SALT LAKE CITY, USA - Recursion (NASDAQ: RXRX) and Exscientia plc (NASDAQ: EXAI), two pioneering tech-bio companies, have announced the approval of their proposed merger by their respective shareholders. The companies revealed that the transaction is set to close on November 20, 2024, pending the satisfaction of customary closing conditions.
The shareholder endorsement is a significant step towards uniting Recursion's biological and chemical exploration expertise with Exscientia's automated chemistry synthesis and molecular design capabilities. The aim is to enhance the pace of drug discovery for various patient needs.
Chris Gibson, Ph.D., Co-Founder and CEO of Recursion, who will continue to lead the combined entity post-merger, expressed his satisfaction with the shareholder support, which he believes validates the strong rationale behind the business combination. "We look forward to bringing together Recursion's biological and chemical exploration and mapping capabilities with Exscientia's molecular design and automated chemistry synthesis capabilities to accelerate the discovery of better drugs for patients," Gibson stated.
Following the closure of the transaction, Recursion plans to conduct an update call on November 20, 2024, which will be live-streamed across multiple platforms, including Recursion's X (formerly Twitter), LinkedIn, and YouTube accounts. Interested parties can submit questions in advance or during the live stream.
The final voting results of the Recursion Special Meeting will be disclosed in a Current Report on Form 8-K, while the results for the Exscientia General Meeting and the Exscientia Court Meeting have been filed in Form 6-K with the U.S. Securities and Exchange Commission.
Recursion is a clinical-stage company headquartered in Salt Lake City, with a mission to decode biology and industrialize drug discovery through its Recursion Operating System (OS). Exscientia, for its part, is a drug design and development company that has pioneered the use of AI in drug discovery.
The completion of this merger is contingent on meeting the remaining conditions, including the approval of the High Court of Justice of England and Wales for the Scheme of Arrangement. This news is based on a press release statement.
In other recent news, Exscientia plc has made significant strides in its collaboration with Sanofi (EPA:SASY) (NASDAQ:SNY), advancing two drug programs to the lead optimization phase. This advancement triggers a $15 million milestone payment to Exscientia and has the potential to garner over $600 million in additional milestone payments. The two compounds in question have successfully met predefined product profile requirements, a crucial step in drug development.
In addition, Exscientia and Recursion Pharmaceuticals have announced a merger, with Exscientia shareholders set to own approximately 26% of the new entity. This announcement followed a downgrade of Exscientia's stock from Buy to Hold by TD Cowen, who still maintains the strategic soundness of the merger.
Exscientia also recently acquired full ownership of the promising asset '617 (CDK7i) from GT Apeiron and is preparing for a critical trial expected to commence by late 2024 or early 2025. Furthermore, the company has expanded its collaboration with Amazon (NASDAQ:AMZN) Web Services to enhance its drug discovery and automation platform. These are among the recent developments that underline Exscientia's ongoing efforts to leverage technology in its drug discovery and development processes.
InvestingPro Insights
As Exscientia (NASDAQ: EXAI) prepares to merge with Recursion, investors should consider some key financial metrics and insights from InvestingPro. The company's market capitalization stands at $761.08 million, reflecting its position in the biotech industry.
InvestingPro Tips highlight that Exscientia holds more cash than debt on its balance sheet, which could provide financial flexibility during the merger process. This is particularly important as the company is quickly burning through cash, a common characteristic of biotech firms investing heavily in research and development.
The company has seen a significant return over the last week, with a 9.6% price increase, and strong returns of 17.1% and 16.4% over the last month and three months, respectively. These positive short-term trends could indicate investor optimism about the upcoming merger.
However, it's worth noting that Exscientia suffers from weak gross profit margins, with a negative gross profit of $15.46 million in the last twelve months as of Q3 2023. The company is not profitable, with a negative operating income of $218.19 million during the same period. Analysts do not anticipate the company will be profitable this year, which is not uncommon for biotech companies in the development stage.
On a positive note, Exscientia's liquid assets exceed short-term obligations, which could provide some financial stability as it navigates the merger process and continues its drug discovery efforts.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Exscientia, providing a deeper understanding of the company's financial position and prospects as it enters this transformative merger.
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