XtalPi Secures Over $300 Million in Series C Funding Led by SoftBank Vision Fund 2, PICC Capital, and Morningside Venture Capital

VCBeat (WeChat ID: vcbeat) has learned that on September 26, 2020, XtalPi, an AI-driven drug discovery company powered by digitalization and intelligence, announced the oversubscribed completion of its $318.8 million Series C financing round, setting a new global record for funding in the AI drug discovery sector.

This round of investment was led by SoftBank Vision Fund 2ⁱ, PICC Capital, Morningside Venture Capital co-led the investment, with participation from CICC Capital, China Merchants Bank International’s China Merchants Telecom Fund, and Mirae Asset(Future Assets), CITIC Investment, CITIC Capital, Haisong Capital, Shunwei Capital, Fangyuan Capital,IMO Ventures, Parkway Fund, and other global investment institutions participated in the follow-on investment, while early shareholders such as Tencent, Sequoia China, China Life Equity Investment, and SIG Asia Investments continued to increase their investments.

XtalPi's Financing Path

According to XtalPi, the funds will be used to further develop its intelligent drug R&D system, building AI-empowered digital infrastructure for drug discovery across three dimensions—computing power, algorithms, and data—to serve global pharmaceutical companies, biotechnology firms, and partners, addressing the urgent need for improved efficiency and accelerated growth in the pharmaceutical industry.

Following a substantial Series C funding round, this MIT spin-off has ascended to the top tier of the AI-driven drug discovery industry, becoming one of the most influential companies globally in this field. With the participation of several renowned domestic and international investment institutions, XtalPi is poised to significantly strengthen its R&D capabilities and collaborate with more major global pharmaceutical companies on joint drug development initiatives.

Algorithms, data, and computing power are the three core elements influencing the development of artificial intelligence technology. XtalPi has managed to stand out among numerous AI-driven pharmaceutical companies by making significant strides in these three areas.

In terms of algorithms, XtalPi has built a robust repository of over 100 algorithms based on the dual cores of physics-based and artificial intelligence (AI) theories. Its physics-based theoretical framework encompasses algorithms ranging from quantum mechanics to classical mechanics. By constructing multi-scale, multi-dimensional models, it can accurately describe the interactions between drug molecules and human proteins at the most fundamental level. Meanwhile, its AI theoretical framework has established AI-enhanced and cross-validated models that correlate diverse feature vectors with various key properties of drugs.

Next, XtalPi will build a digital twin R&D system that closely integrates modern laboratories with digital R&D platforms, enabling efficient interactive iteration between experimental exploration and drug simulation algorithms.

Regarding data, XtalPi employs a data lake as its primary approach to data governance, enabling the vast amounts of data generated by computations to serve not only as direct computational results but also to support applications in data analysis, machine learning, and other scenarios. Furthermore, through specialized data strategies, XtalPi has accumulated extensive foundational data on the chemical space of drug molecules via quantum mechanics calculations.

Currently, XtalPi’s accumulated data has approached the petabyte (PB) scale. With the development and deployment of its digital twin R&D system and the continuous increase in computational workload, XtalPi will leverage its extensive real-world drug development data to support the ongoing innovation and upgrading of its algorithms, tackle more R&D bottlenecks, and address urgent research challenges in the pharmaceutical industry.

In terms of computing power, XtalPi has built a globally scalable computing platform capable of orchestrating massive resources across multiple public clouds, including AWS, Tencent Cloud, and Google Cloud, based on a multi-cloud architecture. Leveraging the elastic scalability and parallel computing capabilities of cloud computing, the platform can establish a supercluster with nearly one million computing cores within hours. This platform enables XtalPi to concurrently conduct ultra-large-scale drug molecule discovery and screening projects, supporting the scaled application of its AI-driven drug R&D technologies.

The COVID-19 pandemic that erupted in 2020 undoubtedly had a profound impact on the daily lives and economic order of people worldwide. However, every coin has two sides; while causing significant damage, the pandemic also sounded an alarm for the construction of global epidemic prevention systems, acted as a catalyst for the development of the pharmaceutical industry, and compelled companies to accelerate the establishment of more efficient drug research and development systems.

Artificial intelligence is undoubtedly one of the key technologies disrupting the existing drug development system. Supported by high computational power, this technology can accelerate the trial-and-error-dependent steps in new drug development by using precise and rapid algorithms to predict outcomes, thereby helping pharmaceutical companies improve R&D efficiency and success rates, reduce risks, and ultimately expedite the drug development process.

During the pandemic, XtalPi discovered that only the deep integration of AI models with physics-based thinking could simultaneously meet the demands for both speed and precision in drug development. To this end, XtalPi leveraged cloud-based supercomputing to support physics-chemistry algorithms in building viral models, and then, starting from structural analysis, used AI to accelerate the identification of FDA-approved drugs with antiviral activity, thereby providing the most direct and effective drug screening strategy during the outbreak.

