Seven biotech unicorns are advancing AI-powered drug discovery and development—but must contend with a difficult investing environment where competition is steep and the usual roads to exit are uncertain.
Unicorns are creatures of legend, a rare and mystical horse-like being that sports a single large horn on its forehead. The same is roughly true in the biotech world—sans the horn, of course.
In investing parlance, unicorns are startups that are worth at least $1 billion—a definition that might be a bit too simplistic given the current fraught market environment and the complexities of proving the worth of a fledgling biotech. “Sustained $1 billion valuations are exceptionally rare,” Kaz Helal, senior biotech analyst at PitchBook, told BioSpace in an email.
“Biotech valuations remain speculative bets on binary clinical outcomes that typically take 10 to 15 years to materialize,” Helal added. “Most biotechs only prove their true worth when Big Pharma writes the check at exit.”
Ken Krisko, head of Life Sciences Corporate Partnering and Licensing at the law firm Cooley, agreed, pointing to the sheer degree of upfront commitment and risk that biotech startups need to balance as they work their way toward the market. “Regulatory, marketing and pricing risk and pressures further constrain valuation” for these companies, he explained to BioSpace.
Players who achieve unicorn status despite these difficulties are “an exceptional breed,” Krisko said in an email . Moderna, one of the pioneers of mRNA vaccines, is one such example of a unicorn, as is Ginkgo Bioworks, a company focused on engineering microbes.
But achieving $1 billion in valuation and maintaining it are two very different things, especially in an industry where single data points can often make or break share prices. A classic example is bluebird bio, which at its peak in early 2018 was worth over $10 billion. By the end of February this year, the biotech sold its business to private equity firms Carlyle and SK Capital Partners for just under $50 million.
According to Krisko, having a promising pipeline “is table stakes in today’s market.” That is, it’s no longer enough to have a couple of high-potential molecules. “Companies who demonstrate differentiated data—both best-in-class and first-in-class—are the true winners.”
Startups also have to grapple with the question of an exit strategy for handing the reins of the unicorn to new owners. This generally means M&A or an IPO—the latter of which has not been a viable off-ramp this year. A good exit will not only ensure profitability for the unicorn’s backers, but guarantee the business’ longevity. PitchBook’s Helal explained that there are many other ways for a unicorn to exit, each with their own ups and downs.
For startups working in drug development, for instance, “the traditional pharma playbook still applies,” he said. “The ideal exit remains a $1 billion+ M&A deal triggered by positive clinical data.”
This is much easier said than done, however, particularly for companies that are more service-oriented, including those that offer AI-enabled drug discovery platforms—which, incidentally, is a profile that fits the vast majority of the current class of biotech unicorns. For these companies, an initial public offering (IPO) might still be the best option, Helal continued.
However, Robert Stanislaro, senior managing director at FTI consulting, offered a contrarian and sobering view. “In today’s volatile market, IPOs are no longer a guaranteed, or even a near-term, viable exit path,” he told BioSpace in an email. Unicorns, he argued, should come to grips with the reality that they might need to find other ways of exiting or raising capital.
“Companies are having to conduct multiple private financing rounds or find alternative routes to the public markets, including SPAC transactions, reverse mergers or being acquired outright while still private,” he said.
To weather the difficult market, Stanislaro said that startups need to be flexible and strategic—and to be able to “clearly articulate its products’ unique points of differentiation.”
“Whether going public or pursuing strategic transactions, biotech unicorns that maintain operational discipline and credibility will be best positioned to maximize their value and seize the right opportunity when the moment comes,” Stanislaro added.
Below, BioSpace has compiled a list of biotech unicorns. This list is based on a PitchBook analysis, which suggested that the seven unicorns below are likely to exit via an IPO, one of the most popular exit strategies.
Most of the companies below are young, with few or no pipeline assets to their name. Their businesses are often built solely on a promising drug discovery engine underpinned by AI and machine learning models—a space that is rapidly becoming crowded.
Xaira Therapeutics
Valuation: $2.7 billion
With a deep bench of superstar supporters and experienced leaders, South San Francisco’s Xaira Therapeutics is the biggest—and youngest—unicorn on this list, worth $2.7 billion in value, according to PitchBook’s most recent data.
After being jointly incubated by ARCH Venture Partners and Foresite Labs, Xaira launched in April 2024 with $1 billion in starting capital and a mission to use artificial intelligence to support the drug development process. In particular, Xaira will use algorithms that are essentially the biological versions of AI image generation tools, like OpenAI’s DALL-E.
Xaira’s models, which build on previous work from the University of Washington School of Medicine, can eliminate noise from atom clouds and then arrange them into novel, potentially therapeutic molecules. Xaira’s platform also allows users to input certain specifications—such as binding preferences, for instance—which are taken into consideration for building protein candidates.
Leading the company is CEO Marc Tessier-Lavigne, who previously served as the chief scientific officer of the Roche’s Genentech. Fellow Genentech alums Arvind Rajpal and Don Kirkpatrick also have seats on the startup’s executive team. Hetu Kamisetty, who had assumed leadership roles for various AI initiatives at Meta, is Xaira’s chief technology officer.
