Chris Gibson, Recursion CEO (Vaughn Ridley/Sportsfile for Web Summit via Getty Images)

Re­cur­sion nabs $239M and an up to $1B part­ner­ship with Bay­er as AI race heats up

Some biotechs strug­gle for cash. Re­cur­sion, late­ly, seems to be swim­ming in it.

To­day, hav­ing al­ready raised over $180 mil­lion in the last two years, the Salt Lake City-based AI drug de­vel­op­er an­nounced a $239 mil­lion Se­ries D. That’s more than any US or Eu­ro­pean biotech has raised in a round this year and more than all but two biotechs raised last year. (Mab­well, a Shang­hai-based an­ti­body de­vel­op­er, raised $278 mil­lion in a Se­ries A in April.)

The round came with an im­por­tant point of val­i­da­tion for Re­cur­sion and a po­ten­tial long-term source of rev­enue: a new part­ner­ship with Bay­er. That deal, cen­tered on fi­brot­ic dis­eases, will pay Re­cur­sion $30 mil­lion up­front for the part­ner­ship, along with $100 mil­lion in mile­stones for each of up to 10 pro­grams the com­pa­nies could pur­sue. So it’s an up to $1 bil­lion deal, even if it’s van­ish­ing­ly un­like­ly to reach that. Leaps by Bay­er, the Ger­man phar­ma’s ven­ture arm, al­so led the Se­ries D, con­tribut­ing a $50 mil­lion eq­ui­ty in­vest­ment.

The in­vest­ment-part­ner­ship rep­re­sents one of the largest rounds, if not the sin­gle largest round, for an ar­ti­fi­cial-in­tel­li­gence fo­cused biotech and ce­ments Re­cur­sion as one of the ma­jor play­ers in a nascent field that has pro­duced many small star­tups but few heavy­weights. It al­so points to where Big Phar­ma and ma­jor VCs may spread their fo­cus as ma­chine learn­ing ap­proach­es ad­vance. The first small com­pa­nies to make head­lines and sign deals used ma­chine learn­ing to screen vast li­braries of mol­e­cules in search of ones that can hit tar­gets that drug com­pa­nies have long tried to hit. More re­cent­ly, though, a cou­ple up­starts have raised sig­nif­i­cant cash and scored promi­nent part­ner­ships us­ing ad­vanced com­pu­ta­tion­al tools to study cells more close­ly and come up with new tar­gets them­selves.

“What Re­cur­sion does is re­al­ly hard so I wouldn’t say there is go­ing to be a del­uge of com­pa­nies,” Zachary Bogue, founder of ear­ly Re­cur­sion backer DCVC, told End­points News. “But this idea of bi­ol­o­gy as a plat­form and us­ing AI as a drug dis­cov­ery is the new fron­tier in biotech.”

Rough­ly, that’s what Re­cur­sion does. In a 100,000 square-foot ware­house in down­town Salt Lake City, ro­bots take petri dish­es of dif­fer­ent cell types and knock out dif­fer­ent genes, tak­ing con­stant pic­tures in the process. Hu­mans can’t eas­i­ly tell the dif­fer­ence be­tween most of those pic­tures, but com­put­ers can, and with enough im­ages and hun­dreds of dif­fer­ent mea­sure­ments on each, they can pick up pat­terns to in­di­cate what can make a cell sick and which genes, when tar­get­ed, can make them healthy.  They can then iden­ti­fy and tweak mol­e­cules or com­pounds that hit those tar­gets.

So far, they’ve used that ap­proach to iden­ti­fy mol­e­cules to bring in­to clin­i­cal de­vel­op­ment for sev­er­al rare neu­ro­log­i­cal con­di­tions and hered­i­tary can­cer syn­drome, pulling com­pounds from Ohio State, Take­da, and co-founder Dean Li’s labs. But the com­pa­ny lists a bevy of pre­clin­i­cal dis­ease ar­eas on its pipeline, and Re­cur­sion CEO Chris Gib­son said that, with the Bay­er deal, they would be­gin to look to part­ner with big com­pa­nies where clin­i­cal de­vel­op­ment is more com­plex, such as in neu­rol­o­gy and on­col­o­gy.

