The Globe and Mail reports in its Tuesday edition that Vancouver start-up Variational AI has signed a two-year development contract with Merck & Co. worth up to $349-million (U.S.) to discover therapeutic drugs. The Globe's Sean Silcoff writes that using its Enki platform, trained on Merck data, Variational will generate promising molecules for Merck's undisclosed therapeutic targets, according to Merck Research Laboratories head Robert Garbaccio. Merck will have the exclusive right to develop and take to market any compounds arising from the collaboration, which stems from a partnership the companies struck last year. Merck also invested in a $5.5-million (U.S.) venture capital financing of Variational this year, which the start-up will spend on increasing its compute capacity to power its algorithms. The parties did not reveal the deal terms, but Variational will get an upfront payment plus additional sums for reaching certain milestones. Variational AI chief executive officer Handol Kim said his 18-person company would not receive royalties from sales of any resulting drugs that make it to market. The deal "is a validation for both AI and drug discovery and specifically for our model and approach," Mr. Kim said.