We’ve reached a critical juncture in life sciences, marked by a powerful convergence of breakthroughs in biology and advancements in AI and computational power. We believe this transformative moment presents significant opportunities for investors, biotech leaders, and researchers seeking to drive innovation and build enduring businesses. We’re particularly excited about companies developing novel medicines—both through computationally-enabled discovery and by harnessing nature’s machinery—and those building foundational platforms that underpin research, development, and commercialization across the life sciences industry. In our view, these developments offer powerful opportunities to address complex health challenges and enhance patient outcomes. 

A Steady Drumbeat of Innovation

Over the past decade, the biopharmaceutical industry has quietly produced a steady drumbeat of significant medical advances. The five-year survival rate for cancer, for example, has improved from 49% to 69% in recent years. Advances in cancer immunotherapy have driven higher long-term remission rates than chemotherapy in non-small cell lung cancer, enabling patients to live longer with higher quality of life.  Similarly, advances in treatment for cystic fibrosis have nearly doubled the median age of survival, with patients now having near-normal lifespans. And for those living with hepatitis C, advancements in direct acting antivirals have resulted in a 95% cure rate for this once-fatal disease.

Despite these advances, there’s global competitive pressure to innovate faster. While the U.S. has historically been the global leader in scientific research and development, it now faces increased international competition, particularly from China. After increasing its investments across biomedical research, clinical development, and regulatory approval, China is now beginning to reap the rewards. In 2024, Chinese companies accounted for 27% of licensing agreements that received at least a $50 million upfront payment—a 500% increase from just two years ago. 

We Must Invest to Sustain Innovation and Maintain Global Competitiveness

For America to maintain its competitive advantage, it must continue investing in research and clinical development. But there is a significant funding gap: federal research funding as a share of the American economy has dropped by one-third since 1987. 

We believe that venture capital can meaningfully contribute to fill this investment gap, providing support for America’s continued ability to innovate and advance global human health. This isn’t just our belief—venture-backed companies are driving enhanced R&D productivity and efficiency. Recent data shows that roughly 65% of new medicines originated from outside of large pharmaceutical companies. 

The enhanced success rate of pharmaceutical development suggests that the innovative strategies pursued by venture-backed biopharmaceutical companies are working. A 2024 paper in the Journal of the American Medical Association estimates the mean costs to develop a new drug, inclusive of the average cost of failed drugs and of post marketing studies, at $516M. This stands in contrast to the widely cited estimate of $2.6B inclusive of failed drugs from just 8 years prior. What’s the difference? The older estimate primarily relies on data from large pharmaceutical companies which appear to be less successful, less efficient, or both. 

While ~$500M in cost to generate a successful drug is still a significant cost, the payoff is substantial. There are 33 pharmaceutical products now achieving $5B+ in annual revenue, and the single largest product, Keytruda, is generating ~$30B in annual revenue.

Our Investment Pillars

We’re actively seeking opportunities to support companies as they meet this moment by providing long-term patient capital, facilitating connections with potential partners, and bolstering the overall pace of progress in life sciences.

General Catalyst has made more than 30 life sciences investments since 2021, representing ~$700 million in deployed capital. While our core focus is on seed and company creation—reflecting our belief in patient capital and long-term partnership—we invest across the spectrum, from initial capital for startups to financing for clinical-stage companies. This includes supporting companies through their public debuts, as we did with ArriVent, a leader in developing innovative cancer therapies.

Our team’s breadth of experience, bolstered by the policy engagement of the General Catalyst Institute, allows us to pursue an investment strategy that we believe is aligned with the transformative forces shaping the sector, and to identify the most promising avenues for impact, with a focus on:

• Computationally-enabled drug discovery: treatments powered by computational approaches that address unmet medical needs and have the potential to transform patient care.
• Harnessing nature’s machinery: companies leveraging and engineering biological systems to develop novel and effective therapies. 
• Transforming the life sciences industry: software, services, and tools that underpin scientific research, development, and commercialization across the life sciences.

Computationally-Enabled Drug Discovery

The convergence of progress in AI, the decreasing cost of sequencing and proteomics, and the increasing availability of high-quality datasets are dramatically enhancing the power of computationally-enabled drug discovery. We invest in companies leveraging specific computational approaches that aim to identify and develop novel treatments across a range of therapeutic areas, and we seek teams with a truly “bilingual” understanding of computation and biology to translate insights effectively.

Kekulai is one such company. The team is focused on accelerating drug discovery for autoimmune and inflammatory indications through the power of AI. Kekulai’s platform leverages combinatorial chemical libraries and scalable AI to identify promising therapeutic candidates by rapidly screening through vast chemical space.

Harnessing Nature's Machinery

Scientific breakthroughs are unlocking novel therapeutic potential by manipulating the intricate machinery of the biological world. This has led to transformative advancements in areas like cell and gene therapies, where the ability to introduce or modify genetic material offers new approaches to treating and curing diseases. We're also witnessing significant progress in immunotherapies, which harness the innate power of the body's immune system to combat conditions like cancer. Furthermore, the sophisticated engineering of proteins and other biomolecules is opening up entirely new frontiers for targeted drug delivery and the development of novel therapeutic mechanisms.

This profound progress fuels our excitement for the innovative companies operating in this space, like Maxion Therapeutics. In a pioneering approach to biologics, Maxion Therapeutics’ platform combines protein engineering and computational techniques to target previously “undruggable” targets like ion channels and G protein-coupled receptors. This technology has the potential to develop potent, selective, and long-acting therapies for diseases including autoimmune diseases, cardiovascular disease, and chronic pain.

Transforming the Life Sciences Industry

We’re currently witnessing the transformative power of AI in life sciences. AI models can accelerate the pace of innovation, spurring novel discoveries and enhancing the efficiency of business processes. But digital transformation remains nascent in the pharmaceutical industry, presenting tremendous opportunities to transform the business of science. So we’re investing in software solutions and platforms that in our view address critical problems in research, development, and distribution.

One key area of focus is enhancing research capabilities through advanced platforms. These include AI-native drug design and optimization platforms, and tools to enable the study of novel swaths of biology previously not feasible. For example, Cellanome is developing an automated platform to enable a richer understanding of individual cell behaviors, interactions, and functions at massive scale. Cellanome’s platform allows researchers to tackle new questions and expand the range of cell types and functions accessible to study at scale. 

We are also currently witnessing the transformative power of AI in diagnostics. AI models can accelerate the speed and accuracy of diagnoses, as we’re seeing with companies like Aidoc and PathAI, which are designed to deliver more accurate diagnoses and bring life-saving therapies to patients faster. 

Beyond research, AI is rapidly transforming the business of science by enhancing productivity, optimizing commercialization, and boosting efficiency across sales and administrative functions. This includes leveraging AI copilots to augment sales, using compliant tools to accelerate marketing, modernizing regulatory submission workflows, and more.

Building Together

We believe the most meaningful breakthroughs in life sciences are rarely achieved in isolation. They’re the result of deep, sustained collaboration—between scientists and clinicians, industry and academia, and increasingly, founders and investors.

At General Catalyst, we work hand-in-hand with the teams we back. From early insights to breakthrough solutions, we bring a long-term perspective and a network of partnerships including healthcare systems, biopharmaceutical companies, research institutions, policymakers, and more. We back founders with the humility to understand that most science fails and the ambition to nevertheless pursue hard problems. Together, we’re working to reimagine how medicines are discovered, how diseases are treated, and how the promise of biology can translate into impact at scale.