The AI-first biotech sector is at a pivotal juncture. After years of substantial investment, bold claims of reinventing drug discovery, and a proliferation of sophisticated platforms, the industry is increasingly under scrutiny to deliver tangible results. The critical question is no longer about the potential of AI, but its proven ability to yield Investigational New Drugs (INDs), advance therapies through human clinical trials, and ultimately, benefit patients.

As of Q2 2025, the landscape is one of contrasts. While many AI platforms remain preclinical despite significant funding, a select group of companies are breaking through, demonstrating genuine clinical momentum with AI-originated assets. These leaders are not just building impressive algorithms; they are navigating the complexities of biology, scaling operations, and generating the clinical proof that truly matters.

This report spotlights AI-biotech companies in North America and Europe that are making significant strides in the clinic. It examines their lead assets, clinical progress, strategic partnerships, and the operational realities shaping the sector. The focus is on those moving beyond theoretical models to deliver validated biology and clinical evidence, distinguishing true innovation from the “slide deck factories.” The future of AI in drug discovery hinges on this translation from computational promise to concrete patient impact.

The Vanguard: AI Biotechs Delivering Clinical Progress

Several AI-first companies are demonstrating that their platforms can indeed identify novel targets and design drug candidates that progress into and through human trials. These companies are characterized by sophisticated AI engines, strategic partnerships, and a clear focus on clinical validation.

1. Insilico Medicine

• Headquarters: Hong Kong & USA (Global Presence)
• AI Platform: Pharma.AI – An end-to-end platform integrating PandaOmics™ (target discovery), Chemistry42™ (generative chemistry for small molecule design), and InClinico™ (clinical trial prediction).
• Clinical Momentum:
  
  • Rentosertib (ISM001-055): A first-in-class TNIK inhibitor for Idiopathic Pulmonary Fibrosis (IPF). Notably, both the novel target (TNIK) and the molecule were discovered and designed using Insilico’s generative AI.
    
    • Status: Phase 2a completed with positive results (China & Global studies). As of May 2025, Insilico plans to fast-track Rentosertib into a Phase 3 trial in China and a Phase 2b/3 study in the US.

  • Broader Pipeline & Partnerships: Insilico has vigorously pursued out-licensing and co-development, resulting in a substantial pipeline.
    
    • Exelixis: Global license for XL309 (ISM3091, USP1 inhibitor) for oncology. Received an $80M upfront and a $10M clinical milestone (Dec 2024) as XL309 entered Phase 1.
    • Menarini Group: Two deals, including MEN2312 (KAT6 inhibitor, Phase 1 for breast cancer) and a novel AI-discovered preclinical oncology asset (Jan 2025, $20M upfront, >$550M potential milestones).
    • Sanofi: Multi-target collaboration (initiated Nov 2022) leveraging Pharma.AI. Achieved a milestone (Oct 2024) for an AI-facilitated lead against an “undruggable” oncology target.
    • Fosun Pharma: Ongoing strategic partnership with QPCTL inhibitor (ISM004-1057D) in Phase 1 for cancer immunotherapy (initiated May 2024).

• Recent Highlights: Secured $110 million in Series E financing (March 2025) to advance its pipeline and AI platform. Actively expanding into new therapeutic areas like pain, obesity, and muscle wasting.
  
  

2. Recursion Pharmaceuticals (Post-Exscientia Acquisition)

• Headquarters: Salt Lake City, UT, USA
• AI Platform: Recursion Operating System (OS) – Integrates automated wet-lab experiments with advanced computational tools (ML, LLMs) and a vast proprietary dataset to decode biology and identify drug candidates. Enhanced by Exscientia’s precision chemistry and automated synthesis capabilities.
• Clinical Momentum (Selected AI-Originated Assets):
  
  • REC-4881 (MEK1/2 inhibitor): For Familial Adenomatous Polyposis (FAP). Therapeutic hypothesis identified via Recursion OS.
    
    • Status: Phase 2 (TUPELO study) ongoing. Preliminary Phase 1b/2 data (May 2025) showed a median 43% reduction in polyp burden.

