A Vancouver startup using artificial intelligence (AI) to discover new drugs has struck a deal with pharmaceutical giant Merck worth “up to” $349 million USD ($482 million CAD).
“This partnership meaningfully elevates our profile in AI-enabled drug discovery.”
Valentin Beuchillot, Merck
The agreement will see Variational AI use its AI drug discovery platform, which is trained on Merck’s proprietary data, to generate molecular candidates for therapeutic targets. Merck will have the exclusive right to develop and commercialize any compounds that arise from the collaboration, while Variational AI receives an undisclosed upfront payment. Variational will receive full compensation if it completes undisclosed milestones.
Variational’s senior manager, Valentin Beuchillot, would not disclose the financial terms of the agreement in an email to BetaKit, but said that it follows a “customary ‘biobucks’ structure.”
“At Merck, we are working to harness the potential of AI to improve efficiency, speed, and quality of candidates earlier in the discovery continuum,” Merck Research Laboratories vice president Robert Garbaccio said in a statement. “We look forward to working with Variational AI to apply their Enki platform to challenging therapeutic targets.”
Variational’s Enki platform helps design molecules for drug discovery in a similar way other AI models can generate images. Enki generates molecular structures based on a target product profile, which is established through a series of prompts describing molecules using chemical language.
Variational was founded in 2019 by CEO Handol Kim, CTO Jason Rolfe, and head of platform Ali Saberali, all of whom worked at Canadian-founded quantum company D-Wave before it relocated to the United States. The company has approximately 20 full-time employees, Beuchillot said. He would not say how many customers the company serves.
The new contract is the product of a working relationship established between Merck and Variational in January 2024, when Merck became an early-access user of Enki through the CQDM Quantum Leap program. The relationship deepened earlier this year when Merck participated in Variational’s $5.5-million USD (7.6-million CAD) seed extension round through its Global Health Innovation Fund. Beuchillot said the new contract between the two companies is separate from the CQDM project, but “underscores the strong technical fit” between the teams.
“This partnership meaningfully elevates our profile in AI-enabled drug discovery,” Beuchillot said. “It’s a strong vote of confidence in the rigor of our science and the quality of our platform, and it underscores that Variational AI is a credible, at-scale partner in this industry.”
There are a number of Canadian firms tackling AI drug discovery, which attempts to make pharmaceutical production cheaper and less time-consuming. Toronto-based ProteinQure nabbed $11 million for its AI-powered drug discovery platform earlier this year. the platform focuses on therapies using peptides, or smaller versions of proteins. Other Canadian category leaders include BenchSci and Deep Genomics.
Feature image courtesy Unsplash. Image by Paul Einerhand.