ARCH, which counts Alnylam and Illumina among its successful startups, pitched in to provide Xaira its initial working capital. Though venture capital firm did not specify how much it committed, ARCH co-founder Robert Nelsen said at the time that it was “largest initial funding commitment in ARCH history.”
Xaira is still in its early stages. Its website doesn’t yet list any assets, nor has the startup publicly announced any partnerships with drugmakers.
Generate:Biomedicines
Valuation: $2 billion
Like Xaira, Generate:Biomedicines leans heavily into the AI wave. The startup’s proprietary Generate Platform draws from extensive and high-quality data and inferring “generalizable principles of biology,” generating novel protein sequences for specific therapeutic purposes, according to the biotech’s website. The model then learns from its own creations, assessing “critical molecular characteristics and functions” helping to continuously improve its AI engine.
After three years in stealth, Generate:Biomedicines debuted in 2020, backed by Flagship Pioneering, one of the most prolific life sciences investors in the industry. Since then, the startup has picked up two powerhouse partners. The first, Amgen, signed on in January 2022, pledging almost $2 billion to use the AI-driven platform to design and develop protein-based therapies for five targets. The companies expanded their engagement in January 2024, adding one additional program.
Novartis, meanwhile, bought into the Generate platform in September 2024 with a potential $1 billion contract also for protein therapies.
Generate:Biomedicines has also raised hundreds of millions of dollars since launch, including a $370 million series B in 2021 and a $273 million series C in September 2023.
Aside from its pharma-partnered programs, Generate:Biomedicines is also working on several early clinical programs, including the TSLP-targeted GB-0895 for severe asthma and chronic obstructive pulmonary disease.
Generate:Biomedicines is now worth $2 billion, according to PitchBook.
Eikon Therapeutics
Valuation: $1.85 billion
Eikon Therapeutics burst onto the scene in 2021 with a high-profile C-suite led by Merck alum Roger Perlmutter. The biotech has attracted the consistent support of several institutional backers, including Soros Capital and Foresite Capital, the investment arm of Xaira’s incubator. In total, Eikon has raised more than $1 billion since it was founded in 2019, including a $517.6 million series B round in January 2022 and a $106 million series C in June 2023.
Mostly recently, the California biotech in February announced $350.7 million in a series D fundraising, which will help bankroll the late-stage development of EIK1001 in advanced melanoma. At the time, CEO Roger Perlmutter told Endpoints News that he expects even more investors to commit additional funds later this year. PitchBook’s analysis puts Eikon’s current value at $1.85 billion.
Eikon built its business on the ability to track and analyze how proteins move. “There is a direct link between protein motion and protein activity,” the biotech noted on its website, arguing that by looking at the “dynamics at protein populations,” its platform can assess how novel therapies work “in great detail.”
Eikon achieves this through its proprietary single-molecule tracking platform, which it claims can track the motion of “hundreds of thousands” of proteins in living cells “in less than a second.” The biotech then uses AI to paint a detailed picture of cellular processes, capturing the different interactions between molecules and the spatial and temporal activities of proteins. Eikon then leverages this information to guide its drug design and development.
Further ahead of Generate:Biomedicines in the drug development process, Eikon is developing the TLR7/8 dual-agonist EIK1001, currently in Phase III for melanoma and in Phase II for non-small cell lung cancer. The latest raise will help bankroll the late-stage development of EIK1001 in advanced melanoma. The drug came to the biotech in June 2023, when it acquired global rights over the asset from Seven and Eight Biopharmaceuticals, though the companies at the time did not say for how much.
According to PitchBook, Eikon’s exit strategy will most likely be an IPO. Perlmutter, in the February interview with Endpoints, confirms this analysis, saying that “I am confident that Eikon Therapeutics will be a public company,” though he declined to provide a specific timeline for the exit.
ArsenalBio
Valuation: $1.85 billion
While the first three unicorns on this list are focusing their development efforts on proteins, ArsenalBio stands out by leveraging a synthetic biology platform to advance cell therapies.
The South San Francisco biotech’s approach is built on what it calls “synthetic modules”—engineered genetic elements that could enhance CAR T cell therapies by programming them to “execute new behaviors, much in the same way that smartphones get new features as new versions are released.”
These modules include many different features such as RNA molecules that make the investigational therapy resistant to the tumor microenvironment and, importantly, a logic gate that allows the CAR T therapy to differentiate between cancer cells and healthy tissues.
Like others on this list, ArsenalBio also uses computational biology and machine learning to “examine more fully the universe of possible therapeutic constructs” rather than have its scientists rely on “intuition.”
This data-centric approach perhaps reflects in the roster of its backers. Aside from the usual investing giants in the life sciences, ArsenalBio counts among its supporters NVentures, which is the venture capital arm of the tech giant and AI enabler Nvidia.
