AI Startup Chai Discovery Hits $1.3B, Partners with Eli Lilly

Creating new medicines traditionally takes over a decade and costs billions, but a startup born in OpenAI's offices just proved that AI might dramatically change those odds.

Chai Discovery, founded in 2024, reached a $1.3 billion valuation in just 12 months. Last week, pharmaceutical giant Eli Lilly announced it will use Chai's software to develop new medicines, joining forces with one of the brightest names in AI drug development.

The company's secret weapon is Chai-2, an algorithm designed to develop antibodies that fight illness. Think of it as computer-aided design software, but instead of buildings or products, it designs the proteins that could save lives.

Co-founders Josh Meier and Jack Dent had been dreaming about this moment for six years. Back in 2018, OpenAI CEO Sam Altman first approached them about starting a proteomics company focused on studying proteins. But Meier, who worked on OpenAI's research team, felt the technology wasn't ready yet.

He spent the next few years building the foundation at Facebook, where he helped develop ESM1, the first transformer protein-language model. After three more years at another AI biotech firm, Meier and Dent finally reconnected with Altman in 2024 to launch Chai.

OpenAI became one of their first investors and even gave the four co-founders office space in San Francisco's Mission neighborhood to get started. The timing couldn't have been better. Last week, Eli Lilly also announced a separate $1 billion partnership with Nvidia to create an AI drug discovery lab in San Francisco.

Why This Inspires

Elena Viboch from General Catalyst, one of Chai's major backers, sees a future where pharmaceutical companies using this technology could get first-in-class medicines into clinical trials by the end of 2027. That's lightning speed in an industry where development typically spans 10 to 15 years.

Aliza Apple, who heads Eli Lilly's TuneLab AI program, shared similar optimism. "By combining Chai's generative design models with Lilly's deep biologics expertise and proprietary data, we intend to push the frontier of how AI can design better molecules from the outset," she said.

Not everyone believes AI will revolutionize drug development. Some industry veterans remain skeptical, arguing that traditional drug discovery is too complex for algorithms to crack. But the believers are betting big, with hundreds of millions of dollars backing their vision.

The real winners could be patients waiting for treatments that might arrive years sooner than anyone thought possible.