Biotech investor behind Moderna raises $3.6bn for new ventures

Flagship Pioneering, the venture capital fund that launched Moderna, is planning to create a spree of new biotechs harnessing generative artificial intelligence to power drug discovery after securing $3.6bn in funding from its financial backers.

As part of its latest fundraise, the venture firm raised $2.6bn for its eighth fund and $1bn to deploy across parallel funds, which will invest in specific sectors, such as certain diagnostics or therapeutics. Flagship is also likely to raise extra money for its eighth fund later this year, helping it meet a target of $3bn for the investment vehicle.

Much of the investments from Flagship’s fund VIII will be focused on platforms that use AI in novel ways to develop drugs, according to Noubar Afeyan, who founded Flagship in 2000. “Each of the pools of capital we raise supports around 25 companies; I wouldn’t be surprised if the majority of [the companies in fund VIII] are but for AI we wouldn’t do them,” said Afeyan.

Ideas that Flagship are developing include using AI to generate novel chemical materials which serve as the building blocks of medicines, as well as using the technology to automate hypothesis generation for scientists. “AI is a prosthesis for your imagination — your ability to leap dramatically changes using these tools,” said Afeyan. The money from Flagship’s eighth fund will be spent over the next three years.

Flagship, which has 40 companies in its portfolio, not only bankrolls biotech start-ups, it also generates the ideas for them in-house and builds them from the ground up, before bringing in outside investors.

The close of Flagship’s latest raise is a bullish sign for venture investment in biotech, which has been trying to recover following a downturn caused by the end of a pandemic-inspired boom in addition to a series of interest rate hikes.

Arch Venture Partners, another leading biotech investor, started raising a $3bn fund earlier this year. Flagship closed its last fund, which raised a record $3.4bn, in June 2021 during the pandemic.

Flagship — which is based in Cambridge, Massachusetts — has a total of $14bn of assets under management, making it one of the world’s biggest specialist biotech investors. The VC firm already has big investments in AI, including Generate Biomedicines which completed the biggest funding round for a biotech last year.

Flagship’s investment strategy has typically centred on founding platform companies aimed at revolutionising an area of medicine, such as Moderna’s mRNA platform that yielded the blockbuster Covid vaccine. But Afeyan said the VC firm is increasingly investing in biotechs focused on developing individual drugs.

At least a quarter of investments from its last fund were deployed through Flagship’s Pioneering Medicines arm, which partners with pharma groups such as Novo Nordisk and Pfizer, on developing drugs. “We have absolutely responded to the [criticism] ‘don’t platforms take a long time and even if they’re a big return, doesn’t it take six, seven, eight years?” said Afeyan. “The answer is we now have a dozen programmes, and there’ll be two dozen, probably over the next year and a half of single asset programmes.”