$1 Billion in Potential Capital For Protein Therapeutics

Novartis has signed a deal worth over $1 billion with Generate: Biomedicines. A computational biology company that uses machine learning to generate and assess large numbers of possible therapeutics, Generate: Biomedicines will receive $65MM in cash and $15MM in exchange for equity. With over $1 billion in milestone payments, the contract between Novartis and Generate Biomedicines is one of the largest in the new age of computational biology deals.

While specifics about the deal are yet to be released, the collaboration is aimed “to discover and develop protein therapeutics across multiple disease areas.” Generate’s AI powered platform is able to optimize already existing therapeutics, but also generate completely new therapeutics that can then be screened through their high throughput experimental validation protocol.

• Slight differences in chemical structure of various compounds can have drastic effects on the way the body interacts with the drug. One example is Carvone. The rotation of a single bond in Carvone changes the smell from spearmint to caraway seed. This same principle can be, and is, applied in drug discovery to fine tune molecules to be more effective in treating disease.

Though not a pharmaceutical giant, Generate: Biomedicines is no stranger to the drug development protocol. With multiple therapeutics in their pipeline along with previous and current collaborations with Amgen, Generate was in a great position to pen the deal with Novartis. Despite their strong scientific platform, Generate is nowhere near close to Novartis in regard to resource accessibility that is necessary for bringing possible products to market. In providing access to the resources and expertise that come with a strong reputation and market cap of ~$255 billion, Novartis hopes to leverage Generate’s platform in order to optimize their own drug development protocols and broaden their portfolio. 

• In their Q2 2024 Financial Results Presentation, Novartis saw an increase in both sales and core operating income by 11% and 19% respectively in comparison to Q2 2023. The company also has 105 pipeline projects, of which 65 are Oncology or Immunology therapeutics. 

The deal comes just a year after Generate raised $273MM as the company saw the first therapeutics move to clinical trials, a major milestone that signals proof of concept to potential investors. The company is not short on cash either, an issue that biotech startups tend to run into while in pursuit of clinical trials.

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