NVentures was one of the new investors in Arsenal’s $325 million Series C megaround in September 2024, alongside other new supporters ARCH Venture Partners and Regeneron Ventures. Existing backers also include Bristol Myers Squibb. And in September 2022, the startup roped in another Big Pharma partner, Roche’s Genentech, in a multi-year T cell-based collaboration.
ArsenalBio’s most mature candidate is AB-2100, which is being tested in a Phase I/II trial for kidney cancer.
Currently, ArsenalBio is worth $1.85 billion, as per PitchBook.
Isomorphic Labs
Valuation: $1.793 billion
Also backed by a tech titan is Isomorphic Labs, which falls under the expansive Alphabet umbrella, most known for the search giant Google.
The startup jumped into the AI arena in 2021 with a “unified” drug design and discovery engine powered by AlphaFold, a family of machine learning models that can accurately predict the structure of DNA, RNA and proteins, as well as the interactions between these molecules, according to the biotech’s website. AlphaFold was awarded one of the Nobel Prizes in Chemistry in 2024.
Isomorphic’s explicit focus on AI is a reflection of both the growing trend across the industry and the biotech’s legacy. Its co-founder and CEO, Demis Hassabis, is also the founder and CEO of Google DeepMind, Alphabet’s AI research subsidiary. AlphaFold was originally developed by DeepMind, and many of the engineers involved in the project are now part of Isomorphic.
Isomorphic has yet to disclose any pipeline assets on its website. Nevertheless, the biotech’s leadership and platform have captured the attention of two Big Pharma partners. In January, it signed back-to-back contracts with Novartis and Eli Lilly worth up to more than $1 billion each for small-molecule drug development.
Isomorphic raised its first external financing round in March, with $600 million thanks to Thrive Capital and GV, with Alphabet providing follow-on capital. Currently, Isomorphic is valued at $1.793 billion, as per PitchBook’s analysis.
Formation Bio
Valuation: $1.7 billion
Previously known as TrialSpark, Formation Bio emerged in 2016 to streamline the drug discovery and development pipeline.
The biotech leverages an AI-native model to find drugs more quickly and efficiently, according to its website. Formation’s model involves in-licensing or acquiring assets which it will then develop in-house, pushing these molecules through various milestones before ushering them through what the company calls “bespoke exit” pathways.
In searching for potential assets to bring onboard, Formation leverages its so-called AI Drug Hunter system, which screens for, evaluates and recommends molecules with high therapeutic potential. Then, Formation deploys its AI Drug Developer tool to help with decision-making across various steps of drug development, including clinical trial design, program strategy and regulatory planning. Formation also has an AI tool specifically meant to help with clinical trials called the Automated Clinical Trial system.
Putting this model in motion, Formation has accrued a pipeline of three molecules across five indications. The most mature is the SYK/JAK inhibitor gusacitinib, which was in-licensed from Asana BioSciences in November 2022 and is in Phase III development for chronic hand eczema. The Asana deal also included ASN008, a Phase II sodium channel blocker that is in mid-stage development for itch associated with atopic dermatitis and notalgia parasthetica.
In January 2022, Formation obtained rights to the recombinant human fibroblast growth factor 18 sprifermin from Germany’s Merck KGaA. The asset is being trialed for knee osteoarthritis.
According to PitchBook data, Formation is currently worth $1.7 billion. Helping to bolster its market value is a May 2024 partnership with Sanofi focused on developing AI-powered software to speed up drug development. A month later, Sanofi participated in a late-stage funding round for Formation, which gave the biotech $372 million to help in-license at least 10 new assets over five years.
Tessera Therapeutics
Valuation: $1.7 billion
Massachusetts startup Tessera Therapeutics is working on “gene writing,” a novel and proprietary genome engineering approach that, according to the biotech’s website, “writes therapeutic messages into the genome to treat diseases at their source.”
Tessera is leveraging so-called mobile genetic elements—naturally occurring stretches of DNA that can move from one spot on the genome to another, or even across species—to “efficiently write DNA into the human genome.” The biotech claims it can potentially address disease-causing genetic aberrations, including single point mutations, insertions and deletions. Tessera’s platform could also “write an entire gene,” according to the company’s website.
While its technology sounds impressive, Tessera is still relatively immature and has only posted preclinical data so far. The startup plans to leverage its gene writing platform to target various oncology indications and some of the most “challenging genetic diseases.”
Backed by Flagship Pioneering, Tessera launched in July 2020 and quickly drew top-tier talent. In August 2022 , the startup announced that Anne-Virginie Eggimann, who had worked to secure the approval of bluebird bio’s gene therapy Zynteglo, would be joining as chief regulatory officer. A few months earlier, AbbVie alumnus Michael Severino also joined the startup’s masthead as CEO.
Over the years, Tessera has also attracted the attention of investors. The biotech raised $230 million in January 2021 and $300 million a little over a year later. In December 2024, Tessera inked an agreement with the Bill & Melinda Gates Foundation with total investments of up to $50 million to help develop in vivo gene therapies for sickle cell disease.
PitchBook’s data places Tessera’s current value at $1.7 billion.