On January 20, the NCBI publicly released the genetic sequence of the novel coronavirus for the first time, laying the foundation for constructing protein structural models of the virus. Structure-based drug screening and design have provided more accurate and higher-success-rate approaches for computation-based screening methods. On the same day, XtalPi established a COVID-19 research team. Based on the genetic sequence and using the homologous protein crystal structures of the SARS virus as a reference, the team built three-dimensional structural models of key proteins in SARS-CoV-2, including 3CLpro and PLpro, which affect the viral replication process, as well as the receptor-binding domain (RBD) of the Spike protein, which is closely associated with patient infection.

On February 2, XtalPi released these high-precision models, along with extensive computational data and research findings, on its social media channels and corporate website, where they were downloaded thousands of times within a few days. These models provide a foundation for investigating viral molecular mechanisms, as well as for the design and screening of potential therapeutics. As research progresses, XtalPi continues to periodically update the shared resources available for download by peers.

Upon the completion of this funding round, XtalPi will continue to contribute valuable research findings to the industry and fully deploy new AI-enabled digital infrastructure for drug R&D. This initiative aims to drive the transformation of the pharmaceutical industry toward a more intelligent drug development model, empower global pharmaceutical and biotechnology companies to leverage artificial intelligence in developing more efficient drugs, benefit patients worldwide, and contribute to the AI-driven digital upgrade of China’s pharmaceutical industry.

“Over the past few years, we have focused on building and refining our independently developed ID4 intelligent drug discovery platform. Through collaborations with major pharmaceutical companies and biotech firms worldwide, we have continuously validated the advantages and significant potential of the ID4 platform in terms of cost, speed, and success rate, achieving multiple milestone breakthroughs,” said Wen Shuhao, Co-founder and Chairman of XtalPi. “We are honored that, as advocates and pioneers in the field of AI-driven drug discovery, we have gained increasing recognition from investment institutions for our technology, team, and social value.”

Meanwhile, Wen Shuhao further stated: “‘Patients have access to their medicines’—these five simple words embody XtalPi’s vision, reflecting our most fundamental aspiration: We hope that every individual suffering from illness, regardless of age, nationality, skin color, or socioeconomic status, can receive equitable treatment and have affordable access to high-quality medications.”

“However, this is no easy task. The widespread resonance sparked by the film *Dying to Survive* reflects such real-world challenges. Among leading pharmaceutical companies, the return on investment (ROI) for new drug development has fallen below 5% since 2015. Rising failure rates and escalating costs in drug R&D have made effective medications increasingly expensive. Moreover, a vast number of diseases still lack available therapeutic options.”

Artificial intelligence holds great promise to transform this status quo. XtalPi aims to develop AI-driven technologies with a human touch, leveraging algorithms, computing power, and data to enhance the efficiency and success rate of drug development, reduce R&D costs, and explore chemical spaces of broader magnitude. Ultimately, this will benefit patients worldwide by delivering more targeted therapies faster to those in need.

Dr. Chen Xun, Managing Partner at SoftBank Vision Fund, stated, “We are firmly confident in XtalPi’s potential to become a world-class platform company that transforms the drug discovery process through innovative interdisciplinary approaches. XtalPi’s technology platform breakthroughly integrates quantum physics, artificial intelligence, and cloud computing technologies, effectively enhancing the efficiency and accuracy of drug development. We are delighted to support XtalPi in fulfilling its mission to build a healthier society worldwide and its ambitious vision of ‘ensuring every patient has access to medicine.’”

Zhang Lingjia, President of PICC Equity Investment, a subsidiary of PICC Capital, stated, “PICC Equity has consistently focused on the vertical applications of AI across various industries. We believe that AI will transform production methods and significantly enhance efficiency in every sector. XtalPi has already established itself as a global leader in drug crystal form prediction, demonstrating the tangible potential for its future success in drug molecule discovery. XtalPi is poised to converge long-standing human advancements in computational chemistry, quantum mechanics, and AI into an engine for the high-throughput generation of new drug pipelines and a comprehensive platform for new drug R&D. We also have strong confidence in the team led by Wen Shuhao, Ma Jian, and Lai Lipeng. They are the right people doing the right things in the right way. Technology for good, AI for good.”

