Core Insights - Recursion Pharmaceuticals is a pioneer in utilizing artificial intelligence (AI) for drug discovery, having started its efforts in 2013, well before AI became a prominent topic in the industry [1] - Despite its first-mover advantage, Recursion faces increasing competition, particularly from Eli Lilly, which is positioning itself as a strong contender in the healthcare AI space [2] Company Overview - Recursion Pharmaceuticals currently has no products on the market and none of its candidates are in phase 3 studies, raising questions about its ability to deliver tangible results despite claims of efficiency in drug development [4] - The company has some early-stage candidates and may benefit from the FDA's shift away from animal testing towards AI models [5] Technological Advancements - Recursion has built the largest supercomputer in the pharmaceutical industry in collaboration with Nvidia, but this title may soon be challenged by Eli Lilly, which is also partnering with Nvidia to create a more powerful supercomputer [6][8] - Eli Lilly's extensive clinical trial data across various therapeutic areas provides it with a significant advantage in utilizing AI for drug discovery compared to Recursion [7][9] Competitive Landscape - Eli Lilly's established history and vast clinical trial experience position it as a safer investment in AI drug discovery compared to Recursion, which lacks the same level of data and experience [6][8][9]

Recursion Pharmaceuticals FY Conference Summary Company Overview - **Company**: Recursion Pharmaceuticals (NasdaqGS:RXRX) - **Event**: Second annual Guggenheim Healthcare Innovation Conference - **Date**: November 11, 2025 - **Key Speakers**: Najat Khan (incoming CEO), Ben Taylor (CFO) Key Points Leadership Transition - Najat Khan will take over as CEO starting January 1, 2026, marking a planned transition to enhance company leadership continuity [2][3] - Chris, the outgoing CEO, will remain on the board as chair and serve as an executive advisor [2] Strategic Focus and Evolution - The company is transitioning from exploring AI's potential in drug discovery to demonstrating proof of impact [2][4] - Emphasis on increasing shareholder value and patient impact through a strengthened pipeline and strategic partnerships [5][6] Partnerships and Collaborations - Significant partnerships with Roche and Sanofi, with milestones worth approximately $300 million per program [5][6] - Collaboration with MIT and use of advanced supercomputing capabilities to enhance data analysis [9][10] - Over $500 million in partnership inflows, indicating strong investor interest and validation of the platform [12][13] Pipeline and Therapeutic Areas - Focus on four therapeutic areas: oncology, rare diseases, neuroscience, and gastrointestinal oncology [24] - Intentional targeting of novel and challenging drug targets in oncology, including RBM39 and CDK7 [25][26] - Development of a comprehensive clinical development platform for patient selection and trial acceleration [27] CDK7 Inhibitor Development - CDK7 inhibitors show manageable gastrointestinal toxicity with a 7% discontinuation rate and no severe adverse events [29] - Early signs of efficacy observed in monotherapy, with ongoing combination studies in ovarian cancer [31] Financial Position and Future Outlook - Cash position reported at nearly $800 million, sufficient to fund operations through year-end 2027 without additional financing [41] - Anticipation of at least $100 million in partner inflows by year-end 2026, with multiple clinical milestones expected [42][43] Integration with Exscientia - Successful integration of technology platforms with a focus on operational efficiency, achieving a 35% reduction in expenses [17][18] - Retention of cultural and operational capabilities from both legacy companies [19][20] Upcoming Milestones - Key upcoming events include data readouts for the FAP program, which has shown significant polyp burden reduction in trials [36][43] - Continued focus on rapid decision-making regarding pipeline programs to optimize capital allocation [43] Conclusion Recursion Pharmaceuticals is positioned for growth with a strong leadership transition, strategic partnerships, and a robust pipeline focused on innovative therapeutic areas. The company aims to leverage its AI-driven platform to deliver differentiated therapeutics while maintaining a solid financial foundation.

