In this week’s edition of InnovationRx, we look at a new AI drug development deal, a pill for sleep apnea, Commure’s $7 billion valuation, and more. To get it in your inbox, subscribe here.

Evan Feinberg founded Genesis Molecular AI seven years ago to take his research at Stanford on AI for drug discovery to the real world. Today the company announced its biggest partnership to date: A $120 million deal with publicly traded global biotech Incyte (market cap $19 billion) that includes both $80 million in upfront cash and a $40 million equity investment. The deal could be worth a total of more than $1 billion with future milestone payments, plus potential royalties.

As part of the agreement, Incyte’s proprietary experimental data will be used to train Genesis’s foundation model to increase its capabilities.

“Drug discovery is one of the famously difficult grand challenges for AI,” Feinberg tells Forbes. “There are a lot of easier ways these days to work on AI.”

Feinberg, who is 34 and an alum of the 2019 Forbes 30 Under 30 list, cofounded the San Mateo, California-based company based on his Ph.D. work in the lab of venture capitalist Vijay Pande. Since then, it has raised $340 million from investors that include Andreessen Horowitz, NVidia and Menlo Ventures.

The deal follows a massive $2.1 billion fundraise last week for Isomorphic Labs, the Alphabet-founded drug discovery firm, as hopes have risen that the promise of AI to cut the time and cost to develop new therapies will pay off.

It’s also indicative of how AI drug discovery companies are increasingly raising funds from partnerships with major pharma and biotech companies – often structured as cash, but also, as here, with a mix of cash and equity – rather than relying solely on VC funds. Developing medicines is a long game. Even if AI efficiently finds potential new therapies for previously “undruggable” targets, it still takes years to go through the clinical development process and gain approval from regulators.

Pablo Cagnoni, Incyte’s president and global head of R&D, tells Forbes that the company had been looking for a tech partner to collaborate with starting a year and a half ago, and zeroed in on Genesis after speaking........

© Forbes