Liu Qin, Founding Partner of Morningside Venture Capital, stated: “With the continuous advancement of artificial intelligence, coupled with the further decline and widespread public availability of computing resources, the trillion-dollar pharmaceutical industry has finally witnessed a qualitative transformation driven by quantitative technological breakthroughs. This shift has enabled a tighter integration of computation and experimentation, establishing rapid feedback mechanisms that significantly enhance both the speed and quality of new drug discovery. Amidst this productivity revolution, XtalPi was among the earliest companies to effectively combine physics-based computing with AI algorithms. It has thoroughly optimized its computational architecture and established real-world iterative systems, thereby preliminarily demonstrating the feasibility and scalability of its technology. We believe that XtalPi will soon emerge as a new generation of critical infrastructure in the new drug R&D industry. Morningside Venture Capital has long been bullish on the application of computational science in the life sciences sector, and we hope that the convergence of IT and biotechnology will usher human health into a new era in the near future.”

Shan Junbao, Co-President of CICC Capital, stated: “We are firmly optimistic about XtalPi’s potential to become a world-class, innovation-driven platform company. By leveraging its two foundational technologies—AI and quantum mechanics—XtalPi empowers and accelerates the R&D of innovative drugs both in China and globally, while utilizing its platform advantages to generate a scalable pipeline of innovative drug assets, thereby becoming a key player in global pharmaceutical innovation. Moreover, XtalPi’s underlying technologies and R&D platform can also be applied to fields such as fine chemicals and advanced materials, making significant contributions to global technological innovation on a broader scale.”

Lian Suping, a member of the Management Committee of CMB International Capital Corporation, stated: “The trillion-dollar pharmaceutical market is facing the challenges of Eroom’s Law, with continuously declining R&D returns, characterized by high investment, long development cycles, and elevated risks. AI technology has the potential to enhance and transform traditional drug discovery approaches, gaining increasing favor among multinational pharmaceutical companies and leading domestic pharmaceutical firms. As China’s premier computation-driven innovative drug R&D technology company, XtalPi possesses unique scarcity in the domestic new drug development landscape. Furthermore, XtalPi has the capability to generate innovative drug pipeline assets at scale, which determines its high value ceiling. We believe that, with capital support, XtalPi will influence and even reshape the landscape of China’s new drug R&D industry.”

Mr. Wang Jinyin, Head of the Private Equity Department at Mirae Asset Global Investments (Hong Kong), stated, “Technological innovation driven by artificial intelligence in the biopharmaceutical sector has become an unstoppable trend. With its proprietary ID4 drug discovery platform, which integrates cutting-edge technologies such as quantum physics and artificial intelligence, XtalPi offers novel solutions to the longstanding challenges of lengthy development cycles, high costs, and significant risks associated with new drug R&D, thereby emerging as a key pioneer in this wave of technological innovation. We firmly believe that, following this round of financing, XtalPi will leverage its superior technology platform to continuously expand the breadth and depth of its engagement in the biopharmaceutical field, becoming an important emerging force and source of support in global new drug research and development.”

Xie Yijing, Managing Director and Head of the Healthcare and Life Sciences Group at China Renaissance, stated, “Leveraging its team of top-tier scientists led by Wen Shuhao, Ma Jian, and Lai Lipeng, XtalPi is significantly enhancing R&D efficiency in the pharmaceutical industry through quantum physics and AI technologies, with potential future expansion into fields such as material discovery and the materials industry. The growing number of multinational and leading domestic pharmaceutical companies choosing XtalPi as a strategic partner serves as the strongest endorsement of its value. China Renaissance is highly optimistic about this sector. As the exclusive financial advisor for this round of financing, we believe that XtalPi, as a leading enterprise in this field, will create substantial long-term value for the pharmaceutical industry, and we are honored and eager to become its long-term partner in the capital markets.”

XtalPi is an AI-driven drug discovery technology company powered by digitalization and intelligence. Leveraging quantum physics, quantum chemistry, artificial intelligence, and cloud computing, we provide intelligent drug R&D services to innovative pharmaceutical companies worldwide. By enhancing the efficiency and success rates of critical stages in drug development and reducing R&D costs, we aim to empower our partners to deliver more high-quality medicines to patients.

XtalPi was founded on the campus of the Massachusetts Institute of Technology (MIT), with a core team composed of outstanding talents from academia, the IT and internet sectors, and the pharmaceutical industry. Headquartered in Shenzhen, the company has branches in Beijing, Shanghai, and Boston. Since its establishment, XtalPi has successfully provided drug R&D services to more than 40 pioneer pharmaceutical companies from the United States, Europe, China, and Japan.

In 2020, “AI-Driven Molecular Discovery” was included in the list of “10 Breakthrough Technologies” published by MIT Technology Review. Both artificial intelligence and the pharmaceutical industry are trillion-dollar sectors, and their convergence holds immense potential. This round of fundraising marks XtalPi, a spin-off from the Massachusetts Institute of Technology (MIT), as gradually becoming one of the most influential companies in the global AI-driven drug discovery field.