The initiative will support the acquisition and clinical advancement of ten to 15 drug programmes over the next three to five years.
The company plans to source Phase I and Phase II assets from biotechnology and pharmaceutical entities through acquisitions or in-licensing agreements.
Selection prioritises therapies addressing conditions with substantial unmet need and limited industry development, focusing on programmes with clear pathways to clinical proof of concept.
Formation Bio aims to reach major clinical milestones within two to four years of acquiring each asset, before pursuing commercialisation or co-commercialisation agreements with pharmaceutical partners.
Capital from the vehicle will be deployed through a hub-and-spoke operational model, with each funded programme housed within an independent corporate entity.
Formation Bio serves as the fund’s general partner via a wholly owned subsidiary and has invested its own capital alongside external limited partners.
These backers include hospitals, institutional endowments, philanthropic organisations, and research foundations.
Formation Bio co-founder and CEO Benjamine Liu said: “This fund gives our LPs access to an important and emerging investment category—individual drug assets—through a capital-efficient structure.
“For Formation Bio, it expands the number of promising drugs we can pursue, gives us strategic and financing flexibility, creates paths to liquidity without selling the parent company, and positions us to lower our cost of capital over time.
“Together, these advantages address structural challenges in our industry, allow us to develop more drugs for patients, and support our ambition to build this generation’s enduring pharma company.”
Formation Bio has its headquarters in New York City and a second office in Boston. It combines computational platforms with clinical trial operations to progress drug candidates.