The same week that BenevolentAI announced it was cutting 30% of its staff, AI-focused biotech Xaira Therapeutics debuted with a $1 billion funding round with little precedent in healthcare over the past year. A survey of the biggest fundraising rounds over the past year revealed that the absolute largest investments were attracted by sectors such as semiconductors (China-based Changxin New Bridge — $1.99B and GTA Semiconductor — $1.86B), data centers (Vantage Data Centers — $6.4B in equity investment), AI (Inflection AI — $1.3B) and automotive (Leapmotor — $1.6B). But in healthcare, Xaira’s $1 billion in fundraising is one of the largest in recent memory — with the $3B emergence of Altos Labs in early 2022 being one exception.
Support from high places
Arch Venture Partners and Foresite Capital co-led Xaira Therapeutics’s $1 billion funding round. The San Francisco-based company, with former Genentech chief scientific officer and Denali Therapeutics co-founder Marc Tessier-Lavigne at the helm, aims to leverage AI for drug discovery and development.
Xaira’s board boasts an all-star lineup of industry veterans, including former FDA Commissioner Scott Gottlieb, Nobel laureate Carolyn Bertozzi and former Johnson & Johnson CEO Alex Gorsky. The investment in Xaira is Arch Venture Partners’ largest in its 39-year history.
Investor confidence amidst leadership scandal
The Xaira saga is not without controversy, given that Marc Tessier-Lavigne, the former president of Stanford University, was implicated in a research misconduct scandal that led to his resignation from the university in July 2023 after a scientific panel determined that he had failed to correct papers that contained manipulated data and that labs he managed had at times produced sloppy or manipulated data.
Robert Nelsen of ARCH Venture Partners, which incubated Xaira, said he specifically sought out Tessier-Lavigne to lead the company and that he had the support of investors, some of whom said they would only back Xaira if Tessier-Lavigne was at the helm, according to Bloomberg.
Out of the gate, Xaira’s already outfunded many prominent private healthcare companies
Based on an analysis of more than 100 of the top-funded healthcare companies that have received funding in the past year, Xaira has considerably more funding than the average funding amount of $270,299,000. Notable companies in the assessment included Freenome ($1.4B), a biotech focused on early cancer detection through blood tests using ML; ElevateBio ($1.2B), a cell and gene therapy technology company and Biosplice Therapeutics ($778M), which specializes in novel therapeutics based on alternative splicing for major diseases including cancer and osteoarthritis.
Filed Under: Biotech, machine learning and AI