Recursion Pharma nets $239M, plus an AI research contract with Bayer

Recursion Pharmaceuticals has secured $239 million in new venture capital financing, plus a long-term collaboration deal with Bayer to help boost its pipeline in fibrotic diseases of the lung, heart, kidney and more.

The German drugmaker took the lead role in the artificial intelligence company’s series D round, bestowing $50 million through its equity investment arm Leaps by Bayer.

The investment round also gathered new backers in Casdin Capital, Catalio Capital Management, Laurion Capital Management, Samsara BioCapital and others—plus additional support from Recursion’s returning investors Baillie Gifford, Mubadala, DCVC, Lux Capital, Obvious Ventures, Felicis Ventures, EPIC Ventures, Two Sigma Ventures, Advantage Capital and Intermountain Ventures.

“We have made significant progress since our last financing a year ago—doubling the number of clinical and preclinical programs in our pipeline, doubling the size of our proprietary database of cellular images, and significantly expanding the capabilities of our deep-learning algorithms, as well as continuing to integrate new technologies at every step of the discovery process to create the first truly digitally-powered biotechnology company,” said Recursion co-founder and CEO Chris Gibson.

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Going forward, Bayer plans to wield Recursion’s drug discovery platform—combining AI with automated, “wet lab” biology experiments—to comb through its libraries of potential small molecule treatments. The two companies will then use phenotypic screening and high-resolution imaging to measure the compounds’ effects on different cells to find a possibly successful drug.

“We are driving forward digital transformation in R&D as we believe that digital technologies such as artificial intelligence and machine learning, offer a myriad of novel opportunities to address the complex biology of many diseases and identify new treatments for patients,” said Bayer’s R&D head, Joerg Moeller.

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Under the collaboration agreement—which carries its own $30 million upfront payment—Bayer and Recursion may launch 10 or more research programs, with potential milestone awards of over $100 million linked to each. In addition, Bayer will have the option to exclusively license any novel therapeutics discovered.

Bayer’s M.O. is similar to its dealings with the digital health company One Drop—where it recently led the latter’s $35 million series C round while also re-upping its development partnerships and committing to another $64 million in fees and potential milestone payments.

Bayer had previously led one of One Drop’s financing rounds, and licensed its personalized digital coaching programs—largely aimed at diabetes—for future use in areas such as cancer care, heart disease and women’s health.

“Leaps by Bayer is investing in transformative technologies with the ability to move the paradigm from treatment to cure,” said Juergen Eckhardt, head of Leaps by Bayer. “With a pipeline of over 30 programs ranging from early discovery to clinical stage, including four clinical stage assets, Recursion is defining and leading technology-enabled drug discovery and has the potential to help enable new curative treatments in a large spectrum of disease areas and discover therapeutic candidates for intractable diseases.”