Breaking: In Arguably the Largest AI in Bio Deal, Recursion Acquires UK-based "End-to-End" AI Biotech Exscientia
Recursion Pharmaceuticals, a biotech firm leveraging artificial intelligence (AI) for drug discovery, has announced its acquisition of Exscientia, a smaller rival, for $688 million in an all-stock transaction. The deal, expected to be publicized on Thursday morning, underscores the growing reliance on AI within the pharmaceutical industry to expedite drug development and reduce associated costs.
Human clinical trials represent the most costly and time-consuming phase of drug development, often requiring several years and over a billion dollars to bring a new drug to market. By integrating AI, companies aim to streamline patient recruitment for trials and minimize the number of participants needed, thereby accelerating development timelines and saving substantial financial resources.
"Recursion and Exscientia coming together is extraordinarily complementary in terms of using end-to-end AI in drug discovery from biology to chemistry. It enables us to make medicines better and faster, and that's our goal," stated Najat Khan, Chief R&D Officer at Recursion.
Founded in 2013, Recursion is a phase 2 clinical-stage company with a focus on treatments for rare diseases and certain cancers. The firm went public in 2021 and maintains collaborations with major pharmaceutical entities such as Roche AG and Bayer. Earlier this year, Recursion unveiled BioHive-2, a supercomputer powered by Nvidia technology, designed to accelerate drug discovery processes. Nvidia is also an investor in Recursion.
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Exscientia, headquartered in the UK, operates an AI-driven drug discovery platform and is developing a pipeline targeting immunology and oncology. The acquisition of Exscientia is anticipated to enhance Recursion's drug development pipeline and extend its partnerships with leading pharmaceutical companies, including Sanofi and Merck KGaA.
Under the terms of the agreement, Exscientia shareholders will receive 0.7729 Recursion shares for each Exscientia share held. The transaction is expected to close in early 2025, providing the merged entity with approximately $850 million in cash, sufficient to support operations for the next three years.
Salt Lake City-based Recursion will report its quarterly earnings later on Thursday. Advisors Allen & Co., Wilson Sonsini Goodrich & Rosati, Clifford Chance for Recursion, Centerview Partners, and A&O Shearman for Exscientia facilitated the acquisition.
AI in Drug Discovery Sector Consolidation
Recursion Pharmaceuticals has been actively expanding its capabilities in AI-driven drug discovery through previous acquisitions. The acquisition of Valence Discovery in 2023 brought in advanced machine learning models that predict molecular properties and interactions, aimed at enhancing Recursion's ability to identify promising drug candidates with precision.
Additionally, the acquisition of Cyclica in 2023, introduced Ligand Express and Ligand Design platforms, which utilize AI to predict drug-target interactions and design novel molecules, enriching Recursion's computational chemistry capabilities. These strategic moves have integrated sophisticated computational methods into Recursion's biology-centric platform, optimizing their drug discovery and development processes.
In its turn, Exscientia previously strengthened its AI capabilities by acquiring Allcyte back in 2021. Allcyte's focus on AI-powered precision medicine for hematologic cancers employs high-content imaging and AI to analyze patient-derived tumor samples, offering insights into drug efficacy and enabling personalized treatment strategies. This acquisition allowed Exscientia to merge functional drug testing with AI-driven design, advancing targeted oncology therapies.
The recent acquisition of Exscientia by Recursion for $688 million is a strategic move to consolidate Recursion's position as a leading player in the AI-driven biopharmaceutical sector. By integrating Exscientia’s AI platforms and its drug pipelines focused on immunology and oncology with Recursion's extensive dataset and machine learning infrastructure, including the Nvidia-powered BioHive-2 supercomputer, Recursion aims to create a comprehensive end-to-end drug discovery and development process. This deal signifies Recursion's ambition to leverage combined technological advancements to accelerate the discovery and delivery of innovative therapies, solidifying its leadership in the AI space
This is reflective of a larger pattern of AI in drug discovery sector consolidation, which is reflected in a dozens of acquisition deals over the recent years:
Topics: Startups & Deals
