When a biotech startup reveals significant funding, the announcement typically includes information about a pipeline, or at least a lead drug candidate. Large sums are also often a sign of clinical trial projects. Isomorphic Labs has revealed a new $2.1 billion in funding this week, but it says nothing about the drugs it is developing or the diseases they target.
The biopharmaceutical community has already seen this. When Altos Labs launched with $3 billion in funding in 2022, it was the largest funding round ever by a biotech company, according to PitchBook. Altos presented a broad vision of cell rejuvenation and restoration as a means to reverse disease under the leadership of CEO Hal Barron, former chief scientific officer of GSK. But there was no information about a drug pipeline at the time and there are still no details about a molecule or clinical program today, said Ben Zercher, senior biotechnology and pharmaceutical analyst at PitchBook.
“Altos cited scientific publications that supported their thesis, which is a more preclinical focus than we have for Isomorphic Labs, but both companies demonstrated far less transparency than is the norm for biotech companies running large rounds,” Zercher said in an email.
Isomorphic is not a traditional drug discovery company. The London-based startup is a subsidiary of technology conglomerate Alphabet. It was created by DeepMind, another Alphabet subsidiary that applies machine learning techniques to solve problems. The founder and CEO of Isomorphic is Demis Hassabis, who is also the co-founder and CEO of DeepMind.
Isomorphic describes its technology platform as a unified drug design informatics system with predictive accuracy beyond that of AlphaFold 3, an AI model developed by Isomorphic and DeepMind that predicts the structure and interactions of all the molecules that make up life. These predictions can help Isomorphic identify molecules that bind to particular disease targets. The predictions can also help the company find places where a drug can bind to an elusive target. But to be fair, there are other tech companies applying AI to these same drug discovery goals.
The potential of Isomorphic technology has attracted interest and research investment from some major pharmaceutical companies. Isomorphic announced its first partnership in 2024, a multi-drug R&D alliance with Eli Lilly. The scope of this partnership is the discovery of small molecules for multiple targets that have not been disclosed. Lilly paid $45 million up front and could pay up to $1.7 billion more, depending on research progress.
Novartis and Johnson & Johnson are also partners. THE Novartis Research initially focused on small molecule discovery against “three particularly challenging targets” that have not been disclosed. Last year, this alliance expanded to three additional research programs. The J&J partnership covers multiple therapeutic modalities for challenging disease targets that remain undisclosed.
Isomorphic’s new funding comes just over a year after its $600 million Series A round. At that time, the startup said its internal programs were primarily in oncology and immunology. There are no additional details at this time. Isomorphic said it would use the new capital to continue developing its technology while working to move its drug pipeline closer to human testing. No time frame was disclosed for arriving at the clinic.
Isomorphic’s Series B round was led by Thrive Capital, a firm that invests in internet, software, and technology companies. Thrive’s healthcare investments include OpenEvidence, an AI-powered search engine that gives doctors answers to their medical questions. The company also led Isomorphic’s Series A round last year. Previous investors Alphabet and GV participated in the latest round, joined by new investors MGX, Temasek, CapitalG and the UK Sovereign AI Fund. In a prepared statement, Hassabis described the funding as a vote of confidence from investors in Isomorphic’s AI-driven approach to drug design and development.
“Now that we have demonstrated that our approach is fundamentally sound, we are focused on scaling our technology to reach its full potential,” he said. “This capital injection allows us to scale our drug design engine at scale, enabling us to advance our mission to solve all diseases.” »
None of Isomorphic’s backers are traditional biotech investors, but Zercher doesn’t see that as necessarily negative. He acknowledged that traditional biotech venture capital firms would bring a level of scientific due diligence that tech investors cannot do. That said, the absence of traditional biotech VCs in the Series B round means that these life sciences-focused investors can focus on other aspects of the biotech ecosystem and are not dependent on the results of a single preclinical company, such as Isomorphic. This risk falls on technology investors.
“Tech and AI money can be devoted to larger, riskier preclinical outlier bets like Isomorphic and Altos,” Zercher said. “That’s not to say that venture capital money in traditional biotech isn’t going toward innovative technologies – there are plenty of cutting-edge AI-based biotechs backed by venture capital. It’s just that these companies have a higher proof barrier for investment, which is a good thing.”
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