In this paper we introduce a novel graph classification algorithm and demonstrate its efficacy in drug design. In our method, we use graphs to model chemical structures and apply a wavelet analysis of graphs to create features capturing graph local topology. We design a novel graph kernel function to utilize the created feature to build predictive models for chemicals. We call the new graph kernel a graph wavelet-alignment kernel.We have evaluated the efficacy of the wavelet-alignment kernel using a set of chemical structure-activity prediction benchmarks. Our results indicate that the use of the kernel function yields performance profiles comparable to, and sometimes exceeding that of the existing state-of-the-art chemical classification approaches. In addition, our results also show that the use of wavelet functions significantly decreases the computational costs for graph kernel computation with more than 10 fold speed up.
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