AI in Drug Discovery and Diagnostics in 2026, and the ASX Companies Using It

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Samso News theme banner. AI in Drug Discovery and Diagnostics in 2026.

Samso taxonomy strip. Samso News, Biotech and Health, AI in Drug Discovery, Biotech and Health Series, Part 5.

In September 2026 Insilico Medicine dosed the first patient in a Phase 3 trial of rentosertib. Both its target and its molecule were found with generative artificial intelligence (AI) [R1]. This is part 5 of our Biotech and Health Series, on AI drug discovery and AI diagnostics. It follows our pieces on AI in healthcare, BCAL Diagnostics and Cleo Diagnostics.

All prices in this piece are as at the close of ASX trading on 30 October 2026.

AI in Drug Discovery

A drug acts on a target, usually a protein that drives a disease. AI drug discovery uses models trained on biological and chemical data to find targets and design molecules faster.

Insilico used AI to link a protein called TNIK to idiopathic pulmonary fibrosis (IPF), a scarring of the lungs, and then to design rentosertib [R1]. A Phase 2a study of 71 patients over 12 weeks, published in Nature Medicine in June 2025, showed what the company calls a dose-dependent efficacy trend [R1][R2]. The Phase 3 trial plans to enrol 320 patients at 47 centres in China and treat them for 52 weeks [R1].

TRIAL PHASES

Phase 1 tests safety in a small group. Phase 2 tests whether the drug works, and at what dose. Phase 3 compares it with a placebo (a dummy treatment) in a larger group, and usually decides approval. The endpoint is the measure a trial is judged on. For this trial it is how fast lung capacity declines over a year [R1].

As at October 2026 no drug discovered by AI holds full approval from the US Food and Drug Administration (FDA), according to industry trackers [R3].

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AI in Diagnostics

Diagnostics is further along. Software that reads a scan or a blood result is regulated in the United States as a medical device. The FDA keeps a public list of AI-enabled devices it has authorised. Its September 2026 update holds 1,614 devices, with the latest decision dated 29 June 2026 [R4][R5]. The FDA says the list is not a complete record [R4].

FDA CLEARANCE

Most AI software reaches the US market through a 510(k) clearance [R5]. The company shows its device is substantially equivalent to one already sold. Clearance allows sale. Whether insurers pay is a separate decision.

The ASX Companies

TABLE 01. ASX companies with an AI or algorithm-based product in drug discovery or diagnostics, and where each stands as at 30 October 2026. Columns: Company, Product, Area, Stage, Next step the company has named. Company Algorae (1AI), Product AlgoraeOS, Area Drug discovery, Stage Laboratory testing, Next step the company has named Third Peter Mac program, 40 combinations. Company Artrya (AYA), Product Salix, Area Heart CT scans, Stage Two modules FDA cleared, Next step the company has named Reader study, then FDA filing for Coronary Flow. Company Echo IQ (EIQ), Product EchoSolv AS, HF, Area Heart ultrasound, Stage AS cleared, HF under appeal, Next step the company has named FDA meeting on the HF appeal. Company Cleo (COV), Product Ovarian cancer test, Area Blood test, Stage Analytical validation, Next step the company has named FDA 510(k) submission, first half 2027. Company BCAL (BDX), Product Avantect tests (licensed), Area Blood test, Stage On sale in Australia, Next step the company has named National availability of Avantect Multicancer. Source: company ASX announcements and reports cited in the references. Compiled by Samso.

Algorae Pharmaceuticals (ASX: 1AI). Algorae's platform, AlgoraeOS, uses machine learning to predict which drugs work better together than alone [R6]. In July 2026 Algorae reported that the Peter MacCallum Cancer Centre had tested 24 drugs, each paired with cannabidiol (CBD), in four cancer cell models. The company says version 2 of its platform predicted better than version 1 [R6]. A third program of 40 combinations was announced on 16 October 2026 [R7].

Artrya (ASX: AYA). Artrya's Salix software reads CT scans of the heart's arteries. The FDA cleared its Coronary Anatomy module in March 2025 and its Coronary Plaque module in August 2025 [R8]. In its September 2026 quarterly report, Artrya said it will run an additional reader study before it files a third module, Coronary Flow, with the FDA. Artrya says the FDA did not ask for the study, and the submission timing has been extended [R9].

