Tech-enabled drug discovery company Valo Health announced today plans to go public through a $2.8 billion SPAC deal with Khosla Ventures Acquisition Co., a special purpose acquisition company from Khosla Ventures.
The deal, which is expected to close in the third quarter of this year, will deliver approximately $168.5 million in proceeds in private investment in public equity (PIPE) funding from investors including Khosla Ventures, NG MGG Strategic and Caz Investments.
Once combined, Samir Kaul, a founding partner and managing director at Khosla Ventures, will join Valo’s board of directors.
WHY THIS MATTERS
Valo’s flagship product is its Opal Computational Platform, which is designed to create a new model for drug discovery. The platform harnesses human-centric data, artificial intelligence and a single integrated architecture to share information throughout the drug discovery process with the goal of accelerating the rate of development.
In fact, Valo says that the Opal platform can identify new target areas for development in a matter of weeks compared to traditional methods, which can take between six months and a year.
The platform is currently working on a number of drug discovery processes across cardiovascular, metabolic, renal, oncology and neurodegenerative diseases.
By going public with Khosla Ventures Acquisition Co., Valo hopes to achieve its goal of becoming the industry-standard platform for drug discovery and development through scaling and democratizing the Opal platform.
"We see this partnership with KVAC as a unique and fantastic opportunity to bring the future forward to transform and accelerate the discovery and development of life-changing therapeutics,” David Berry, CEO of Valo, said in a statement.
“Khosla's reputation is second to none for building and investing in transformational technology-enabled businesses, and we believe this partnership helps realize our vision – of accelerating the creation of life-changing drugs."
THE LARGER TREND
This past March, Valo scored $300 million in a Series B funding round. The investment brought its total funding to over $450 million.
There are several other well-funded startups using AI to improve drug discovery, including insitro, which recently landed $400 million in its Series C round; Atomwise, which scored $123 million in Series B funding last year; and XtalPi, which also brought home nearly $319 million in its Series C funding round last year.
This April, Silicon Valley giant NVIDIA teamed up with pharma company AstraZeneca and the University of Florida on new artificial intelligence research projects aimed at boosting drug discovery and patient care.
SPAC mergers continue to be a hot topic in digital health. Already in 2021, there have been more completed or announced public exits by digital health companies than for the entirety of 2020. Most of which have been through SPAC deals, according to Rock Health.
ON THE RECORD
"Khosla Ventures invests in bold, early and impactful companies, and believes Valo meets these criteria,” Kaul said in a statement.
“Valo is building an end-to-end fully-integrated computational approach to drug discovery and development – one built on human data throughout the entire process. They have already established an impressive lineup of clinical and early-discovery therapeutic programs.
"By bringing powerful computational approaches and human data across the life cycle of drug discovery and development – aiming to reduce time, cost and risk to programs - Valo offers to potentially change the value curve for a trillion-dollar market segment. Valo fits squarely into the companies we are excited to back and bring our experience to."