In this week’s edition of InnovationRx, we delve into the biotech deal frenzy, Recursion’s upcoming CEO transition, the infant formula botulism outbreak, and more. For direct delivery to your inbox, subscribe here.
Merck recently announced its acquisition of biotech company Cidara Therapeutics for about $9.2 billion. The main driver behind the deal is Cidara’s antiviral drug designed to prevent flu infections in high-risk patients, currently undergoing late-stage clinical trials. This acquisition marks Merck’s second multi-billion dollar deal following its $10 billion agreement to acquire Verona Pharma for its respiratory drugs in July.
The recent Merck deals are just a glimpse of the biotech deal frenzy of this year. In the past month alone, Pfizer acquired Metsera for $10 billion after a bidding war for its weight-loss drugs, and Johnson & Johnson sealed a $3 billion agreement to acquire Halda Therapeutics for its cancer therapies.
According to accounting firm EY, the total value of M&A deals (through October 31) has reached $129 billion, which is 43% higher than the total for 2024. Interestingly, this was achieved with only 67 deals, which is 26% fewer than in 2024, due to the average deal size in 2025 being $1.9 billion, up 101% from the previous year. EY explained that this year’s deals reflect a shift towards “market-ready assets.”
Recursion’s Incoming CEO Needs to Demonstrate the Viability of AI Drug Development
Recursion’s incoming CEO Najat Khan
Recursion
In 2014, Recursion cofounder and CEO Chris Gibson pledged to develop 100 drugs in 10 years, leveraging AI for drug discovery.
However, progress has been slow. Over a decade later, Recursion has yet to bring a single drug to market. Its stock has plummeted by 86% since its IPO in April 2021, resulting in a current market cap of $2.2 billion. Earlier this year, Recursion culled half of its drug pipeline and in June, it reduced its workforce by 20%, marking the third round of layoffs since August 2024. Additionally, its revenue for the latest 12 months (through September 30) decreased by one-third to $44 million from $65 million, while its losses surged by nearly 90% to $716 million.
Despite these challenges, Najat Khan, who is set to assume the CEO role on January 1 as Chris Gibson steps down, is undaunted by the task ahead.
“Many people at Recursion told me that changing the rules of medicine production is extremely difficult. I accepted the challenge,” Khan shared with Forbes in her first interview since accepting the position. “Will it succeed or not? It’s definitely worth a shot, and rising to the challenge is crucial, especially since even after 20 years in my career, we still face a 90% failure rate.”
Learn more here.
Baby Formula Botulism Outbreak
ByHeart was positioned as a premium organic infant formula, challenging established players in a tightly regulated market. However, this month saw a botulism outbreak linked to the formula affecting 23 infants across 13 states, resulting in multiple hospitalizations, as detailed in an FDA update published Friday. Parents of affected children have filed five lawsuits against ByHeart.
Earlier this year, ByHeart closed its Pennsylvania manufacturing facility after safety violations were discovered by federal inspectors, including mold, a leaking roof, and thousands of dead insects in the production area, according to reporting by The New York Times. ByHeart issued a nationwide recall of all its infant formula products last week.
This outbreak coincides with President Trump’s Make America Health Again initiative, emphasizing organic ingredients like those found in ByHeart’s formula. Additionally, HHS Secretary Robert F. Kennedy Jr. has launched Operation Stork Speed to enhance healthy infant formula options and strengthen the U.S. supply chain, despite significant vacancies in FDA food inspector positions due to layoffs and a hiring freeze.
Deal of the Week
In 2020, Ali Madani began exploring the integration of AI into biology, predating the launch of ChatGPT. As a machine learning scientist at Salesforce, he was involved in the ProGen project, a moonshot endeavor to design innovative proteins using generative AI. In 2022, Madani partnered with Alexander Meeske, head of a research lab at the University of Washington, to establish Profluent. The startup, based in Emeryville, California, has developed AI models that allow scientists to articulate desired protein properties in human terms (such as stability or ease of production) and generate a DNA blueprint to produce the desired protein.
Madani, a Ph.D. graduate from the University of California, Berkeley and the lead author of a Nature Biotechnology paper on ProGen, believes that focusing on proteins will unlock revolutionary new drugs and drive advancements in agriculture, where researchers aim to create more resilient and sustainable crops. “The concept of making biology programmable will facilitate breakthrough drugs and solutions in therapeutics, diagnostics, and agriculture – but it will require substantial funding,” he stated.
Consequently, Profluent secured $106 million in new venture funding led by Jeff Bezos’s Bezos Expeditions and Altimeter Capital, bringing its total investment to $150 million. With this latest funding round, Profluent’s valuation is nearing $1 billion.
Find out more here.
WHAT WE’RE READING
A $2.6 billion agreement with Eli Lilly boosted shares of South Korean biotech firm ABL Bio by approximately 80% over the past week, making CEO Lee Sang-hoon a billionaire.
Novartis’s malaria drug, the first new treatment in 25 years, achieved over 99% cure rate in late-stage clinical trials.
Competitive threats to Abbvie’s $2.7 billion Botox treatment have emerged.
