Recursion, Exscientia Merge to Create AI-Enabled Biotech

Handshake over a deal

Handshake over a deal

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Armed with a combined $850 million in cash, the companies said Thursday the resulting biotech will have a pipeline that could deliver 10 clinical readouts over the next 18 months.

The AI-enabled biotechs Recursion and Exscientia have entered into a merger that will create a company with $850 million in cash and 10 upcoming clinical readouts over the next 18 months, according to Thursday’s announcement.

Both companies raised hundreds of millions of dollars when they went public in 2021 on the strength of technology designed to tackle long-standing drug development challenges. However, the share prices of both companies have fallen around 80% since the initial public offerings. Now, Recursion and Exscientia have concluded combining their capabilities is the best option.

The resulting biotech, which will take Recursion’s name, will have a pipeline that could deliver 10 clinical readouts in the next 18 months. Recursion sees no competitive overlap between the pipelines, with its first-in-class oncology, rare disease and infectious disease drug candidates covering different ground than Exscientia’s focus on best-in-class cancer therapies.

Together, Recursion and Exscientia had around $850 million in cash and cash equivalents at the end of the second quarter of 2024. By realizing estimated annual synergies of around $100 million, Recursion calculates the money can fund operations into 2027.

Both companies have deals that may provide additional cash, including $200 million tied to milestones that could be achieved over the next two years. Recursion is partnered with Roche and Bayer. Exscientia has partnerships with Sanofi and Merck KGaA.

The technology platforms that support the deals are complementary, according to Recursion. While both companies are using AI and other technologies to improve R&D, Recursion is more focused on biology while Exscientia has strengths in chemistry.

Talking on an earnings call Thursday, Recursion CEO Chris Gibson said the number of compounds that Exscientia synthesizes while often achieving best-in-class status is “dramatically lower than the industry average.” However, Exscientia spends a lot on outsourcing early-stage biology and hit discovery work. Recursion, by contrast, is “great at finding hits for novel biology,” Gibson said, but works at an efficiency that is closer to the industry average once it gets into chemistry.

“By combining our platforms, we believe we’re going to be able to bring the most efficient technology-enabled approach across the entire process of discovering and translating these medicines. And that, frankly, is going to make us not only a powerful organization, but I think one that is going to be extraordinarily efficient,” Gibson said.

Exscientia’s capabilities include an automated synthesis facility in the U.K. Gibson said “this facility is now up and running, we believe it should stay up and running, we should build it out from here” and floated the prospect of using the experience gained from setting up the platform to add similar capabilities at its site in Salt Lake City, Utah.

Nick is a freelance writer who has been reporting on the global life sciences industry since 2008.
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