Glasgow’s DeepMatter signs Merck license agreement

Glasgow-based DeepMatter Group plc, the AIM-listed digital chemistry data and software company, announced that it signed a multiyear database license agreement with Merck.

DeepMatter said the collaboration has the potential to become one of the group’s largest to date.

DeepMatter shares soared about 50% to 0.12p.

Pursuant to the agreement, DeepMatter will licence to the Life Science business sector of Merck certain proprietary data for machine learning-based applications,” said the Glasgow firm.

“The terms of the agreement were not disclosed.”

DeepMatter CEO Mark Warne said: “We are delighted to announce an important licensing agreement with Merck, one of the leading companies using digitalisation in healthcare and life sciences to deliver our vision to provide the data that enables all medicines to be made in the best possible way.” 

The Glasgow firm said Merck and Deepmatter will also explore ways to identify, acquire, generate and structure sets of chemical reaction data that can be used to enable scientists to develop new molecules faster and more efficiently which could encompass the use of DeepMatter’s SmartChemistry capabilities.

DeepMatter also published a trading update, saying that after the nine months of the financial year and having signed the agreement with Merck, the group expects revenue for the current financial year to be no less than £1.5 million, an increase of over 50% year on year.

The company said: “DeepMatter has secured three strategically important multi-year collaborations during the current financial year and as anticipated continues to see a strengthening of its sales pipeline following a strong first half.

“The Merck collaboration has the potential to become one of the group’s largest to date.

“These collaborations bring future revenue visibility and opportunities to grow the revenue opportunity from existing customers as well as new customers.

“They include technology access fees, collaboration fees and royalties.

“As stated in the group’s H1 results, DeepMatter is investing in product enhancements, strengthening its team, pursuing machine learning (ML) and artificial intelligence (AI) based R&D activities that create new intellectual property (IP).

“It also continues to assert its IP rights which have the potential to contribute to long term value creation.

“The directors remain in regular contact with the group’s major shareholders who are supportive.

“Deepmatter held cash balances of £0.7m at 30 September 2022, with costs remaining in line with those reported at the time of group’s H1 results.

“Additionally, ChemIntelligence, which DeepMatter acquired in June 2022, has been selected by Bayer CropScience, the world’s second largest agrochemical company, to provide its capabilities in Bayer’s LifeHub Lyon in La Dargoire Research Centre (CRLD).

“The inclusion of ChemIntelligence in the LifeHub should accelerate the safe design and more effective development of chemical crop protection products using its artificial intelligence expertise and intellectual property.”

DeepMatter CEO Mark Warne added: “After a solid H1, we are now on course to increase our year on year revenues by some 50% and importantly are seeing increasing customer interest and the potential for recurring royalty revenues.

“These revenues which are recognised over the life of contracts, providing us with growing visibility.

“With our strengthening relations with Merck and other international blue chip organisations plus our investment programme, we are leading the digitalisation of chemistry space and driving the market shift. 

“Our vision is to provide the digital data that enables all molecules to be made efficiently and safely as well as sustainably.”