Bristol Myers, Merck bet on cancer detection in PathAI's $165M funding round

PathAI Inc., a health tech company with a track record of partnering with the pharmaceuticals and life sciences sectors, completed a $165 million series C financing round that including funding from Bristol Myers Squibb Co. and Merck & Co. Inc.

The Boston-based company uses its translational research platform to identify unique biomarkers to help pharmaceutical companies with patient selection and assessing drug activity during their clinical trials. PathAI is also developing technology to assist pathologists with making accurate diagnoses for conditions like cancer.

"These new funds will enable new platform and product investments as we continue to scale our integrated technology platform for building solutions to support drug development and diagnostics," Aditya Khosla, PathAI co-founder and chief technology officer, said in a May 18 statement.

The company's expertise in detecting cancer has made PathAI attractive to some of the top pharmaceutical companies specializing in this disease area, including Bristol Myers and Merck & Co. Inc., which both previously joined PathAI's series B funding round in November 2019.

"[PathAI's] industry-leading work incorporating artificial intelligence into digital pathology holds the potential to change the way we diagnose and treat cancer," David Rubin, managing director of Merck's Global Health Innovation Fund, said in a 2019 press release.

Bristol Myers and Merck's Global Health Innovation Fund again contributed to the latest funding round, which was led by D1 Capital Partners LP and Kaiser Permanente Inc.

Bristol Myers — whose former head of translational sciences, Michael Montalto, was appointed as PathAI's chief scientific officer in November 2019 — has already tested the effectiveness of the platform. At the 2020 American Association for Cancer Research annual meeting, the two companies presented an exploratory analysis of how PathAI's technology accurately identified PD-L1 expression in patients with a certain type of skin cancer and bladder cancer who had been treated with Bristol Myers' blockbuster drug Opdivo.

Investing in digital solutions

Laboratory Corp. of America Holdings was another investor in the latest funding round. In March, PathAI expanded its collaboration with LabCorp with the aim of deploying the Boston company's algorithms in clinical trials by various biopharma companies in cancer and other diseases.

"This collaboration will provide our biopharma partners a differentiated understanding of relevant patient characteristics through applying leading AI-driven algorithms to support clinical trials from novel biomarker development through patient stratification and companion diagnostic development," Paul Kirchgraber, CEO of Labcorp Drug Development, said in a March 8 statement.

Roche Holding AG subsidiary Genentech Inc., meanwhile, worked with PathAI to develop machine learning models that were applied to non-small cell lung cancer samples in a trial of monoclonal antibody therapy Tecentriq. Preliminary analyses announced in January 2021 found that these models could identify and quantify cell and tissue features of biopsies and reveal if there was a difference after treatment with the drug.

Aside from cancer, the company also partnered with Gilead Sciences Inc. to retrospectively analyze liver biopsies from patients with liver disease.

The fresh funding for PathAI comes as pharmaceutical companies, such as Moderna Inc., are pledging to increase investments in digital solutions such as AI in light of the COVID-19 pandemic. The day after the series C funding was announced, Bristol Myers revealed a collaboration with another AI-focused company, U.K.-based Exscientia Ltd., with the aim of accelerating the discovery of small molecule drug candidates in multiple therapeutic areas, including oncology and immunology.