From the offices of OpenAI to a deal with Eli Lilly – how Chai Discovery became one of the brightest names in AI drug development

Drug discovery, the art of identifying new molecules for drug development, is a difficult and time-consuming process. Traditional techniques, such as high-throughput screening, offer an expensive scattering approach, which is often not successful. However, a new generation of biotech companies is leveraging artificial intelligence and advanced data technologies in an attempt to speed up and simplify the process.

Chai Discovery, an AI startup founded in 2024, is one such company. In just over 12 months, its young founders have raised hundreds of millions of dollars and enlisted the support of some of Silicon Valley’s most influential investors, making it one of the brightest companies in a growing industry. In December, the company completed its Series B, bringing in an additional $130 million and a valuation of $1.3 billion.

Last Friday, Chai also announced a partnership with Eli Lilly, a deal under which the pharmaceutical giant will use the startup’s software to help develop new drugs. Chai’s algorithm, called Chai-2, is designed to develop antibodies, which are proteins needed to fight diseases. The startup said it hopes to serve as a “computer-aided design suite” for molecules.

It is a critical moment for Zhai’s specific domain. The startup deal was announced shortly before Eli Lilly announced it would also team up with Nvidia in a $1 billion partnership to create an AI drug discovery lab in San Francisco. The “co-innovation lab,” as it is called, will combine big data, computational resources and scientific expertise, all in an effort to accelerate the speed of development of new medicine.

The industry is not without its critics. Some industry veterans seem to feel that – given how difficult it is to develop traditional drugs – these new technologies are unlikely to have much of an impact. However, there seem to be a similar number of believers for every naysayer.

Elena Feibush, managing director at General Catalyst — one of Chai’s main backers — told TechCrunch that her company is confident that companies that adopt the startup’s services will see results. “We believe that the biopharma companies that move most quickly to partner with companies like CHAI will be the first to get molecules into the clinic and will make important medicines,” Feibush said. “In practice, this means partnering in 2026 and by the end of 2027, seeing first-in-class drugs enter clinical trials.”

Alisa Apple, head of Lilly’s TuneLab program — which uses artificial intelligence and machine learning to enhance drug discovery — also expressed confidence in Chai’s product. “By combining Chai’s generative design models with Lilly’s deep expertise in biology and proprietary data, we intend to push the boundaries of how AI designs better molecules from the beginning, with the ultimate goal of helping accelerate the development of innovative medicines for patients,” she said.

Chai may have been founded less than two years ago, but the startup’s origins began about six years ago, amid talks between its founders and OpenAI CEO Sam Altman. One of those founders, Josh Mayer, previously worked at OpenAI in 2018 on its research and engineering team. After he left the company, Altman wrote to Mayer’s old college friend, Jack Dent, to ask him about a possible job opportunity. Mayer and Dent had originally met in computer science classes at Harvard, but at the time, Dent was an engineer for Stripe (another company of which Altman was an early backer). Altman asked him if he thought Mayer would be open to collaborating on a proteomics startup, that is, one focused on studying proteins.

“Altman wrote to me to say that everyone at OpenAI thought very highly of him and to ask if I thought I would be open to working with them on proteomics,” Dent said. “Of course,” Dent told Altman, but there was just one hitch: Mayer didn’t feel the technology was quite “there” yet. The AI ​​technology behind such companies — which leverages powerful algorithms — was still a growing field and far from where it needed to be.

Mayer was also very intent on joining Facebook’s research and engineering team, which he will continue to do. At Facebook, Mayer helped develop ESM1, the first transformative protein language model, an important precursor to the work Zhai is currently doing. After his time at Facebook, Mayer spent three years at Absci, another AI biotech company centered around drug production.

By 2024, Mayer and Dent finally felt ready to take on the protein company they had originally discussed with Altman. “Josh and I reached out to Sam and told him that we should pick up that conversation where we left off — and that we start Chai together,” Dent said.

OpenAI ended up becoming one of Chai’s early investors. In fact, Mayer and Dent founded Chai — along with their co-founders, Matthew McPartlon and Jack Poitreau — while working at the AI ​​giant’s offices in San Francisco’s Mission District. “They were kind enough to give us some office space,” Dent revealed.

Now, a little more than a year later, as Chai relishes her new partnership with Eli Lilly, Dent says the key to the company’s rapid growth has been assembling a team of extremely talented people. “We put our heads down and pushed the limits of what these models can do,” Dent said. “Every line of code in our code base is produced locally. We are not removing LLM certifications from the shelves in open source.” [ecosystem] And adjust it. These are very custom builds.”

General Catalyst’s Viboch told TechCrunch that she felt Chai was ready to hit the ground running. “There are no fundamental barriers to deploying these models in drug discovery,” she said. “Companies will still need to conduct testing and clinical trials on drug candidates, but we believe there will be significant benefits for those who embrace these technologies – not only in compressing discovery timelines, but also in opening up drug classes that have historically been difficult to develop.”