are relevant, a marked difference to artificial intelligence or semantic search approaches used by competing products.

On Companies House, Year Ending December 2022, the company reported a growth in net current assets, which increased from £214,000 in the previous year to £303,000. Additionally, the debtors increased from £482,000 in 2021 to £694,000. The company growing at circa 33% revenue growth. 

Exscientia (Company listed)

Successfully listed on the NASDAQ - 1st company to full benefit from the end-to-end collaboration with FIPP

Company has been selling down its holding to free up cash. Latest report it still owns 782,400 shares (Circa $4M or £3.3m). Easy to value as the shares are freely traded under NASDAQ: EXAI

Fieldwork Robotics (FIPP owns 22%)

Raspberries picked by Fieldwork Robotics’ robot harvesting technology went on sale in supermarkets after the company launched commercial operations. The company deployed two robots to Portugal, where the fruit can be harvested throughout the year, as part of a commercial field trial to prove the robots could work autonomously alongside humans. Fieldwork’s focus is now on making the robots faster and scaling up production to get more robots into the field. 

The company is also working with Bonduelle, a leading vegetable producer, on a three-year project to develop a cauliflower harvesting robot.

Within the year, Fieldwork Robotics has raised £1.5m, looking to achieve £2m in capital raises, which values the company at £6.7M post money. 

Insignals Neurotech (FIPP owns 33%)

InSignals is at the forefront of pioneering a groundbreaking innovation called iHandU. This technological solution aims to accurately quantify muscular rigidity in patients diagnosed with movement disorders. Our primary objective is to create medical devices that minimize the subjective nature of neurological assessments, providing invaluable support to both clinicians and patients alike. By developing such cutting-edge tools, we strive to enhance the accuracy and reliability of neurological evaluations, ensuring optimal patient care.

iHandU can support patients, Neurologists & researchers better understand diseases such as Parkinson's Disease, Multiple Sclerosis & Epilepsy. 

Molendotech (FIPP owns 12%)

Molendotech is a leading expert in conducting detailed analyses of environmental samples obtained from various water and air sources. With a specific focus on applications in environment and human health, their specialised expertise enables them to provide valuable insights into the quality and potential impact on both the surrounding ecosystem and human well-being. 

Products include BacterisK+, providing testing for faecal contamination in water. The kit provides rapid results and is portable, so can be used out in the field. The product is currently being used by regulators and is available to buy, both in UK & globally. 

The business recently announced a £1m oversubscribed funding round (September 2023).

As of December 2022 - Net Assets stood at circa £1.2M (Companies House)

Nandi Proteins (FIPP owns 20.1%)

Nandi Proteins is actively involved in addressing critical challenges faced by food companies as they strive to meet societal expectations regarding processed foods. With increasing concerns about social, health, and environmental aspects, such as obesity. Nandi Proteins offers innovative solutions to tackle these issues head-on. By prioritising the importance of proteins within diets and promoting healthier food options, Nandi Proteins supports food companies in their commitment to improving social well-being, personal health, and environmental sustainability.

Brands are under pressure to cut the amount of sugar, fat and e-numbers in their products from governments, regulators and consumers. 

David Flower is the Chief Executive Officer. David is the former Managing Director, Europe, for Singha beer. He was previously Managing Director Home Baking for Kerry Foods.

In FIPP's latest interim report; 

Nandi Proteins is also striding forwards in terms of commercial development and scale up. The company signed heads of terms with a commercial partner for a meat/fat replacement product during the period, and successfully manufactured a fava bean based egg-white replacer on commercial production equipment in trials with a subcontractor. The egg-white replacer is now at an advanced stage of application trials with a potential customer, a major company in the meat alternative sector.

NTPE (FIPP owns 48%)

NTPE's primary objective is to create and commercialise the innovative "Paper-E" technology, which harnesses the potential of paper electronics within the circular economy. Through extensive research, they have developed paper transistors that offer a sustainable alternative to traditional silicon-based electronics. By utilising environmentally friendly materials like metal oxides and cellulose, NTPE aim to revolutionise various industrial applications. Their focus lies in the development of paper-based diagnostic kits, as well as the creation of advanced systems for fraud prevention (e.g., notes, passports) and intelligent packaging. This groundbreaking technology opens up a vast array of possibilities in the pursuit of both ecological sustainability and practical innovation.

PoreXpert (FIPP owns 15%)

PoreXpert is a software & consultancy practice that excels in its ability to analyse and create a three-dimensional map of the interconnected void network within different rigid porous materials. This network of pores can hold substances like water, oil, or gas in various contexts. The software also facilitates the input of mathematically defined void networks, such as those derived from electron microscopy, and allows for modifications to simulate changes like ageing, higher pressure sintering, or weight loss in the structure.

Pulsiv (FIPP owns 18.3%)

Pulsiv has revolutionary technology that revolutionises the energy efficiency of power supplies, battery chargers, and LED lighting. By significantly reducing energy consumption, customers benefit from lower bills. Moreover, this groundbreaking technology maximises the energy extraction from photovoltaic solar cells. With its streamlined design requiring fewer components, Pulsiv's technology offers cost-effective solutions for manufacturers. This allows for more compact and efficient designs, leading to enhanced energy efficiency across various applications.

Net Assets as of November 2022 was £3.7M

Riskocity (FIPP owns 15.9%)

Riskocity is a consultancy led by industry experts, equipped with proprietary software and an exclusive vulnerability database. Their comprehensive risk assessments cater to various sectors and operations, with a specific focus on ports, ships, and maritime assets like offshore wind farms. Using their in-house software, Riskocity offer customised threat and risk assessment services, along with intuitive dashboards. Whether clients need to profile a single ship or an entire fleet, Riskocity provides holistic and sector-specific solutions to address the maritime risk management needs.

The Vaccine Group (FIPP owns 17%)

TVG has successfully built a robust pipeline of projects aimed at tackling infectious diseases in animals. This is made possible through a combination of funding sources, including public grants and private equity. These projects specifically focus on addressing diseases that have the potential to be transferred from animals to humans (zoonotic diseases) or that significantly impact livestock production, such as PRRS and African Swine Fever in pigs, as well as bovine tuberculosis in cattle. 

It is widely recognised that many emerging infections, including those with a high potential for human pandemics, originate from domestic and wildlife animal populations. By addressing these diseases in animals, TVG plays a crucial role in mitigating potential threats to human health and safeguarding both livestock and public well-being.

On Companies house - Net Assets as of June 2022 was £555k. 

Enfold Health (FIPP own 75.8%) 

Commercialising the unique DNA Origami IP developed by Dr Ioanna Mela, Associate Professor in the Department of Pharmacology at the University of Cambridge, for making antibacterial treatments more effective, with an initial focus on P.gingivalis, considered to be the main risk factor for periodontal disease. 

GraphEnergyTech (FIPP own 32.1%) 

GraphEnergyTech are experts in advanced solar cell design and graphene to facilitate the development of cost-effective, high-efficiency solar photovoltaic systems. Their patented technology revolves around the creation of graphene electrodes with exceptional conductivity, dramatically reducing both the cost and environmental footprint of producing perovskite and silicon solar cells. This breakthrough allows GraphEnergyTech to revolutionise the renewable energy industry by providing innovative solutions that make solar power more accessible and sustainable.