NEW YORK, Aug 8 (Reuters) - Recursion Pharmaceuticals ( RXRX )

, a biotech firm which uses artificial intelligence to

discover new drug candidates, has agreed to buy smaller rival

Exscientia ( EXAI ) for $688 million in an all-stock deal,

according to a statement seen by Reuters.

The deal, which is expected to be announced as early as

Thursday morning, comes as major drugmakers double down on AI to

boost drug development, find patients for clinical trials

quickly or reduce the number of people needed to test medicines,

both accelerating drug development and potentially saving

millions of dollars.

Human studies are the most expensive and time-consuming part

of drug development as it can take several years to recruit

patients and trial new medicines in a process that can cost more

than a billion dollars to get a newly discovered drug over the

finishing line.

"Recursion and Exscientia ( EXAI ) coming together is extraordinarily

complementary in terms of using end-to-end in discovery from

biology to all the way through chemistry. It enables you to make

medicines better and faster and that's what we're trying to do,"

said Najat Khan, chief R&D officer at Recursion.

Founded in 2013, Recursion is a phase 2 clinical-stage firm,

which has a pipeline of treatments for rare diseases and some

forms of cancers. It became a publicly-listed company in 2021

and has partnerships with large pharmaceutical companies

including Roche AG and Bayer.

Earlier this year, it launched an Nvidia ( NVDA )-powered

supercomputer called BioHive-2, which helps accelerate the

process of drug discovery. Nvidia ( NVDA ) is also an investor

in Recursion.

UK-headquartered Exscientia ( EXAI ) also operates an AI-powered drug

discovery platform and is developing a pipeline of treatments

for immunology and oncology.

Acquiring Exscientia ( EXAI ) would boost Recursion's pipeline of

drugs in development and give it access to partnerships with

large pharma players like Sanofi and Merck KGaA

.

As part of the deal, Exscientia ( EXAI ) shareholders will receive

0.7729 Recursion shares for each Exscientia ( EXAI ) share they hold. The

deal, which is expected to close in early 2025, would provide

the combined entity with about $850 million of cash that would

help fund its operations for the next three years.

Salt Lake City-based Recursion is expected to report its

quarterly earnings later on Thursday.

Allen & Co., Wilson Sonsini Goodrich & Rosati, and Clifford

Chance advised Recursion on the deal, while Centerview Partners

and A&O Shearman advised Exscientia ( EXAI ).