Echo IQ (ASX: EIQ). Echo IQ's FDA-cleared EchoSolv AS reads heart ultrasound data to flag severe aortic stenosis, a narrowing of the main heart valve. The company reported 9,697 completed assessments in the September 2026 quarter, about 193 per cent more than a year earlier [R10]. Its heart failure product, EchoSolv HF, was found not substantially equivalent by the FDA in September 2026 [R10][R11]. Echo IQ's appeal has been accepted, and on 12 October 2026 it expected a meeting with the FDA within 30 days [R12].

Cleo Diagnostics (ASX: COV) and BCAL Diagnostics (ASX: BDX). Both work on cancer blood tests in which software combines several markers into one result [R14]. On 13 October 2026 Cleo announced it had begun analytical validation of its ovarian cancer test. Cleo plans clinical testing from late November and an FDA 510(k) submission in the first half of 2027 [R13][R14]. BCAL holds the exclusive licence to sell ClearNote Health's Avantect tests in Australia and New Zealand [R15]. ClearNote says its updated pancreatic test uses machine learning [R16].

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Where the Share Prices Sit

TABLE 02. Closing share prices of the five ASX companies, against the close a year earlier. Columns: Company, Code, Close 30 October 2026, Close a year earlier, Change. Company Algorae Pharmaceuticals, Code 1AI, Close 30 October 2026 1 cent, Close a year earlier 0.9 cents, Change up 11%. Company Artrya, Code AYA, Close 30 October 2026 A$2.77, Close a year earlier A$3.26, Change down 15%. Company Echo IQ, Code EIQ, Close 30 October 2026 53 cents, Close a year earlier 19.5 cents, Change up 172%. Company Cleo Diagnostics, Code COV, Close 30 October 2026 29.5 cents, Close a year earlier 41 cents, Change down 28%. Company BCAL Diagnostics, Code BDX, Close 30 October 2026 8.4 cents, Close a year earlier 9 cents, Change down 7%. Source: Yahoo Finance daily closes [R18], Samso calculation. Year-earlier close is the last session on or before 30 October 2025.

Two of the five share prices rose over the year and three fell. Echo IQ rose 172 per cent, although its shares halved on 9 September, after the FDA decision on EchoSolv HF was announced. Artrya fell 15 per cent, after peaking at A$6.27 in July 2026. Our reading is that Echo IQ's price moved on its regulatory news more than on the AI theme. Small-cap prices like these should not be read as literally as BHP's.

What Comes Next

Google-backed Isomorphic Labs raised US$2.1 billion in May 2026 and expects its first clinical trials by the end of 2026 [R17]. Echo IQ expects its FDA meeting, and Artrya plans to file Coronary Flow after its reader study. The rentosertib Phase 3 result is further away, because each patient is treated for 52 weeks.

THE OTHER WAY TO READ THIS

AI speeds up the early steps of drug discovery. Insilico calls rentosertib the first generative AI drug in Phase 3 [R1], so generative AI drugs have no late-testing record yet. In diagnostics, the EchoSolv HF decision shows a 510(k) clearance is not automatic.

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Samso Concluding Comments

For ASX investors, AI in healthcare is mainly a diagnostics story today. Artrya and Echo IQ each have FDA-cleared software in use in US hospitals.

AI drug discovery is earlier on the ASX. Algorae is at the laboratory stage. The main test for the field is Insilico's Phase 3. A positive result would make rentosertib the first generative AI drug to pass a Phase 3 trial.

SAMSO TAKE

AI in diagnostics is more likely to succeed in the near term, because its products are already cleared and in use. AI drug discovery has the larger prize. Will rentosertib's Phase 3 be the first result to show it?

Related Samso Coverage

28 OCT 2026 Cleo Diagnostics (ASX: COV) - The Ovarian Cancer Blood Test, the Evidence and the FDA Submission

Cleo's ovarian cancer blood test and its path to an FDA submission.

