Insilico Medicine, a Hong Kong-based company that has been using artificial intelligence to discover new drugs since 2014, has completed a new round of funding.
It’s a sign that certain investors are continuing to bet on emerging biotechnologies – which often take longer to demonstrate profitability compared to other verticals – at a time when venture capital funding is cooling.
Insilico raised $60 million in new Series D funding from investors, including existing shareholders Warburg Pincus, B Capital, Qiming Venture Partners, BOLD Capital Partners, Pavilion Capital and new investors, an undisclosed “large, diversified asset management firm on the US West Coast” and BHR Investment.
Alex Zhavoronkov, the founder and CEO of Insilico, also took part in the Series D round.
The new financial infusion is just a fraction of what Insilico took from its Series C a year ago, a $255 million mega round. Zhavoronkov explained to gotechbusiness.com that the latest round was “very substantial and intended to allow us to fund clinical development” and that the company is “trying to be very conservative and careful with the money.”
“We still have a significant amount of cash from the previous round and this round has extended our runway and allows us to continue to innovate and grow,” added the founder.
“Right now the market is in the ‘biotech winter’, where many companies run out of money and die. This presents an opportunity for Insilico Medicine to emerge as the winner during the biotech spring.”
Insilico focused solely on drug discovery until 2019, when it began developing its own therapies in areas such as: fibrosis, immunology, oncology and the central nervous system. It has nominated eight preclinical candidates since 2021.
The company plans to use the proceeds of the investment to conduct Phase I studies, the clinical trial phase that primarily tests for safety, and further develop its drug discovery platform, which uses AI to identify new targets and molecules. . The capital will also be used to fund Insilico’s global expansion and “strategic initiatives,” including a “robotic drug discovery lab” and a “biological robot data factory.”
The “prototype” lab will be located in Suzhou, a prosperous eastern Chinese city bordering Shanghai with a favorable government policy for attracting biotech and autonomous driving startups. The lab will be equipped with autonomous guided vehicles (AGVs), which are now a common sight in advanced logistics facilities, Zhavoronkov said. It will also partner with imaging company X-Imaging to perform phenotyping, the process of determining an organism’s physical properties.
Insilico is headquartered in Hong Kong, which has emerged as an attractive hub for biotech startups in recent years. In 2018, the city new rules introduced that removed some hurdles for pre-revenue biotech startups to list on the Hong Kong Stock Exchange. Establishing a base in Hong Kong also gives companies potential access to China’s vast market for biotech innovation.
Insilico has its own Chinese partner: pharmaceutical giant Fosun Pharma. The two inked a partnership in January this year to work on drug discovery and development through a profit-sharing scheme. As part of the deal, Insilico also received an equity investment from Fosun Pharma, which has funded more than 60 startups, according to startup database IT Juzi†
Eight-year-old Insilico is in the “R&D” phase and is not yet profitable, Zhavoronkov said. It generates revenue through R&D collaborations, including prepayments and milestones, and customer subscriptions to its AI platform for drug discovery. It has 200 employees in six countries and regions.