In a groundbreaking move within the biotech industry, Exscientia plc (NASDAQ: EXAI) has announced a merger with Recursion Pharmaceuticals Inc. (NASDAQ: RXRX), a company partnered with tech giant Nvidia. The merger, revealed on Thursday, signifies a major step forward in AI-powered drug discovery, bringing together the strengths of both companies.
Under the terms of the agreement, Exscientia shareholders will receive 0.7729 Recursion shares for each Exscientia share they hold, with any fractional shares being compensated in cash. The fixed exchange ratio means that Recursion shareholders will own approximately 74% of the newly combined entity, leaving Exscientia shareholders with about 26%.
Chris Gibson, Co-Founder and CEO of Recursion, who is slated to lead the combined company, emphasized the strategic alignment of the merger. “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,” Gibson stated.
The newly merged company will retain the Recursion name and remain headquartered in Salt Lake City, Utah. It will continue trading on the NASDAQ while maintaining a significant operational presence in the U.K. David Hallett, currently serving as Interim CEO and Chief Scientific Officer of Exscientia, will transition to the role of Chief Scientific Officer for the combined firm.
Exscientia is set to enhance Recursion’s capabilities by contributing its precision chemistry design and automated small-molecule synthesis technology. This integration is expected to boost Recursion’s already advanced biology exploration and translational capabilities. Together, they plan to evolve the Recursion Operating System, aiming to discover and translate higher-quality medicines more efficiently and on a larger scale through a full-stack technology-enabled platform.
Looking ahead, the merged company anticipates significant advancements, with plans to read out approximately ten clinical trials over the next 18 months. Many of these programs, if successful, could potentially achieve annual peak sales exceeding $1 billion.
Financially, the combined entity will be robust, with $850 million in cash reserves and an additional $200 million expected from milestones over the next two years. There is also a potential for up to $20 billion in future royalties if any of the drugs in their pipeline gain approval. The merger is projected to generate approximately $100 million in annual synergies, with the combined company’s financial runway extending into 2027.
Market reaction to the merger was positive, with Exscientia’s stock price closing 17.1% higher at $5.27 on Thursday.
This merger marks a significant milestone in the intersection of artificial intelligence and drug discovery, with both companies poised to lead the industry into a new era of innovation and efficiency.
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