Isomorphic Labs Ltd., an Alphabet Inc. spinoff working to accelerate drug discovery, is said to be raising a new funding round.

The Bloomberg report that revealed the discussions today didn’t specify the size of the deal. The paper’s sources did, however, divulge that Isomorphic is eyeing a valuation of between $40 billion and $50 billion.

Isomorphic’s flagship product is an AI platform called IsoDDE. It’s designed to speed up the manual research tasks involved in developing a new therapy. Several of its features focus on automating binding pocket discovery, one of the most challenging aspects of drug development.

Drugs usually neutralize disease-causing cells by attaching to a specific point along their surface. That point is known as a binding pocket. Finding a suitable binding pocket is a complicated, time-consuming process for several reasons.

Cells have highly complex surfaces that can only be mapped out using specialized microscopes. Furthermore, cell surfaces change on a regular basis. That means the potential binding pockets they contain change as well, which makes them difficult to study. Under certain circumstances, binding pockets disappear completely.

In February, Isomorphic stated that IsoDDE was more than 50% better at finding binding pockets than the closest competing tool. It can also map out protein-ligament complexes. Those are the molecular structures that form when a drug attaches to a disease-causing cell’s binding pocket.

AlphaFold, the Google DeepMind model that won its creators one half of the 2024 Nobel prize in chemistry, can also predict protein-ligament complexes. IsoDDE performs the task about twice as accurately.

A disease-causing cell’s binding pockets are targeted by not only drugs but also the immune system’s antibodies. Modelling interactions between binding pockets and antibodies is particularly difficult because antibodies have structural variations that are difficult to predict. According to Isomorphic, IsoDDE models such interactions about 2.3 times better than AlphaFold.

The Alphabet spinoff monetizes its technology through research partnerships with drugmakers. In 2024, it inked deals worth nearly $3 billion with Eli Lilly and Co. and Novartis AG. This past January, Isomorphic launched a similar collaboration with Johnson & Johnson. All three partnerships focus on small molecules, biological building blocks that form the basis of many drugs.

Isomorphic’s fundraising talks are said to be in an early stage. Bloomberg’s sources didn’t specify the investors who are expected to back the deal. Isomorphic’s last raise, a $2.1 billion round announced in March, included contributions from Alphabet, two of the search giant’s venture capital funds and several external backers.

Image: Isomorphic Labs