Xaira, an AI drug discovery startup, launches with a massive $1B, says it’s ‘ready’ to start developing drugs

Investments in groundbreaking computational methods aimed at revolutionizing drug discovery are on the rise. Recently, ARCH Venture Partners and Foresite Labs, a division of Foresite Capital, announced a collaboration to establish and fund Xaira Therapeutics, an AI-focused biotech company, with a substantial investment of $1 billion. Notable investors in this venture, which has been operating quietly for about six months, include F-Prime, NEA, Sequoia Capital, Lux Capital, Lightspeed Venture Partners, Menlo Ventures, Two Sigma Ventures, and SV Angel.

CEO Marc Tessier-Lavigne, with previous ties to Stanford University and Genentech, highlights Xaira’s readiness to undertake drug development initiatives previously considered unattainable without recent AI advancements. The significant funding reflects a strong belief in the potential of AI technology to revolutionize the industry. Fundamental advancements stem from the University of Washington’s Institute of Protein Design, under the leadership of Xaira co-founder David Baker. These advancements, akin to those powering image generators like OpenAI’s DALL-E and Midjourney, aim to design molecular structures suitable for real-world production.

While Xaira’s investors are optimistic about its potential to transform data-driven design, they acknowledge that generative AI applications in biology are still in their infancy. Vik Bajaj, CEO of Foresite Labs and managing director of Foresite Capital, emphasizes the challenge of data scarcity in biology and medicine compared to technology. Generating datasets for model development remains a crucial aspect.

Several biotech firms, including Recursion and Genesis Therapeutics, are leveraging generative AI to innovate drug design. Xaira declined to disclose its timeline for human trials but stressed a commitment to a long-term strategy, as noted by ARCH Venture Partners managing director Bob Nelsen.

The intersection of AI and drug development requires substantial financial resources, according to industry experts. “You need billions of dollars to be a real drug company and also think AI. Both of those are expensive disciplines,” one expert remarked. Xaira aspires to establish itself as a leading force in AI-driven drug discovery. However, the appointment of Tessier-Lavigne as CEO has sparked discussion. Tessier-Lavigne’s departure from Stanford University’s presidency, prompted by reports of research data manipulation in his Genentech lab, raised eyebrows. Although Tessier-Lavigne himself was not implicated in any data manipulation and denied awareness of falsified research by his colleagues, concerns lingered.

Following a review initiated by Stanford‘s Board of Trustees, Tessier-Lavigne was cleared of any fraudulent or falsified scientific data involvement. Despite this, the investigation’s impact on university operations led to his resignation. However, investors remain unfazed by these events, expressing confidence in Tessier-Lavigne’s leadership. Bob Nelsen, among them, vouched for Tessier-Lavigne’s integrity and scientific acumen, citing Stanford’s exoneration of him from any wrongdoing or scientific misconduct.

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