OXFORD, England - Exscientia plc (NASDAQ:EXAI) has reached significant milestones in its collaboration with pharmaceutical giant Sanofi (NASDAQ:SNY), advancing two drug discovery programs to the lead optimization phase. This progress triggers $15 million in milestone payments to Exscientia.
The two compounds in question have successfully met predefined product profile requirements, marking a crucial step in drug development. Exscientia, a company that integrates artificial intelligence in drug discovery, has designed these compounds with the potential to become best-in-class assets.
David Hallett, Ph.D., interim Chief Executive Officer and Chief Scientific Officer at Exscientia, expressed enthusiasm about the advancement, highlighting the company's capability to design compounds that address complex medical problems. The collaboration with Sanofi aims to develop new treatments for diseases with significant unmet medical needs.
In addition to the immediate milestone payments, Exscientia is eligible to receive over $600 million in further milestone payments for these two programs. The company will also receive tiered royalties on product sales, ranging from high-single-digits to mid-teens, contingent upon achieving various research, development, regulatory, and commercial milestones.
The $15 million payment is expected to be received by Exscientia in the fourth quarter of 2024 and will be recorded as revenue over the duration of the collaboration with Sanofi.
Exscientia, a pioneer in AI-driven drug discovery, continues to focus on creating more effective medicines efficiently. The company's approach combines precision design with experimentation, aiming to transform the economics of drug discovery and rapidly advance scientific ideas into patient therapies.
This announcement is based on a press release statement and contains forward-looking statements regarding the future development of the two programs. These statements are subject to risks, uncertainties, and assumptions, and actual results may differ materially from those projected.
In other recent news, Exscientia and Recursion Pharmaceuticals have announced a merger to enhance their drug discovery capabilities. Exscientia shareholders are set to own roughly 26% of the new combined entity. This development comes as TD Cowen downgraded Exscientia's stock from Buy to Hold, citing the upcoming merger. The analyst firm maintains that the merger is strategically sound, given the synergy between Exscientia and Recursion's artificial intelligence platforms for drug discovery.
In other developments, Exscientia has acquired full ownership of the promising asset '617 (CDK7i) from GT Apeiron. The company is also preparing to initiate a dose escalation cohort for CDK4/6-refractory HR+/HER2- metastatic breast cancer, with the trial expected to commence by late 2024 or early 2025. Initial Phase 1/2 data across multiple tumor types is anticipated in the second half of 2024, a critical step for validating Exscientia's platform.
Exscientia has expanded its collaboration with Amazon (NASDAQ:AMZN) Web Services (AWS) to enhance its drug discovery and automation platform. The partnership aims to accelerate the drug discovery process and reduce costs. These recent developments are in line with Exscientia's ongoing efforts to leverage technology to streamline its drug discovery and development processes.
InvestingPro Insights
Exscientia's recent milestone achievements with Sanofi underscore the company's potential in AI-driven drug discovery, but a closer look at its financials reveals a more complex picture. According to InvestingPro data, Exscientia's market capitalization stands at $651.45 million, reflecting investor interest in its innovative approach.
Despite the promising collaboration with Sanofi, InvestingPro Tips indicate that Exscientia is "quickly burning through cash" and is "not profitable over the last twelve months." This aligns with the company's focus on research and development, which often requires significant upfront investment before realizing returns.
On a positive note, Exscientia "holds more cash than debt on its balance sheet," which could provide a financial cushion as it pursues its drug discovery programs. Additionally, the company has seen a "significant return over the last week," with a 9.09% price total return, possibly reflecting market optimism about its recent progress.
However, investors should be aware that Exscientia "suffers from weak gross profit margins," with a gross profit margin of -32.45% for the last twelve months as of Q2 2024. This negative margin underscores the challenges faced by early-stage biotech companies in generating profits while heavily investing in research.
For those interested in a deeper analysis, InvestingPro offers 8 additional tips for Exscientia, providing a more comprehensive view of the company's financial health and market position.
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