Recursion Pharmaceuticals announced it has entered into agreements to acquire two drug chemistry-focused preclinical startups, Cyclica and Valance, for a total of $87.5 million. The deals will add digital chemistry predictive models and further deep learning capabilities to Recursion’s artificial intelligence (AI)-enabled drug discovery platform.

The agreed purchase prices are $40m and $47.5m for Cyclica and Valence respectively. The deals, both stock transactions, are expected to be completed in Q2 2023. Though Recursion shares closed at an 8.5% increase on Monday 8 when the acquisitions were announced compared to the previous Friday, the company has reported a $65.3m loss in Q1 2023.

Cyclica’s MatchMaker and POEM (Pareto Optimal Embedding Model) tools will be integrated into RecursionOS— Recursion’s technology platform that uses machine-learning algorithms applied to biology to accelerate drug discovery. The digital chemistry products from the Toronto, Canada-based Cyclica will add AI-enabled proteome-wide prediction models, which use AlphaFold2 structures and molecular fingerprints, to the platform.

Valence will provide deep learning capabilities to Recursion’s drug discovery repertoire. Based at the world’s largest deep learning research institute in Montreal, Canada, Valence’s technology is able to identify drug candidates from small and noisy datasets. The team will join forces with Recursion’s deep learning research office, which is also based in Montreal.  

The addition of digital chemistry and machine learning technologies will bolster the capabilities of Recursion’s drug discovery platform. CEO and co-founder Chris Gibson believes the acquisitions, in combination with Recursion’s automated wet laboratories and computing infrastructure, will cement the company as a gold-standard example of tech-enabled drug discovery, especially at a time of accelerated widespread AI adoption in biotechnology.

“We look forward to showing the world proof of the compounding benefit of this full-stack approach through the rapid acceleration of our pipeline and partnerships,” Gibson said.