Biossil raises $153-million in OpenAI-led funding to bring resuscitated drugs to market

Sean Silcoff, The Globe and Mail

OpenAI has led a US$153-million venture capital financing of Biossil Inc., a Toronto startup that uses artificial intelligence to give failed drug candidates a second chance at becoming approved therapies.

The AI giant, best known for ChatGPT, provided the majority of the round through its OpenAI Startup Fund.

This latest financing values Biossil at US$1-billion. OpenAI co-led Biossil’s last venture capital financing a year ago with Silicon Valley billionaire Peter Thiel’s Founders Fund, when the Toronto company raised US$43-million.

Founders Fund, which led a previous US$22-million financing of Biossil in 2024, participated in the new deal, alongside existing investors Quiet Capital, Modern Capital, Golden Ventures and Panache Ventures, plus Duke University’s endowment fund and sovereign wealth fund Abu Dhabi Investment Council. Janet Bannister’s Staircase Ventures led Biossil’s $3.7-million seed financing in 2023.

The latest deal was not announced, but details were shared by a source familiar with the matter. The Globe and Mail is not identifying the source as they are not authorized to discuss the information.

Biossil plans to use the financing to expand its capacity for clinical development and selectively buy more drug candidates, the source said. It is an all-equity deal, with a small portion being paid to early employees.

The company also disclosed in an August filing with Corporations Canada that it had created a new class of 5.37 million preferred shares, each valued at US$28.69 – triple the value of shares issued in last year’s financing.

Anthony Mouchantaf, chief executive officer of Biossil, declined to comment.

The funding is happening as OpenAI and rival Anthropic expand beyond offering broadly used AI models to delivering sector-specific tools. One such sector is health care, where some believe AI purveyors could make the strongest case that their technology can benefit humanity by discovering life-saving therapies, countering mounting concerns their algorithms could threaten civilization.

Both AI giants have launched specialized models and programs to help speed up life-sciences research. Earlier this month, Anthropic said it had set up a wet laboratory in the San Francisco Bay Area staffed by a life-sciences research group using its Claude AI assistant. It said Claude had already “discovered a novel enzyme system with properties reminiscent of CRISPR,” a genetic modification technology used by medical researchers.

Mr. Mouchantaf, a lawyer turned tech entrepreneur who previously headed Royal Bank of Canada’s venture capital investment strategy, co-founded Biossil in 2023 with Alexander Mosa, who had trained to be an internal medicine specialist.

Several companies have designed drug candidates using AI and taken them into trials; none have yet made it to market.

Biossil has taken a different approach. It built a software platform using OpenAI’s large language models to uncover promising molecules from the pharmaceutical discard pile. The Toronto company’s algorithms scavenge through the expanse of drug candidates that failed trials at advanced stages, detecting ways to give them a second chance. For example, some drugs failed because they only worked in certain patients with particular attributes. In some cases, trials were poorly designed or pursued the wrong outcomes.

The founders figured that if they could bring the molecules back into trials in a modified fashion, they could forgo years of studies and hundreds of millions of dollars in costs and advance toward regulatory approval. Their approach quickly won over investors and researchers.

Biossil has bought or licensed 12 molecules, including a July deal where it paid US$500,000 up front for a precision antibiotic from Summit Therapeutics Inc., with more money to follow if the drug clears regulatory and commercial milestones and gets to market. The drug faltered in a late-stage efficacy trial five years ago as a treatment for patients suffering from C. difficile infections.

The Toronto company has partnered with universities and research hospitals in Canada, the United States and Europe, including Toronto’s Hospital for Sick Children (SickKids), Harvard University and the Mayo Clinic. It recently signed trial collaboration agreements with SickKids, Toronto’s University Health Network and Stanford University’s Skin Innovation and Interventional Research Group.

Two Biossil molecules target sickle cell disease, a debilitating genetic condition that predominantly affects people of African or Indian descent. Johnson & Johnson JNJ-N +0.38%increase and Pfizer Inc. PFE-N +0.31%increase each attempted to develop the drugs with biotechnology startups but abandoned those programs after they failed late-stage efficacy trials.

In both cases, Biossil’s AI uncovered reasons to revisit the drug candidates.For example, the J&J drug, called senicapoc, failed to show significant improvement over placebos in relieving pain, the study’s main goal. But the data showed it was better at preventing the breakdown of red blood cells, which would cause anemia and other serious complications.

Biossil is now sponsoring a sickle cell disease trial with J&J’s abandoned molecule, with recruiting under way at SickKids, Centre hospitalier de l’Université de Montréal and McGill University. It’s also launching a trial in Germany using the same molecule to treat glioblastoma, an aggressive cancerous brain tumour, in partnership with Heidelberg University Hospital and the German Cancer Research Center, and a separate trial for the same indication in Denmark with Aarhus University.