Allosteric drug discovery company Nutshell Therapeutics has raised $20 million in a Series A round led by Source Code Capital.

Nutshell Therapeutics (宇道生物) has officially announced the completion of a $20 million Series A funding round to advance its computation-driven allosteric drug discovery platform and clinical development of allosteric drug candidates. The round was led by Matrix Partners China, with participation from Source Code Capital and Kunlun Capital. Existing investors Northern Light Venture Capital and Baidu Venture also continued their support. Dian Shi Capital served as the exclusive financial advisor.

Nutshell Therapeutics has long focused on allosteric drug R&D and is currently the only platform-based allosteric new drug discovery company in China driven by computational approaches. Its team comprises top global scientists in the allosteric field, seasoned experts from major multinational pharmaceutical companies, and specialists in AI-driven drug discovery (AIDD). The company had previously raised two rounds of funding, with its Pre-A round led by Northern Light Venture Capital and Baidu Venture, followed by Fangyuan Capital and Tengye Venture Capital.

Nutshell Therapeutics maintains the world's earliest, largest, and most comprehensive allosteric database. Through its self-developed AI + allosteric drug discovery platform, the company enables the development of lead molecules for previously "undruggable" targets via allosteric mechanisms (from 0 to 1) and accelerates their path to becoming viable drugs (from 1 to 10). Based on this platform, the company has built multiple pipelines, including First-in-Class programs targeting novel targets. Compared to traditional methods, Nutshell's platform significantly shortens allosteric drug development timelines and reduces costs, with commercialization through self-developed programs, co-development partnerships, and licensing-out arrangements.

Currently, conventional druggable targets — which account for roughly 15% of the human proteome — are nearing exhaustion, with me-too and fast-follow competitors flooding already crowded fields. Breaking through the remaining ~85% of difficult-to-drug targets requires introducing new technologies such as allosteric modulation and PROTAC. Allosteric technology can address challenges that conventional orthosteric drugs face, such as the difficulty of developing agonists and highly selective inhibitors. Additionally, allosteric drugs can be combined with orthosteric drugs to delay the emergence of resistance mutations in diseases such as cancer. Comparable companies in this space overseas include Relay Therapeutics, which went public on Nasdaq in 2020, and HotSpot Therapeutics, which raised a $65 million Series B.

Before 2010, most reported allosteric molecules were discovered serendipitously through high-throughput screening experiments. The lack of rational discovery methods, standardized allosteric drug data, and understanding of allosteric sites and their molecular mechanisms made rational design and development impossible for drug developers. As a global allosteric data hub, Nutshell possesses massive amounts of standardized data on allosteric proteins, allosteric sites, their modulators, and allosteric site mutations — enabling the development of rational methods for identifying allosteric sites and screening allosteric mechanism drug candidates, as well as the discovery of entirely new allosteric drugs. Several multinational pharmaceutical companies, biotech firms, and research institutions have already become early adopters.

Building on its allosteric database, the company has developed the ALLOSTARTM allosteric drug discovery platform. Combining artificial intelligence, first-principles methods, and biochemical laboratory capabilities, it achieves rapid breakthroughs from target protein structures to allosteric small-molecule drugs, covering the complete allosteric drug discovery and optimization process. Key modules of ALLOSTARTM include using AI 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 for these sites.

Based on the ALLOSTARTM platform, Nutshell has developed multiple self-owned pipelines, including allosteric agonist programs targeting novel targets, with PCC (preclinical candidate) confirmation expected by the end of 2021. The company is also actively pursuing collaborations with multiple pharmaceutical and biotech companies based on its allosteric drug discovery platform.

Yungang Huang of Source Code Capital said: "Source Code Capital remains bullish on the biotech and healthcare sector. The application of AI technology in new drug discovery will only grow deeper, and in the long run will bring enormous industry transformation and social impact. The Nutshell team has long focused on new drug R&D with a sustained commitment to innovation. We look forward to the team continuing to optimize its AI + allosteric drug discovery platform, advancing both its proprietary and partnered pipelines, and bringing greater empowerment and advancement to the industry."

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