AI firm Insilico closes a $255 million financing round as it builds on discovery research

Insilico Medicine, a developer of artificial intelligence technology for drug discovery, has raised $255 million in series C financing. The investment round is the second this year to top $200 million for an AI-based drug discovery firm.

The investment follows Insilico’s announcement in February that it used AI to identify a novel target and develop an investigational small-molecule therapy to treat idiopathic pulmonary fibrosis. Claiming a first, Insilico says it identified the target, developed molecules, and completed preclinical trials in 18 months.

Exscientia, an AI competitor, netted $225 million in a financing round announced in April. Three drug candidates designed with Exscientia AI are in clinical trials, including a therapy for obsessive-compulsive disorder developed with Sumitomo Dainippon Pharma.

Insilico’s funding was led by Warburg Pincus with participation from 25 other investors, a majority of them based in China. Insilico says it will use the proceeds to progress its pipeline of 16 therapeutic programs, several based on novel targets, and to initiate new programs. It will also continue to invest in AI software and associated robotics, according to CEO Alex Zhavoronkov, CEO.

Insilico also announced a partnership with Teva Pharmaceutical. The firm has already collaborated with Pfizer, Astellas, Johnson & Johnson, and Taisho.

From its base in developing AI tools, Zhavoronkov says Insilico has turned to building a drug discovery research engine this year. Feng Ren, an 11-year veteran of GlaxoSmithKline and former executive at Medicilon, a Chinese contract research organization, recently joined the company as chief scientific officer. Insilico hired 50 researchers this year to do discovery research at facilities in China, Taiwan, and the US.

Insilico announced a $37 million series B investment round last September. While some repeat investors, such as Sinovation Ventures, show an interest in digital healthcare technology, the first-time investors in the new funding round, including OrbiMed and Lake Bleu Capital, frequently invest in pharmaceutical start-ups. Zhavoronkov says the new backers reflect Insilico’s effort to grow as a hybrid AI and drug company.

“We are trying to embrace a mixed martial art philosophy,” he says. “This funding shows you that we probably grappled with enough champions to demonstrate to some of the companies that invest in pharmaceutical companies that our AI is at the level of the best target hunters in the world.”

Alán Aspuru-Guzik, a professor of chemistry and computer science at the University of Toronto and cofounder of Kebotix, a materials discovery AI firm, says the spate of investment in AI indicates that the pharmaceutical sector needs new ideas. Advances in AI technology firms’ pipelines are attracting investors, he says. “These are the kinds of things that show AI in drug discovery is not just a game.”

Aspuru-Guzik, who has advised Insilico, anticipates that AI for materials discovery is next up for major venture capital backing. “Materials science is a more traditional industry,” he says. “But the next is materials. Next agriculture, and next petrochemicals. Industry after industry will go through digital transformation with AI and data science.”