Fermion Therapeutics Secures Over RMB 100 Million in Series B Funding, Emerges as the Fastest-Advancing AI Biotech in Global CNS Drug Pipeline Development

VCBeat learned第一时间 that Guangzhou Fermion Technology Co., Ltd. ("Fermion"), an AI + new drug research and development company, has recently announced the completion of a B round financing of more than 100 million yuan. The investors in this round include iFlytek Ventures and Zhengxuan Capital. Existing shareholders Panda Capital and Challenger Capital continued to follow up on their investments. The funds from this round of financing will be mainly used to advance the company's core pipeline in Phase 1 clinical trials and the subsequent Proof of Concept (POC) for efficacy, preclinical development of other pipelines, as well as further upgrades to the company’s AI drug discovery platform and team.

As an AI Biotech company, Fermion focuses onCentral Nervous System (CNS), Autoimmune, and Refractory TumorsField, positioning based on AI technology to develop differentiated BIC/FIC pipelines. Drug Studio, the AI drug discovery platform independently developed by the company, focuses on solving challenges such as drug tissue targeting and high selectivity. Through rapid design, large-scale screening, and precise calculations, it can efficiently identify druggable molecules with optimal comprehensive parameters.

Relying on the Drug Studio AI drug discovery platform, Fermion has currently built10Drug Pipeline: Four of them have been successfully out-licensed at the early drug discovery stage; among the six self-developed pipelines, the FZ002 project for chronic pain has submitted IND applications in both China and the US this April. Additionally, according to Dr. Deng Daiguo, founder and CEO of Fermion, the company will also advance IND filings for two more product pipelines this year.

In recent years, the development of AI + new drug field has been "in full swing". The investment and financing heat in AI + new drug field has been rising year by year, reaching a new peak in 2021 - according to incomplete statistics from the VCBeat database,In 2021, the total number of financing events in the global AI + new drug field reached 83, with a total financing amount of $4.591 billion.

However, in the second half of last year, due to the fluctuations in the secondary market, the entire biopharmaceutical field was permeated with a sense of anxiety, entering what is called the "capital winter." During this period, there were not many startups in China that successfully completed a new round of financing, especially for projects after Series A. However, Fermion remained unaffected by the market environment and smoothly completed a Series B round of financing exceeding 100 million yuan. Dr. Deng Daiguo revealed that as early as the beginning of this year, several major investors had already confirmed their investment intentions and signed the term sheet (TS).

Dr. Deng Daiguo pointed out: "The global AI + new drug field has gradually moved from the concept stage to the pipeline validation stage, and multiple AI drug pipelines have entered clinical trials. However, there are still very few AI + new drug companies in China that have advanced AI drug pipelines into clinical stages."

VCBeat learned that,Fermion's core pipeline FZ002 project has undergone IND applications in both China and the US this April, and is expected to be approved soon to carry out clinical research domestically and internationally.Dr. Deng Daiguo introduced that the FZ002 project for treating chronic pain is a non-addictive analgesic target with preliminary proof of concept (POC). It will become the second drug of its kind globally and the first in China to enter clinical trials. For this project, Fermion has signed two term sheets (TS) for domestic rights in China with a TOP10 pharmaceutical company in China.

In the current AI + new drug field, since no drug developed by AI has been approved for marketing, the industry is still in the validation stage. No business model has gained widespread recognition from the capital market yet. Therefore, many AI + new drug companies are still in the exploration and adjustment phase regarding their business models. However, Fermion had already figured out the direction for the team two years ago — AI Biotech.

"As a team of serial entrepreneurs, we have our own business judgment on AI + new drug development:The value of the drug pipeline is relatively low in the early stages of the new drug development process, and its core commercial value is often obtained in the later stages. The characteristics of this industry dictate that one must focus on the backend to maximize value."Therefore, from the perspective of creating commercial value, user value, and other aspects, AI Biotech is the best choice. This also aligns with the capabilities and strengths of our team."

In two years, the Fermion team has preliminarily validated its business judgment and strengthened its commercial implementation capabilities. As the FZ002 project for treating chronic pain advances to clinical trials, Fermion is set to become the fastest AI Biotech company globally in advancing new drug pipelines for CNS disorders. The investors of Fermion have expressed approval of the team's business judgment and commercial implementation capabilities.

