Recursion's Strategic Acquisition
Recursion Pharmaceuticals, a leading biotech firm known for its use of artificial intelligence to discover new drug candidates, has announced its agreement to acquire Exscientia, a smaller competitor, for $688 million in an all-stock transaction. This move highlights the growing trend of leveraging AI to revolutionize drug development.
The Role of AI in Drug Development
In the pharmaceutical industry, human studies are often the most expensive and time-consuming phase of drug development. It involves recruiting patients and conducting trials, a process that can take several years and cost over a billion dollars. By incorporating AI, companies like Recursion aim to streamline these processes, potentially accelerating drug development and saving millions of dollars.
For instance, AI technologies can help identify suitable patients for clinical trials much faster than traditional methods and reduce the number of participants needed, thereby lowering costs and expediting timelines.
Complementary Strengths
According to Najat Khan, chief R&D officer at Recursion, the acquisition of Exscientia is seen as "extraordinarily complementary". This merger brings together Recursion's expertise in biological research and Exscientia's prowess in chemistry, enabling the creation of more effective medicines at a faster pace.
Company Backgrounds and Synergies
Founded in 2013, Recursion is a phase 2 clinical-stage firm with a focus on treating rare diseases and certain types of cancer. It went public in 2021 and maintains partnerships with major pharmaceutical firms like Roche AG and Bayer. Notably, Recursion has also launched BioHive-2, a supercomputer powered by Nvidia, to further expedite drug discovery.
On the other hand, UK-based Exscientia uses an AI-driven drug discovery platform to develop treatments for immunology and oncology. Their acquisition by Recursion not only boosts Recursion's drug pipeline but also grants access to Exscientia's partnerships with large pharma players, including Sanofi and Merck KGaA.
Financial and Strategic Implications
Under the terms of the deal, Exscientia shareholders will receive 0.7729 Recursion shares for each Exscientia share they own. Expected to close in early 2025, the merger will provide the combined company with around $850 million in cash to support operations over the next three years.
Recursion, headquartered in Salt Lake City, is set to release its quarterly earnings later this week. The deal was advised by Allen & Co., Wilson Sonsini Goodrich & Rosati, and Clifford Chance for Recursion, while Centerview Partners and A&O Shearman advised Exscientia.