“We’ve been talk­ing about this in­ter­nal­ly as the be­gin­ning of a sec­ond act for the com­pa­ny,” he said in an in­ter­view with End­points.

Oth­er com­pa­nies have scored large amounts of cap­i­tal with sim­i­lar ap­proach­es. Most no­tably, Daphne Koller’s start­up In­sitro has nabbed two $100 mil­lion-plus rounds in a span of 13 months, plus a Gilead col­lab­o­ra­tion on NASH. In Jan­u­ary, star Cana­di­an re­searcher Bren­dan Frey’s Deep Ge­nomics raised $40 mil­lion in­to the clin­ic. Mean­while, the rhetoric from the hand­ful of drug phar­ma ex­ec­u­tives who talk open­ly about ma­chine learn­ing, such as Glax­o­SmithK­line’s Hal Bar­ron, has cen­tered on ap­proach­es that help un­cov­er not just new mol­e­cules but al­so new tar­gets.

Un­der the deal with Bay­er, Re­cur­sion will use their sys­tem to build mod­els for dif­fer­ent fi­brot­ic dis­eases, fol­low­ing guid­ance from Bay­er fi­bro­sis ex­perts at the phar­ma. They will then use Bay­er’s li­brary of small mol­e­cules and their own in­ter­nal abil­i­ty to screen and de­vel­op mol­e­cules to come up with pre­clin­i­cal can­di­dates. Around that point, Gib­son said, they’ll hand things off to Ger­many.

Al­though Leaps by Bay­er de­scribed their $50 mil­lion con­tri­bu­tion to the Se­ries D as “our big bet in terms of dig­i­tal drug dis­cov­ery,” Bay­er it­self has al­so in­vest­ed in the mol­e­cule-screen­ing side of the AI biotech world, as have oth­er ma­jor com­pa­nies. In Jan­u­ary, Bay­er and the UK-based Ex­sci­en­tia signed a dis­cov­ery col­lab­o­ra­tion for up to €240 mil­lion. Ex­sci­en­tia has al­so teamed with Sum­it­o­mo, Sanofi and Cel­gene, the last of which in­clud­ed a $25 mil­lion up­front pay­ment. Atom­wise and In­sil­i­co have al­so signed mul­ti­ple big-name part­ner­ships, al­though they have been large­ly mile­stone-heavy, with lit­tle up­front dis­closed.

Health­care Dis­par­i­ties and Sick­le Cell Dis­ease

In the complicated U.S. healthcare system, navigating a serious illness such as cancer or heart disease can be remarkably challenging for patients and caregivers. When that illness is classified as a rare disease, those challenges can become even more acute. And when that rare disease occurs in a population that experiences health disparities, such as people with sickle cell disease (SCD) who are primarily Black and Latino, challenges can become almost insurmountable.

The End­points 11: They've got mad mon­ey and huge am­bi­tions. It's time to go big or go home

These days, selecting a group of private biotechs for the Endpoints 11 spotlight begins with a sprint to get ahead of IPOs and the M&A teams at Big Pharma. I’ve had a couple of faceplants earlier this year, watching some of the biotechs on my short list choose a quick leap onto Nasdaq or into the arms of a buyer.

Vividion, you would have been a great pick for the Endpoints 11. I’m sorry I missed you.

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Dave Lennon, former president of Novartis Gene Therapies

So what hap­pened with No­var­tis Gene Ther­a­pies? Here's your an­swer

Over the last couple of days it’s become clear that the gene therapy division at Novartis has quietly undergone a major reorganization. We learned on Monday that Dave Lennon, who had pursued a high-profile role as president of the unit with 1,500 people, had left the pharma giant to take over as CEO of a startup.

Like a lot of the majors, Novartis is an open highway for head hunters, or anyone looking to staff a startup. So that was news but not completely unexpected.

