UK-based biotech company Exscientia has agreed to merge with Recursion Pharmaceuticals, a US-based company that uses artificial intelligence (AI) to discover new drug candidates.
Under the terms of the agreement, Exscientia shareholders will receive 0.7729 shares of Recursion Class A common stock for each Exscientia ordinary share held.
The boards of directors of both companies unanimously approved the proposed transaction, which is planned to be implemented through a court-sanctioned scheme of arrangement.
The transaction is expected to be completed by early 2025, subject to the satisfaction of certain conditions, including shareholders and stockholders, court sanctions, and regulatory approvals.
Upon closing, Recursion shareholders will own around 74% and Exscientia shareholders around 26% of the combined company, based on the fixed exchange ratio.
Recursion co-founder and CEO Chris Gibson will be appointed as CEO of the combined company, and Recursion Interim CEO David Hallett as chief scientific officer.
Chris Gibson said: “We believe the proposed combination is deeply complementary and aligned with our missions to industrialise drug discovery to deliver high-quality medicines and lower prices for consumers.
“Exscientia’s precision chemistry tools and capabilities, including its newly commissioned automated small molecule synthesis platform, will augment our tech-enabled biology and chemistry exploration, hit discovery and translational capabilities.
“I am excited to continue building the best example of the next generation of biotechnology companies. It still feels like we are just getting started.”
The merger will create an advanced, technology-first, end-to-end drug discovery platform.
It will combine Recursion’s scaled biology exploration and translational capabilities with Exscientia’s precision chemistry design and small molecule automated synthesis capabilities.
The combined company is expected to leverage the latest advances in the life sciences and technology to deliver better novel treatments to patients, faster and at a lower cost.
It is expected to begin around 10 clinical trials in the next 18 months and advance drug discovery partnerships with biopharma companies, including Roche, Sanofi, Bayer, and Merck.
The merger has the potential to receive around $200m in milestone payments from the current partnerships, and more than $20bn in revenue before royalties on net sales.
Furthermore, the combined company is expected to achieve annual synergies of around $100m with a runway extending into 2027.
David Hallett said: “Adding Exscientia’s best-in-class focused precision oncology internal pipeline to Recursion’s first-in-class focused pipeline spanning rare disease, precision oncology and infectious disease is highly complementary as we look to bring treatments to patients faster.
“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.”
