Exscientia announces drug discovery pact with Merck KGaA

Exscientia (EXAI) announced a new collaboration with Merck KGaA (MKKGY), Darmstadt, Germany focused on the discovery of novel small molecule drug candidates across oncology, neuroinflammation and immunology. The multi-year collaboration will utilize Exscientia’s AI-driven precision drug design and discovery capabilities while leveraging Merck KGaA, Darmstadt, Germany’s disease expertise in oncology and neuroinflammation, clinical development capabilities and global footprint. Three potential targets have been identified as the initial focus of the partnership. The collaboration allows Merck KGaA, Darmstadt, Germany and Exscientia to identify additional targets in oncology and immunology or other mutually agreed disease areas. Should Exscientia identify additional targets for the collaboration, the company would be responsible for target validation in addition to drug design and eligible for additional discovery milestones. Under the terms of the agreement, Exscientia will receive an upfront cash payment of $20M from Merck KGaA, Darmstadt, Germany and will be eligible for discovery, development, regulatory and sales-based milestone payments of up to $674M in aggregate, if all milestones for all three initial programmes are achieved. If Merck KGaA, Darmstadt, Germany commercializes a therapeutic from one of the initial targets of the collaboration, Exscientia will receive tiered royalties on product sales ranging from mid-single-digits to low-double-digits. The upfront cash payment of $20M is expected to be reflected in second half 2023 results for Exscientia as cash inflows from collaborations and recognized as revenue over the duration of the agreement.