Formation Bio

Biotech · AI · Pharma

Funding

Formation Bio launches $600M fund to fix clinical trial bottlenecks

Each acquired drug program becomes a standalone company funded by endowments and hospitals instead of venture capital.

• Formation Bio launched a $600 million debut fund to acquire 10 to 15 clinical-stage drug programs over the next three to five years, backed by research foundations, endowments, hospitals and philanthropic organizations.
• Formation Bio, the AI-native pharma company formerly known as TrialSpark, was last valued at $1.7 billion in a 2024 round led by a16z with Sanofi participating.
• The fund operates like a venture vehicle with Formation Bio as general partner, housing each acquired drug program in its own standalone company and selling early wins to Big Pharma.
• CEO Ben Liu argues nearly half of drug development costs stem from CRO margins driven by billable hours, and believes Formation can cut that spend by 30% to 50%.
• Formation Bio says the number of discovered drug candidates has roughly doubled over the past decade while annual FDA drug approvals have stayed flat around 50.
• Liu says Formation has no plans to raise another venture round, treating the fund as a way to keep taking shots on goal without diluting existing shareholders.
• The fund structure signals a shift in AI biotech financing, using LP capital to scale clinical pipelines instead of equity rounds that dilute ownership.