CNBC Disruptor 50: Formation Bio CEO Benjamine Liu on using AI for drug development

Key Concepts:

• AI-native pharma company
• Drug development and clinical trials
• Acquiring stalled drugs
• AI-driven drug development
• Streamlining clinical trials
• Predictive modeling
• Generative AI
• AI systems for knowledge work
• Patient recruitment campaigns
• Drug picking
• Human-AI collaboration

1. Formation Bio's Business Model and AI Integration

• Formation Bio is an AI-native pharmaceutical company focused on making drug development more efficient.
• The company acquires drugs that have stalled in development and uses AI to advance them through clinical trials.
• The goal is to resell these drugs to pharmaceutical partners after positive phase two or phase three trial results.
• Formation Bio partnered with OpenAI and Sanofi to use predictive modeling and generative AI for drug candidate selection and protein generation.
• The company received $372 million in Series D funding at a $1.7 billion valuation.

2. Streamlining Clinical Trials with AI

• Formation Bio uses AI to streamline the drug development process, particularly clinical trials.
• Clinical trials are expensive, costing hundreds of millions of dollars, with a significant portion attributed to knowledge work.
• The company developed an AI system called "Muse" to automate tasks such as writing protocols, regulatory submissions, and biostatistics.
• Muse can create patient recruitment campaigns in minutes, a process that previously took teams two months.
• AI systems are used to analyze data and identify white spaces for drugs, such as obesity drugs, more efficiently.

3. Drug Acquisition Strategy

• Formation Bio focuses on acquiring drugs that are discovered but not developed due to the high cost of clinical trials.
• The company targets drugs that are valuable post-phase two trials.
• The drug-picking process involves human experts, including Michael Dolsten (ex-CSO at Pfizer), who have a high success rate in phase two drug selection.
• The company trains AI models based on the thought processes of human experts to improve drug selection.

4. Human-AI Collaboration and Transformation

• Formation Bio seeks individuals who are enthusiastic about using AI to transform the entire drug development function.
• The average cost to develop a successful drug is $2.6 billion, and the company aims to reduce this cost significantly using AI.
• The company acknowledges that AI-driven efficiency may lead to job losses in the industry.

5. Notable Quotes

• "Formation bio, as you mentioned, is an AI native pharma company." - Ben Lew
• "We're seeing these AI systems now do the work of entire teams." - Ben Lew
• "It used to take our teams two months to put together a patient recruitment campaign... And now it's really a minute, a few minutes with an AI system." - Ben Lew
• "There's been A2X increase in discover drugs in the past ten years, the number of approved drugs is kept constant at around 60 because drug development clinical trials cost so much" - Ben Lew
• "We brought on Michael Dolsten who is the ex CSO president R&D at Pfizer, because his phase two success picking rate was really great." - Ben Lew
• "We know how expensive it is to develop a drug, 2.6 billion on average, to develop a successful drug. And if we can do it at a fraction of the cost, and that might mean some jobless" - Ben Lew

6. Technical Terms and Concepts

• AI-native pharma company: A pharmaceutical company that integrates artificial intelligence into its core operations and processes.
• Generative AI: A type of AI that can generate new content, such as proteins or drug candidates.
• Predictive modeling: Using AI to predict outcomes, such as the success of a drug candidate.
• Phase two/three trials: Stages in clinical trials where the drug is tested on a larger group of patients to assess its effectiveness and side effects.
• IRB approved: Institutional Review Board approved, meaning the research protocols have been reviewed and approved for ethical considerations.
• Biostats: The application of statistical methods to biological or medical data.

7. Logical Connections

• The video connects Formation Bio's business model of acquiring stalled drugs with its AI-driven approach to streamlining clinical trials.
• The partnership with OpenAI and Sanofi is presented as a key step in leveraging AI for drug discovery and development.
• The discussion of AI systems like "Muse" illustrates how AI is being used to automate and accelerate specific tasks in the drug development process.
• The explanation of the drug-picking process highlights the importance of both human expertise and AI in selecting promising drug candidates.

8. Data and Statistics

• The average cost to develop a successful drug is $2.6 billion.
• There has been a 2x increase in discovered drugs in the past ten years, while the number of approved drugs has remained constant at around 60.
• Formation Bio's Series D funding round was $372 million, valuing the company at $1.7 billion.

9. Synthesis/Conclusion

Formation Bio is leveraging AI to disrupt the traditional pharmaceutical industry by acquiring stalled drugs and using AI to accelerate and streamline the drug development process. The company's AI-native approach, combined with human expertise, aims to reduce the cost and time required to bring new drugs to market. While this approach has the potential to transform the industry, it may also lead to job displacement.