Recursion has agreed to merge with Exscientia to create a global technology-enabled drug discovery company for the rapid development of effective medicines.

The deal will consolidate Recursion’s scaled biology exploration and translational capabilities, as well as the precision chemistry design and small molecule automated synthesis expertise of Exscientia, to create a technology-first, end-to-end drug discovery platform.

Shareholders of Exscientia will receive 0.7729 shares of Recursion class A common stock for each share held.

Recursion and Exscientia shareholders will hold 74% and 26% of the new company respectively.

The merger is expected to enhance the Recursion Operating System platform, facilitating the discovery of high-quality medicines.

The combined entity expects to conduct approximately ten clinical trials before the end of 2025.

The merger is anticipated to bolster therapeutic discovery collaborations with major biopharma companies such as Sanofi, Roche-Genentech, Bayer and Merck KGaA.

Exscientia and Recursion collectively hold $850m in cash and cash equivalents at the end of the second quarter of 2024. The merger is projected to yield annual synergies of $100m.

The combined company will retain the Recursion name, with headquarters in Salt Lake City, Utah and a significant presence in the UK.

Recursion CEO Chris Gibson will lead the new entity while Exscientia interim CEO David Hallett will join the combined company as chief scientific officer.

Hallett said: “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.

“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.”

The transaction is expected to close by early 2025.