- Brings together Recursion’s scaled biology exploration and translational capabilities with Exscientia’s
precision chemistry design and small molecule automated synthesis capabilities to create a leading
technology-first, end-to-end drug discovery platform
- Combined business positioned to leverage latest advances in the life sciences and technology to deliver better
novel treatments to patients, faster and at a lower cost relative to traditional drug discovery and development
methods
- Highly complementary pipeline with approximately 10 clinical readouts expected over the next 18 months
- Industry-leading portfolio of pharma partnerships with the potential for approximately $200 million in milestone
payments over the next 24 months, and over $20 billion overall before potential royalties over the course of the
partnership
- Well-capitalized balance sheet with approximately $850 million in cash and cash equivalents between the two
companies as of the end of Q2 2024
- Operational complementarities expected to yield annual synergies in excess of $100 million
SALT LAKE CITY and OXFORD, United Kingdom, Aug. 08, 2024 (GLOBE NEWSWIRE) -- Recursion (Nasdaq: RXRX) and Exscientia
plc (Nasdaq: EXAI) today announced the companies have entered into a definitive agreement, combining Recursion, a
leading clinical stage technology-enabled biotech company decoding biology to industrialize drug discovery, with
Exscientia, a technology-driven clinical stage drug design and development company, committed to creating more
effective medicines for patients, faster.
“We believe the proposed combination is deeply complementary and aligned with our missions to industrialize drug
discovery to deliver high quality medicines and lower prices for consumers,” said Chris Gibson, Ph.D., Co-Founder
and CEO of Recursion as well as the planned CEO of the combined entity. “Exscientia’s precision chemistry tools and
capabilities, including its newly commissioned automated small molecule synthesis platform, will augment our
tech-enabled biology and chemistry exploration, hit discovery and translational capabilities. I am excited to
continue building the best example of the next generation of biotechnology companies. It still feels like we are
just getting started.”
“Adding Exscientia’s best-in-class focused precision oncology internal pipeline to Recursion’s first-in-class focused
pipeline spanning rare disease, precision oncology and infectious disease is highly complementary as we look to
bring treatments to patients faster,” said David Hallett, Ph.D., Interim Chief Executive Officer and planned Chief
Scientific Officer of Recursion post-closing of the transaction. “We look forward to bringing our teams together and
integrating Recursion's high throughput and target biology capabilities with Exscientia's highly scalable molecular
design and automated chemistry synthesis capabilities to truly accelerate the discovery of better drugs for
patients.”
Once integrated, the companies believe the extended and evolved Recursion OS will enable the discovery and
translation of higher quality medicines more efficiently and at a higher scale with a full-stack technology-enabled
small molecule discovery platform. In addition, the combined company expects to read out approximately 10 clinical
trials in the next 18 months.
The proposed business combination will also advance significant therapeutic discovery collaborations with some of the
most prominent biopharma companies in the world, including Roche-Genentech, Sanofi, Bayer, and Merck KGaA. Moreover,
there is the potential for approximately $200 million in milestone payments over the next 2 years from these current
partnerships and there is the potential for more than $20 billion in revenue before royalties on net-sales of
partnership programs which range from mid single-digit to double-digit royalties over the course of the partnership.
Strategic Rationale
- Pipeline: The combination would create a diverse portfolio of clinical and near-clinical
programs (approximately 10 clinical readouts expected in the next 18 months) where most of these programs, if
successful, could have annual peak sales opportunities in excess of $1 billion. In addition to Recursion’s
internal pipeline, Exscientia has wholly-owned oncology programs associated with targets CDK7 (clinical), LSD1,
and MALT1 as well as partnered programs associated with targets PKC-Theta (clinical) and ENPP1. Across the
combined pipeline there is no competitive overlap, with Recursion’s pipeline focusing on first-in-class drug
candidates within oncology, rare disease, and infectious disease and Exscientia’s focus on best-in-class drug
candidates within oncology. Additionally, for both companies there are many research and discovery stage
pipeline programs that would benefit from the complementary combination of the two platforms.
- Partnerships: The proposed business combination would bring together transformational
partnerships with leading large pharma companies with a total of 10 programs already optioned across oncology
and immunology. In addition to Recursion’s transformational partnerships with Roche-Genentech (neuroscience and
a gastrointestinal oncology indication) and Bayer (undruggable oncology), Exscientia has partnerships with
Sanofi (immunology and oncology) and Merck KGaA (oncology and immunology). In addition, Exscientia has a
partnership with BMS (oncology and immunology) where an optioned program related to PKC-Theta has already shown
positive early Phase 1 results. Furthermore, the combined company expects potential additional milestone
payments of approximately $200 million over the next 2 years from its current partnerships.
- Platform: The combination will help enable a full-stack technology-enabled platform spanning
patient-centric target discovery, structure based drug design including hotspot analysis, quantum mechanics and
molecular dynamics modeling, 2D and 3D generative AI design, encode and automate design-make-test-learn cycles
with active learning, automated chemical synthesis, predictive ADMET and translation, biomarker selection,
clinical development, and more. Furthermore, Exscientia’s automated chemistry design and synthesis capabilities
are expected to allow Recursion to more rapidly and effectively run SAR cycles during hit to lead and lead
optimization. These capabilities are expected to generate diverse chemistry to experimentally improve our
predictive maps of biology and chemistry.
