Y Combinator graduate bags $4M for algorithm-enabled drug discovery

Verge Genomics has raised $4 million to finance a computer-based drug discovery program targeting neurological disorders. The plan is to map all the genes implicated in a disease, using technology that Verge compares to Google's ($GOOG) search engine, and find drugs that can hit each of the targets simultaneously.

San Francisco, CA-based Verge got its start at renowned startup incubator Y Combinator earlier this year, at which time it picked up $120,000 in seed funding to bankroll its initial activities. On the back of their participation in Y Combinator, Verge co-founders Alice Zhang and Jason Chen have persuaded a clutch of investors to part with $4 million. Zhang, the CEO of Verge, spent the three years prior to the founding of Verge as a PhD candidate at the University of California, Los Angeles. Chen, the CSO, is a 5th-year MD and PhD candidate at UCLA.

The pair's work on bioinformatics and computational biology led them to set up Verge to test their idea that drug discovery can be improved through the application of network algorithms to genomic data. As with many of the new breed of biotech startups emerging from Silicon Valley, Verge isn't lacking in confidence. "We find new cures for brain diseases 1000X more cheaply and quickly using our proven network algorithms," the company's website states. In July, Verge told TechCrunch it had entered into a partnership with a large pharmaceutical company.

Given that the whole biopharma industry has struggled for decades to find cures for brain diseases, let alone do so quickly and cheaply, Verge will likely have no trouble attracting more partnerships if it can come close to living up to its self-generated hype. However, the moderate impact of in silico techniques on drug discovery to date means question marks will hang over Verge--and the rest of the sector--until data start to disprove the doubters. Other Y Combinator alumni, such as Atomwise, and more traditional biotech players are working to deliver such data.

Both Verge and Atomwise have found West Coast investors who are willing to finance efforts to prove their concepts. The $4 million round in Verge was led by IA Ventures, a tech fund that has started to add biotech-related companies to its portfolio. Verge now sits alongside Flatiron Health and Transcriptic in the life science enclave at IA Ventures. Two Sigma Ventures, Draper Associates, Great Oaks VC, Slow Ventures and Karlin Ventures also contributed to the round.

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