[Executive Summary and Q2 2025 Highlights](index=1&type=section&id=Recursion_Q2_2025_Report_Overview) Recursion reported Q2 2025 financial results, business updates, and CEO statements, highlighting platform power and clinical program progress [Q2 2025 Highlights and CEO Statement](index=1&type=section&id=Q2_2025_Highlights_CEO_Statement) Recursion reported Q2 2025 financial results and business updates, including a **$7 million** Sanofi milestone and progress on clinical programs REC-1245 (RBM39) and REC-617 (CDK7) - Achieved fourth partnered discovery milestone with Sanofi, reflecting tangible momentum across the joint pipeline[3](index=3&type=chunk) - The platform's power allows for discovery and development of potential new medicines and insights on patient populations, leveraging advanced models like Boltz-2 for rapid ligand design[3](index=3&type=chunk) [Summary of Business Highlights](index=1&type=section&id=Summary%20of%20Business%20Highlights) Recursion provided updates on its internal and partnered programs, including clinical advancements, new acquisitions, and significant platform developments [Portfolio - Internal and Partnered Programs](index=2&type=section&id=Portfolio_Internal_Partnered_Programs) Recursion provided updates on its internal pipeline, including REC-1245 (RBM39 degrader) and REC-617 (CDK7 inhibitor) with refined patient population strategies, and the acquisition of full rights to REC-102 (ENPP1 inhibitor) [Internal Pipeline Updates](index=2&type=section&id=Internal_Pipeline_Updates) Recursion advanced several internal programs, including REC-1245 (RBM39 degrader) with ongoing Phase 1/2 DAHLIA study enrollment and early safety/PK data expected in 1H26 - REC-1245 (RBM39 degrader) Phase 1/2 DAHLIA study is enrolling select tumor types to identify responsive populations, with early safety and PK data from dose-escalation on track for 1H26[5](index=5&type=chunk)[6](index=6&type=chunk)[8](index=8&type=chunk) - REC-617 (CDK7 inhibitor) initiated a combination dose escalation portion of the ELUCIDATE Phase 1/2 trial in 1H25, selecting platinum-resistant ovarian cancer as the first combination cohort based on clinical, preclinical, and causal AI modeling data[5](index=5&type=chunk)[8](index=8&type=chunk) - Acquired full rights to REC-102 (ENPP1 inhibitor) for hypophosphatasia (HPP), with Phase 1 initiation on-track for 2H26 and preclinical data to be presented at ASMBR 2025[8](index=8&type=chunk) - Additional data for REC-4881 (MEK1/2) in FAP from TUPELO is expected in 2H25[8](index=8&type=chunk) [Partnered Discovery Updates](index=4&type=section&id=Partnered_Discovery_Updates) Recursion's collaborations yielded significant progress, including a **$7 million** milestone payment from Sanofi for an immunology program, marking the fourth such milestone in 18 months - Achieved a **$7 million** milestone payment from Sanofi in Q2 2025 for an immunology program, marking the fourth partnered program reaching a significant discovery milestone in 18 months[10](index=10&type=chunk) - Potential for over **$100 million** in partnership milestones by the end of 2026, with several programs advancing towards potential development candidate designation over the next 12-15 months[10](index=10&type=chunk) - The Roche and Genentech collaboration has built a whole-genome knockout phenomap from over one trillion iPSC-derived neural cells and identified potential neuroscience targets for validation[10](index=10&type=chunk) - Bayer collaboration nominated multiple early discovery precision oncology programs against previously 'undruggable' targets, with work underway to advance them to lead series milestone decisions[10](index=10&type=chunk) - Collaboration with Merck KgAa, Darmstadt, Germany, is ongoing to identify first-in-class and best-in-class targets[10](index=10&type=chunk) [Platform (Recursion OS 2.0)](index=5&type=section&id=Platform) Recursion OS 2.0 continues to drive program development across biology, chemistry, and clinical development, expanding its Virtual Cell and releasing the open-source Boltz-2 model - Recursion OS 2.0 is driving program development with applications across biology, chemistry, and clinical development[13](index=13&type=chunk) - Released Boltz-2 open-source model, which is over **1,000 times faster** than physics-based FEP calculations for binding affinity prediction and has been downloaded by over **40,000 unique users**[15](index=15&type=chunk) - Expanding the Virtual Cell to understand and predict cellular behavior across a wider range of biology, incorporating diverse cell types and disease areas beyond oncology[15](index=15&type=chunk) - Expanding ClinTech