  • REC-617 (CDK7 inhibitor, ex-Exscientia): For Advanced Solid Tumors.
    
    • Status: Phase 1/2 (ELUCIDATE study) ongoing. Monotherapy dose escalation active; combination studies planned for 1H 2025.

  • REC-1245 (RBM39 inhibitor): For Biomarker-selected Solid Tumors and Lymphomas. Novel target-MoA identified by Recursion OS.
    
    • Status: Phase 1 (DAHLIA study) ongoing and recruiting.

  • REC-3565 (MALT1 inhibitor, ex-Exscientia): For Relapsed/Refractory B-cell Malignancies.
    
    • Status: Phase 1 (EXCELERIZE study) ongoing, first patient dosed (April 2025).

• Strategic Moves & Partnerships:
  
  • Acquired Exscientia (Nov 2024), significantly expanding its AI capabilities and clinical pipeline.
  • Undertook a major pipeline restructuring (May 2025) to focus on high-potential programs, discontinuing three clinical assets.
  • Roche & Genentech: Ongoing collaboration in neuroscience and GI oncology. $30M option exercised (Aug 2024).
  • Sanofi: Achieved fourth milestone (Q1 2025, $7M payment) for an oral small molecule lead in autoimmune diseases.

• Recent Highlights: Actively integrating Exscientia’s assets and technology, aiming for significant operational synergies and a strengthened end-to-end platform. Raised $200M via public offering (June 2024).
  
  

3. Generate Biomedicines

• Headquarters: Somerville, MA, USA
• AI Platform: The Generate Platform – Employs generative AI and ML, trained on extensive protein data, to design and develop novel protein-based therapeutics (antibodies, peptides, enzymes).
• Clinical Momentum:
  
  • GB-0895 (anti-TSLP mAb): For Severe Asthma, COPD.
    
    • Status: Phase 1 ongoing and recruiting (EUCTR2023-507611-35-00).

  • GB-7624 (anti-IL-13 mAb): For Atopic Dermatitis.
    
    • Status: Phase 1 recruiting (NCT06920693, ACTRN12625000229471).

• Recent Highlights: Advancing two de novo AI-designed antibody programs into clinical trials, showcasing the platform’s capability to generate novel biologics.
  
  

4. Relay Therapeutics

• Headquarters: Cambridge, MA, USA
• AI Platform: Dynamo® – Integrates computational approaches (molecular dynamics, ML) with experimental technologies (cryo-EM) to visualize protein motion and drug previously intractable targets.
• Clinical Momentum:
  
  • RLY-2608 (Allosteric, pan-mutant, isoform-selective PI3Kα inhibitor):
    
    • For PI3Kα-mutated, HR+/HER2- Advanced Breast Cancer: Phase 1 (ReDiscover trial) ongoing. Phase 3 initiation planned for mid-2025.
    • For PIK3CA-Related Overgrowth Spectrum (PROS): Phase 2 ongoing and recruiting.

• Strategic Moves & Partnerships:
  
  • Genentech (Roche Group): Collaboration for RLY-1971 (SHP2 inhibitor). Achieved a $10M milestone (Q1 2024).
  • Elevar Therapeutics: Exclusive global license for lirafugratinib (RLY-4008, FGFR2 inhibitor) (Dec 2024). Relay to receive up to $500M (incl. $75M upfront/regulatory milestones) + royalties.
  • Pfizer: Clinical trial collaboration (June 2024) to evaluate Pfizer’s atirmociclib with RLY-2608 and fulvestrant in breast cancer.

• Recent Highlights: Demonstrating a balanced strategy of advancing internal assets while strategically out-licensing others to manage risk and generate capital.
  
  

5. BPGbio

• Headquarters: Framingham, MA, USA
• AI Platform: NAi® Interrogative Biology Platform – Utilizes Bayesian AI, a large proprietary biobank with multi-omics data, and supercomputing to model patient biology, identify biomarkers, and develop therapeutics.
• Clinical Momentum:
  
  • BPM31510 (IV formulation of oxidized CoQ10):
    
    • For Glioblastoma Multiforme (GBM): Phase 2 ongoing and recruiting (NCT04752813). Favorable tolerability and early disease control signals presented at AACR 2025.
    • For Pancreatic Cancer: Phase 2a completed with positive PFS data. Phase 2b planned.

