Investors bet on AI start-ups to speed up drug development


Startups promising to use artificial intelligence to transform drug development are raising hundreds of millions of dollars and signing deals with Big Pharma, despite the recent selloff in biotech stocks.

Owkin, a French company, is teaming up with Bristol Myers Squibb to improve the way the US drugmaker designs its trials in a deal worth up to $180 million, including step if drugs pass regulatory hurdles.

The collaboration comes after three other startups raised a total of $150 million this week. The move comes amid a broader biotech stock market rout that has left investors wary of companies focusing on developing one or two drugs.

Hussein Kanji, a partner at Hoxton Ventures, said there was a “new money rush” in this nascent market from tech and life sciences investors due to the “irresistible” prospect that you could build a platform that speeds up and reduces the cost of the long drug development process.

“The real novelty is bringing in a bunch of new funds that may or may not know what they’re doing,” he added. “Everyone is experimenting right now on what’s going to work and what’s not going to work.”

Hoxton Ventures is investing in Peptone, a London-based start-up that uses machine learning to fix ‘messy proteins’ that traditional drug discovery methods struggle to target. The company announced a $40 million Series A led by venture capital group F-Prime Capital and Bessemer Venture Partners.

F-Prime Capital also co-led a $50 million seed round in another London-based company, Charm Therapeutics, which was set up last September, alongside specialist healthcare investor OrbiMed. .

Charm’s DragonFold platform is built on Alphabet’s AlphaFold and RosettaFold, developed at the University of Washington in the lab of Charm co-founder David Baker. They use AI to determine the three-dimensional structure of proteins.

Charm has extended them to predict how proteins will fold around ligands — small molecules that could have pharmacological effects — and research new cancer drugs.

Earlier in the week, Hong Kong-based startup Insilico raised $60 million in a BCG-led round, following a $255 million round last year. Insilico has its first drug candidate – a treatment for lung scarring – in an early-stage clinical trial.

The three start-ups plan to spend part of their funds on new facilities, which will help create new biological data.

Vishal Gulati, founder of venture capital firm Recode Health, said many companies originally thought they could apply new data technologies to publicly available datasets. But they found the data was not good enough to provide “fruitful” insights, he added. “Smart companies have started generating their own data in an effort to discover new drugs.”

Investors are also tempted by the prospect of partnerships with large pharmaceutical laboratories, which recognize that they do not have all the necessary skills in-house. Bristol Myers Squibb already signed a $1.2 billion deal with artificial intelligence company Exscientia last year, and Owkin and Exscientia recently signed partnerships with French drugmaker Sanofi.

Venkat Sethuraman, head of global biometrics and data services at Bristol Myers Squibb, said the company was “very optimistic” about how AI could help improve clinical trial design and wanted to work with Owkin in because of its “complementary data set”. Owkin uses federated learning, a machine learning technique, to train its algorithm on hospital data, without ever seeing the data itself.

Thomas Clozel, chief executive of Owkin, said pharmaceutical companies were more interested in investing in ways that “hacked into the system” than acquiring the only potential drug from a biotech. “Everyone really wants to believe that there is a way to find not a cure in 10 years, but 10.”


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