But Wait, There's More: Utah-based Recursion Pharmaceuticals is Acquiring UK-based Exscientia for $688 Million in an All-Stock Deal

Early yesterday morning (Thursday, 08 August 2024), Salt Lake City, Utah-based Recursion Pharmaceuticals (NASDAQ:RXRX) announced that is "combining" with Oxford, England-based Exscientia (NASDAQ:EXAI) in an all-stock transaction that will create a global tech-enabled drug-development / drug-discovery powerhouse.

Under terms of the agreement disclosed in yesterday's news release, "... 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."

Post-acquisition, Exscientia shareholders will own ~26% of the combined firm, with Salt Lake City-based Recursion shareholders owning ~74%.

And although the Recursion news release did not term the transaction as an acquisition, Exscientia's Form 6-K filing with the U.S. Securities and Exchange Commission was more forthcoming, stating "... Recursion will acquire the entire issued and to be issued share capital of Exscientia ...."

Although neither firm attached a dollar figure to the acquisition valuation, several media outlets did, most notably Reuters, which pegged the transaction valuation at $688 million.

Post-acquisition (expected to close in early 2025), the combined entities will use the Recursion name on a go-forward basis, with Recursion's current CEO, Chris Gibson, Ph.D. maintaining his role as CEO of the combined entity and Exscientia's Interim CEO and Chief Scientific Officer, David Hallett, Ph.D., retaining his CSO position at the new firm.

Some of the highlights I found particularly interesting from Recursion's investor presentation yesterday include

• The two entities have $850 million in cash, combined, at the end of Q2 2024 (ended 30 June 2024);
• They anticipate $200 million in new milestone payments from existing partners over the next two years;
• They expect to save $100 million annually in combined synergies (aka, eliminating structural and personnel overlaps);
• Hence, without any additional agreements/contracts/partnerships, the combined firm will have over $1.0 billion in operating capital over the next 2+ years; and, to be honest,
• The combined portfolio of drug candidates in clinical trials or drug discovery efforts is actually quite impressive, especially given that neither firm has any revenue-generating drugs/treatments at this time (as highlighted in the slide below).

AUTHOR'S NOTE: Although Recursion's preso from yesterday's investor call was decent, if you really want to dive deep into the science and technologies of both firms and their programs/undertakings, you might find Recursion's "Decoding Biology To Radically Improve Lives" presentation to be especially eye-opening. It too was published yesterday.

So, in a nutshell, there you have it.

Bravo, Chris and Team Recursion.

This looks like a great deal!!! 💥 💥 💥

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