Advances in generative artificial intelligence have taken the technology world by storm. Biotech investors are betting that similar computational methods could revolutionize drug discovery.
On Tuesday, Partners of the ARCH project AND Foresite Laboratoriessubsidiary of Foresite Capital, announced incubation Xair therapy and funded artificial intelligence biotechnology with $1 billion. Other investors in the latest company, which has been operating secretly for about six months, include F-Prime, NEA, Sequoia Capital, Lux Capital, Lightspeed Venture Partners, Menlo Ventures, Two Sigma Ventures and SV Angel.
Xaira CEO Marc Tessier-Lavigne, former president of Stanford and chief scientific officer at Genentech, says the company is poised to begin developing drugs that might be unimaginable to produce without recent breakthroughs in artificial intelligence. “We made this large capital raise because we believe the technology is at an inflection point where it can have a transformative impact on the field,” he said.
Advances in basic models originated at the University of Washington’s Protein Design Institute, run by David Baker, one of Xaira’s co-founders. These models are similar to the diffusion models that power image generators resembling DALL-E and OpenAI’s Midjourney. But slightly than creating art, Baker’s models aim to design molecular structures that will be made in the three-dimensional physical world.
While Xaira’s investors imagine the company can revolutionize data design, they stressed that applications of generative AI in biology are still in their early stages.
Vik Bajaj, CEO of Foresite Labs and managing director of Foresite Capital, said that unlike technology, where the data used to train artificial intelligence models is created by consumers, biology and medicine are “data poor.” You need to create datasets that may drive model development.”
Other biotech firms using generative AI for drug design include Recursion, which went public in 2021, and Genesis Therapeutics, a startup that raised $200 million in a Series B round last 12 months co-led by Andreessen Horowitz.
The company would not say when it expects to make its first drug available for human trials. However, ARCH Venture Partners managing director Bob Nelsen stressed that Xaira and its investors are ready to play the long game.
“You need billions of dollars to be a real pharmaceutical company and also think about artificial intelligence. Both of those disciplines are expensive,” he said.
Xaira wants to position itself as a powerhouse in AI-based drug discovery. However, some imagine that the appointment of Tessier-Lavigne as CEO is an unexpected move. Tessier-Lavigne resigned as Stanford’s president last 12 months amid allegations that his lab at Genetech manipulated research data.
However, investors are convinced that he is the right person for the job.
“I have known Marc for many years and know him to be an individual with integrity and scientific vision who will be an exceptional CEO,” Nelsen wrote in an email. “Stanford exonerated him of any scientific misconduct or misconduct.”