• Recent Highlights: Focusing on diseases with high unmet need, leveraging its unique combination of AI and deep biological data. Presented promising GBM data at AACR 2025.
  
  

6. Healx

• Headquarters: Cambridge, UK
• AI Platform: Specializes in applying AI to accelerate discovery and development of treatments for rare diseases, often in collaboration with patient-focused organizations.
• Clinical Momentum:
  
  • HLX-1502 (AI-derived oral therapy for Neurofibromatosis Type 1 – NF1):
    
    • Status: Phase 2 (INSPIRE-NF1 trial) ongoing. First patient dosed (Feb 2024).

• Strategic Moves & Partnerships:
  
  • Children’s Tumor Foundation (CTF): Deep collaboration for HLX-1502, including expertise, patient insights, and an equity investment by CTF in Healx (announced April 2024).

• Recent Highlights: Demonstrating a focused strategy on rare diseases, with strong patient group engagement. HLX-1502 has received Fast Track, Orphan Drug, and Rare Pediatric Disease designations from the FDA.
  
  

7. Enveda Biosciences

• Headquarters: Boulder, CO, USA
• AI Platform: Pioneers the use of AI to explore the chemical diversity of the natural world for novel therapeutics.
• Clinical Momentum:
  
  • ENV-294 (oral molecule for atopic dermatitis and asthma): Phase 1 trials ongoing.

• Strategic Moves & Partnerships:
  
  • Sanofi: Strategic equity investment as part of Enveda’s $150M Series C financing (Feb 2025), supporting platform and pipeline advancement, particularly in immunology.

• Recent Highlights: Attracting significant pharma investment, validating its approach to unlocking nature’s chemistry with AI.
  
  

8. Verge Genomics

• Headquarters: South San Francisco, CA, USA
• AI Platform: CONVERGE® – Utilizes an all-in-human AI platform analyzing human tissue-derived genomic data for neurodegenerative diseases.
• Clinical Momentum:
  
  • VRG50635 (PIKfyve inhibitor for ALS): Phase 1b proof-of-concept study ongoing.

• Strategic Moves & Partnerships:
  
  • Ferrer Internacional: Co-development and commercialization agreement for VRG50635 in Europe, LatAm, SE Asia, Japan (March 2024). Verge eligible for >€112.5M upfront/milestones + royalties.
  • Eli Lilly: Collaboration for ALS target discovery. Lilly pursuing two Verge-identified targets (milestones announced Nov 2024).
  • Alexion, AstraZeneca Rare Disease: Multi-target discovery collaboration for rare neurodegenerative/neuromuscular diseases (Sept 2023). Up to $42M upfront/equity/near-term payments, $840M total potential.

• Recent Highlights: Successfully advancing its lead AI-discovered ALS candidate while securing multiple high-value pharma partnerships for its target discovery platform.
  
  

Navigating the AI Frontier: Key Trends and Realities (2023-2025)

The journey of AI-first biotechs is shaped by several critical trends:

