Nutshell Therapeutics Completes $20M Series A Financing to Advance AI-Driven Allosteric Drug Discovery Platform and Pipeline

Recently, Nutshell Therapeutics officially announced the completion of a $20 million Series A financing round to advance the development of its computation-driven allosteric drug (Allosteric Drug) R&D platform and the clinical development of allosteric drug candidates. The round was led by Matrix Partners China, with follow-on investments from Source Code Capital and Kunlun Capital. Existing investors Northern Light Venture Capital and Baidu Ventures continued to participate, with Dianshi Capital serving as the exclusive financial advisor.

NUTSHELL has long been dedicated to the research and development of allosteric drugs and is currently internationally leading, standing as the only platform-based company in China focused on the development of novel allosteric therapeutics.，The company's team comprises top global scientists in the field of allostery, along with senior experts from renowned MNC pharmaceutical companies and the AIDD sector. Previously, the company has secured two rounds of financing, with the Pre-A round led by Northern Light Venture Capital and Baidu Ventures (BV), and Fangyuan Capital and Tengye Capital participating as follow-on investors.

NUTSHELL possesses the world's earliest, largest, and most comprehensive allosteric database. Leveraging its proprietary AI-powered allosteric drug discovery platform, it enables the development of allosteric lead molecules for undruggable targets (from 0 to 1) and accelerates their progression into viable drugs (from 1 to 10). Based on this platform, NUTSHELL has developed multiple drug pipelines, including first-in-class pipelines targeting novel targets. Compared to traditional methods, NUTSHELL's platform significantly shortens the development timeline and reduces costs for allosteric drugs, and supports commercialization through models such as independent R&D, co-development, and license-out.

Currently, conventionally druggable targets, which account for approximately 15% of the human proteome, are nearing exhaustion. The therapeutic space is extremely crowded due to a massive number of Me-too and Fast-follow competitors. Breakthroughs in the approximately 85% of hard-to-drug targets require the introduction of novel technologies such as allosteric modulation and PROTACs. Allosteric technology can address the challenges inherent in conventional orthosteric drugs, particularly the difficulty in developing agonists and highly selective inhibitors. Furthermore, allosteric drugs can be used in combination with orthosteric drugs to delay the emergence of drug-resistant mutations in diseases such as cancer. Overseas companies operating in the same field include Relay Therapeutics, which listed on NASDAQ in 2020, and HotSpot Therapeutics, which secured $65 million in Series B financing, among others.

Prior to 2010, most reported allosteric molecules were discovered serendipitously through high-throughput screening experiments. Due to the lack of rational discovery methods, insufficient accumulation of standardized allosteric drug data, and limited understanding of allosteric sites and their molecular mechanisms of action, drug developers were unable to rationally design and develop these compounds.

As a global allosteric data center, NUTSHELL houses a vast repository of standardized data on allosteric proteins, allosteric sites, their modulators, and allosteric site mutations. This enables the development of rational methods for identifying allosteric sites and screening allosteric mechanism-based drug discovery approaches, while also facilitating the R&D of novel allosteric therapeutics. Numerous multinational pharmaceutical companies, biotechnology firms, and research institutions have already become early adopters.

Based on the allosteric database, the company has developed ALLOSTAR.^TMAn allosteric drug R&D platform that leverages artificial intelligence and first-principles methods, integrated with a biochemical laboratory platform, to achieve rapid breakthroughs from target protein structures to allosteric small-molecule drugs, covering the complete process of allosteric drug discovery and optimization. ALLOSTAR^TMThe main modules include utilizing artificial intelligence and physics-based computational methods to discover and analyze hidden allosteric sites on targets, and employing deep learning algorithms to automatically generate novel small molecules with allosteric effects targeting these sites, among others.

Based on ALLOSTAR^TMLeveraging its allosteric drug R&D platform, NUTSHELL has developed multiple in-house pipelines, including a novel-target allosteric agonist pipeline, with the preclinical candidate (PCC) expected to be confirmed by the end of 2021. Meanwhile, NUTSHELL is also actively collaborating with multiple pharmaceutical and biotechnology companies based on this allosteric drug development platform.

Sun Linghao, Investment Director at Matrix Partners China, said: "We have already invested in multiple startups with unique technological platforms in the biopharmaceutical sector and have long focused on new drug development opportunities targeting undruggable targets. Over the past year, the NUTSHELL team has demonstrated exceptional execution capabilities, establishing a distinctive allosteric drug discovery platform. Preliminary data across several highly promising innovative targets have validated its potential, making the systematic and 'non-random' discovery of allosteric sites and drugs possible. We look forward to the company gradually developing into one of the world's leading computationally driven allosteric platforms."

Source Code Capital partner Huang Yungang said“Source Code Capital remains highly optimistic about the biomedical sector. The application of AI technology in new drug R&D will continue to deepen, and over the long term, will drive profound industry transformations and deliver significant social impact. The NUTSHELL team has long been dedicated to new drug discovery and committed to continuous innovation. We look forward to the team continuously optimizing its AI+allosteric drug discovery platform, advancing the development of both its proprietary and collaborative pipelines, and bringing greater empowerment and advancement to the industry.”

Kunlun Capital Vice President Chen Xinying stated: “Kunlun Capital focuses on investing in technology and innovation-driven enterprises. 2020 marked the breakthrough year for allosteric therapeutics, with overseas allosteric drug companies successively going public or securing investments from renowned institutions. NUTSHELL is currently the only innovative drug R&D company in China that possesses both an AI platform and a proprietary pipeline. We are highly confident in NUTSHELL's future development.”

