Alphabet spinoff Isomorphic Labs reportedly raising funding at up to $50B valuation

Isomorphic Labs Ltd., the Alphabet Inc. spinoff focused on accelerating drug discovery, is in talks to raise a new round of funding, according to a Bloomberg report. The report did not disclose how much capital the company is seeking. People familiar with the discussions told Bloomberg that Isomorphic is targeting a valuation between $40 billion and $50 billion.

The company's main product is an artificial intelligence platform called IsoDDE, which is built to automate parts of the manual research work involved in creating a new therapy. Some of its capabilities are aimed at binding pocket discovery, which is considered one of the hardest problems in drug development. Drugs typically work by attaching to a specific spot on the surface of a disease-causing cell, a location known as a binding pocket.

Identifying a viable binding pocket is slow and complex. Cell surfaces are highly intricate and can only be mapped with specialized microscopes, and they change regularly, which means their binding pockets shift as well and become difficult to study. In some cases, binding pockets vanish entirely. IsoDDE also maps protein-ligament complexes, the molecular structures that form when a drug binds to a disease-causing cell's binding pocket.

In February, Isomorphic said IsoDDE outperformed the nearest competing tool by more than 50% at finding binding pockets. The platform also predicts protein-ligament complexes roughly twice as accurately as AlphaFold, the Google DeepMind model whose creators shared one half of the 2024 Nobel prize in chemistry. According to Isomorphic, IsoDDE models interactions between binding pockets and antibodies about 2.3 times better than AlphaFold, a task made difficult by antibody structural variations that are hard to predict.

Isomorphic generates revenue through research partnerships with drugmakers. In 2024, it signed deals worth nearly $3 billion with Eli Lilly and Co. and Novartis AG, and this past January it began a similar collaboration with Johnson & Johnson. All three partnerships center on small molecules, the biological building blocks behind many drugs.

The fundraising talks are described as being at an early stage, and Bloomberg's sources did not name the investors expected to participate. Isomorphic's most recent raise, a $2.1 billion round announced in March, drew contributions from Alphabet, two of the search giant's venture capital funds and several outside backers.

More company and startup news from TechManNews.