• Strong Pharma Interest & Investment: Established pharmaceutical companies are consistently partnering with AI-first biotechs, evidenced by numerous collaborations with substantial upfront payments (e.g., Isomorphic Labs with Lilly and Novartis, Insilico with Exelixis) and massive potential milestone payments. This signals a strategic imperative for pharma to access AI-driven innovation.
• Focus on Discovery & Novel Targets: Most partnerships center on early-stage discovery, leveraging AI for novel target identification, validation, and molecule design. This highlights AI’s potential to expand the “druggable genome.”
• Validation Through Milestones & Expanded Deals: Milestone payments (e.g., Insilico/Exelixis, Recursion/Sanofi, Insitro/BMS) and partnership expansions (e.g., Isomorphic Labs/Novartis) are crucial validators of AI platform capabilities.
• Therapeutic Focus: Oncology, neurology/neurodegeneration, and immunology are prominent areas, reflecting high unmet needs where AI’s ability to parse complex biology is valuable.
• Hybrid Business Models: Many AI biotechs (e.g., Insilico, Verge, Relay) are advancing internal pipelines alongside platform partnerships, balancing near-term revenue with long-term proprietary value.
• The Data Imperative: Proprietary, high-quality, and relevant datasets (e.g., Recursion’s patient data partnerships, Verge’s human tissue data focus) are critical differentiators.
• Consolidation for End-to-End Platforms: Recursion’s acquisition of Exscientia points to a trend of building comprehensive AI drug discovery platforms through M&A.
• Funding Dynamics – The Flight to Quality: While “megarounds” for leaders like Isomorphic Labs ($600M) and Xaira ($1B preclinical launch) grab headlines, many others face a tougher funding climate, emphasizing capital efficiency and proven progress. The median biotech venture round remained substantial (near $100M in early 2025), but selectivity is key.
• Operational Realities – Restructuring & Focus: The 2024-2025 period has seen significant operational adjustments, including pipeline reprioritizations and workforce reductions (e.g., BenevolentAI, Recursion post-merger) as companies adapt to market conditions and focus resources on their most promising assets.
  
  

The Proving Ground: Beyond the Algorithm

While the companies above demonstrate clinical momentum, the broader AI drug discovery landscape includes entities at different stages:

• Well-Funded but Preclinical: Companies like Xaira Therapeutics have launched with substantial backing ($1B) but are yet to advance assets into clinical trials. Their journey will be closely watched to see if large initial funding translates into rapid clinical entry.
• Early Clinical Stage / Pivoting:
  
  • Atomwise: Nominated its first AI-driven candidate (ATW-TYK2) in late 2023 and aimed for an IND in 2024. As of Q2 2025, getting this into human testing is a top priority under a new CEO appointed in Feb 2025. Their progress into Phase 1 will be a key indicator.
  • BenevolentAI: Despite a challenging period involving delisting (March 2025) and significant restructuring, BenevolentAI still possesses clinical-stage assets (e.g., BEN-8744 for Ulcerative Colitis, Phase 1a completed, “Phase 2 ready”) and active pharma partnerships (AstraZeneca, Merck KGaA). Its strategic pivot back to a “TechBio” service model alongside progressing select assets will be a test of this revised approach.

• Platform-Focused with Emerging Pipelines: Companies like Isomorphic Labs, while having significant pharma partnerships (Eli Lilly, Novartis) and massive recent funding ($600M), are primarily focused on leveraging their AI (AlphaFold) for discovery, with their internal pipeline still approaching the clinic.

The success of these companies, and the many others in the field, will ultimately depend on their ability to move beyond sophisticated AI platforms to demonstrate consistent clinical validation.

Conclusion: From Hype to Hope – The Path to Validated AI Drug Discovery

The narrative around AI in drug discovery is maturing. The initial exuberance is giving way to a more discerning evaluation based on tangible clinical outcomes. As of Q2 2025, it’s clear that AI holds immense potential to accelerate and reshape how we discover and develop medicines. However, this potential is only realized when AI-originated candidates successfully navigate the rigors of clinical trials.

The companies highlighted in this report as having “real clinical momentum” are leading this charge. They are demonstrating that AI can indeed identify novel targets, design effective molecules, and contribute to a pipeline of promising new therapies. Their progress, along with the ongoing advancements in AI technology and the strategic adaptations within the sector, offers a hopeful outlook.

The journey is far from over. Clinical development is inherently challenging, and setbacks are inevitable. Yet, the commitment to integrating AI deeply into the R&D fabric, coupled with a relentless focus on scientific rigor and patient needs, paves the way for a future where AI-driven drug discovery moves definitively from hype to a new era of hope and healing. The key will be continued investment in validated biology, scalable operations, and, above all, clinical proof.

The AI Drug Discovery sector stands at a pivotal moment, with immense therapeutic promise tempered by significant early-stage technological uncertainties. AI focused Biotechs are at the heart of this challenge

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