Recursion Pharmaceuticals Inc - Ordinary Shares (RXRX) 8 Aug 24 2024 Q2 Earnings call transcript

Recursion and Exscientia, two pioneering players in the biopharmaceutical industry, have recently announced their plans to combine forces in a transformative deal. This move signifies a major shift in the landscape of drug discovery and development, with the potential to revolutionize the way medicines are discovered and brought to market. In a recent earnings call, the co-founder and CEO of Recursion, Chris Gibson, along with Najat Khan, the Chief R&D and Commercial Officer, and David Hallett, the Interim CEO of Exscientia and soon-to-be CSO of Recursion, shared insights into the rationale behind this strategic union and what it means for the future of both companies.

A Pipeline of Opportunities

One of the most notable aspects of this merger is the pipeline of opportunities it presents. With nearly 10 readouts expected in the next 18 months, Recursion and Exscientia are poised to make significant strides in advancing new medicines towards patients. This milestone underscores the companies' commitment to pushing the boundaries of drug discovery and development.

The synergies between the two pipelines are particularly noteworthy. While Recursion has been focusing on rare diseases, infectious diseases, and first-in-class targets, Exscientia has been making headway in immunology beyond oncology. The combination of these pipelines will not only expand the reach of both companies but also create a more comprehensive and diverse portfolio.

Partnerships: A Path to Success

Another key aspect of the call was the discussion on partnerships. Recursion and Exscientia have built impressive partnerships with industry giants like Roche, Genentech, Bayer, Sanofi, and Merck KGaA. This network of collaborations not only provides a solid foundation for the combined entity but also positions it as a preferred partner for other companies in the industry. The potential for synergies between these partnerships is immense, with the potential to drive significant milestones and value for all parties involved.

Platforms: The Backbone of Innovation

The call also highlighted the role of platforms in driving innovation. Recursion and Exscientia have been at the forefront of developing cutting-edge technology for drug discovery and development. The integration of these platforms will create a powerful end-to-end solution, enabling the companies to design, make, test, and learn more effectively. This integrated approach, coupled with a philosophy of technology enablement at every step, is expected to significantly boost the efficiency and success rate of drug discovery.

A Bright Future Ahead

The call painted a picture of a bright future ahead for Recursion and Exscientia. With a combined cash reserve of roughly $850 million and operational synergies projected to extend the runway into 2027, the companies are well-positioned to capitalize on the opportunities ahead. The integration of talent and resources from both sides is also expected to yield significant benefits, with the combined team being hailed as a formidable force in the industry.

Conclusion

The earnings call provided a fascinating glimpse into the strategic rationale behind the Recursion-Exscientia merger and the opportunities it presents. With a strong pipeline, a robust network of partnerships, and a commitment to innovation, the combined entity is set to redefine the landscape of drug discovery and development. As the industry continues to evolve, Recursion and Exscientia's strategic union is poised to lead the charge, driving the development of novel medicines and transforming the way healthcare is delivered.