Deng Feng, Managing Director of Northern Light Venture Capital, stated：“Allosteric drug development is a high-barrier field within small-molecule therapeutics that has long lacked systematic and rational discovery methodologies. Aurora has backed NUTSHELL since the Pre-Series A round, confident in the team’s academic leadership in allostery and the value of tackling undruggable targets. We look forward to NUTSHELL’s pipeline entering clinical trials soon to benefit patients.”

Baidu Ventures stated：“Innovative drug pipeline development will be the core theme of China's healthcare innovation over the next decade. As a long-standing shareholder of NUTSHELL, we are highly optimistic about the company's accumulated expertise in allosteric technology. Empowered by AI, we believe the team can progressively lead the company to become a new technology-driven pipeline platform. Since 2017, BV has strategically positioned itself in the AI drug discovery sector and will steadfastly and continuously support technological innovation teams in this field.”

Matrix Partners China, established in 2008, is a premier venture capital firm in China. Over the decade-plus since its inception, it has remained deeply rooted in the domestic market, steadfastly investing in Chinese entrepreneurs. To date, Matrix Partners China has invested in over 700 companies, with notable portfolio companies including DiDi, XPeng, Li Auto, Futu, Chehaoduo Group, Youzan, Ronbay Technology, XGIMI, Momo, Ele.me, Peijia Medical, KMD Diagnostics, Genor Biopharma, Career International, LexinFintech, So-Young, Yuanfudao, PingCAP, Zihai Guo, Simple Love, iSpace, Taimei Medtech, and Yaoyanshe, among others.

Founded in the spring of 2014, Source Code Capital is dedicated to identifying and empowering leading enterprises in the wave of the information revolution. The firm currently manages $2.5 billion and RMB 8.8 billion in capital. Adhering to first-principles thinking and in-depth research to guide its investment activities, Source Code Capital operates within a "Three Horizontals and Nine Verticals" investment map. Driven by three core forces—"Internet+", "Smart+", and "Global+"—it has invested in over 200 companies spanning major sectors including media and content, consumer services, industrial enterprises, finance, retail, automotive and real estate, as well as education and healthcare.

Portfolio companies (partial list) include: ByteDance, Meituan (3690.HK), KE Holdings (NYSE:BEKE); Li Auto (NASDAQ:LI), Niu Technologies (NASDAQ:NIU), RELX (NYSE:RLX), Narwal, Ziroom, Jvyou, Huizhao.com, Pagoda, Mogu Inc. (NYSE:MOGU), Xinchao Media, Walnut Coding, Weimai, Huishoubao, Linji, Qingzhu, Chayan, Wangbaobao, Bloks; Yijiupi, Yimidida, Little Pharmacy, Baibu, DianCloud, Zhongneng United, Keenon Robotics, Chuxin, YunQuNa, Ruigu, CAS, Che300; Qudian (NYSE:QD), Zichan360, Woniu Insurance, Ci Finance, Aboc; KrazyBee, Zenjoy, BLUE, OPay, etc.

Founded in 2015, Kunlun Capital specializes in investing in technology-driven innovative enterprises and operates with dual-currency funds in US dollars and RMB. With user value at its core, Kunlun Capital focuses on innovative business models driven by technology, products, and data. Through the careful selection of leading companies in niche sectors, it seeks entrepreneurial teams with strong globalization potential and localization capabilities.

In recent years, Kunlun Capital has successively invested in companies such as Inke, Dada, Cloudm, Pony.ai, Keya Medical, EdiGene, Cytek, PingCAP, Obio Technology, LeYan Technology, and Xunshi Technology.

Founded by Mr. Deng Feng in 2005, Northern Light Venture Capital is committed to the mission of "empowering world-class Chinese entrepreneurs and cultivating world-class Chinese enterprises." It has long focused on investing in outstanding early-stage, technology-driven innovative enterprises. To date, it has invested in over 400 high-potential companies across the ToB, healthcare, and ToC consumer sectors. Northern Light Venture Capital entered the healthcare sector in 2009. Over the past decade, its investments have spanned multiple sub-sectors including medical devices, in vitro diagnostics (IVD), biopharmaceuticals, healthcare services, and E-Health, covering nearly the entire industry value chain. The firm has successively invested in more than 70 companies, including CITIC Healthcare, BGI Genomics, Burning Rock Biotech, Genor Biopharma, iRay Technology, Taimei Medical, Cytek Biosciences, Grandtech Supply Chain, Connetics Biosciences, XinNian Bio, Yidao Bio, OSTO Group, and Caydy Biotech.

Baidu Ventures is an independent venture capital firm initiated by Baidu Group, managing two USD and RMB funds with a combined scale of $400 million. Baidu Ventures primarily focuses on early-stage pioneer companies in artificial intelligence, and is committed to driving development across key sectors such as commercial consumption, healthcare and livelihood, and technological expansion. The team is composed of professional investors with extensive experience in the investment industry.

Leveraging the robust support and resource-sharing capabilities of Baidu Group, Baidu Ventures strategically deploys investments across the artificial intelligence sector. It is committed to tirelessly advancing the rapid and optimal integration of AI into the daily lives of the general public. To date, its investment portfolio spans industrial design, intelligent healthcare, logistics and warehousing, smart cities, IoT-enabled living, semiconductors, and smart manufacturing.

Throughout its investment process, Baidu Ventures aspires to join hands with peers across the investment community to attain the state of “where sound and silence blend, and the distinction between self and object fades into inner joy,” thereby empowering the rapid growth of AI companies. In response to China’s current grand vision of national rejuvenation through science and technology, it will honor the solemn trust of its shareholders, align with the momentum of the times, and courageously shoulder its historic responsibilities.