platform by integrating high-quality, linked patient datasets (Tempus, HealthVerity, and Helix) to strengthen programs, bolster preclinical and early clinical data, and optimize recruitment[15](index=15&type=chunk) [Second Quarter 2025 Financial Results](index=5&type=section&id=Second%20Quarter%202025%20Financial%20Results) Recursion reported increased Q2 2025 revenue but also significantly higher R&D and G&A expenses, leading to a widened net loss, with cash runway extending into Q4 2027 [Key Financial Metrics Summary](index=5&type=section&id=Key_Financial_Metrics_Summary) Recursion's Q2 2025 revenue increased to **$19.2 million**, up from **$14.4 million** in Q2 2024, while R&D and G&A expenses significantly rose, resulting in a net loss of **$171.9 million** Q2 2025 Key Financial Metrics Comparison (YoY) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :--------------------------- | :----------------- | :----------------- | :----------- | | Total Revenue | $19.2 | $14.4 | +33.3% | | Research & Development Exp. | $128.6 | $73.9 | +74.0% | | General & Administrative Exp.| $46.7 | $31.8 | +46.9% | | Net Loss | $(171.9) | $(97.5) | -76.3% | - Cash, cash equivalents and restricted cash were **$533.8 million** as of June 30, 2025, compared to **$603.0 million** as of December 31, 2024[15](index=15&type=chunk) - Based on current operating plans, the Company believes that its expected cash runway will extend into the **fourth quarter of 2027**[15](index=15&type=chunk) - Net cash used in operating activities was **$208.4 million** for the six months ended June 30, 2025, compared to **$184.5 million** for the same period in 2024, primarily due to the inclusion of Exscientia's operations[18](index=18&type=chunk) - The Company expects to incur costs totaling **$9.3 million** in 2025 for restructuring activities, of which **$3.9 million** has been paid in Q2 2025[18](index=18&type=chunk) [Consolidated Statements of Operations (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20(unaudited)) The consolidated statements of operations show a significant increase in total revenue for both the three and six months ended June 30, 2025, compared to the prior year, alongside substantially rising operating costs and expenses Consolidated Statements of Operations (Unaudited) - Q2 2025 vs Q2 2024 | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $19,223 | $14,417 | $33,968 | $28,211 | | Total operating costs and expenses| $195,450 | $114,960 | $401,563 | $225,094 | | Loss from operations | $(176,227) | $(100,543) | $(367,595) | $(196,883) | | Net loss | $(171,897) | $(97,540) | $(374,384) | $(188,913) | | Net loss per share (basic & diluted)| $(0.41) | $(0.40) | $(0.91) | $(0.79) | | Weighted-average shares outstanding| 417,361,147 | 242,196,409 | 410,268,199 | 239,107,879 | [Condensed Consolidated Balance Sheets (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) The condensed consolidated balance sheet shows a decrease in total assets from **$1,448.598 million** at December 31, 2024, to **$1,302.355 million** at June 30, 2025, primarily driven by a reduction in cash and cash equivalents Condensed Consolidated Balance Sheets (Unaudited) - June 30, 2025 vs December 31, 2024 | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $525,110 | $594,350 | | Total current assets | $587,160 | $714,269 | | Total assets | $1,302,355 | $1,448,598 | | Total current liabilities | $164,026 | $187,472 | | Total liabilities | $383,209 | $413,816 | | Total stockholders' equity | $919,146 | $1,034,782 | [About Recursion](index=6&type=section&id=About%20Recursion) Recursion is a clinical-stage TechBio company leveraging its OS platform to decode biology and discover new medicines at massive experimental and computational scales [Company Overview](index=6&type=section&id=Company_Overview) Recursion is a clinical-stage TechBio company that decodes biology to improve lives by leveraging its Recursion OS platform, which integrates diverse technologies to generate vast proprietary datasets - Recursion is a clinical stage TechBio company leading the space by decoding biology to radically improve lives[16](index=16&type=chunk) - The Recursion OS platform continuously generates one of the world's largest proprietary biological and chemical datasets, leveraging sophisticated machine-learning algorithms to distill trillions of searchable relationships[16](index=16&type=chunk) - The company operates at massive experimental scale (up to **millions of wet lab experiments weekly**) and massive computational scale (owning and operating one of the most powerful supercomputers in the world)[16](index=16&type=chunk) [Forward-Looking