Formation Bio Launches Fund With $600 Million in Capital Commitments

Formation Bio launched a drug development fund backed by $600 million in capital commitments, giving the drug developer dedicated financing to acquire or license programs and advance them toward clinical milestones.

The company plans to acquire or license 10 to 15 programs over the next three to five years. It is targeting programs from pharmaceutical companies and biotechs that have not completed clinical development, with particular interest in Phase 1 and Phase 2 candidates. The strategy centers on advancing existing drug candidates rather than starting discovery from the beginning.

Each selected program will be housed in a separate company. Formation Bio plans to make clinical development teams and artificial intelligence systems available across the companies. The tools will help teams select indications, design trials and move programs through clinical development toward key milestones. The structure assigns capital to individual projects while making shared teams and systems available across them.

Fund investors can support individual drug programs, while Formation Bio manages development and commits its own capital alongside them. The structure adds dedicated financing and flexibility to the company’s drug development model. Formation Bio expects to pursue partnerships with pharmaceutical companies after programs make meaningful clinical progress, with commercialization or co-commercialization as the goal.

Formation Bio raised $372 million in a Series D financing in 2024. Its new fund adds a separate source of capital devoted to drug programs.

Co-Founder and CEO Benjamine Liu has framed the fund around a growing gap between discovery and development. The number of drug candidates discovered over the past decade doubled, while annual new-drug approvals remained roughly flat. Liu says faster discovery risks making drug development a greater bottleneck as programs move toward clinical trials.