Big pharma has spent two years trying to figure out where AI changes the drug game. Tuesday brought one of the bigger answers yet.
Eli Lilly signed a research deal with AI biotech Profluent worth up to $2.25 billion. The bet is that AI can design gene drugs that today's tools can't.
It is also Profluent's first big pharma deal. And it is the largest of its kind in the AI-protein space so far.
Profluent is a four-year-old startup. It uses AI to design custom enzymes.
Enzymes are the proteins that cells use to read and rewrite DNA. Profluent says its AI can build enzymes that make bigger, more exact changes to gene code.
That is the gap the deal is built on. Many gene diseases come from different errors in different patients.
That makes one-size-fits-all drugs hard to design with current tools. If Profluent's tech works, doctors could swap out whole faulty genes.
That would be much better than just patching small parts. It would open up a class of diseases stuck in labs for years.
Profluent gets an upfront check, research funds, and milestone payments. Those payments could reach $2.25 billion in total.
The startup also keeps royalties on any drug that hits the market. Lilly gets the rights to develop and sell the picked enzymes.
For Lilly, this is a small upfront check against a big bet on a new tool. For Profluent, Lilly is its first big pharma partner.
It is the biggest stamp of approval to date. The deal setup is typical for early pharma deals.
Most of the money is paid only if the drugs work.
CRISPR is the gene-editing tool that won a Nobel Prize in 2020. It can fix small gene typos.
But CRISPR struggles with the bigger swaps some diseases need. Pharma has been waiting for a tool that can do more.
AI-designed enzymes are one of the leading bets. Profluent is one of the first private firms to land a deal this big with a major drugmaker.
That sets a price point for the rest of the AI biotech space. Dozens of well-funded startups are now racing for the same kinds of deals.
Lilly has been one of the most active buyers in pharma. It has signed major deals in obesity, cancer, and now gene drugs.
Lilly has been one of the most active deal-makers in big pharma. It signed a $2.75 billion AI drug deal with Insilico Medicine in March.
The Profluent deal is its first major bet on AI for whole-gene swaps. It is also the largest AI-protein-design pact yet.
The signal to the rest of the space is clear. AI biotech firms with real platforms are now seen as core targets, not side bets.
That should pull more capital into the space. It should also drive up the price tags on the next round of deals.
The deal setup means the big number is mostly potential. Most of the $2.25 billion is paid only if the science works.
If it does, Lilly just bought a head start in gene drugs. If it doesn't, it bought a cheap option on the AI biotech space.