Flash BioUpdate: Major AI-Driven Biotech Merger: Recursion and Exscientia Join Forces

Dear Subscribers,

We are witnessing a pivotal moment in the AI-biotech industry with the announced merger of Recursion Pharmaceuticals and Exscientia. This merger, poised to be one of the largest M&A deals in AI-driven biotech, marks a significant step toward the future of drug discovery and development.

Strategic Implications

The all-stock merger deal combines Recursion’s extensive dataset and cutting-edge machine learning capabilities with Exscientia’s innovative AI-driven drug design platform.

In 2022, Recursion’s dataset was already weighing in at a whopping 14 petabytes of biological and chemical data, and is expected to have grown significantly since then. They claimed that this dataset along with their machine learning capabilities would allow for rapid hypothesis generation and testing at an unprecedented scale. Recursion previously inked partnership deals with Bayer, Genentech, and Roche as well as tech giant NVIDIA, and already has oncology and rare disease therapeutic candidates advancing in the pipeline. Its partnership portfolio is valued at over $1.2 billion.

Exscientia brings its sophisticated AI-driven drug design platform to this marriage; they claim this can reduce the time for drug discovery from years to months. This claim might be pretty valid: they have advanced multiple drug candidates into clinical trials. Notably, this was the first company to have an AI-designed molecule enter human clinical trials, with DSP-1181, a drug candidate for OCD, in partnership with Sumitomo Dainippon Pharma. They also have partnerships with Sanofi and Roche, and raised an upsized IPO in 2021 valued at $2.9 B.

Market Impact

The consolidation of these two powerhouses is likely to set a precedent for further sector M&A. Interesting that rather than sell to an established Big Pharma, these younger hotshots are deciding to team up along a common vision of innovation and disruption in the drug discovery and development space. Investors and stakeholders can anticipate increased competition in this market, potentially with the largest pharma companies left out as the AI upstarts gain ground and consolidate for power. Moreover, this merger underscores the growing recognition of AI as a critical component in modern drug development and the serious weight of the emerging AI-driven pipelines.

Future Outlook

For biotech and pharmaceutical executives, this merger highlights the importance of integrating AI into their R&D pipelines. Companies that can harness the power of AI to streamline drug discovery processes will likely gain a major competitive edge in terms of speed to market, capital conservation (in a tough market), optimization of clinical development plans, and generally finding a higher probability of technical success. In a tough capital raise market where “AI” remains a hot buzzword, coupling a high-risk biotech play with the de-risking power of predictive algorithms, all in a marketing-friendly “AI” wrapper, also doesn’t hurt!!

To read more about this landmark deal, click here for a piece from Endpoints News.

Stay tuned for more updates as we continue to monitor and analyze the evolving landscape of AI in biotechnology.

Best regards,

The BioUpdates.AI Team