Talk of AI is everywhere, especially in healthcare.
Companies are flooding into the space, promising to solve age-old problems by revolutionizing how prescription drugs are made and sold.
A very different prediction comes by way of Chris Gibson, the CEO of AI-powered biotech Recursion Pharmaceuticals.
"We are just coming off a peak hype cycle and about to go through the valley of disillusionment," he told Business Insider. Gibson founded the startup in 2013, after completing a doctorate in bioengineering at the University of Utah.
Recursion uses AI tech to both discover and develop drugs for rare diseases, cancer and more. The startup hasn't yet made a drug that you can be prescribed at your doctor's office. Its products are being tested out in early research now.
Gibson says other AI startups have also made real progress, pointing to Daphne Koller's Insitro, Nimbus Therapeutics, BenevolentAI and Atomwise.
But ultimately, "I think it's hard to build a super-valuable business that changes the industry if you're focused on a single swathe. And that's where 90-plus-percent of the companies are," Gibson said in an interview at Business Insider's New York City headquarters in June.
Recursion on Monday said it raised $121 million in a Series C round led by Baillie Gifford's Scottish Mortgage Investment Trust PLC. Other investors included the venture-capital firms Menlo Ventures and Lux Capital.
Recursion has raised about $200 million total, with a $646 million valuation.
Zavain Dar, a partner at Lux Capital and board member of Recursion, said the startup's approach is "starkly different from how pharma in general does drug discovery" because instead of a protein in the body it wants to work on, it begins with cells instead. Recursion then studies those cells using imaging and machine learning.
"Candidly, I think big pharma is asleep behind the wheel" in this area, Dar said. Lux Capital has $1.5 billion under management, and Recursion is "one of our biggest positions across our funds," Dar said.
The start-up, which has inked partnerships with drugmakers Takeda and Sanofi, will use the new financing to grow its drug pipeline and build out tech capabilities.
Working to both discover promising new drugs and test them out in humans is an expensive proposition. But Recursion is betting that taking both on will set it apart.
That's because "if you look at the companies that have won in other areas where technology has been disruptive, they've built the full stack," Gibson said. "Uber or Lyft didn't make an app for taxis. They rebuilt the industry."
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