The rapid advancement of the pipeline demonstrates the strength of the Fermion team in AI drug discovery, while the differentiated design of the pipeline reflects the team's deep understanding and insight into the entire biopharmaceutical sector. Dr. Deng Daiguo believes that AI is merely a tool for drug discovery. For AI-driven new drug companies, the biggest challenge does not lie in the type of technology used, but rather in the differentiated design of the pipeline, and whether the pipeline has sufficient commercial competitiveness and value.

Unlike many companies that currently focus their drug research and development on the oncology field,Fermion focuses its drug research and development on the CNS field, relying on its self-developed Drug Studio AI drug discovery platform. With high selectivity and tissue targeting as breakthrough points, it actively develops differentiated BIC/FIC new therapies.Among the multiple drug pipelines currently laid out by Fermion, more than four drug pipelines are focused on the CNS field.

Fermion has three reasons for focusing on the CNS field. "First, compared to other disease areas, drug development in the CNS field is relatively less 'competitive,' and the existing therapies in this field are limited with significant unmet clinical needs. Second, from a technical perspective, to address the shortcomings of current treatments, our team has chosen to focus on high selectivity and tissue targeting, aiming to develop differentiated BIC/FIC products. Third, many members of our team have previously worked on CNS drugs, so we already have some know-how in this area. Our company's investors are also optimistic about this field."

Fermion's main consideration in drug project initiation is to focus on mining knowledge and data in specific fields, making AI technology and business competition more vertical to form a stronger core competitiveness.

In the past decade, over 400,000 deaths in the United States have been attributed to opioid overdoses. To address the widespread issue of opioid addiction, European and American countries have implemented a series of stringent control measures targeting the opioid crisis. However, there is an enormous patient population worldwide suffering from acute and chronic pain with an urgent need for pain relief. The market potential for non-addictive analgesics is immense — in 2020, the global pain medication market was approximately $71.6 billion, with the market size for opioid painkillers that urgently need replacement nearing $20 billion. Fermion’s two most advanced potential Best-in-class pipelines in the CNS field — FZ002 and FZ008 — are being developed for patients with chronic and acute pain respectively, presenting a future opportunity to capture a share of the multi-billion-dollar pain medication market.

With the completion of this round of financing, Fermion willContinue to advance the clinical trials of the pain project and develop more projects by applying the company's unique Drug Studio AI drug discovery platform, building a differentiated CNS pipeline matrix.; At the same time, it will further enhance the efficiency of the company's artificial intelligence algorithms, achieve continuous optimization of the platform, and apply AI technology to empower innovative drug research and development.

Ding Jingna, Vice President of iFlytek Ventures, said: "Artificial intelligence is profoundly impacting various industries and disciplines, and iFlytek Ventures has always been optimistic about 'AI+' field, with numerous strategic layouts already in place. The integration of AI and pharmaceuticals will undoubtedly bring disruptive innovation to the field of new drug discovery. Fermion, led by Dr. Deng, is composed of a top artificial intelligence team in China and a pharmaceutical industry team with an average of over 10 years of experience in new drug development. This innovative and pragmatic combination of "artificial intelligence + pharmaceuticals" is a rare team in the industry. To date, the company has achieved milestone progress across multiple pipelines and gained recognition from large pharmaceutical enterprises. We believe that Fermion, as a native Chinese AI pharmaceutical company, will achieve more "Best in class" and "First in class" innovations, benefiting patients worldwide with innovative drugs.”

Liang Weihong, founding partner of Panda Capital, said: "From Fermion's angel round to Series B, we have invested in three consecutive rounds. This is not only because we are optimistic about AI-driven drug discovery, but also because we believe in the team led by Dr. Deng. We highly value next-generation technologies represented by AI, but even more so, we value the commercialization capabilities of these technologies. The fact that Fermion’s product pipeline has entered clinical trials ahead of others and gained recognition from leading pharmaceutical companies in the market is proof of the perfect combination of this team’s technical expertise and business acumen.”