Core Insights - Recursion Pharmaceuticals (RXRX) reported a narrower loss of $0.36 per share in Q3 2025, compared to the expected loss of $0.38 and a loss of $0.34 in the same quarter last year [1][7] - Total revenues for the quarter were $5.2 million, significantly down from the previous year, missing the consensus estimate of $17 million due to the timing of a $30 million milestone payment from Roche recognized in the prior year [2][7] Financial Performance - Research and development (R&D) expenses increased by 62% to $121.1 million from $74.6 million year-over-year, driven by increased in-process R&D purchases related to REC-102 and the business combination with Exscientia [4] - General and administrative (G&A) expenses rose by 10% to $41.6 million, influenced by the inclusion of G&A expenses from the Exscientia merger [5] - The cost of revenues increased by 22% to $14.7 million in the reported quarter [5] - As of September 30, 2025, the company had cash and equivalents totaling $667.1 million, up from $533.8 million as of June 30, 2025, which is expected to sustain operations through the end of 2027 [6] Pipeline Developments - RXRX earned a second $30 million milestone from Roche for a novel phenomap of microglial cells, with a portion expected to be recognized as revenue in Q4 2025 [9] - The company discontinued three key drug candidates in May 2025 as part of a strategic pipeline reprioritization, focusing instead on more promising candidates like REC-4881, which is in a phase Ib/II study [10][11] - REC-1245 is undergoing a phase I/II DAHLIA study for biomarker-enriched solid tumors and lymphoma, with data readout expected in the first half of 2026 [12] - REC-102, a new candidate for hypophosphatasia, is anticipated to enter phase I studies by late 2026 [13][14]

Financial Data and Key Metrics Changes - The company reported a pro forma cash balance of almost $800 million as of a few weeks ago, providing runway through the end of 2027 without additional financing [9][41] - The company achieved nearly $40 million in partnership inflows over the course of the year, contributing to over $500 million in total partnership inflows since inception [40][44] - The company reaffirmed its guidance for 2025 on an expense base of less than $450 million and for 2026, less than $390 million [41][42] Business Line Data and Key Metrics Changes - The collaboration with Roche and Genentech has resulted in the delivery of four whole genome phenomaps in GI oncology, generating over 100 billion GI oncology relevant cells [11] - The company earned a $30 million milestone payment from Roche and Genentech for the delivery of a whole genome neuromap, marking the second such milestone [10] Market Data and Key Metrics Changes - The company has identified numerous novel potential targets in both microglial and neuronal phenomaps, which are expected to lead to meaningful medicines in neuroscience [12][14] - The company is leveraging AI and machine learning techniques to enhance drug discovery and development processes, indicating a strong focus on technological advancement in the biotech sector [18][19] Company Strategy and Development Direction - The company aims to translate platform insights into repeatable clinical proof, focusing on both wholly owned programs and partnerships [7] - The strategic plan laid out in May allowed the company to hit multiple high-value milestones while reducing its expense base by 35% from 2024 [40][41] - The company is committed to maintaining deep, collaborative partnerships while being selective about new partnerships to ensure mutual value [60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong position and the potential for significant advancements in the next 18 months [9] - The new CEO emphasized the importance of translating data and insights into tangible proof points that matter for patients and shareholders [64][66] - Management acknowledged the challenges of drug discovery but remains focused on disciplined execution and capital stewardship [66] Other Important Information - The company is in a robust financial position, having completed all restructuring associated with recent transactions and focusing on high-value projects [42][44] - The company is actively working on multiple programs, including CDK7 and REC-4881, with significant updates expected in the near future [46][49] Q&A Session Summary Question: Can you review expectations for cash burn through 2026 and how this works with runway expectations through 2027 without additional financing? - Management confirmed that the company has fully utilized the ATM and does not plan to open a new one, allowing for a cash balance that supports operations through the end of 2027 without additional financing [51][52] Question: How do you see platform utilization feeding into the quality or uniqueness of newer assets? - The new CEO highlighted that even older programs leverage the current platform significantly, and improvements in compounds continue throughout the development process [56][57] Question: Is Recursion looking to maintain current biopharma partnerships or expand to new partnerships in the near to midterm? - The company is focused on deepening existing partnerships while remaining open to new collaborations that can drive significant value [60]

