❯ ByteDance spin-off Anew Labs raises $290 million in an angel round at a first-round valuation of RMB 10 billion

RMB 10 billion in the first roundAnew Labs, an AI drug discovery company spun out of ByteDance, completed a $290 million angel round in September at a first-round valuation of RMB 10 billion, The Economic Observer reported on October 10. Investors include Sequoia China, IDG Capital, Hillhouse Ventures, 5Y Capital, Gaorong Ventures, Primavera Venture Partners and Boyu Capital, with Sino Biopharmaceutical and the Shanghai Future Industry Fund participating as strategic investors.

Building models and its own drugsThe team was formed inside ByteDance in 2021 under Liu Kai, became independent in June this year, is headquartered in Shanghai and has fewer than 100 people. It develops models, including the open-source protein models Protenix and PXDesign and AnewMind for drug R&D decision-making, while also advancing its own drug pipeline. ByteDance remains the controlling shareholder after the spin-off and continues to supply compute through Volcano Engine.

All four programs are preclinicalThe company has four preclinical pipeline assets. The lead program is an oral small-molecule candidate targeting IL-17, now in lead optimization. The company says it is the world’s first full-spectrum oral small-molecule inhibitor targeting both IL-17A and IL-17F, with data first presented in April at the annual meeting of the American Association of Immunologists. Preclinical means the drug has not yet entered human trials.

People who know algorithms and people who know drugsIndustry figures quoted in the report said returns from tools alone are limited and a pipeline offers more room, but a pipeline needs senior pharmaceutical talent to oversee it. Internet companies are used to fast iteration, while drug development is long and failure-prone; how the two kinds of talent work together and how returns are measured are problems the company has to solve. Its scientific advisers already include people from drugmakers, such as former Innovent Biologics president Liu Yongjun.

▮ SIGNALWhen an internet company goes into AI drug discovery, compute and algorithms are the advantages it brings; whether it produces a drug depends on rebuilding a team by the rules of life sciences.