Shares of Exscientia PLC (EXAI, Financial) got a nice boost last week when the U.K.-based biotech announced it signed a research collaboration and license agreement with large drugmaker Sanofi SA (SNY, Financial) that could be worth $5.2 billion.
Excsientia’s stock climbed about 9% to just under $20 on the news, still below its October offering price and a long way from its high of more than $30.
The agreement with Sanofi covers up to 15 small molecule drugs to treat oncology and immunology. Sanofi benefits from Excientia’s artificial intelligence-driven platform that uses actual patient samples, according to the companies’ joint release. The two companies know each other well, having worked together since 2016 and, in 2019, when Sanofi licensed Exceientia’s drug candidate.
Sanofi investors reacted favorably to the partnership, too, bidding the company’s shares up more than 3% to about $51.30. The French company has traded in a narrow range the past 52 weeks, hovering between just more than $45 and $54.26. The company is rated a strong buy by analysts with a high target price of $69. Besides its upside potential, investors might be enticed by the more than 3.8% yield on its shares.
Exscientia uses human tissue as models to generate the data that its AI technology analyzes to find the biological indicators of disease, select the right molecules to hit those targets and identify the patients most likely to benefit from treatment, reported MedCity News. The company’s founder and CEO, Andrew Hopkins, thinks that testing drug candidates against patient tissue is more accurate than using mouse models.
Sanofi isn’t the only pharma capitalizing on Exscientia’s expertise. Since its launch in 2012, the latter has forged alliances with Bristol-Myers Squibb Co. (BMY, Financial), Sumitomo Dainippon Pharma Co. Ltd. (DNPUF, Financial), EQRx Inc. (EQRX, Financial) and the Bill & Melinda Gates Foundation. Exscientia also wants to develop its own drugs and is using its initial public offering money to finance the development of its preclinical and early clinical drug pipeline.
For its part, Sanofi is hedging its AI bets. In November, the company paid $180 million for an equity investment in privately-held AI and precision medicine startup Owkin. Sanofi also shelled out $90 million to begin a three-year partnership with the startup aimed at developing new drugs for four types of cancer.
Other big pharma companies don’t want to get left behind in the AI race. Last week, Amgen Inc. (AMGN, Financial) said it was paying Generate Biomedicines, also a private company, $50 million upfront to begin a protein drug research partnership focusing on five targets. Also last week, Absci Corp. (ABSI, Financial) enlarged the sphere of its pharma collaborations with an alliance with Merck & Co. Inc. (MRK, Financial) that covers up to three targets.