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Jacob Van Naarden (Eli Lilly)

Ex­clu­sives: Eli Lil­ly out to crash the megablock­buster PD-(L)1 par­ty with 'dis­rup­tive' pric­ing; re­veals can­cer biotech buy­out

It’s taken 7 years, but Eli Lilly is promising to finally start hammering the small and affluent PD-(L)1 club with a “disruptive” pricing strategy for their checkpoint therapy allied with China’s Innovent.

Lilly in-licensed global rights to sintilimab a year ago, building on the China alliance they have with Innovent. That cost the pharma giant $200 million in cash upfront, which they plan to capitalize on now with a long-awaited plan to bust up the high-price market in lung cancer and other cancers that have created a market worth tens of billions of dollars.

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Who are the women su­per­charg­ing bio­phar­ma R&D? Nom­i­nate them for this year's spe­cial re­port

The biotech industry has faced repeated calls to diversify its workforce — and in the last year, those calls got a lot louder. Though women account for just under half of all biotech employees around the world, they occupy very few places in C-suites, and even fewer make it to the helm.

Some companies are listening, according to a recent BIO survey which showed that this year’s companies were 2.5 times more likely to have a diversity and inclusion program compared to last year’s sample. But we still have a long way to go. Women represent just 31% of biotech executives, BIO reported. And those numbers are even more stark for women of color.

Maureen Hillenmeyer, Hexagon Bio CEO

Hexa­gon Bio rais­es $61M to con­tin­ue ef­forts to turn fun­gi in­to drugs

A year after raising a $47 million launch round, the fungi-loving drug hunters at Hexagon Bio have more than doubled their coffers.

Hexagon announced today that it raised another $61 million for its efforts to design cancer and infectious disease drugs based on insights mined from the DNA in millions of species of fungi. The new financing brings Hexagon’s committed funding to over $108 million.

FDA+ roundup: Bs­U­FA III ready for show­time, court tells FDA to re-work com­pound­ing plan, new guid­ance up­dates and more

The FDA has now spelled out what exactly will be included in the third iteration of Biosimilar User Fee Act (BsUFA) from 2023 through 2027, which similarly to the prescription drug deal, sets fees that industry has to pay for submitting applications, in exchange for firm timelines that the agency must meet.

This latest deal includes several sweeteners for the biosimilar industry, which has yet to make great strides in the US market, with shorter review timelines for safety labeling updates and updates to add or remove an indication that does not contain efficacy data.

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Paul Hudson, Sanofi CEO (Raphael Lafargue/Abaca/Sipa USA; Sipa via AP Images)

In­side look: How a po­ten­tial part­ner­ship turned in­to a $1.9B buy­out for Sanofi

A couple of months before the FDA was set to make a decision on Kadmon’s so-called “knock-your-socks-off kind of results” for its chronic graft-versus-host disease drug, Sanofi put out feelers for a potential collaboration. But an early approval triggered an offer to buy the company outright — and Sanofi didn’t win without a fight, according to an inside look.

Sanofi’s head of business development and licensing Matthieu Merlin reached out to Kadmon on June 26 with a simple request: He wanted to introduce himself and explore potential partnerships, according to an SEC filing. It had been several months since Kadmon’s belumosudil arrived on the FDA’s doorstep, and after delaying their decision once, regulators said they’d have an answer by Aug. 30. But Sanofi wasn’t the only company interested in getting to know the execs over at Kadmon.

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Jean Bennett (Brent N. Clarke/Invision/AP Images)

Lux­tur­na in­ven­tor Jean Ben­nett starts a new gene ther­a­py com­pa­ny to tack­le rare dis­eases left be­hind by phar­ma, VCs

A few years ago Jean Bennett found herself in a surprising place for a woman who invented the first gene therapy ever approved in the United States: No one, it seemed, wanted her work.

Bennett, who designed and co-developed Luxturna, approved in 2018 for a rare form of blindness, had kept building new gene therapies for eye diseases at her University of Pennsylvania lab. But although the results in animals looked promising, pharma companies and investors kept turning down the pedigreed ophthalmology professor.

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