When Benjamine Liu was a young computational biologist working on his doctorate at the University of Oxford, he had some ideas for novel drugs that could treat Alzheimer’s. He was so excited by their promise that he tried shopping them around to a few pharmaceutical companies. Not a single one was interested.

“They said, ‘We have more drugs than we can afford to develop,’” Liu tells Forbes. “A discovered drug isn’t worth that much.”

That rejection led him to a realization: The biggest problem in drug R&D wasn’t in the sexy part of searching for new discoveries. Instead, it was the long, grueling, expensive process of clinical development, where most potential drugs fail.

In fact, while there was a nearly twofold increase in drug candidates in the last decade, the number of drugs approved by the FDA, at around 50 per year, hasn’t changed much, he says now. And that, Liu figured, is something that AI is uniquely suited to help.

It’s a contrarian take at a time when AI is being touted as a godsend for faster and cheaper drug discovery that will usher in a golden age of new therapies. But that’s a long game. And Liu is convinced the bigger opportunity is in fixing clinical trials. “What we think the world has wrong is that drug discovery is the bottleneck, and it has not been the bottleneck for a long time,” he says.

In 2016, Liu, now 36, teamed up with Linhao Zhang, 34, a computer scientist who had worked on the engineering team at Oscar Health, to start Formation Bio to help pharma companies do their clinical trials better and faster. Originally called Trialspark, it was set up as a service business: drug companies and biotechs would hire Liu and Zhang to run their trials for them. But Liu is now chasing a bigger goal: Buying a portfolio of 10 early-stage drug candidates, many of which failed or stalled out in early-stage clinical trials, and then using AI to help get them back on track.

Today, New York City-based Formation Bio has some of the world’s top investors betting on Liu’s vision, including Andreessen Horowitz, Sequoia, Thrive Capital, Kleiner Perkins’ chairman John Doerr and OpenAI’s Sam Altman. It has raised a total of $615 million at a $1.8 billion valuation. Forbes estimates that Liu’s stake is worth more than $150 million, while Zhang’s is worth above $100 million.

“It has the potential—the potential—of being one of these enormously significant companies in an industry whose apple cart has not been upset all that much by a young company started in the last 10 or 15 years,” says Michael Moritz, the billionaire venture capitalist and former Sequoia chairman. Way back in........

© Forbes