Core View - Nvidia's portfolio stocks experienced a significant decline, with CoreWeave dropping over 9% and Arm Holdings falling more than 4% [1] Company Performance - CoreWeave (CRWV.US) saw a decline of over 9% [1] - Arm Holdings (ARM.US) decreased by more than 4% [1] - Applied Digital Corporation (APLD.US) fell by over 4% [1] - Nebius (NBIS.US) dropped more than 5% [1] - Recursion Pharmaceuticals (RXRX.US) experienced a decline of over 2% [1]

Core Insights - The artificial intelligence (AI) revolution is significantly impacting various industries, with healthcare being one of the sectors that is beginning to adopt AI technologies [1][2][3] Group 1: AI in Healthcare - Despite the slow adoption of AI in healthcare, there are promising opportunities for investors as companies begin to commercialize AI solutions [3] - Recursion Pharmaceuticals has developed Recursion OS, a platform that utilizes 36 petabytes of biological and chemical data to virtually test drug potentials at a fraction of the cost of traditional clinical trials [7][9] - Tempus AI offers practical AI solutions for caregivers, helping with disease diagnosis, clinical trial suggestions, and treatment efficacy predictions, which enhances patient outcomes [15][16] Group 2: Company Performance - Recursion Pharmaceuticals reported a revenue of just under $34 million in the first half of the year, with a net loss of $374 million, but analysts expect revenue to triple by 2027 while halving losses [11][12] - Tempus AI generated $693 million in revenue last year, reflecting a 30% year-over-year growth, and is projected to become profitable by fiscal 2027 as it continues to grow [14][18]

Core Points - Recursion Pharmaceuticals (RXRX) has seen its stock value decrease by more than 17% week-to-date as of Thursday night, primarily due to an analyst price target cut and insider stock sales [1][2][4] - Morgan Stanley analyst Sean Laaman reduced the price target for Recursion from $5.00 to $4.80 while maintaining an equal-weight recommendation [2] - Several executives, including CEO Christopher Gibson and Chief R&D Officer Najit Khan, sold significant amounts of stock, with Gibson selling 40,390 shares and Khan selling 40,388 shares, primarily to meet tax obligations related to restricted stock units [5][6] Summary by Categories Analyst Actions - Morgan Stanley's Sean Laaman cut the price target for Recursion Pharmaceuticals by $0.20 to $4.80, while keeping an equal-weight recommendation [2] Insider Trading - CEO Christopher Gibson and Chief R&D Officer Najit Khan sold 40,390 and 40,388 shares respectively, with the sales primarily for tax withholding purposes related to restricted stock units [5] Market Reaction - The stock's decline of over 17% reflects the volatility typical in biotech stocks, where even minor negative news can significantly impact share prices [1][6]

Group 1 - Nvidia-related stocks experienced a decline on Tuesday, with NEBIUS (NBIS.US) and CoreWeave (CRWV.US) dropping over 6% [1] - Recursion Pharmaceuticals (RXRX.US) fell more than 5%, while Applied Digital (APLD.US) decreased nearly 5% [1] - Arm Holdings (ARM.US) saw a decline of over 3% [1]

Group 1 - Nvidia-related stocks experienced a decline on Tuesday, with NEBIUS (NBIS.US) and CoreWeave (CRWV.US) dropping over 6% [1] - Recursion Pharmaceuticals (RXRX.US) fell more than 5%, while Applied Digital (APLD.US) decreased nearly 5% [1] - Arm Holdings (ARM.US) saw a decline of over 3% [1]

Core Insights - Recursion Pharmaceuticals reported disappointing quarterly earnings, leading to a nearly 5% decline in stock price, which was worse than the S&P 500's 0.5% dip [1] Financial Performance - In the second quarter, Recursion generated $19.2 million in revenue, an increase from $14.4 million in the same period of 2024, but the GAAP net loss deepened to almost $172 million ($0.41 per share) compared to a $97.5 million loss in the previous year [2][4] - Analysts had expected lower revenue of $15.4 million but had estimated a narrower net loss of $0.35 per share [4] Pipeline and Collaborations - Recursion focuses on developing investigational drugs for cancer and rare disorders, with its most advanced program, oncology drug REC-617, entering phase 1/2 clinical trials in the first half of the year [4] - The company generates modest revenue primarily through collaborations with major pharmaceutical companies, including Bayer and Merck [5] - A notable collaboration with Sanofi has the potential to yield over $300 million in milestone payments [6]

