TL;DR:
- Recursion, a US Biotech Company, acquires Canadian AI Drug-Discovery Firms Valence and Cyclica.
- Cyclica has two AI products in the digital-chemistry space.
- Valence Discovery uses AI and machine learning to support drug-discovery efforts.
- The acquisitions are expected to be completed in Q2 2023
- Recursion believes that the acquisitions will accelerate its work in drug discovery.
- The acquisition will give Valence access to Recursion’s wet-lab facilities and extensive datasets.
- Recursion claims to have the most complete, technology-enabled drug-discovery solution in the biopharma industry
- Cyclica has received a $2.4 million CAD grant from the Bill & Melinda Gates Foundation to discover new contraceptive options.
- Recursion will pay for the acquisitions using shares of Recursion Class A common stock and the assumption of certain outstanding Valence and Cyclica options.
- The acquisitions follow a pattern of venture capital-backed Canadian startups selling themselves to foreign hands.
Main AI News:
Recursion, a Salt Lake City-based drug-discovery company, has made headlines by acquiring two Canadian startups in the artificial intelligence (AI) drug-discovery space. Toronto-based Cyclica, which calls itself a neo-biotech company, has built two products in the digital-chemistry space – an AI deep learning engine for drug design and an AI prediction model used to describe molecules. Valence Discovery, based in Montréal’s Mila AI research institute, partners with leading pharmaceutical and biotech companies using AI and machine learning to support their drug-discovery efforts.
Recursion will acquire Cyclica for $53.4 million CAD ($40 million USD) and Valence for $63.4 million CAD ($47.5 million USD). Both acquisitions are expected to be completed in the second quarter of 2023. Toronto is home to Recursion’s largest office outside of its headquarters, and the teams at Cyclica will be fully integrated into Recursion.
Recursion has already completed a prospective, blinded evaluation of Cyclica’s software against its internal programs. This has given Recursion deep confidence in the power of Cyclica’s tools, reinforcing its belief that Cyclica’s team could accelerate Recursion’s work across its pipeline and partnerships by rapidly advancing the discovery of novel molecules that could become drug candidates in the future.
Joining forces with Recursion’s deep learning research office in Montréal, Valence will become an AI and machine learning research center to be led by Valence co-founder Daniel Cohen with continued advisory from Mila founder Yoshua Bengio. Recursion noted in its quarterly filing that the small team at Valence had led a massive open-science movement with a network of academic collaborators at the forefront of machine learning, chemistry, and other fields.
The acquisition of Valence, a technology company, will enable them to accelerate their work in multiple fields. The acquisition gives Valence access to Recursion’s wet-lab facilities and extensive datasets, which will aid the team in their ongoing work building foundation models and other approaches that use active learning. Recursion uses machine learning algorithms to analyze biological and chemical datasets, allowing the computer to identify significant relationships among substances while minimizing human bias.
Recursion also owns and operates BioHive 1, a powerful supercomputer that merges technology, biology, and chemistry to advance the future of medicine. With the acquisition of Cyclica and Valence, Recursion claims to have “the most complete, technology-enabled drug-discovery solution in the biopharma industry.” Chris Gibson, co-founder, and CEO of Recursion, said the strategic acquisitions will give the company an edge in drug discovery.
The purchase of Valence and Cyclica by an American company follows a pattern where many ventures capital-backed Canadian startups sell themselves to foreign hands. A 2021 research by the Innovation Economy Council revealed that three-quarters of the patents held by Canadian startups involved in recent takeovers are now in foreign hands. More than 200 promising young companies, along with valuable intellectual property, have left the country since 2017, mainly to the US.
Benjamin Bergen, President of the Council of Canadian Innovators, said founders need to weigh many factors when deciding to sell their companies. Policymakers should look into why many promising tech companies choose to sell themselves instead of scaling up into Canadian juggernauts.
Cyclica, which has around 60 staff, has previously raised a $4.65 million CAD Series A, made up of an initial $2.25 million in September 2016 and a $2.4 million follow-on in July 2017. The startup received a $2.4 million CAD grant from the Bill & Melinda Gates Foundation in 2022 to discover new contraceptive options. With the grant, Cyclica hopes to develop new, non-hormonal contraceptive drugs, using its artificial intelligence-enabled drug-discovery platform to address the problem.
Recursion said that the purchase price for Valence and Cyclica would be payable in the form of shares of Recursion Class A common stock, shares of a subsidiary of Recursion are exchangeable for shares of Recursion’s Class A common stock, and the assumption of certain outstanding Valence and Cyclica options. Recursion expects no material change to its cash runway as a result of these acquisitions.
Conlcusion:
The acquisition of Valence and Cyclica by Recursion, a US Biotech Company, signifies a growing interest in AI and machine learning in drug discovery. This move is expected to create significant opportunities for businesses offering such solutions in the biopharma industry. The acquisition also highlights the trend of Canadian startups selling to foreign buyers, which may impact the growth of domestic innovation. Overall, this development underscores the growing importance of AI and machine learning in the biopharma industry and could signal a shift towards increased investment in this area.
