Massachusetts-based Generate: Biomedicines said that equity financing now stands at nearly $700mn.
September 15 (Preqin News) – Machine learning-powered clinical therapeutics firm Generate: Biomedicines has raised $273mn in series C financing. The funding is the latest in a series of large biotech fundraising rounds fueled by anticipation that AI could yield major advances in drug discovery and therapeutics.
Announcing details on Thursday, Massachusetts-based Generate: Biomedicines said that equity financing now stands at nearly $700mn. The firm, which completed series B financing in 2021, added that the capital will be used to further develop its machine learning-powered generative biology platform.
‘Our series C round further propels The Generate Platform to increase significantly the precision, speed, and probability of success of novel therapeutics – positioning us to tackle even more complex targets and unmet patient needs,’ Mike Nally, the firm’s Chief Executive Officer said in a statement. ‘With our first program now in the clinic and multiple programs expected to enter clinical studies over the next couple of years, we are beginning to realize the enormous potential of generative biology to save and improve the lives of patients in areas where the burden of disease is greatest.’
The increased adoption of AI in drug discovery is fostering hope that it could boost the pace, profitability, and efficacy of new treatments for conditions or diseases, including those that have eluded medicine to date. Some analysts have predicted the market could be worth $50bn over the next decade.
Palo Alto-based biotech start-up Inceptive, which develops vaccines and drugs using AI-based biological software, announced on September 7 that it raised $100mn in a series A funding round. In August, California-based Genesis Therapeutics said it had raised $224mn in series B funding for its AI-based platform, developing novel therapies for the treatment of severe disorders.
Generate: Biomedicines’ founder, Flagship Pioneering, and all Series B investors participated in its latest round. Nvidia’s venture capital (VC) arm NVentures co-led the Inceptive deal and participated in both the Genesis and Generate: Biomedicines rounds. Andreessen Horowitz co-led the Inceptive and Genesis fundraising.
AI algorithms process and analyze data faster than humans. This potentially helps accelerate drug discovery and allows clinical trials to take place earlier, boosting efficacy and cutting the time and cost of developing new therapeutics. The success of the Pfizer and Moderna COVID-19 vaccines, in particular, highlighted the value of machine learning in therapeutics development.
According to analysts at Morgan Stanley, the use of AI and machine learning in early-stage drug development could result in the development of dozens of novel therapies over the next decade which, they said in an October 2022 report, ‘could translate to a more than $50bn opportunity’.
‘Predictive diagnostics, enhanced by data, present a significant near-term opportunity for the life sciences industry,’ said Tejas Savant, who covers life science tools and diagnostics at Morgan Stanley. He added: ‘It’s also likely to resonate with payors, since these trials can generate better outcomes. They can also deliver sizable cost savings by enabling earlier identification and treatment of higher-risk patients.’
Despite the positive forecast and recent large deals, the sector has seen the number of transactions and capital raised slide, along with a slowdown across the VC landscape. Preqin data shows that start-ups developing or using AI-based medical software have raised $6.9bn from 505 deals so far this year, down from a peak of $25.9bn in the whole of 2021. US-based companies have raised the most ($4.8bn), followed by China ($286.7mn), the UK ($246.6mn), Canada ($199.2mn), and Japan ($153.1mn).
Meanwhile, the depressed IPO and valuations environment has caused a drop in the number of exits to 38 so far this year. As such, trade sales have dominated deal-making, with 25 transactions completed during that period.
AI biotech VC in numbers
Early stage continues to lead investment, with seed (119), series A (95), and series B (37) rounds. Late-stage investment remains healthy, with series C (23), series D (16) and series F (4) transactions.
Most active deal-makers (September 2018 – 2023 YTD):
Most active seed investors (September 2018 – 2023 YTD):
General Catalyst Partners has dominated series A investment (19), while Khosla Ventures leads series B (14) and Insight Ventures is the most active series C investor (14).