Formation Bio Introduces the $600M Formation Bio Drug Development Accelerator Fund

Formation Bio, a tech-driven, AI-native pharma company changing the way drug development is done, led by Ben Liu, Linhao Zhang, and the team, has announced the $600M Formation Bio Drug Development Accelerator Fund (the “Fund”), the latest step towards the ambition to build an enduring, AI-native pharmaceutical company. The Fund pairs dedicated capital with its drug development capabilities, team, and AI platform, allowing the company to acquire and advance more promising drugs through clinical development.

Formation Bio Targets the Growing Drug Development Bottleneck.

AI is accelerating drug discovery, but clinical development and trials are emerging as major bottlenecks. Over the past decade, the number of discovered drug candidates has doubled, while annual drug approvals have remained largely flat.

Many biotech and pharmaceutical companies lack the capital, experienced teams, and clinical resources to develop every promising candidate they discover. Formation Bio believes this gap will widen as AI makes drug discovery increasingly productive.

The company combines experienced drug developers and researchers with AI systems, translational models and proprietary datasets to identify promising candidates, select suitable indications, design clinical trials and improve development efficiency.

Its fund adds dedicated capital to these capabilities, enabling Formation Bio to advance a larger portfolio of drug candidates toward patients.

A New Funding Model for Drug Development.

For biotech and pharma partners, Formation Bio’s Fund combines financing with drug development capabilities. Instead of investing in standalone biotech companies, it will invest in individual drug programs and license them into newly formed, asset-focused companies (NewCos).

Each NewCo will receive funding to reach key clinical milestones, alongside access to Formation Bio’s drug developers, scientists, AI systems and infrastructure across clinical trials, regulatory affairs, manufacturing and quality.

Partners can receive upfront payments while retaining potential milestone payments and royalties. The model also allows platform biotechs to advance more discoveries without raising additional capital or diluting shareholders.

For Formation Bio, the Fund supports its ambition to build an AI-enabled pharmaceutical company combining technology with experienced drug development teams. A single investment committee will allocate capital from both Formation Bio’s balance sheet and the Fund to each acquired asset, supporting development through key clinical milestones. The approach aims to reduce financing uncertainty, create liquidity opportunities, and improve capital efficiency.

For limited partners, the Fund offers exposure to individual drug assets typically two to four years away from clinical readouts. With more than $300 billion in drug sales facing patent expirations over the next decade, pharmaceutical companies' need for acquisitions could create multiple potential exit opportunities. The asset-focused structure also offers a more capital-efficient way to invest in clinical-stage biotech.

Expanding Drug Development for Unmet Medical Needs.

The Fund will also support development of transformative treatments, including for diseases that have historically been difficult to address. Formation Bio plans to focus on areas where its AI systems, models, development capabilities and scientific teams can make a meaningful difference for patients.

The company acknowledged the support of its limited partners, including research foundations, academic institutions, philanthropies and hospitals.

Formation Bio believes the growing volume of AI-discovered drug candidates must be matched by greater clinical development capacity. The Fund is designed to help bridge that gap by investing in the capital, talent and AI infrastructure needed to turn more discoveries into medicines.