Space Peptides: Commercializing AI-Driven Peptide Drug Discovery Through a CRDMO Model

AI Drug Development: One of the Most High-Profile Fields in Recent Years

About a month ago, Insilico Medicine announced a potential $1.2 billion Big Deal with Sanofi, which sparked more realistic discussion topics——How do large domestic and international pharmaceutical companies view the technology of AI drug discovery companies in China, and more directly, are they willing to pay for AI technology?

Space Peptides, as a company mainly providing AI-driven peptide innovative drug CRO and CDMO services, directly answered this sharp question.This year marks the second year of commercialization for this low-profile company, but it is also the first year of profitability.It is reported that Space Peptides has finalized eight project collaborations this year, initiated 12 new pipelines, and has some currently under commercial negotiation. Its clients include Roche, Lonza, BRACCO, Renfu Pharmaceutical, Xingqi Eye Medicine, and Kangyuan Pharmaceutical.

Space Peptides Represents a New Approach in AI Drug Discovery: From CADD to AIDD. Why Are Global Pharmaceutical Giants Interested in This Company? How Does Their Business Model Work for International and Domestic Partners? To Explore These Questions, VCBeat’s New Medicine Column Interviews Dr. Runze He, Founder of Space Peptides.

The three labels "Peptide Drugs," "AI Drug Development," and "CRO+CDMO" accurately define Space Peptides. Its "path to self-validation" differs from most AI drug development companies: Space Peptides deeply integrated peptide drug design with AI from the outset of its establishment.

When it comes to entrepreneurial stories, the transformation of mature scientific research results into practical applications through collaboration with mentors in starting businesses is not uncommon. Dr. Runze He met Professor Jean-Louis Reymond during an exchange activity in 2009 and went on to study under Professor Reymond for his master’s, Ph.D., and post-doctorate, eventually co-founding a business together. In fact, they began planning as early as around 2013. The AI-driven innovative drug development platform used by Space Peptides, which is based on the Chemical Space theory, has been under construction since 2002, with nearly 20 years of data accumulation and AI training foundation. To date, Chemical Space has amassed 10^12 different compounds, forming the Chemical Space virtual database.

Dr. Runze He believes that,The design concept of polypeptides is the future trend in drug development.However, using AI to predict peptides is much more difficult than predicting small molecules. Predicting the spatial structure of peptides requires more powerful algorithms. This is because the spatial structure of small molecules is relatively simple and rigid, making it easier to predict. In contrast, the spatial changes in peptide structures are more complex, involving tertiary or even quaternary structural changes, which significantly increases the difficulty of prediction. More importantly, the key to achieving precise AI predictions lies in the sufficiently large amount of real peptide data that Space Peptides has been continuously accumulating.

Building on the AI + peptide drug model, Space Peptides has established a one-stop CRO + CDMO service chain through its clearly divided subsidiaries located around the world. Each subsidiary has a "small but highly skilled" professional team, whose members include researchers from major pharmaceutical companies such as Novartis and Roche, as well as biochemists and computer scientists from top universities worldwide.

The AI team in Basel, Switzerland, composed of multiple PhDs with backgrounds in artificial intelligence and medicinal chemistry, is mainly responsible for the virtual design and screening of drugs. The synthesis team in Zhangzhou, Fujian, handles the transformation process of compounds from virtual to reality, including peptide synthesis, purification, impurity research, and more. The biological validation team located in Xiamen, Fujian, collaborates with the advanced platforms and technologies of the Xiamen University School of Pharmaceutical Sciences to carry out in vitro and in vivo biological validation of new drug molecules. Finally, the GMP factory in Taixing, Jiangsu, will undertake the crucial function of industrial transformation for new drug molecules, with the first innovative drug project expected to officially launch in the second quarter of next year. Additionally, the factory will also handle some non-innovative drug CDMO services for external clients.

Space Peptides has gained recognition from several leading enterprise clients, and the ensuing orders for innovative drug development serve as the best "external validation" for this technology company.

The first successful project order came from a leading pharmaceutical company in China. In January 2020, when the COVID-19 outbreak occurred, by July, Space Peptides had successfully delivered three PCCs (Preclinical Candidate Compounds) for COVID-19 drugs. Despite the impact of the pandemic lockdown, it only took six months in total.

The reasons why many customers choose Space Peptides repeatedly are its speed and precision.

Dr. He Runze's Advocacy of Rational Drug Discovery: A Technological Revolution from the Deep Integration of AI and Structural Chemistry. Through one to three rounds of "AI design to wet-lab experimental validation cycles," it not only significantly reduces the number of molecules synthesized manually but also greatly improves the accuracy of effective molecule screening. This, in turn, lowers R&D costs and shortens the development cycle.

In terms of delivery speed, the time from target validation to PCC delivery has been shortened from about 3-4 years to 6-12 months, significantly improving the efficiency of new drug development.

In terms of business model, Space Peptides is also highly confident in its technology. Space Peptides adopts a risk-sharing approach with clients to jointly develop drugs. Throughout the drug development process, the company commits to "deliver first, pay later" at each milestone, deeply engaging in the entire drug development cycle while sharing the benefits.

When discussing the differences between domestic and international clients in terms of new drug innovation, Dr. Runze He stated, "Currently, there is still a significant gap between Chinese pharmaceutical companies and their foreign counterparts in terms of investment in innovation. However, with the continuous optimization of innovative concepts and the increasing investment in innovation by large domestic pharmaceutical enterprises, it is expected that within the next five years, China will gradually catch up with international standards."

WuXi AppTec's Q3 financial report for this year shows that the company achieved rapid growth in performance from Q1 to Q3 of 2022, with revenue doubling. The revenue for Q3 2022 was 20.82 billion yuan, representing a year-on-year growth rate of 106.6%. Small CXO companies also performed well, and for CXO companies, it seems to be a mild winter.

Space Peptides has also seized the opportunity for CDMO business development. By deeply integrating front-end new drug discovery CRO services with back-end CDMO services, it further enhances customer loyalty while allowing more pharmaceutical companies to recognize the strong technical capabilities of this technology-driven enterprise. With the continuous accumulation of project experience, the steady increase in technical talent, and the ongoing optimization of workflow management, Space Peptides’ future one-stop CRDMO full-process services may lead new drug innovation—especially peptide-based drug innovation—into an entirely new era.