Formation Bio has added a major new financing round to its push to use AI in drug development. The company announced Wednesday that it raised $372 million in a Series D funding round, giving it more capital to expand partnerships, support R&D and advance a pipeline that already includes three clinical drug candidates.
What Formation Bio Raised
The $372 million Series D was led by Andreessen Horowitz. Sanofi, Sequoia, Thrive, Emerson Collective, Lachy Groom, SV Angel Growth and FPV Ventures also participated.
According to PitchBook, the new round brings Formation Bio's total raised to more than $600 million. Formation said the money is being directed mainly toward partnership acquisition efforts and R&D.
The company declined to disclose its new valuation. A spokesperson told TechCrunch that it is a "material step up" from $1 billion, the valuation Formation Bio reached in its Series C.
Formation Bio is also notable for its connection to OpenAI CEO Sam Altman, who backed the startup. That link matters because Formation is not simply presenting AI as a side feature. It is building its business around applying AI and software systems to parts of drug development that have long been expensive, slow and difficult to manage.
From TrialSpark to Formation Bio
Formation Bio was previously known as TrialSpark. It was co-founded by Benjamine Liu and Linhao Zhang in 2016.
Liu has a background in computational biology and conducted neuroscience research at Oxford and UPenn. Zhang is a software developer who worked at Salesforce before joining Oscar Insurance as a product engineer.
The company now builds technology-focused systems for clinical trials and drug development. Its model includes licensing drug IP from biotech and pharma companies, co-developing drugs with those companies, and developing drugs beyond clinical proof-of-concept.
That structure gives Formation Bio a role that is broader than providing software to other drug developers. It is also involved in moving drug candidates through the development process itself.
Why AI Is Central to the Strategy
Drug development is difficult because the path from early discovery to approval is long, costly and uncertain. The source article notes that it takes 10 to 15 years on average to take a drug from initial discovery through regulatory approval. The cost per drug can reach up to $5.5 billion, and an estimated 90% of drugs fail to reach the market.
Those numbers explain why Formation Bio is focusing on efficiency. If clinical trials can be run with fewer delays, clearer data workflows and better decision support, the business case for AI becomes easier to understand.
Formation says it can run clinical trials more efficiently by streamlining several processes, including:
- study startup
- participant recruitment
- data management
- patient recruitment materials
- reports for "adverse events"
The company is already deploying AI to generate patient recruitment materials and reports for "adverse events." It is also fine-tuning AI models to give drug development teams recommendations for R&D decisions and to better predict drug toxicity, tolerability and efficacy.
Those use cases are practical rather than abstract. They point to AI as a tool for producing materials, organizing trial work and informing development choices. Formation Bio's pitch is that software and AI can reduce friction inside a process where small delays and poor decisions can become very expensive.
The Sanofi and OpenAI Collaboration
Last month, Formation Bio announced a collaboration with OpenAI and Sanofi. The three organizations said they would jointly design and develop customized AI solutions for drug development.
OpenAI said it would provide access to AI capabilities and expertise. Sanofi said it would contribute proprietary data for developing AI models.
Sanofi is also an investor in the new Series D round. Sanofi CEO Paul Hudson described the company's interest in AI in a press release:
"At Sanofi, we're all in on AI," Sanofi CEO Paul Hudson said in a press release. "And we are proud to partner with and invest in Formation Bio, whose AI-driven drug development vision and capabilities will help lead our industry forward in the shared ambition to accelerate and improve how we bring more new medicines to patients."
The OpenAI connection also raises a governance question noted in the source article. OpenAI's involvement gives the appearance of conflict of interest because Altman was involved in Formation's Series C fundraising. OpenAI PR told TechCrunch the deal was led by OpenAI COO Brad Lightcap and OpenAI's board of directors, but did not say whether Altman, who is on the board, recused himself.
Where the Pipeline Stands
Formation Bio has three drug candidates in its clinical pipeline. They include treatments for chronic hand eczema, sensory neuropathy and knee osteoarthritis.
The eczema treatment is the furthest along. It recently reached phase 3, which is the last stage of testing before a drug is submitted to regulatory authorities.
Formation is operating in a crowded and closely watched area. Other startups are also trying to build AI-powered technology for drug development, including EvolutionaryScale, which emerged from stealth this week with investments from Amazon and Nvidia.
The broader market is drawing attention as well. Markets and Markets anticipates that the market for AI in drug discovery will be worth $4.9 billion by 2028. Other major players named in the space include Xaira, which launched with $1 billion, DeepMind spin-off Isomorphic, Insilico, Jeff Dean-backed Profluent, Enveda and Causaly.
For Formation Bio, the new funding gives it more room to pursue its AI drug development roadmap. The larger question is whether its mix of clinical trial software, AI models, partnerships and drug co-development can change the economics of a process known for high costs and high failure rates.