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AI is transforming industries across every sector of the economy. Biotech and pharma are now experiencing a boom in AI initiatives to discover new treatments, and repurpose existing ones, in a fraction of the time it would take traditional research methods. That kind of efficiency could also save drugmakers billions of dollars.

The potential for AI to disrupt healthcare is now translating into expanded partnerships, stepped-up VC funding, and a wave of IPOs and SPAC mergers. Just last week, AI-focused biotech firm Absci Corp. went public with a valuation of nearly $2 billion after its stock price spiked by more than 30% on their first day of trading.

Related ETFs & Stocks: iShares Biotechnology ETF (IBB), SPDR S&P Pharmaceuticals ETF (XPH), Gritstone bio, Inc. (GRTS), Evaxion Biotech A/S (EVAX), AbCellera Biologics Inc. (ABCL), Absci, CORP (ABSI)

Over the last few years, the biotech and pharmaceutical industries have experienced an introduction of artificial intelligence (AI) into the drug discovery process. Increased efficiency promises to be a goldmine for the many startups now focused in on AI, and larger pharmaceutical giants are finally taking notice.

AI Accelerates Drug Discovery, Identification in COVID Era

Last week, Google-owned AI company DeepMind released a database that used AI to predict the 3D-shape of more than 350,000 proteins, now expected to be utilized by many startups and publicly traded companies to help accelerate disease detective work and drug discovery. Per MIT Technology Review, DeepMind also says it will predict and release the structures for more than 100 million more in the next few months — more or less all proteins known to science.

DeepMind’s AI tool, AlphaFold, predicts the shape of proteins to within the width of an atom. AlphaFold predicted shapes for 36% of human proteins with such accuracy, versus only 17% of the proteins in the human body’s structures being identified in the lab after decades of work.

Per Nikkei Asian Review, applying AI to drug discovery and development is expected to sharply reduce in the time required to create new drugs, a process that usually takes nine to 17 years.

That timetable could be cut in half for approved drugs that are discovered to be useful for other applications. AI’s rapid response abilities were displayed in 2020 when BenevolentAI, a British startup, identified Eli Lilly’s rheumatoid arthritis medication, baricitinib, as a potential treatment for COVID-19 respond quickly to the outbreak of COVID-19.

Ensuing clinical trials found a 35% lower mortality rate in hospitalized COVID patients taking baricitinib (5.1% vs 7.8%), as well as a lower in proportion of patients progressing to ventilation when taking baricitinib in combination with remdesivir (as opposed to remdesivir alone). Just nine months after BenevolentAI identified the drug’s potential, it was granted emergency use authorization in November 2020 by the US Food and Drug Administration (FDA). In May, India’s Ministry of Health granted permission for the restricted emergency use of baricitinib in their country.

Several startups, including Pepticom and Exscientia, are working to identify new treatments for COVID-19 with the use of AI.

As the name suggests, Pepticom primarily focuses on the use of peptides in medical treatments. Their AI approach will save them a significant amount of time and labor by narrowing down the scope of molecules they will need to analyze. Instead of having to check millions of molecules, “we may check just 20, 100 or maybe up to 3,000 molecules,” adds Maayan Elias Robicsek, Pepticom’s business development officer. Per Israel21c, Pepticom’s software has already analyzed several protein targets related to SARS-Cov-2, the virus that causes Covid-19, and will be seeking partnerships with pharmaceutical companies.

Exscientia, which previously announced the first AI-designed molecule for immuno-oncology to enter human clinical trials, claims to have demonstrated proof-of-concept by using its AI platform to design a novel class of inhibitors targeting the SARS-CoV-2’s main protease enzyme, Mpro, also known as 3CLpro, the causative agent of COVID-19.

Exscientia has also extended a collaboration agreement with Bristol-Myers Squibb Company, a partnership that includes up to $50 million in upfront funding, up to $125 million in near to mid-term potential milestones, as well as additional clinical, regulatory and commercial payments that take the potential value of the deal beyond $1.2 billion. As BusinessWire writes, this collaboration has the potential to add to the Bristol Myers Squibb drug pipeline whilst enhancing Exscientia’s portfolio of shared assets.

As that partnership demonstrates, larger pharmaceutical firms are beginning to take notice of the groundbreaking potential AI presents. So far this year, Gilead Sciences expanded partnerships with two AI-based startups, AbCellera and Gritstone Bio, to develop new antibodies for infectious diseases and…

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