Oxford-based technology company Exscientia, which specialises in drug design and development, has agreed a merger with clinical-stage biotech firm Recursion. The all-share deal values Exscientia at £550 million.

The proposed combined business will also strengthen significant drug discovery collaborations with leading pharmaceutical companies including Roche-Genentech, Sanofi, Bayer and Merck KGaA.

The new company expects to release results from approximately ten clinical trials over the next 18 months.

David Hallett, interim chief executive of Exscientia, who will become the combined company’s chief scientific officer, 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.”

There is potential for around £160 million in milestone payments from existing partnerships over the next two years, with the possibility of over £16 billion in revenue before royalties on net sales throughout the partnerships.

Chris Gibson, co-founder and chief executive of Recursion, concluded: “We believe the proposed combination is deeply complementary and aligned with our missions to industrialise drug discovery to deliver high quality medicines and lower prices for consumers.

“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.