SandboxAQ Deal to Drive AI Push in Drug Discovery --- Good Chemistry purchase highlights hopes for cheaper, faster development

"Artificial intelligence and quantum company SandboxAQ on Tuesday announced that it acquired Good Chemistry, a deal aimed at addressing demand for technology that speeds up development of new drugs or new materials at lower cost.

The deal was valued at approximately $75 million in cash and stock, according to people with knowledge of the acquisition.

"Combining forces, we absolutely can serve this market at a bigger scale and with more capability," said SandboxAQ Chief Executive Jack Hidary.

SandboxAQ, spun out of Google parent Alphabet in 2022 to make quantum-technology and AI tools for commercial use, including molecular simulations, said the deal will expand its customer base and bring in rarefied quantum talent.

Based in Vancouver, Good Chemistry is also a spinoff, having separated from quantum-computing firm 1QBit in 2022. The company, whose customers include Dow Chemical, uses quantum tech and machine-learning to predict and simulate chemical properties.

 Good Chemistry CEO Arman Zaribafiyan will join SandboxAQ as head of product for AI-simulation platforms, and Good Chemistry's existing software will be integrated into Sandbox's enterprise-software portfolio.

The deal closed last Friday. It was SandboxAQ's second acquisition, following its 2022 purchase of cybersecurity and encryption startup Cryptosense.

Hidary noted that SandboxAQ and Good Chemistry work along similar lines: Both use algorithms designed to leverage the advanced capabilities of quantum computing to simulate the behavior of materials at molecular level. The resulting data can be used to train new AI algorithms for drug discovery or the development of new materials, he added.

Typically, it is a long and costly slog to develop a new drug or material, Zaribafiyan said. Being able to simulate the behavior of chemicals, rather than physically test them, could make the process significantly faster and cheaper, he said.

The two companies had been in conversations to collaborate for a year, Hidary said, but it was the rapidly growing demand for their services that in part inspired the deal.

"When we talk about the global impact of AI, and we look back five or 10 years from now, we're going to turn to this kind of AI that impacts the very nature of our healthcare system, medicine, automotive, aerospace and renewable energy," Hidary said.

Reema Khan, founder of Green Sands Equity, who led Good Chemistry's seed round, pointed to Palo Alto, Calif.-based SandboxAQ's investors, who include former Google CEO Eric Schmidt and Salesforce CEO and co-founder Marc Benioff.

"When you have a team like that, it can really help push you forward," Khan said.

It is early for a company like Good Chemistry to be acquired, she said, but it is "ready for scaling." For small companies with compelling technology that want to expand, "it's a good idea to consider M&A in this market, absolutely," she added.

Carl Dukatz, next-gen compute lead at Accenture, said he thinks the combination of SandboxAQ and Good Chemistry might yield "very beneficial" products.

"The quantum and AI ecosystem is obviously extremely active right now, so we're seeing a lot of great companies joining forces in order to enhance both their capabilities and services," he said, calling the SandboxAQ-Good Chemistry tie-up "a really good match."" [1]

1. SandboxAQ Deal to Drive AI Push in Drug Discovery --- Good Chemistry purchase highlights hopes for cheaper, faster development. Bousquette, Isabelle.  Wall Street Journal, Eastern edition; New York, N.Y.. 10 Jan 2024: B.5.