Recursion Pharmaceuticals(RXRX.US), a drug development company powered by artificial intelligence, has agreed to buy smaller rival Exscientia(EXAI.US) in a $688m all-stock deal. Recursion, backed by chipmaker Nvidia(NVDA.US), uses AI to help develop new drugs. At the time of writing, Exscientia was up 16 per cent and Recursion was up 2 per cent.
Under the terms of the deal, Exscientia shareholders will receive 0.7729 shares of Recursion A class common stock for every share of common stock they hold. Some of the shares will be paid in cash.
The deal is expected to close in early 2025 and provide about $850m in cash for the merged entity to fund its operations over the next three years. Recursion shareholders will own about 74 per cent of the combined company, with Exscientia shareholders owning the rest.
The combined Recursion will be led by co-founder and chief executive Chris Gibson, while Exscientia’s interim chief executive David Hallett will become chief scientific officer.
In July, Recursion raised $50m from Nvidia, a boost for AI-driven biopharma stocks. Its peers Abcellera Biologics(ABCL.US), Absci Corporation(ABSI.US), Exscientia and Schrodinger(SDGR.US) all rallied.
Earlier this year, the company also unveiled a Nvidia supercomputer called BioHive-2, which helps speed up the drug discovery process.
Big pharma companies are increasingly using AI to speed up drug development, hoping to find trial patients more quickly or reduce the number of people needed to test drugs, which could both help speed up the drug development process and save, or even millions of dollars.
Najat Khan, chief research officer at Recursion, said: “The way we use end-to-end AI to go from biology to chemistry in drug discovery is very synergistic. That will allow us to make drugs faster and better, which is what we are trying to do.”