Financial Status & Outlook - Recursion had approximately $785 million in cash as of October 9, 2025 [12, 72] - The company anticipates a cash runway through the end of 2027 without needing additional financing [12, 71] - Recursion projects its 2025 cash burn to be less than $450 million [73] - The company expects its 2026 cash burn to be less than $390 million [73] - Total cash inflows exceeding $500 million have been achieved across all partnerships and collaborations [15, 72] Pipeline & Platform Advancements - The company is anticipating multiple catalysts in the second half of 2025, including additional safety and efficacy data for REC-4881 in Familial Adenomatous Polyposis (FAP) [11, 79] - Recursion's platform has facilitated a $30 million milestone payment for delivering a second whole-genome neuro map [15, 72, 77] - In a Phase 1b/2 trial of REC-4881, 43% median reduction in total polyp burden was observed [61] - 6 out of 6 patients achieved >30% reduction in total polyp burden in REC-4881 Phase 1b/2 trial [62] - In Phase 1 monotherapy dose-escalation of REC-617, 90% of patients experienced treatment-related adverse events (TRAEs), with 28% being Grade ≥3 [48]

Financial Performance - Recursion reported a net loss of $162.3 million for Q3 2025 and $536.6 million for the nine months ended September 30, 2025, compared to a net loss of $95.8 million and $284.8 million for the same periods in 2024 [150]. - Total revenue for the three months ended September 30, 2025, was $5,175,000, a decrease of 80% compared to $26,082,000 in the same period of 2024 [152]. - Operating revenue decreased by 81% to $4,983,000 for the three months ended September 30, 2025, from $26,082,000 in 2024 [153]. - The net loss for the three months ended September 30, 2025, was $162,253,000, representing a 69% increase from a net loss of $95,842,000 in the same period of 2024 [169]. - Operating costs and expenses for the three months ended September 30, 2025, were $177,377,000, an increase of 43% from $124,436,000 in 2024 [152]. - The company incurred a total operating loss of $172,202,000 for the three months ended September 30, 2025, compared to a loss of $98,354,000 in 2024, marking a 75% increase [152]. - General and administrative expenses rose by 10% to $41,628,000 for the three months ended September 30, 2025, from $37,757,000 in 2024 [163]. - Cash used in operating activities increased to $325,735,000 for the nine months ended September 30, 2025, compared to $243,744,000 in 2024 [171]. - The company has an accumulated deficit of $2.0 billion as of September 30, 2025 [169]. Cash and Financing - As of September 30, 2025, Recursion had cash and cash equivalents of $659.8 million, which is expected to fund operations for at least the next twelve months [149]. - Cash and cash equivalents totaled $659.8 million as of September 30, 2025, up from $594.3 million at the end of 2024 [168]. - Cash provided by financing activities included proceeds of $395.5 million from common stock issuances during the nine months ended September 30, 2025 [177]. - Cash provided by financing activities also included proceeds of $289.4 million from common stock issuances during the nine months ended September 30, 2024 [178]. - The company raised approximately $358.2 million from the sale of 74.6 million shares under an Open Market Sales Agreement as of September 30, 2025 [148]. Research and Development - Recursion's internal pipeline includes six high-potential clinical and pre-clinical programs across oncology and rare diseases, with several programs advancing towards potential development candidate designation over the next 12 months [135][143]. - The ELUCIDATE Phase 1/2 trial for REC-617 established a maximum tolerated dose of 10 mg once-daily, with 29 patients treated and a manageable safety profile [139]. - REC-7735, a precision-designed PI3Kα H1047R inhibitor, has shown significant tumor regressions in preclinical studies and is now in IND-enabling studies [143]. - Research and development expenses increased by 62% to $121,062,000 for the three months ended September 30, 2025, compared to $74,600,000 in 2024 [158]. Collaborations and Milestones - The company achieved over $500 million in upfront and milestone payments from partners, with potential future milestone payments exceeding $10 billion [142]. - The collaboration with Roche and Genentech has resulted in a second $30 million milestone payment, part of a larger 10+ year partnership [144]. - Recursion has achieved $213 million in upfront and milestone payments through its collaboration with Roche and Genentech [144]. Investments and Assets - Cash used by investing activities included property and equipment purchases of $12.4 million, with $2.9 million allocated for upgrading the BioHive-2 supercomputer and $2.7 million for lab equipment [176]. - Investing activities during the nine months ended September 30, 2025 included the disposal of Exscientia GmbH for $4.4 million [175]. - The acquisition of Exscientia involved disposal-related payments of $9.7 million and severance payments of $14.3 million [173]. Currency and Accounting - The company has not experienced material foreign currency transaction gains or losses, and a 10% change in exchange rates would have an insignificant effect on financial results [182]. - As of September 30, 2025, the company's cash and cash equivalents primarily consisted of money market funds, with interest income sensitivity affected by changes in interest rates [181]. - There were no significant changes in the company's application of critical accounting policies during the nine months ended September 30, 2025 [179]. - The company does not have a formal hedging program for foreign currency, indicating a potential risk exposure [182].

