An Ottawa startup that uses artificial intelligence to generate “synthetic” medical data that mimics the real thing without raising privacy red flags has been sold to a U.S. company.
Replica Analytics was acquired by New York-based Aetion in a deal that closed in late December, the companies announced this week. Terms of the transaction were not disclosed.
Founded in early 2020, Replica Analytics uses machine learning algorithms to generate “synthetic data” that closely replicates the statistical properties and patterns found in real datasets.
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The company says the AI-generated information is just as useful as actual data when it comes to analyzing the results of clinical studies but doesn’t come with any of the privacy concerns that often limit how much of their work researchers can share with each other.
Replica Analytics was spun out of projects that began at the University of Ottawa and the Children’s Hospital of Eastern Ontario Research Institute. Now at 15 employees, the company is partnering with organizations such as pharmaceutical giant Merck Canada and the University of Alberta to test its software in real-world clinical settings.
Fortune 50 customers
Fortune 50 companies have already begun using Replica’s platform, and the firm closed a seed round with Barcelona-based Nina Capital in 2021. Its target customers include life sciences firms, medical device manufacturers, drugmakers and organizations that collect and analyze clinical research for pharmaceutical companies.
Co-founder and CEO Khaled El Emam says the company considered raising another equity round in a bid to scale up on its own before shifting gears and pursuing a deal with Aetion last fall.
“I think that this will allow us to scale probably much faster than we would have been able to had we just raised money and continued on our own.”
He says management ultimately decided it made more sense to join forces with the U.S. firm, a larger organization with more financial resources and greater access to real-world medical data.
“I think that this will allow us to scale probably much faster than we would have been able to had we just raised money and continued on our own,” says El Emam, an epidemiologist at uOttawa and a senior scientist at the CHEO Research Institute.
“I describe Aetion as a rocket ship in the sense that they are a very fast-growing company,” he adds. “They’re quite well-known and well-established as a leader in that space. It was obvious that working together we can do some very powerful things.”
The company now becomes a wholly owned subsidiary of Aetion and will remain based in Ottawa. El Emam says he expects the firm to double its headcount by the end of the year as it responds to growing demand for its products.
“This market is moving faster than we anticipated, and I expect that to continue this year,” he says.
As concerns over the security of medical data intensify, so do opportunities for companies like Replica, industry analysts say.
Market research firm Gartner, for example, predicts that by 2024, 60 per cent of data used for AI and big-data analytics solutions will be synthetically generated.
As a veteran medical researcher, El Emam says his platform “checks all the boxes” when it comes to alleviating a pair of longstanding pain points for organizations that conduct clinical research: privacy concerns and the sheer cost of staging medical trials that often take years and require data from thousands of patients.
Like many tech CEOs in the National Capital Region, he cites recruitment as his company’s biggest obstacle to growth. But El Emam believes Replica is an enticing draw for data experts eager to make their mark in an emerging field because it offers them the chance to work in three of the tech R&D world’s hottest areas – AI, health data and privacy.
“I think we have a pretty good story to tell to attract data scientists and engineers,” he says.
The CEO says the firm’s close ties to uOttawa and CHEO also give it an edge when it comes to winning the war for talent.
“It’s a competitive space, and having these types of strong connections and relationships with the university and a good R&D environment gives us a huge advantage,” he adds.
Now, he says, it’s up to the team at Replica to deliver on the technology’s promise.
“It’s really being able to execute fast enough to get us to where we want to be,” El Emam says.