AI pharmaceutical company Formation Bio has raised a $600 million fund specifically to acquire drug candidates and advance them into clinical trials.

Beating AI News Flash: AI pharmaceutical company Formation Bio announces the establishment of a $600 million drug development fund, planning to acquire or license 10 to 15 candidate drug projects over the next 3 to 5 years. It has already secured licenses for two projects.

Formation Bio does not develop new drugs from scratch, but instead selects drugs that other pharmaceutical companies have already developed but have not yet completed clinical validation, focusing on Phase I and Phase II clinical projects. It establishes a separate company for each drug, provides funding, and shares its own clinical development team and AI systems to help screen indications, design trials, and advance clinical validation. After obtaining key clinical data, it then collaborates with large pharmaceutical companies for development or commercialization.

Founder Ben Liu believes that AI is making drug discovery increasingly faster, but clinical trials remain time-consuming and costly. Over the past decade, the number of candidate drugs discovered has doubled, yet the number of new drugs approved each year has not grown significantly. Many pharmaceutical companies, even after discovering promising drugs, lack sufficient funding and manpower to continue advancing them.

Formation Bio raised $372 million in 2024, when investors purchased equity in the company. This time, it has established an independent fund, allowing external investors to directly fund drug projects, with Formation Bio responsible for development and co-investing. If a drug achieves clinical progress, returns can be obtained through licensing or sale. This way, the company does not need to rely on new rounds of equity financing each time it acquires a new drug, and can channel more funds into clinical trials.