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

Drug discovery, the art of identifying new molecules to develop pharmaceutical products, is a notoriously time-consuming and difficult process. Traditional techniques, such as high-throughput screening, offer a costly, dispersed approach that is often not successful. However, a new breed of biotech companies are leveraging AI and advanced data technologies to try to speed up and streamline the process.

Chai Discovery, an AI startup founded in 2024, is one such company. In just over 12 months, its young co-founders have managed to raise hundreds of millions of dollars and rally the support of some of Silicon Valley’s most influential investors, making it one of the flashiest 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 in 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, the proteins needed to fight disease. The startup said it hopes to serve as a sort of “computer-aided design suite” for molecules.

This is a critical moment for Chai’s particular field. The startup’s deal was announced shortly before Eli Lilly announced it would also collaborate with Nvidia in a billion-dollar partnership to create an AI drug discovery lab in San Francisco. This “co-innovation laboratory”, as it is called, will combine big data, computing resources and scientific expertise, all with the aim of accelerating the development of new drugs.

The industry is not without its detractors. Some industry veterans seem to think that, given the difficulty of traditional drug development, these new technologies are unlikely to have a major impact. However, for every naysayer, there seem to be as many believers.

Elena Viboch, chief executive of General Catalyst — one of Chai’s main backers — told TechCrunch that her company is confident that businesses that adopt the startup’s services will see results. “We believe that the biopharmaceutical companies that partner fastest with companies like Chai will be the first to bring molecules into the clinic and make medicines that matter,” Viboch said. “In practice, this means a partnership in 2026 and by the end of 2027, first-class drugs will enter clinical trials.”

Aliza Apple, head of Lilly’s TuneLab program – which uses AI and machine learning to advance drug discovery – also expressed confidence in Chai’s product. “By combining Chai’s generative design models with Lilly’s deep biologics expertise and proprietary data, we intend to push the boundaries of how AI can design better molecules from the start, 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 conversations between its co-founders and OpenAI CEO Sam Altman. One of these founders, Josh Meier, previously worked for OpenAI in 2018 as part of its research and engineering team. After leaving the company, Altman messaged Jack Dent, a former college friend of Meier’s, to ask about a possible business opportunity. Meier and Dent had originally met in computer science classes at Harvard, but, at the time, Dent was a Stripe engineer (another company of which Altman was an early backer). Altman asked him if he thought Meier would be willing to collaborate on a proteomics startup, that is, a company focused on the study of proteins.

Altman “messaged me to say that everyone at OpenAI thought highly of him and asked if I thought he would be willing to work with them on a proteomics spin-out,” Dent said. Dent told Altman “sure,” but there was just one problem: Meier didn’t feel like the technology was quite “there” yet. The AI ​​technology behind these companies – which leverages powerful algorithms – was still a growing area and nowhere near where it should be.

Meier was also determined to join Facebook’s research and engineering team, which he would eventually do. At Facebook, Meier helped develop ESM1, the first transformative protein language model – an important precursor to the work Chai is currently doing. After Meier’s time at Facebook, he will spend three years at Absci, another AI biotechnology company based on drug creation.

By 2024, Meier and Dent finally felt ready to take on the proteomics company they had initially discussed with Altman. “Josh and I contacted Sam and told him we should pick up this conversation where we left off – and start Chai together,” Dent said.

OpenAI ended up becoming one of Chai’s first seed investors. Meier and Dent actually founded Chai — along with their co-founders, Matthew McPartlon and Jacques Boitreaud — while working in the AI ​​giant’s offices in San Francisco’s Mission District. “They were kind enough to give us office space,” Dent revealed.

Now, just over a year later, as Chai looks forward to his 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’ve really put our heads down and pushed the boundaries of what these models are capable of,” Dent said. “Every line of code in our codebase is developed in-house. We don’t take off-the-shelf LLMs that are in the open source ecosystem and refine them. These are highly customized architectures.”

General Catalyst’s Viboch told TechCrunch that she felt Chai was ready to launch. “There are no fundamental barriers to deploying these models in drug discovery,” she said. “Companies will still need to put their drug candidates through testing and clinical trials, but we believe those who adopt these technologies will realize significant benefits, not only by reducing discovery times, but also by unlocking drug classes that have historically been difficult to develop.