Statements](index=11&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements regarding Recursion's future plans, subject to inherent risks and uncertainties in pharmaceutical R&D and financial outlook [Disclaimer and Risk Factors](index=11&type=section&id=Disclaimer_Risk_Factors) This section contains forward-looking statements regarding Recursion's future plans, including drug discovery and development, clinical trial timelines, partnership milestones, platform enhancements, and financial outlook - Forward-looking statements include those regarding Recursion's ability to discover and develop medicines, timing of data readouts, impact of preclinical data, future as a TechBio leader, and financial position and cash runway[23](index=23&type=chunk) - These statements are subject to known or unknown risks and uncertainties, including challenges inherent in pharmaceutical research and development, financing, regulatory approval, intellectual property protections, and cyberattacks[23](index=23&type=chunk) - Recursion undertakes no obligation to correct or update any such statements, whether as a result of new information, future developments, or otherwise, except to the extent required by applicable law[23](index=23&type=chunk)

Core Insights - Recursion reported a $7 million milestone achievement with Sanofi, reflecting progress in their partnered discovery programs and overall business momentum [3][4][11] - The company is advancing multiple clinical programs, including REC-1245 and REC-617, targeting various cancer indications and leveraging advanced AI models for drug discovery [3][4][5] Business Highlights - **Partnerships**: Recursion has established collaborations with major pharmaceutical companies such as Sanofi, Roche, Genentech, Bayer, and Merck KGaA, focusing on oncology and immunology [4][10][13] - **Clinical Programs**: The company is actively developing several programs, including REC-1245 (RBM39) and REC-617 (CDK7), with ongoing trials aimed at identifying responsive patient populations [5][8][20] - **Financial Performance**: Total revenue for Q2 2025 was $19.2 million, up from $14.4 million in Q2 2024, while R&D expenses increased significantly to $128.6 million due to new collaborations and operational expansions [20][21] Pipeline Updates - **REC-1245 (RBM39)**: This potential first-in-class oral degrader is currently in a Phase 1/2 trial, targeting tumors with replication stress and DNA repair vulnerabilities [5][8] - **REC-617 (CDK7)**: The company initiated a combination dose escalation trial in platinum-resistant ovarian cancer, showing promising early safety and efficacy signals [8][20] - **Other Programs**: Additional programs like REC-102 for hypophosphatasia and REC-4881 for familial adenomatous polyposis are also in development, with various milestones expected in the coming years [8][20] Financial Position - As of June 30, 2025, Recursion had cash and cash equivalents of $533.8 million, down from $603.0 million at the end of 2024, indicating a strong cash runway into Q4 2027 [11][15] - The net loss for Q2 2025 was $171.9 million, compared to a net loss of $97.5 million in Q2 2024, primarily driven by increased R&D and G&A expenses [20][21]

Company Performance - Recursion Pharmaceuticals (RXRX) closed at $5.81, reflecting a -2.35% change from the previous day's closing price, underperforming the S&P 500's daily loss of 0.13% [1] - The stock has increased by 15.98% over the past month, contrasting with the Medical sector's loss of 0.96% and the S&P 500's gain of 3.39% [1] Earnings Projections - The upcoming earnings report for Recursion Pharmaceuticals is scheduled for August 5, 2025, with projected EPS of -$0.35, indicating a 12.50% increase from the same quarter last year [2] - The consensus estimate for revenue is $14.38 million, which represents a 0.3% decline from the equivalent quarter last year [2] Full-Year Estimates - Zacks Consensus Estimates forecast full-year earnings of -$1.35 per share and revenue of $68.39 million, reflecting year-over-year changes of +20.12% and +16.23%, respectively [3] Analyst Estimates - Recent modifications to analyst estimates for Recursion Pharmaceuticals are crucial as they reflect short-term business trends, with upward revisions indicating analysts' positive outlook on the company's operations [4] - Adjustments in estimates are linked to stock price performance, and the Zacks Rank system has been established to leverage these changes [5] Zacks Rank - The Zacks Rank system ranges from 1 (Strong Buy) to 5 (Strong Sell), with stocks rated 1 delivering an average annual return of +25% since 1988 [6] - Currently, Recursion Pharmaceuticals holds a Zacks