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Recursion Pharmaceuticals Raises $239 Million And Partners With Bayer For AI Drug Discovery

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Startups that want to leverage artificial intelligence in drug discovery are a dime a dozen in today’s biotech landscape. But Recursion Pharmaceuticals, one of the oldest and most established AI drug discovery companies, has found a way to stand out. The company announced on Wednesday morning an oversubscribed series D funding round of $239 million, and a lucrative strategic partnership with pharma giant Bayer. 

The funding includes $50 million from Leaps by Bayer, Bayer’s investment arm, as well as funding from Casdin Capital, Baillie Gifford and other investors. Recursion will also receive an additional $30 million upfront payment from Bayer to develop new treatments for chronic scar tissue, or fibrotic, diseases of the lung, kidneys and heart. 

“Recursion is our big bet in terms of digital drug discovery,” says Juergen Eckhardt, head of Leaps by Bayer. “We chose to partner with Recursion as we saw them as the company with the best chance to deliver medicines that could be meaningful to patients as quickly as possible.”

Unlike typical drug discovery, which has the goal of making sick cells healthy, the Salt Lake City-based Recursion starts by making healthy cells sick. Chris Gibson, the company’s CEO and cofounder, describes its lab as a warehouse filled with robots and “really, really tiny petri dishes” that perform one million experiments a week. The experiments involve making human cells sick in a variety of ways, taking pictures of these sick cells, and then using machine learning to understand how the sick cells differ from healthy cells. In this way, Gibson says, they are able to figure out which drugs turn the sick cell back into a healthy cell. 

“It’s kind of flipping the first few steps of drug discovery,” Gibson says. “We like to let biology give us the answer.” 

Many other AI drug discovery companies find new drugs by combing through large, existing datasets, rather than experimenting themselves to develop new data. Recursion, which was founded in 2013, employs both scientists and software engineers to keep their entire pipeline in-house, from creating massive datasets to taking their drugs through clinical development. “We have a focus on building the full stack of drug discovery and development,” Gibson says. 

Recursion currently has four drugs in human testing, including medications for rare diseases neurofibromatosis type 2, a disease that involves noncancerous tumors growing in the nervous system, and cerebral cavernous malformations, which are abnormal blood vessels in the brain. Cerebral cavernous malformations, also called CCMs, affect 0.5% of the population, while neurofibromatosis type 2 affects 1 in 33,000 people worldwide. These diseases, which can be genetic, may cause chronic disability and even death. While the company plans to maintain control of development for rare disease treatments, it is partnering with larger pharmaceutical companies in more competitive areas. 

The new partnership with Bayer will specifically focus on fibrotic diseases, which can cause scar tissue that interferes with organ function. The partnership involves an agreement to begin the development of at least ten new treatment programs, with milestone payments of $100 million per program and royalties on future sales. Both companies will jointly own the projects, and Bayer will have the option to exclusively license the drug candidates. Bayer isn’t the only big pharma company that Recursion has partnered with: in recent years the company has also inked multi-million dollar drug discovery deals with Takeda and Sanofi

Gibson says the new series D capital will be used to expand the company and continue its drug development. He anticipates about 50 new jobs opening up and says that the company’s four top drug candidates will go into phase 2 pivotal trials in 2021. The company may also be on the lookout for more acquisitions following the recent July 2020 purchase of digital vivarium company Vium. “We’re under no illusions that we’re the only ones creating fantastic technologies to disrupt the space,” Gibson says. “We’re interested in building additional partnerships, and in some areas are already heading towards some.”

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