As AI advancements take hold in various sectors, investors in the biotech industry believe it has the potential to revolutionize drug discovery. ARCH Venture Partners and Foresite Labs, through their affiliate Foresite Capital, have recently unveiled Xaira Therapeutics, an AI biotech company that received a substantial $1 billion investment. Xaira, operating discreetly for around six months, boasts a lineup of reputable investors including F-Prime, NEA, Sequoia Capital, Lux Capital, Lightspeed Venture Partners, Menlo Ventures, Two Sigma Ventures, and SV Angel. Led by CEO Marc Tessier-Lavigne, formerly the president of Stanford University and chief scientific officer at Genentech, Xaira aims to harness recent AI breakthroughs to create previously unfeasible drugs. Advances in foundational models developed at the University of Washington’s Institute of Protein Design, led by Xaira co-founder David Baker, play a crucial role in the company’s mission. These models draw inspiration from diffusion models that power image-generating tools like DALL-E and Midjourney. However, Baker’s models are tailored to design molecular structures that can be physically materialized in three dimensions. Xaira’s investors, while optimistic about the potential of AI in drug development, acknowledge that the field is still in its early stages. Vik Bajaj, CEO of Foresite Labs and managing director of Foresite Capital, highlights the challenge of data scarcity in biology and medicine compared to technology. Companies like Recursion and Genesis Therapeutics are also employing generative AI in drug design, indicating the growing trend in this area. Xaira’s entry into the field underscores its ambition to become a dominant force in AI-driven drug discovery. Despite concerns raised by Tessier-Lavigne’s resignation from Stanford amid allegations of data manipulation at Genetech, investors remain confident in his leadership abilities.