Financial Performance - Total revenue for Q3 2025 was $5.2 million, a decrease from $26.1 million in Q3 2024, primarily due to the timing of milestone payments[19]. - Total revenue for Q3 2025 was $5.175 million, a decrease from $26.082 million in Q3 2024, while total revenue for the nine months ended September 30, 2025, was $39.143 million compared to $54.293 million in the same period of 2024[25]. - Net loss for Q3 2025 was $162.3 million, compared to a net loss of $95.8 million in Q3 2024, reflecting a significant increase in losses[23]. - The company reported a net loss per share of $0.36 for Q3 2025, compared to a net loss per share of $0.34 in Q3 2024[25]. Research and Development - Research and development expenses increased to $121.1 million in Q3 2025 from $74.6 million in Q3 2024, driven by increased IPR&D purchases related to REC-102 and the business combination with Exscientia[19][20]. - Research and development expenses surged to $121.1 million in Q3 2025, up from $74.6 million in Q3 2024, indicating a focus on advancing drug development[25]. - The ELUCIDATE Phase 1/2 trial for REC-617 established a maximum tolerated dose of 10 mg once-daily, with 27.6% of patients experiencing grade ≥3 treatment-related adverse events[8]. - REC-7735 has been nominated as a development candidate, with IND-enabling studies underway, showing significant tumor regressions in preclinical studies[12]. Cash and Liquidity - As of October 9, 2025, Recursion reported approximately $785 million in cash and cash equivalents, providing a runway through the end of 2027 without additional financing[6]. - Cash and cash equivalents increased to $659.8 million as of September 30, 2025, from $594.4 million at the end of 2024, indicating improved liquidity[27]. - Net cash used in operating activities for the nine months ended September 30, 2025, was $325.7 million, compared to $243.7 million for the same period in 2024, largely due to the inclusion of Exscientia's operations[23]. - Total liabilities decreased to $352.6 million as of September 30, 2025, from $413.8 million at the end of 2024, reflecting a reduction in current liabilities[27]. Partnerships and Collaborations - Recursion achieved a $30 million milestone from Roche and Genentech for delivering a whole-genome map of microglial immune cells, bringing total milestone and upfront payments to over $500 million[6]. - The partnership with Sanofi has resulted in $130 million in upfront and milestone payments, with each program having the potential for over $300 million in milestone payments[18]. - Recursion expects to achieve over $100 million in milestone payments by the end of 2026, with multiple programs advancing towards potential development candidate designation[12]. - Recursion's collaborations are projected to provide future milestone payments exceeding $10 billion, along with royalties across various indications[11]. Operational Costs - Operating costs and expenses rose to $177.4 million in Q3 2025 from $124.4 million in Q3 2024, driven by increased research and development costs[25]. - General and administrative expenses increased to $41.6 million in Q3 2025 from $37.8 million in Q3 2024, primarily due to the inclusion of G&A expenses from the business combination with Exscientia[23]. Future Outlook - Forward-looking statements indicate expectations for advancements in drug discovery and development, with a focus on achieving near-term milestones and potential collaborations[28]. - The Recursion OS platform continues to drive program development by integrating AI across multimodal biology, enhancing drug discovery and development efficiency[16].

