Recursion Pharmaceuticals to Acquire Exscientia in $688 Mn All-Stock Deal

The deal, anticipated to close in early 2025, will equip the combined entity with approximately $850 million in cash, supporting its operations for the next three years.

Recursion Pharmaceuticals, a biotech firm leveraging artificial intelligence for drug discovery, has entered into an agreement to acquire its smaller competitor Exscientia for $688 million in an all-stock transaction.

The acquisition is expected to enhance Recursion's drug development pipeline and provide access to Exscientia’s partnerships with significant pharmaceutical companies such as Sanofi and Merck KGaA.

As part of the acquisition, Exscientia shareholders will receive 0.7729 Recursion shares for each Exscientia share they hold.

The deal, anticipated to close in early 2025, will equip the combined entity with approximately $850 million in cash, supporting its operations for the next three years.

Allen & Co., Wilson Sonsini Goodrich & Rosati, and Clifford Chance advised Recursion on the deal, while Centerview Partners and A&O Shearman advised Exscientia.

Reasoning Behind the Deal

The acquisition deal comes as major drugmakers double down on AI to enhance drug development efficiency, streamline clinical trial processes, and reduce the extensive costs associated with human studies.

Human trials, known for being the most costly and prolonged phase of drug development, often require several years and over a billion dollars to complete.

"Recursion and Exscientia coming together are extraordinarily complementary in terms of using end-to-end in discovery from biology to all the way through chemistry. It enables you to make medicines better and faster and that's what we're trying to do," said Najat Khan, chief R&D officer at Recursion.

Founded in 2013, Recursion is a phase-II clinical-stage firm, with a pipeline focused on rare diseases and certain cancers. The company went public in 2021 and since then it has established partnerships with major pharmaceutical firms, including Roche AG and Bayer.

Earlier this year, Recursion launched BioHive-2, an Nvidia-powered supercomputer designed to accelerate drug discovery, with Nvidia also being an investor in the firm.

Exscientia, headquartered in the UK, operates an AI-driven drug discovery platform and is developing treatments in the fields of immunology and oncology.

In a similar development, in June, British Drugmaker GlaxoSmithKline also known as GSK acquired Elsie Biotechnologies, a San Diego-based private biotechnology company for up to $50 million.

Per the deal, GSK sought to integrate Elsie’s oligonucleotide discovery, synthesis, and delivery technologies to enhance GSK’s platform R&D capabilities.

This move follows a successful research collaboration with Elsie, announced in July 2023, in which GSK was able to explore and validate the technology.