Insilico Medicine, a Hong Kong-based company that has been using artificial intelligence to discover new drugs since 2014, has completed a fresh round of funding.
It’s a sign that certain investors are continuing to bet on emerging biotechnologies — which often take longer to prove profitability compared to other verticals — at a time venture funding is cooling.
Insilico raised $60 million from new Series D financing from investors, including its 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 West Coast of the US” and BHR Investment.
Alex Zhavoronkov, Insilico’s founder and CEO, also participated in the Series D round.
The new financial infusion is only a fraction of what Insilico banked from its Series C a year ago, a mega-round of $255 million. Zhavoronkov explained to ProWellTech that the last round “was very substantial and was intended to allow us to fund clinical development” and the company is “trying to be very conservative and careful with the money.”
“We still have a substantial amount of cash from the previous round and this round extended our runway and will allow us to continue innovating and growing,” the founder added.
“Right now the market is in ‘biotechnology winter’ where many companies are running out of cash and are dying. This presents an opportunity for Insilico Medicine to emerge as a winner during the biotech spring.”
Insilico focused exclusively on drug discovery until 2019 when it began developing its own therapeutics in areas like fibrosis, immunology, oncology and the central nervous system. It has nominated eight preclinical candidates since 2021.
The firm plans to spend its proceeds from investment on conducting Phase I studies, the clinical trial stage that primarily tests for safety, and further developing its drug discovery platform, which uses AI to identify new targets and molecules. The capital will also go toward funding Insilico’s global expansion and “strategic initiatives”, which include a “robotic drug discovery laboratory” and a “robotic biological data factory.”
The “prototype” lab will be located in Suzhou, an affluent eastern Chinese city adjoining Shanghai with favorable government policies for attracting biotech and autonomous driving startups. The lab, according to Zhavoronkov, will be equipped with autonomous guided vehicles (AGVs), now a common sight in advanced logistics facilities. It will also partner with imaging company X-Imaging to conduct phenotyping, the process of determining the physical properties of an organism.
Insilico is headquartered in Hong Kong, which has in recent years emerged as an attractive hub for biotech startups. In 2018, the city introduced new rules that cleared some hurdles for pre-revenue biotech startups to go public on the Hong Kong Stock Exchange. Setting up a base in Hong Kong also allows companies to gain potential access to China’s enormous market for biotech innovation.
Insilico has its own Chinese partner — pharmaceutical behemoth 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 financed over 60 startups, according to startup database IT Juzi.
Eight-year-old Insilico is in the “R&D” stage and isn’t profitable yet, Zhavoronkov said. It generates revenue through R&D collaborations, including upfront payments and milestones, and customer subscriptions to its AI drug discovery platform. It counts 200 employees across six countries and regions.