Core Insights - Recursion reported business updates and financial results for Q3 2025, highlighting progress in its internal pipeline and strategic partnerships, with a strong cash position extending through the end of 2027 [1][3][19] Business Highlights - The company achieved over $500 million in upfront and milestone payments from partnerships, including a recent $30 million milestone from Roche and Genentech for a whole-genome map of microglial immune cells [3][8][12] - Recursion's internal pipeline includes several programs in oncology and rare diseases, with notable candidates such as REC-617 for advanced solid tumors and REC-7735 for HR+ breast cancer [4][6][13] - The company is advancing its clinical programs, with REC-4881 in the TUPELO study and REC-617 entering combination studies [6][13] Financial Performance - Total revenue for Q3 2025 was $5.2 million, a decrease from $26.1 million in Q3 2024, primarily due to the timing of milestone payments [19][24] - Research and development expenses increased to $121.1 million in Q3 2025 from $74.6 million in Q3 2024, driven by acquisitions and business combinations [19][20] - The net loss for Q3 2025 was $162.3 million, compared to a net loss of $95.8 million in Q3 2024, reflecting increased operational costs [25][26] Cash Position - As of October 9, 2025, Recursion had approximately $785 million in cash and cash equivalents, providing a runway through the end of 2027 without additional financing [8][19] - The company reported a cash position of $667.1 million as of September 30, 2025, an increase from $603.0 million at the end of 2024 [19][28] Strategic Partnerships - Recursion's collaboration with Roche and Genentech focuses on neuroscience and oncology, with ongoing projects and milestones expected to exceed $10 billion in potential future payments [12][18] - The partnership with Sanofi aims to develop up to 15 best-in-class programs across oncology and immunology, with significant milestone payment potential [18][19]

Core Insights - Recursion has announced a leadership transition plan, effective January 1, 2026, with Chris Gibson transitioning to Chairman of the Board and Najat Khan appointed as the new CEO and President [1][2][4] Leadership Transition - The Board of Directors unanimously approved the transition, emphasizing continuity and collaboration for Recursion's future [1][2] - Chris Gibson has led the company for twelve years, transforming it into a pioneer in the TechBio sector, and will continue to provide guidance as Chairman [2][4] - Najat Khan, currently Chief R&D and Commercial Officer, has been recognized for her strategic insight and leadership, having worked closely with Gibson for the past 18 months [2][5] Najat Khan's Background - Dr. Najat Khan has a strong background in biopharma, with experience in integrating scientific discovery, data, and business strategy [3][6] - Prior to joining Recursion, she held significant roles at Johnson & Johnson, where she tripled pipeline value and advanced AI integration in R&D [6] - Khan holds a Ph.D. in Organic Chemistry and has certifications in AI/ML from MIT, showcasing her expertise in both science and technology [7] Recursion's Mission and Vision - Recursion aims to decode biology to radically improve patients' lives, leveraging its OS platform that combines biology, chemistry, and AI [8] - The company operates one of the largest proprietary biological and chemical datasets, utilizing advanced machine-learning algorithms for drug discovery [8] - Recursion's operational scale includes conducting millions of wet lab experiments weekly and managing one of the most powerful supercomputers globally [8]

Core Insights - Recursion Pharmaceuticals is a small player in the biotech industry with potential upside in AI drug discovery [1] - The company utilizes AI to enhance drug development processes, aiming to improve success rates in clinical trials [3][5] - Recursion has established partnerships with major pharmaceutical companies, indicating the promise of its AI-based strategy [7][8] Group 1 - Recursion Pharmaceuticals employs AI to develop drugs, addressing the slow and costly nature of traditional drug development [3][4] - The company has built the largest supercomputer in the pharmaceutical industry in partnership with Nvidia, which may provide a competitive edge [5][6] - The FDA's shift towards AI-based testing methods could further benefit Recursion's approach [6] Group 2 - Recursion has formed partnerships with leading pharmaceutical companies such as Merck, Bayer, Sanofi, and Roche, which validate its AI strategy [7][8] - These partnerships contribute to the evidence supporting Recursion's approach, although the company has yet to achieve significant clinical success [9]