Quick Take: AI-Powered Drug Developer Nets $15 Million From Google, Tencent

A 4-year-old startup that applies artificial intelligence (AI) to drug development has raised $15 million in its latest funding round from Google, Tencent Holdings Ltd. and Sequoia Capital China.

XtalPi Inc. — which has offices in Beijing, Shenzhen, and Cambridge, Massachusetts — said it will use the funds to improve the high-tech chemical-matching algorithm that underpins its drug designs.

Drug development is a marathon-like process, involving compound screening, chemical synthesis, clinical trials and regulatory approval — which altogether can take decades.

Traditional methods of finding chemicals that can properly synthesize with one another is a long and uncertain process, said XtalPi co-founder Lai Lipeng.

Last year, XtalPi secured its largest-ever drug-development client by beating out others in a chemical-matching test — performing, the company said, with 100% accuracy. XtalPi did not disclose the name of the client.

In 2015, the Shanghai subsidiary of Swiss drugmaker Roche Holding AG became XtalPi’s first pharmaceutical partner, according to XtalPi’s website.

Other companies are also exploring drug design through AI, including U.S.-based XtalPi rival Numerate, Insilico Medicine, Berg Health and NuMedii, as well as China’s AccutarBio. Last month, AccutarBio raised $15 million from investors including IDG Capital, ZhenFund and AI startup Yitu.

Lai — who along with two other co-founders did postgraduate work at the Massachusetts Institute of Technology — said that each competitor focuses on a different area, and that a large space exists for collaboration.

For now, the company’s business only covers chemical medicine, but will expand into biopharmaceuticals as well, Lai said.

Contact reporter Coco Feng (renkefeng@caixin.com)