Transaction Details
Under the terms of the transaction agreement, which were unanimously approved
by the boards of directors of both companies, Exscientia shareholders will receive 0.7729 shares of Recursion Class
A common stock for each Exscientia ordinary share they own, with fractional shares paid in cash. Based on the fixed
exchange ratio, Recursion shareholders will own approximately 74% and Exscientia shareholders will own approximately
26% of the combined company, in each case assuming no additional issuance by either company before closing. Major
shareholders of each company, including holders of more than 40% of Exscientia shares, have entered into agreements
on customary terms and conditions under which they have agreed to vote all their shares in favor of the transaction.
There is approximately $850 million in cash and cash equivalents held by both companies at the end of Q2 2024. The
combined company is estimated to achieve annual synergies of approximately $100 million with a runway extending into
2027.
The combination is expected to be implemented through a court sanctioned scheme of arrangement under English law and
is subject to the satisfaction of customary closing conditions, including the approval of Exscientia shareholders,
the approval of Recursion’s stockholders, and the sanction of the High Court of Justice of England and Wales, and
the receipt of required regulatory approvals. Subject to the satisfaction or waiver of the closing conditions, the
transaction is expected to close by early 2025.
Listing, Governance and Management
The combined company, which will be named Recursion, will
continue to be headquartered in Salt Lake City, Utah, and trade on the NASDAQ, while maintaining a significant
presence in the U.K. Chris Gibson, Ph.D., Co-Founder & CEO of Recursion, will serve as CEO of the combined
company and David Hallett, Ph.D., Interim Chief Executive Officer & Chief Scientific Officer of Exscientia,
plans to join the combined company as Chief Scientific Officer. Two existing Exscientia directors will join the
Board of Recursion following the closing of the transaction.
Advisors
Allen & Company LLC acted as exclusive financial advisor to Recursion and Wilson
Sonsini Goodrich & Rosati acted as legal counsel. Centerview Partners LLC acted as exclusive financial advisor
to Exscientia and A&O Shearman acted as legal counsel.
About Recursion
Recursion is a leading clinical stage TechBio company decoding biology to
industrialize drug discovery. Central to its mission is the Recursion Operating System (OS), a platform built across
diverse technologies that continuously expands one of the world’s largest proprietary biological, chemical and
patient-centric datasets. Recursion leverages sophisticated machine-learning algorithms to distill from its dataset
a collection of trillions of searchable relationships across biology and chemistry unconstrained by human bias. By
commanding massive experimental scale—up to millions of wet lab experiments weekly—and massive computational
scale—owning and operating one of the most powerful supercomputers in the world—Recursion is uniting technology,
biology, chemistry and patient-centric data to advance the future of medicine.
Recursion is headquartered in Salt Lake City, where it is a founding member of BioHive, the Utah life sciences
industry collective. Recursion also has offices in Toronto, Montreal, the San Francisco Bay Area and London.
About Exscientia
Exscientia is a technology-driven drug design and development company, committed
to creating more effective medicines for patients, faster. Exscientia combines precision design with integrated
experimentation, aiming to invent and develop the best possible drugs in the most efficient manner. Operating at the
interfaces of human ingenuity, artificial intelligence (AI), automation and physical engineering, we pioneered the
use of AI in drug discovery as the first company to progress AI-designed small molecules into a clinical setting. We
have developed an internal pipeline focused on oncology, while our partnered pipeline extends to many other
therapeutic areas. By leading this new approach to drug creation, we believe we can change the underlying economics
of drug discovery and rapidly advance the best scientific ideas into medicines for patients.
