Formation Bio Secures $372M to Accelerate AI-Driven Drug Development

Formation Bio, a pioneering startup utilizing AI in drug development and supported by OpenAI CEO Sam Altman, has successfully secured over $372 million to advance its innovative product roadmap.

On Wednesday, Formation announced its Series D funding round, led by Andreessen Horowitz, with contributions from industry leaders like Sanofi, Sequoia, Thrive, Emerson Collective, Lachy Groom, SV Angel Growth, and FPV Ventures. This latest round elevates Formation’s total funding to over $600 million, primarily dedicated to expanding partnerships and enhancing research and development efforts.

While Formation has not disclosed its new valuation, a spokesperson indicated that it represents a significant increase from its previous Series C valuation of $1 billion.

Originally founded as TrialSpark in 2016 by Benjamine Liu and Linhao Zhang, Formation Bio is committed to transforming clinical trials and drug development. Liu, with extensive experience in computational biology from institutions like Oxford and UPenn, and Zhang, a former software developer at Salesforce and Oscar Insurance, lead the company’s strategic initiatives.

Formation Bio focuses on innovative solutions in the drug development process, collaborating with biotech and pharmaceutical companies to license drug intellectual property and co-develop treatments beyond the proof-of-concept phase.

The drug development landscape is notoriously complex and costly, typically requiring 10 to 15 years from initial discovery to regulatory approval, with expenditures soaring as high as $5.5 billion per drug. Alarmingly, around 90% of drug candidates fail to reach the market.

Formation aims to enhance the efficiency of clinical trials by optimizing critical processes like study initiation, participant recruitment, and data management. For instance, the company is harnessing AI to create recruitment materials and manage reports on adverse events. Additionally, it is refining AI algorithms to guide R&D teams in making informed decisions regarding drug toxicity, tolerability, and efficacy.

In a significant move, Formation recently announced a partnership with OpenAI and Sanofi to co-create tailored AI solutions for drug development. OpenAI will contribute its advanced AI capabilities, while Sanofi will provide proprietary data to enhance AI model development. Concerns about a potential conflict of interest have been raised, given Altman's involvement in Formation’s Series C fundraising, but OpenAI clarified that the project is spearheaded by COO Brad Lightcap and the board.

“At Sanofi, we’re fully committed to AI,” said Paul Hudson, CEO of Sanofi. “We are excited to partner with Formation Bio, whose AI-driven approach to drug development aligns with our goal to accelerate and improve the introduction of new medicines to patients.”

Formation currently has three drug candidates in its clinical development pipeline, targeting chronic hand eczema, sensory neuropathy, and knee osteoarthritis. Its eczema treatment has progressed to phase 3 trials, the final testing phase prior to regulatory submission.

The race to innovate within AI-driven drug development is heating up, with several startups like EvolutionaryScale recently emerging, backed by investments from tech giants Amazon and Nvidia. According to market research from Markets and Markets, the AI drug discovery market is projected to reach $4.9 billion by 2028, positioning notable players such as Xaira, DeepMind's Isomorphic, Insilico, Profluent, Enveda, and Causaly at the forefront of this evolution.