Recursion Pharmaceuticals to Acquire Exscientia in $1 Billion AI-Driven Drug Discovery Merger

Exscientia stock rises on Recursion's buyout (NASDAQ:RXRX)

Exscientia (NASDAQ:EXAI), an AI-driven drug discovery firm, has agreed to be acquired by its larger peer, Recursion Pharmaceuticals (NASDAQ:RXRX), whose backers include chipmaker Nvidia (NASDAQ:NVDA), in an all-stock deal. Salt Lake City, Utah-based Recursion (RXRX) announced the agreement with its Q2 2024 financials on Thursday. Exscientia (EXAI) shares added ~8% in the premarket after the announcement while Recursion (RXRX) gained ~2%. Under the agreement, Exscientia (EXAI) shareholders will receive 0.7729 shares of Recursion (RXRX) Class A common stock for each ordinary share they hold. Fractional shares will be paid in cash. Once the transaction is completed by early 2024, Recursion (RXRX) shareholders will own approximately 74% of the combined company, while Exscientia (EXAI) shareholders will own the rest. Recursion (RXRX) will be the surviving entity led by co-founder and CEO Chris Gibson. Exscientia's (EXAI) interim CEO David Hallett is expected to join as its chief scientific officer. In July 2023, Recursion (RXRX) fueled a rally in AI-driven biopharma stocks after receiving a $50M investment from chipmaker Nvidia (NVDA). Its peers, Abcellera Biologics (ABCL), Absci Corporation (ABSI), Exscientia (EXAI), and Schrodinger (SDGR), also rallied in reaction. More on Exscientia, Nvidia, etc. Nvidia: Stock Price Likely Peaked Even If Fed Cuts Rates Nvidia: Bad News For Company Is Good News For Investors (Rating Upgrade) Nvidia: Recent Pullback Presents A Prime Buying Opportunity Super Micro CEO indicates Nvidia's Blackwell likely delayed until early 2025 Nvidia clears Samsung's 8-layer HBM3E chips for use in AI processors - report

Recursion and Exscientia announce merger to enhance drug discovery By Investing.com

SALT LAKE CITY and OXFORD, United Kingdom - Recursion Pharmaceuticals Inc. (NASDAQ: RXRX) and Exscientia plc (NASDAQ: EXAI) disclosed today that they have agreed to merge, aiming to create a leading end-to-end drug discovery platform. The combined entity is set to harness advancements in life sciences and technology to expedite the delivery of novel treatments to patients while potentially reducing costs compared to traditional methods. The merger is expected to yield a portfolio with approximately 10 clinical trial readouts in the next 18 months, and a diverse pipeline with no competitive overlap. Recursion focuses on rare diseases, precision oncology, and infectious diseases, while Exscientia specializes in precision oncology. The companies anticipate that the successful programs could generate over $1 billion each in annual peak sales. Industry partnerships are a key component of the strategic rationale behind the merger, with existing collaborations with major biopharma companies such as Roche-Genentech, Sanofi (EPA:SASY) (NASDAQ:SNY), Bayer (OTC:BAYRY), and Merck KGaA. These partnerships could lead to around $200 million in milestone payments over the next two years and more than $20 billion in revenue before royalties over the lifespan of the partnerships. The financial stability of the combined company is reinforced by approximately $850 million in cash and cash equivalents as of the end of Q2 2024. Additionally, annual synergies exceeding $100 million are anticipated, with the cost savings extending into 2027. Under the terms of the agreement, Exscientia shareholders will receive 0.7729 shares of Recursion Class A common stock for each Exscientia ordinary share they own. Post-merger, Recursion shareholders will own approximately 74%, and Exscientia shareholders about 26% of the new company. The transaction is expected to close by early 2025, subject to customary closing conditions and regulatory approvals. The merged company, retaining the Recursion name, will be headquartered in Salt Lake City, Utah, and continue trading on the NASDAQ. Chris Gibson, Ph.D., Co-Founder & CEO of Recursion, will lead the combined company as CEO, while David Hallett, Ph.D., Interim CEO & Chief Scientific Officer of Exscientia, will become the Chief Scientific Officer. This news is based on a press release statement and reflects the companies' current plans and expectations, which are subject to change based on various factors and risks. The merger is seen as a significant move in the biotechnology industry, aiming to leverage technology to streamline drug discovery and development processes. In other recent news, Exscientia, an AI-driven drug discovery firm, has made significant strides in its operations. The company recently acquired full ownership of the oral CDK7 inhibitor program from GT Apeiron, securing rights to '617 and its associated intellectual property. This acquisition, which includes a $10 million upfront cash payment, $10 million in upfront equity, and future single-digit royalties on the commercialization of '617, is viewed as a strategic move to enhance Exscientia's long-term financial prospects. In addition to the acquisition, Exscientia is preparing for a dose escalation cohort in combination with SERD for CDK4/6-refractory HR+/HER2- metastatic breast cancer. The trial is expected to commence by late 2024 or early 2025, potentially accelerating the drug's time to market. Also, initial Phase 1/2 data across multiple tumor types is anticipated in the second half of 2024, a crucial step in validating Exscientia's platform. TD Cowen, an analyst firm, has maintained a Buy rating on Exscientia, citing the company's innovative AI platform and pipeline of next-generation oncology assets. The firm anticipates two more Investigational New Drug applications by the end of 2024, offering multiple opportunities to validate Exscientia's platform in the next two years. Lastly, Exscientia has expanded its collaboration with Amazon (NASDAQ:AMZN) Web Services (AWS) to enhance its drug discovery and automation platform. By leveraging generative AI models and AWS's scalable infrastructure, the partnership aims to accelerate the drug discovery process and reduce costs. As Exscientia plc (NASDAQ: EXAI) prepares to merge with Recursion Pharmaceuticals Inc., the company's financial and market metrics provide important context for investors assessing the future of this combined entity. According to InvestingPro data, Exscientia holds a market capitalization of $568.69 million, which could play a role in the merged company's valuation. Despite a challenging financial performance with a negative P/E ratio of -3.47 (adjusted for the last twelve months as of Q1 2024), which speaks to the company's current lack of profitability, Exscientia's strategic move towards this merger could be seen as an effort to bolster its market position and financial stability. InvestingPro Tips indicate that analysts expect sales growth in the current year, which may contribute positively to the combined company's revenue stream. However, it is important to note that Exscientia is not expected to be profitable this year and has been quickly burning through cash, which highlights the urgency for operational efficiency and successful drug pipeline development post-merger. With gross profit margins suffering at -34.4%, the company faces significant pressure to improve its financial health through this strategic consolidation. The InvestingPro product includes additional tips that can offer more detailed insights into Exscientia's financial health and market performance. For example, there are tips on Exscientia's cash position relative to its debt, which is crucial for investors to understand in the context of the merger. A total of 9 additional tips are available on InvestingPro for Exscientia, which can be found at https://www.investing.com/pro/EXAI. These insights and metrics are particularly relevant as the companies aim to create a leading drug discovery platform, with the goal of delivering novel treatments more efficiently and potentially at lower costs. The financial stability and market performance of Exscientia will be key factors in the success of the merged company, and investors will be watching closely how these aspects evolve as the merger progresses toward completion.