Formation Bio, a startup dedicated to using AI in drug development and backed by OpenAI CEO Sam Altman, has secured over $250 million to advance its ambitious product plans.
On Wednesday, Formation announced it raised $372 million in a Series D funding round led by Andreessen Horowitz, with additional support from Sanofi, Sequoia, Thrive, Emerson Collective, Lachy Groom, SV Angel Growth, and FPV Ventures. This new funding brings Formation’s total to over $600 million, which will primarily support partnership acquisitions and research and development.
While Formation did not disclose its new valuation, a spokesperson indicated it is a significant increase from its previous valuation of $1 billion during the Series C round.
Originally known as TrialSpark, Formation was co-founded in 2016 by Benjamine Liu and Linhao Zhang. Liu, with a background in computational biology, has conducted neuroscience research at Oxford and UPenn. Zhang, a software developer, previously worked at Salesforce and Oscar Insurance.
Formation focuses on creating tech-driven solutions for clinical trials and drug development. It licenses drug IP and co-develops drugs with biotech and pharma companies, advancing these drugs beyond the clinical proof-of-concept stage.
Drug development is notoriously costly and complex, often taking 10 to 15 years and up to $5.5 billion to bring a drug from discovery to regulatory approval. Around 90% of drugs fail to reach the market.
Formation aims to make clinical trials more efficient by optimizing processes like study startup, participant recruitment, and data management. The company is leveraging AI to create patient recruitment materials and adverse event reports, and refining AI models to offer R&D recommendations and better predict drug toxicity, tolerability, and efficacy.
Recently, Formation partnered with OpenAI and Sanofi to design and develop AI solutions for drug development. OpenAI will provide AI expertise, while Sanofi will contribute proprietary data to help develop AI models.
OpenAI’s involvement might seem like a conflict of interest, given Altman’s participation in Formation’s Series C fundraising. However, OpenAI stated the deal was led by COO Brad Lightcap and the board of directors, without specifying if Altman, who is on the board, recused himself.
Sanofi CEO Paul Hudson expressed enthusiasm for the partnership, emphasizing Sanofi’s commitment to AI and the potential of Formation’s AI-driven drug development capabilities to advance the industry.
Formation has three drug candidates in its pipeline, targeting chronic hand eczema, sensory neuropathy, and knee osteoarthritis. The eczema treatment has reached phase 3, the final stage of testing before seeking regulatory approval.
Several startups are also exploring AI-powered drug development, including EvolutionaryScale, which recently received investments from Amazon and Nvidia. Market research firm Markets and Markets projects that the AI in drug discovery market will be worth $4.9 billion by 2028. Notable players in this field include Xaira, DeepMind spin-off Isomorphic, Insilico, Profluent, Enveda, and Causaly.