Recursion Investor Relations
investor@recursion.com
Recursion Media
media@recursion.com
Exscientia Investor Relations
investors@exscientia.ai
Exscientia Media
media@exscientia.ai
Forward Looking Statements
Statements contained herein which are not historical facts may be
considered forward-looking statements under federal securities laws and may be identified by words such as
“anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “potential,” “predicts,” “projects,” “seeks,”
“should,” “will,” or words of similar meaning and include, but are not limited to, statements regarding the proposed
business combination of Recursion and Exscientia and the outlook for Recursion’s or Exscientia’s future business and
financial performance such as delivering better treatments to patients, faster and at a lower cost; the discovery
and translation of higher quality medicines more efficiently and at a higher scale; helping to enable a full-stack
technology-enabled platform; allowing Recursion to more rapidly and effectively run SAR cycles during hit to lead
optimization; generating the diverse chemistry to experimentally improve predictive maps; the number and timing of
clinical program readouts over the next 18 months; the combined company’s first-in-class and best-in-class
opportunities; potential for sales from successful programs with annual peak sales opportunities of over $1 billion
each; potential for approximately $200 million in milestone payments over the next 24 months, and over $20 billion
in revenue before royalties over the course of the partnerships; percentage of the combined company to be received
by Exscientia shareholders; cash runway extending into 2027; the value of estimated annual synergies; implementing
the combination through a UK scheme of arrangement; the expected closing of the transaction by early 2025;
continuing to build the best example of the next generation of biotechnology companies; the plans for David Hallett,
Ph.D. to join the combined company as Chief Scientific Officer; and many others. Such forward-looking statements are
based on the current beliefs of Recursion’s and Exscientia’s respective management as well as assumptions made by
and information currently available to them, which are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Actual outcomes and results may vary materially from these
forward-looking statements based on a variety of risks and uncertainties including: the occurrence of any event,
change or other circumstances that could give rise to the termination of the transaction agreement; the inability to
obtain Recursion’s stockholder approval or Exscientia’s shareholder approval or the failure to satisfy other
conditions to completion of the proposed combination, including obtaining the sanction of the High Court of Justice
of England and Wales to the Scheme of Arrangement, on a timely basis or at all, and the receipt of required
regulatory approvals; risks that the proposed combination disrupts each company’s current plans and operations; the
diversion of the attention of the respective management teams of Recursion and Exscientia from their respective
ongoing business operations; the ability of either Recursion, Exscientia or the combined company to retain key
personnel; the ability to realize the benefits of the proposed combination, including cost synergies; the ability to
successfully integrate Exscientia's business with Recursion’s business, at all or in a timely manner; the outcome of
any legal proceedings that may be instituted against Recursion, Exscientia or others following announcement of the
proposed combination; the amount of the costs, fees, expenses and charges related to the proposed combination; the
effect of economic, market or business conditions, including competition, regulatory approvals and commercializing
drug candidates, or changes in such conditions, have on Recursion’s, Exscientia’s and the combined company’s
operations, revenue, cash flow, operating expenses, employee hiring and retention, relationships with business
partners, the development or launch of technology enabled drug discovery, and commercializing drug candidates;
the risks of conducting Recursion’s and Exscientia’s business internationally; the impact of changes in interest
rates by the Federal Reserve and other central banks; the impact of potential inflation, volatility in foreign
currency exchange rates and supply chain disruptions; the ability to maintain technology-enabled drug discovery in
the biopharma industry; and risks relating to the market value of Recursion’s common stock to be issued in the
proposed combination.
Other important factors and information are contained in Recursion’s most recent Annual Report on Form 10-K and
Exscientia’s most recent Annual Report on Form 20-F, including the risks summarized in the section entitled “Risk
Factors,” Recursion’s most recent Quarterly Reports on Form 10-Q and Exscientia’s filing on Form 6-K filed May 21,
2024, and each company’s other periodic filings with the U.S. Securities and Exchange Commission (the “SEC”), which
can be accessed at https://ir.recursion.com in the case of Recursion, http://investors.exscientia.ai in the case of Exscientia, or www.sec.gov. All forward-looking statements are qualified by these cautionary
statements and apply only as of the date they are made. Neither Recursion nor Exscientia undertakes any obligation
to update any forward-looking statement, whether as a result of new information, future events or otherwise.
Additional Information and Where to Find It
This communication relates to a proposed business
combination of Recursion and Exscientia that will become the subject of a joint proxy statement to be filed by
Recursion with the SEC. The joint proxy statement will provide full details of the proposed combination and the
attendant benefits and risks, including the terms and conditions of the scheme of arrangement and the other
information required to be provided to Exscientia's shareholders under the applicable provisions of the U.K.
Companies Act 2006. This communication is not a substitute for the joint proxy statement or any other document that
Recursion or Exscientia may file with the SEC or send to their respective stockholders in connection with the
proposed combination. Investors and security holders are urged to read the definitive joint proxy statement
and all other relevant documents filed with the SEC or sent to Recursion’s stockholders or Exscientia’s
shareholders as they become available because they will contain important information about the proposed
combination. All documents, when filed, will be available free of charge at the SEC’s website (www.sec.gov). You may also obtain these documents by contacting Recursion’s
Investor Relations department at investor@recursion.com; or by contacting Exscientia’s Investor Relations
department at investors@exscientia.ai. This communication does not constitute an offer to
sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.
Participants in the Solicitation
Recursion, Exscientia and their respective directors and
executive officers may be deemed to be participants in any solicitation of proxies in connection with the proposed
business combination. Information about Recursion’s directors and executive officers is available in Recursion’s
proxy statement dated April 23, 2024 for its 2024 Annual Meeting of Stockholders. Information about Exscientia’s
directors and executive officers is available in Exscientia’s proxy statement dated March 21, 2024 for its 2024
Annual Meeting of Stockholders. Other information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or otherwise, will be contained in the
joint proxy statement and all other relevant materials to be filed with the SEC regarding the proposed combination
when they become available. Investors should read the joint proxy statement carefully when it becomes available
before making any voting or investment decisions.
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/83e2ee85-7b58-4008-b558-a17965edff48
Recursion & Exscientia Combined Pipeline
Recursion & Exscientia Combined Pipeline
Source: Recursion Pharmaceuticals, Inc.