Merck KGaA doubles up on AI partners, tapping BenevolentAI and Exscientia for drug discovery push

Merck KGaA is spreading its bets on an artificial-intelligence-enabled future for drug discovery, inking similar three-target deals with BenevolentAI and Exscientia. The deals are collectively worth more than $30 million upfront and $1 billion in potential milestones. 

In a statement to disclose the deals, Danny Bar-Zohar, global head of R&D for healthcare at Merck, said the convergence of science, data and AI could enable “previously unimaginable medical breakthroughs.” With AI-enabled drug discovery in its infancy, it is unclear which, if any, companies have the capabilities to realize that vision. 

Merck has increased its chances of backing the right horse by teaming up with two companies. The deals are very similar. In both cases, the Germany-based pharma is making a low double-digit million-dollar upfront payment and committing more than $500 million in potential milestones to work on three targets in cancer, neurology and neuroinflammation, and immunology.

Exscientia has provided the most detail. The AI-enabled drug discovery shop will receive a $20 million upfront payment from Merck. Down the line, Exscientia could pocket up to $674 million in milestones, $113 million of which is tied to the discovery phase. BenevolentAI was more vague, only stating that it will get a low-double-digit million-dollar upfront payment as part of a package worth up to $594 million.

Merck has selected three potential first-in-class and best-in-class targets to work on with each partner. BenevolentAI and Exscientia will work on small molecules against the targets using their AI platforms to provide candidates that the German drugmaker can move through preclinical development and into the clinic.

The deals provide a boost for biotechs that have endured a chastening start to life on public markets. Oxford, U.K.-based Exscientia has multitarget collaborations with Bristol Myers Squibb and Sanofi but has seen investor enthusiasm wane since it went public two years ago, dragging its stock down by 81%. News of the Merck deal sent the stock up 20% to $6.03 in premarket trading. 

London-based BenevolentAI suffered an even steeper decline, with the failure of its midphase eczema trial earlier this year contributing to a 90% drop in its share price and the decision to lay off 180 staff. The slimmed-down company has made cash generation a priority, creating a tech division to commercialize AI products and hiring a chief revenue officer. BenevolentAI already has a partnership with AstraZeneca.