Isomorphic Labs, the AI-driven drug discovery company under Alphabet, is seeking a new round of funding at a valuation of at least $40 billion, just five months after its previous funding round.

According to a Bloomberg report on October 8, people familiar with the matter said the funding negotiations are still at an early stage, and the valuation range could reach as high as $50 billion. The people said the funding has not yet been completed and the relevant details may still change. Isomorphic Labs did not respond to a request for comment.

If the funding is successfully completed, it would mark a sharp jump in Isomorphic Labs' valuation within just a few months, further highlighting the capital market's strong enthusiasm for the AI pharmaceutical sector.

Moving again within five months, funding pace clearly accelerating

Earlier this year, Isomorphic Labs had just completed a $2.1 billion Series B funding round. At the time, Alphabet (ASX: GOOGL) reportedly provided a "very large portion" of the funds for that round. CEO Demis Hassabis declined to disclose Alphabet's stake or the company's valuation during the Series B round.

Now, only five months after the Series B round closed, Isomorphic Labs has once again started negotiations for a new funding round, with a target valuation significantly higher than the previous round. The speed of its fundraising pace is quite rare in the industry.

Backed by DeepMind heritage, AlphaFold lays the foundation for core competitiveness

Isomorphic Labs was spun out of DeepMind in 2021 and is headquartered in London. Its core mission is to deeply apply AI technology to drug discovery based on DeepMind's breakthrough protein folding model AlphaFold.

Demis Hassabis previously served as DeepMind CEO for a long time. In August this year, he announced a transition to chairman of DeepMind while also serving as Alphabet's chief scientist, but he retained the CEO role at Isomorphic Labs. This arrangement allows him to play a key role as a bridge between Alphabet's overall AI strategy and Isomorphic Labs' commercialization efforts.

Partnerships with major pharmaceutical companies in hand, proprietary pipeline advancing in parallel

In terms of commercialization, Isomorphic Labs has established partnerships with several of the world's top pharmaceutical companies, including Eli Lilly & Co. and Novartis AG, with research and development focused on cancer and immune diseases.

The company's business model balances two paths: on one hand, it exports AI drug discovery models to pharmaceutical companies to empower partners' R&D processes; on the other hand, Isomorphic Labs is also actively advancing internally designed and developed drug pipelines to pursue a higher position in the value chain.

AI drug discovery has broad prospects, but commercialization remains a test

Although capital enthusiasm continues to run high, the commercialization process of the AI pharmaceutical sector still faces real challenges. At present, few projects in the AI drug discovery field have advanced to the clinical trial stage, and no AI-developed drug has truly entered the market.

Isomorphic Labs faces competitive pressure from multiple sides. OpenAI has already released specialized models for life science research this year, and numerous startups and technology giants are also accelerating their efforts in this sector.

Hassabis has publicly said his goal is to compress the new drug development cycle from years to months. If this vision can be realized, it would have a profound impact on the global pharmaceutical industry — but based on the industry's overall progress so far, achieving this goal still needs time to be tested.