Isomorphic Labs predicts AI-designed drugs as $5bn raise talks surface

Isomorphic Labs was in talks in early November to raise roughly $5 billion at a valuation of about $50 billion, according to a Nov. 4 Bloomberg report citing people familiar with the matter — a financing that would arrive months after a $2.1 billion round closed in May and roughly a year before the company says its first AI-designed drug candidates should enter human trials.

The Alphabet-controlled drug-discovery company, spun out of Google DeepMind, has no molecule in the clinic yet. Its president, Max Jaderberg, described the internal pipeline as "deep in pre-clinical development" in an interview at Bloomberg Tech in London on Nov. 2, where molecules are still tested in cells and animal models. Demis Hassabis, CEO of both Isomorphic and DeepMind, said at Davos on Jan. 20 that the company expected its first clinical trials by the end of 2026, Reuters reported.

What did Jaderberg claim?

Jaderberg's central prediction: AI will eventually design every drug. He grounded the claim in a hard industry number — a failure rate of roughly 90% for medicines that enter human trials, where candidates can prove toxic or simply fail to work as expected. AI, he argued, could improve those odds by helping scientists understand and engineer molecules more precisely before they reach patients.

He split the company's AI use into two complementary categories:

• Reasoning models that help researchers generate scientific hypotheses.
• Simulation models that approximate physical processes, letting researchers test ideas computationally before synthesis.

The measure of success, he said, is whether a molecule works once researchers actually synthesize and test it in the laboratory. He acknowledged that progress in biology still depends on real-world experiments and laboratory time — a caveat that separates the company's ambition from its measured results, which remain preclinical.

How does the business model work?

Isomorphic runs two tracks in parallel. It develops internal drug programs, focused on oncology, immunology and inflammation, and funds them through discovery and clinical testing. It also partners with Eli Lilly, Novartis and Johnson & Johnson, where pharmaceutical partners bring biological expertise and ideas for medicines and Isomorphic turns those ideas into molecules. Those collaborations can generate upfront payments, milestone payments and royalties.

Jaderberg drew a sharp line around what the company does not sell. "We're not selling access to the models, we're not selling tokens or API access," he said — a distinction that matters for R&D managers weighing whether Isomorphic behaves as a platform vendor or a pipeline operator.

Novartis expanded its agreement in February 2025, adding up to three research programs to an initial effort targeting three difficult biological targets with small-molecule drugs.

Where does the money go?

The May round, announced at $2.1 billion, carries specific earmarks: developing the company's drug design engine, advancing therapeutic programs toward clinical trials, and hiring specialists in AI, drug design and clinical work. Hassabis has described Isomorphic's mission as using AI to "solve all disease."

The reported $5 billion raise, if completed on those terms, would multiply the company's war chest as it approaches its first clinical readouts of readiness. Bloomberg noted the financing remained under negotiation and terms could change — the figure is a projection, not a closed deal.

What should R&D managers watch?

Jaderberg's framing carries weight for portfolio decisions. If AI-designed molecules can lift success rates even modestly above the ~90% clinical failure baseline, the economics of early-stage pipelines shift. But no clinical data yet exists to test that thesis: every Isomorphic program sits in preclinical development, and the company's own president concedes that biology advances at the pace of laboratory experiments, not model iterations.

The concentration in oncology, immunology and inflammation reflects that constraint, according to Jaderberg, who said focusing on those areas lets the company assemble the clinical and biological expertise each program requires.

The first hard evidence — a drug candidate entering human trials — carries a stated deadline of end-2026. Whether the reported $5 billion raise closes, and on what terms, will signal how much investors are willing to pay for that timeline before a single patient has been dosed.