Financial Data and Key Metrics Changes - The company ended the quarter with a strong cash balance of $533 million, reflecting effective expense management and cash inflows from partnerships and tax credits [43][44]. - The expected cash burn for 2026 is projected to be 35% less than previous estimates, demonstrating a commitment to operational efficiency [44]. Business Line Data and Key Metrics Changes - The company is advancing a pipeline of internal programs in oncology and rare diseases, alongside collaborations with partners like Roche, Sanofi, Bayer, and Merck KGA [8][12]. - The ClinTech platform is being deployed across all programs, enhancing patient stratification and trial execution, with potential for 50% faster enrollment at high-quality sites [6][7]. Market Data and Key Metrics Changes - The company is leveraging proprietary datasets and AI to enhance drug discovery and clinical trial design, which is expected to improve the quality and speed of bringing medicines to market [9][12]. - The partnership with Sanofi has achieved multiple milestones, indicating strong collaboration in challenging therapeutic areas [40][68]. Company Strategy and Development Direction - The company is focused on building a comprehensive drug discovery platform, integrating various data layers to enhance the probability of success in drug development [47][81]. - The Recursion OS 2.0 platform aims to bring unique biological insights and new targets to the clinic, emphasizing high-quality programs that address unmet medical needs [47][48]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting a catalyst-packed calendar with multiple readouts expected in the coming quarters [48]. - The company is committed to maintaining high standards of quality while advancing its innovative platforms and partnerships [46][47]. Other Important Information - The company has made significant advancements in AI-driven drug design and patient connectivity, which are expected to enhance the efficiency of clinical trials [17][19]. - The integration of the ClinTech platform is anticipated to streamline operations and improve patient outcomes in clinical trials [6][7]. Q&A Session Summary Question: Is Bolts 2 the initiative with a major partner on foundational protein structure modeling? - Yes, Bolts 2 is the partnership mentioned earlier, aimed at enhancing protein structure modeling [49]. Question: Why open source versus keeping it internal? - The company believes in commoditizing certain technologies to foster collaboration while retaining proprietary tools that provide a competitive advantage [50]. Question: What standard of care is allowed in the CDK7 combo expansion cohort in ovarian cancer? - The standard of care will include single-agent chemotherapy plus Bevacizumab, with median progression-free survival (PFS) around 6.7 months [53]. Question: Will multiomic profiling dictate patient enrollment in future studies for RBM 39? - Yes, the multiomic approach will help identify relevant patient populations for enrollment based on biological insights [56][58]. Question: What is the differentiation of RBM 39 compared to other CDK targeting assets? - RBM 39 is not a kinase and offers selectivity advantages over similar targets like CDK 12 and CDK 13, which have challenges in selectivity [62][63]. Question: What is the threshold for success in the upcoming FAP data readout? - The company is looking for meaningful improvement in polyp burden reduction compared to existing off-label therapies [65]. Question: Can you provide details on the $7 million milestone achieved under the Sanofi collaboration? - The milestone was achieved for a challenging target in the immunology space, reflecting progress in the partnership [68].

Financial Data and Key Metrics Changes - The company ended the quarter with a strong cash balance of $533 million, reflecting effective expense management and cash inflows from partnerships and tax credits [42][43] - Expected cash burn in 2026 is projected to be 35% less than the previous year, demonstrating a commitment to operational efficiency [43] Business Line Data and Key Metrics Changes - The company is advancing a pipeline of internal programs in oncology and rare diseases, alongside collaborations with partners like Roche, Sanofi, Bayer, and Merck KGA [7][39] - The ClinTech platform is being deployed across all programs, enhancing patient stratification and trial execution, with projections for 50% faster enrollment at high-quality sites [6][7] Market Data and Key Metrics Changes - The company is leveraging proprietary datasets and AI to enhance drug discovery and development, with significant advancements in partnerships and internal programs [11][39] - The partnership with Sanofi achieved its fourth milestone, indicating progress in challenging targets within immunology and oncology [39] Company Strategy and Development Direction - The focus is on building a comprehensive drug discovery platform, Recursion OS 2.0, integrating various data sources and technologies to improve the efficiency and success rate of drug development [46][47] - The company aims to bring unique biological insights and new targets to the clinic faster and at lower costs, emphasizing the importance of high-quality programs [8][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting a catalyst-packed calendar with multiple readouts expected in the coming quarters [48] - The company is committed to maintaining a high bar for quality while exploring innovative approaches to drug discovery and development [46][47] Other Important Information - The company is actively working on a virtual cell model to predict cellular responses to various interventions, which could significantly enhance drug discovery efforts [78][80] - The integration of AI and multiomic data is central to the company's strategy, allowing for more precise patient targeting and drug design [16][57] Q&A Session Summary Question: Is Bolts two the initiative with a major partner on foundational protein structure modeling? - Yes, Bolts two is the partnership mentioned earlier, aimed at enhancing protein structure modeling [49] Question: Why open source versus keeping it internal? - The company believes in commoditizing certain technologies while retaining proprietary tools that provide a competitive advantage [50] Question: For the CDK7 combo expansion cohort in ovarian cancer, what standard of care are you allowing in the trial? - The standard of care will include single-agent chemotherapy plus Bevacizumab, with a median PFS of about 6.7 months [52][53] Question: Do you expect the data from multiomic profiling for RBM 39 to dictate future patient enrollment? - Yes, the data will help select patients for future studies, focusing on those with specific biomarkers [55][57] Question: What is the differentiation of RBM 39 compared to other CDK targeting assets? - RBM 39 is not a kinase and offers selectivity advantages over similar targets like CDK 12 and CDK 13 [61] Question: What visibility do you have on the potential $100 million in milestones by 2026? - The guidance is based on existing partnerships and programs, with probability-weighted estimates for milestone achievements [70][71] Question: How does the company plan to achieve its cash runway guidance through Q4 2027? - The company is focused on cash flows, managing expenses efficiently, and executing existing partnerships to ensure a sustainable cash runway [72][75] Question: What ambitious initiatives are being planned to reflect the next level of thinking? - The company is investing in large-scale compute initiatives and developing a virtual cell model to enhance drug discovery capabilities [78][80]

Company Performance - Recursion Pharmaceuticals reported a quarterly loss of $0.41 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.35, representing an earnings surprise of -17.14% [1] - The company posted revenues of $19.22 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 33.71%, compared to revenues of $14.42 million a year ago [2] - Over the last four quarters, Recursion Pharmaceuticals has not surpassed consensus EPS estimates and has topped consensus revenue estimates only once [2] Stock Movement and Outlook - Shares of Recursion Pharmaceuticals have declined approximately 14.2% since the beginning of the year, contrasting with the S&P 500's gain of 7.6% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is -$0.32 on revenues of $13.37 million, and for the current fiscal year, it is -$1.35 on revenues of $68.39 million [7] Industry Context - The Medical - Biomedical and Genetics industry, to which Recursion Pharmaceuticals belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor decisions [5]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-40323 RECURSION PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) Delaware 46-4099738 (State or other ...