Advances in generative AI are taking the technology world by storm. Biotech investors are making big bets that similar computational techniques could revolutionize drug discovery.
On Tuesday, Foresite Labs, an affiliate of ARCH Venture Partners and Foresite Capital, announced the formation of Xaira Therapeutics and $1 billion in funding for the AI biotech. Other investors in the new company, which has been operating in stealth mode for about six months, include F-Prime, NEA, Sequoia Capital, Lux Capital, Lightspeed Venture Partners, Menlo Ventures, Two Sigma Ventures and SV Angel.
Zaira CEO Marc Tessier-Lavigne, a former Stanford University president and Genentech's chief scientific officer, said the company is developing drugs that would not have been possible without recent advances in AI. He said he was ready to get started. “We have raised this significant amount of funding because we believe this technology is at an inflection point that could have a transformative impact on the sector,” he said. .
Fundamental model advances come from 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 such as OpenAI's DALL-E and Midjourney. But Baker's model is not about creating art, but about designing molecular structures that can be created in the three-dimensional physical world.
While Xaira's investors are confident that the company can revolutionize data design, they emphasized that the application of generative AI in biology is still in its infancy.
Vik Bajaj, CEO of Foresite Labs and Managing Director of Foresite Capital, said that unlike technologies where the data that trains AI models is created by consumers, biology and medicine are “data-poor. We need to create a dataset to drive it.”
Other biotech companies using generative AI to design drugs include Recursion, which went public in 2021, and Genesis Therapeutics, a startup that raised $200 million in a Series B co-led by Andreessen Horowitz last year.
The company did not say when the first drug is expected to be available for human clinical trials. But Bob Nelsen, managing director of ARCH Venture Partners, emphasized that Zaira and its investors are prepared to play the long game.
“You need billions of dollars to become a real pharmaceutical company and also think about AI. Both are expensive areas,” he said.
Xaira wants to establish itself as a leading company in AI drug discovery. However, some believe that hiring Tessier Lavigne as CEO is an unexpected move. Tessier-Lavigne resigned as president of Stanford University last year amid allegations that Genetech's lab manipulated research data.
But investors are confident he is qualified for the job.
“I have known Mark for many years and know he is a man of integrity and scientific vision who will make an excellent CEO,” Nelsen said in an email. “Stanford University has cleared him of any wrongdoing or scientific misconduct.”