Recursion and Exscientia to merge, creating AI-driven drug discovery powerhouse
In a significant move set to reshape AI-driven drug discovery, Recursion and Exscientia have announced an agreement to combine their operations. The merger, expected to close by early 2025, aims to create a global technology-enabled drug discovery leader with end-to-end capabilities.
Complementary strengths
The proposed combination brings together Recursion’s scaled biology exploration and translational capabilities with Exscientia’s precision chemistry design and small molecule automated synthesis capabilities. This synergy is expected to yield a leading technology-first, end-to-end drug discovery platform capable of delivering novel treatments to patients more efficiently and cost-effectively than traditional methods.
Chris Gibson, Ph.D., Co-Founder and CEO of Recursion, who will serve as CEO of the combined entity, said: “We believe the proposed combination is deeply complementary and aligned with our missions to industrialize drug discovery to deliver high quality medicines and lower prices for consumers.”
Pipeline and partnerships
The merged company will boast a diverse portfolio of clinical and near-clinical programmes, with approximately 10 clinical readouts expected over the next 18 months. Most of these programmes, if successful, could have annual peak sales opportunities exceeding $1 billion.
Furthermore, the combined entity will advance significant therapeutic discovery collaborations with prominent biopharma companies, including Roche-Genentech, Sanofi, Bayer, and Merck KGaA. These partnerships have the potential to generate approximately $200 million in milestone payments over the next two years and more than $20 billion in revenue before royalties over the course of the partnerships.
Technological synergies
The integration of Recursion’s and Exscientia’s technologies is expected to enable a full-stack platform spanning patient-centric target discovery, structure-based drug design, generative AI design, automated chemical synthesis, predictive ADMET and translation, biomarker selection, and clinical development.
David Hallett, Ph.D., Interim Chief Executive Officer of Exscientia and planned Chief Scientific Officer of the combined company, commented: “We look forward to bringing our teams together and integrating Recursion’s high throughput and target biology capabilities with Exscientia’s highly scalable molecular design and automated chemistry synthesis capabilities to truly accelerate the discovery of better drugs for patients.”
Financial and operational details
The transaction, structured as a share exchange, will see Exscientia shareholders receive 0.7729 shares of Recursion Class A common stock for each Exscientia ordinary share. Post-merger, Recursion shareholders will own approximately 74% of the combined company, with Exscientia shareholders owning the remaining 26%.
The combined entity will have a robust financial foundation, with approximately $850 million in cash and cash equivalents as of the end of Q2 2024. Annual synergies are expected to exceed $100 million, with a cash runway extending into 2027.
The merged company, which will retain the Recursion name, will be headquartered in Salt Lake City, Utah, and continue to trade on the NASDAQ. It will maintain a significant presence in the UK, with two existing Exscientia directors joining the Recursion board following the transaction’s closure.
Chris Gibson, Ph.D., Co-Founder and CEO of Recursion
