Investing in Formation Bio

Pharma represents one of the biggest industries in the world. The top 10 pharma companies account for over $3.4T in aggregate market cap, and last year, the US alone spent more than $700B on pharmaceuticals and prescription drugs. 

At Andreessen Horowitz, we believe some of the most valuable companies will be formed at the intersection of tech and bio. Yet there have been few large pharma companies at scale created in the past century. Even fewer have been founder-led.  

The ongoing advancements in AI will transform healthcare, and we believe there is an opportunity to create a tech-native pharma company that can accelerate the development of new treatments for patients. Formation Bio is building this company.

Led by two co-founders, CEO Benjamine Liu and CTO Linhao Zhang, Formation Bio is an AI-native pharma company with a unique approach. Rather than applying AI to drug discovery, Formation Bio is focused on drug development, arguably the most meaningful bottleneck in bringing new medicines to patients.

Even as advances in AI make drug discovery more and more efficient, the cost and time of drug development and clinical trials continues to get longer and more expensive. As a result, drug development is the major hurdle to getting drugs to market today, with a single drug development program across all phases costing hundreds of millions dollars and taking up to a decade to complete. Large pharma companies and small biotechs alike often cannot develop all the promising drug candidates they discover, ultimately limiting the number of life-changing medicines that can reach patients. 

Formation Bio acquires clinical-stage drugs from these pharmaceutical and biotech companies and leverages their drug development engine to run these drugs through clinical development significantly more efficiently than industry standards. By doing so, they unlock greater value per program and ultimately accelerate access to new treatments for patients. 

Formation Bio is already using their advantage in development to acquire, develop, and sell promising drugs in a growing asset portfolio. To date, Formation Bio has built up a robust pipeline of in-licensed assets across a broad range of therapeutic areas, and has been able to accelerate programs through trials significantly faster than industry standards. The team has shown themselves to be highly adept at picking promising assets, combining strong scientific diligence with differentiated clinical development strategies that we know will contribute to their continued success.

Ben has been focused on the problem of more efficient drug development for the past decade, having identified the development bottleneck as a graduate student in computational biology at Oxford. We first met Ben in 2018, where he outlined a bold vision for creating this generation’s big pharma company by building a better drug development engine to run clinical trials faster and more efficiently before acquiring their own drug pipeline.  

We deeply admire Ben’s first principles approach and focus on building a team and culture that cultivates innovation within a regulated industry. He is one of the most expansive thinkers in the pharma space and has surrounded himself with a superstar team of talented subject matter experts across pharma and tech who are willing to rethink drug development from the ground up. The team of leaders and advisors Formation Bio has assembled have collectively worked on 45 approved drugs and have deep experience around the strategy of in-licensing and acquiring high quality drugs from other companies. The team includes Linhao, who was an early engineer at Oscar Health, and Chief Development Officer Gavin Corcoran, who previously held several senior leadership roles including CMO at Allergan, a company that took a similar in-licensing-first approach. 

We’ve been impressed by the deliberate and methodical path Formation Bio has taken to build the pharma company of the future. They have diligently built the capabilities and expertise within the drug development ecosystem (across patient recruitment, trial technology/software, site management, CRO, and so on) over time with their experience supporting 300+ trials across more than 10 therapeutic areas. By understanding every nut and bolt of drug development, Formation Bio has built the technology, operations, team, and processes that will give the company an enduring competitive advantage. 

In May, Formation Bio announced their collaboration with Sanofi and OpenAI to bring together data, software, and fine-tuned models to optimize drug development. This partnership is the first of its kind in the life sciences space, moving beyond personalizing off-the-shelf AI tools to designing, building, and training fit-for-purpose customized AI models for the drug development lifecycle. So many time intensive and manual functions across pharma—medical writing, protocol development, regulatory, biostatistics, data management—can be streamlined by AI, and Formation Bio has put together a robust AI roadmap that will allow them to scale with unprecedented efficiency over time.

We believe AI-native companies that can fundamentally leverage these technologies will capture disproportionate value in their industries. We’ve been impressed by Ben and his team’s ability to balance a long term vision with relentless short term execution. Building a generational, founder-led pharma company is not for the faint of heart, but we believe that Ben, Linhao, and the team are up for the challenge.

We are thrilled to lead the investment in Formation Bio and take a board seat to support them on their journey to create this generation’s consequential pharma company.

Big thanks to Caroline Goggins for her contributions to this deal.