21 OCT 2026 Cancer Blood Tests in Australia and Where BCAL Diagnostics (ASX: BDX) Fits

BCAL's cancer blood tests, including the licensed Avantect tests.

21 OCT 2026 AI in Healthcare - Will It Get Bigger on the ASX?

Four ASX companies with FDA-cleared AI software, including Artrya and Echo IQ.

VOCABULARY

Artificial intelligence (AI)

Computer models that learn patterns from data and use them to make predictions.

Generative AI

AI that creates something new, here a drug target or a molecule, rather than only sorting data.

Target

The molecule in the body, usually a protein, that a drug is designed to act on.

Phase 1, 2 and 3

The three stages of testing a drug in people, from safety in a small group to a large comparison against a placebo.

Endpoint

The measure a trial is judged on, such as the rate of lung decline.

FDA

The US Food and Drug Administration, the regulator for drugs and medical devices in the United States.

510(k) clearance

The FDA route for most medical devices, where a company shows its device is substantially equivalent to one already sold.

Analytical validation

Laboratory testing that a test measures accurately and repeatably, before it is tried on patient samples.

References

[R1] Insilico Medicine, Insilico Medicine Doses First Patient in GENESIS-IPF-3 (press release), 10 September 2026. Link

[R2] Xu Z., Ren F., Wang P., Cao J. and others, A generative AI-discovered TNIK inhibitor for idiopathic pulmonary fibrosis: a randomized phase 2a trial, Nature Medicine 31(8), 2602 to 2610, published online 3 June 2025, doi 10.1038/s41591-025-03743-2. Linked through Insilico's announcement of the paper. Link

[R3] IntuitionLabs, AI Drug Discovery FDA Approvals: The 2026 Reality Check, updated 15 October 2026. Link

[R4] US FDA, List of Artificial Intelligence-Enabled Medical Devices, page updated 4 September 2026. Link

[R5] Complizen, FDA has cleared 1,614 AI medical devices (a count of the FDA list to 29 June 2026, including the share cleared through 510(k)), 2026. Link

[R6] Algorae Pharmaceuticals, Peter Mac Testing Validates AlgoraeOS v2 (ASX announcement), lodged 3 July 2026. The document header reads 3 July 2025. Link

[R7] Algorae Pharmaceuticals, third AOS2 validation program with Peter Mac (ASX announcement), 16 October 2026. Link

[R8] Artrya, Annual Report 2026 with Appendix 4E (ASX announcement), 19 August 2026. Copy on Webull. Link

[R9] Artrya, Quarterly Activities and Cashflow Report, quarter ended 30 September 2026 (ASX announcement), 26 October 2026. Link

[R10] Echo IQ, Quarterly Activities Report and Appendix 4C (ASX announcement), 26 October 2026. Link

[R11] Echo IQ, EchoSolv HF FDA application update (ASX announcement), 8 September 2026. Link

[R12] Echo IQ, EchoSolv HF FDA 510(k) update (ASX announcement), 12 October 2026. Link

[R13] Cleo Diagnostics, CLEO Commences Analytical Validation Ahead of FDA Submission (ASX announcement), 13 October 2026. Link

[R14] Cleo Diagnostics, September 2026 Quarterly Activities Report (ASX announcement), 30 October 2026. Link

[R15] BCAL Diagnostics, Appendix 4C, September 2026 Quarterly Activities Report (ASX announcement), 30 October 2026. Link

[R16] SelectScience, ClearNote Health's enhanced Avantect Pancreatic Cancer Test, 25 February 2026. Link

[R17] Reuters via Ary News, Google-backed Isomorphic raises $2.1 billion to scale AI-driven drug discovery, 13 May 2026. Link

[R18] Yahoo Finance, daily closing prices for 1AI.AX, AYA.AX, EIQ.AX, COV.AX and BDX.AX, to the close of 30 October 2026. Link

Cover photo: A high-throughput screening robot in the laboratories of the National Center for Advancing Translational Sciences (NCATS), US National Institutes of Health, 27 October 2017, image mirrored. Public domain (US government work), via Wikimedia Commons (https://commons.wikimedia.org/wiki/File:NCATS_Robots_(38186983282).jpg).

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