Isomorphic Labs, an Alphabet subsidiary, ramps up investment as partnerships with pharma giants take shape
In a move that underscores the intensifying competition in artificial intelligence, Isomorphic Labs, the AI drug discovery startup spun out of Google DeepMind, has dramatically increased its research and development expenditure. According to the company’s latest financial reports, as reported by Sifted.eu, R&D costs surged more than fourfold to ยฃ49 million in 2023 from ยฃ12 million the previous year.
The UK-based firm, which operates as a subsidiary of Google’s parent company Alphabet Inc., has developed an AI platform aimed at revolutionizing drug discovery for the pharmaceutical and biotech industries. While the company reported no turnover for 2023, it did record an operating income of $583,000, stemming from two significant partnerships announced in early 2024 with pharmaceutical giants Eli Lilly and Co. and Novartis AG, potentially worth up to $2.9 billion.
As Isomorphic Labs expands its operations, staff costs have also risen significantly, jumping from ยฃ7 million in 2022 to ยฃ20 million last year, with the workforce growing from 43 to 71 employees. The company’s total loss after tax for 2023 stood at ยฃ60 million, up from ยฃ17 million in the preceding year.
The substantial increase in spending comes as Alphabet’s AI entities double down on their investments. Google DeepMind, another Alphabet subsidiary, has also ramped up its expenditure, particularly in employee wages, as competition for AI talent intensifies among tech giants. DeepMind’s administrative expenses climbed from ยฃ1 billion to ยฃ1.4 billion in 2023, primarily driven by increased staff costs.
Isomorphic Labs’ ambitious goal is to halve the time required for new drug discovery, a process that traditionally spans over a decade and can cost pharmaceutical companies billions. The company’s platform, built on DeepMind’s groundbreaking AlphaFold technology, aims to accelerate the identification of potential molecule combinations for new drugs.
In a notable technological advancement, Google announced in May that Isomorphic Labs and DeepMind had developed AlphaFold 3, an AI model purportedly capable of predicting the structure and interactions of proteins, DNA, RNA, and ligands with unprecedented accuracy.
The increased spending at Isomorphic Labs aligns with a broader trend among Big Tech companies, which have collectively raised their capital expenditures by 50% to over $100 billion in the first half of 2024. Industry experts project that Amazon, Microsoft, Google, Meta, and Apple could invest up to $1 trillion in AI-supporting assets like data centers over the next five years.
As the AI arms race intensifies, other major players are also making significant moves. SoftBank Group Corp., for instance, has been bolstering its AI portfolio, leading a $1 billion Series C funding round for autonomous vehicle company Wayve and acquiring chip startup Graphcore.
Isomorphic Labs’ substantial increase in R&D spending, coupled with its recent high-profile partnerships, positions the company as a key player in the rapidly evolving landscape of AI-driven drug discovery. As Big Tech continues to pour resources into AI development, the pharmaceutical industry stands to benefit from potentially faster and more efficient drug discovery processes.