Rank of 3 (Hold), with the consensus EPS estimate having decreased by 0.75% over the past month [6] Industry Context - The Medical - Biomedical and Genetics industry, part of the Medical sector, has a Zacks Industry Rank of 91, placing it in the top 37% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Company Overview - Recursion is a clinical stage TechBio company focused on decoding biology to improve lives, utilizing a platform called Recursion OS that generates extensive biological and chemical datasets [3][4] - The company employs advanced machine-learning algorithms to analyze trillions of relationships in biology and chemistry, aiming to enhance drug discovery and development [3] Upcoming Earnings Call - Recursion will host a public earnings call on August 5, 2025, at 8:00 am ET, where it will provide business updates and report its second quarter 2025 financial results [1][2] - The earnings call will be accessible via live stream on Recursion's social media platforms, including X (formerly Twitter), LinkedIn, and YouTube, allowing investors and the public to submit questions [2]

Core Insights - Americans are likely not saving enough for a comfortable retirement, with the median retirement savings at $87,000 as of 2022, indicating a significant portion of the population is underprepared [1][2] Group 1: Recursion Pharmaceuticals - Recursion Pharmaceuticals has developed an AI-powered platform that can virtually test drugs, significantly reducing the time and cost associated with traditional clinical trials, leveraging 36 petabytes of data [5][6] - The technology is already being utilized by major pharmaceutical companies like Roche and Sanofi, which enhances its credibility and market potential [6] - The company is currently unprofitable but is expected to reach a turning point in revenue and profitability, with the AI drug-development industry projected to grow at an annualized rate of nearly 32% through 2030 [8] Group 2: Shopify - Shopify enables businesses to create their own e-commerce platforms, facilitating $292.3 billion in sales in the previous year, a 24% increase year-over-year [11][14] - The global retail market is still largely untapped online, with only about 20% of spending occurring through e-commerce, indicating significant growth potential for Shopify [13][14] - Analysts predict Shopify will achieve approximately 20% top-line growth over the next three years, reflecting its strong market position [14] Group 3: Nio - Nio, a Chinese electric vehicle manufacturer, delivered 72,056 cars in Q2, marking a nearly 26% increase from the previous year, showcasing its production growth [16][20] - The electric vehicle market in China is thriving, with sales increasing by 25% to 1.1 million units last month, representing over half of the country's total automobile sales [17][19] - The International Energy Agency forecasts that EVs will account for 80% of China's car sales by 2030, supported by favorable policies, indicating a robust growth trajectory for Nio [19][20]

Group 1 - The article highlights the emergence of AI-driven companies like Palantir, Tempus AI, and Recursion Pharmaceuticals as key players in the cancer diagnostics and drug development sectors, contrasting them with traditional pharmaceutical companies [1][2][5] - Palantir's stock has increased nearly 10% month-to-date and has shown significant year-to-date growth, indicating strong investor sentiment ahead of its earnings report [3] - Tempus AI shares are stable at around $64, despite a 6% pullback, reflecting confidence in its genomics-powered diagnostics [3] - Recursion Pharmaceuticals has seen a nearly 15% surge since late June, although it remains down about 10% year-to-date, suggesting renewed optimism in its AI-assisted drug discovery pipeline [4] Group 2 - Traditional pharmaceutical companies like Pfizer and Merck are struggling with stagnant stock prices and challenges such as patent cliffs and rising scrutiny, despite solid revenue [4][6] - In contrast, AI-native companies are redefining the industry by offering innovative solutions: Palantir provides essential data architecture, Tempus delivers actionable diagnostics, and Recursion accelerates drug discovery through machine learning [5] - The article raises the question of whether traditional drugmakers are simply behind in innovation or if they are at risk of becoming obsolete in the evolving healthcare landscape [6]

Core Insights - Recursion Pharmaceuticals (RXRX) and Relay Therapeutics (RLAY) are utilizing artificial intelligence (AI) to innovate drug discovery across various disease areas, positioning themselves as leaders in the AI-driven biotech sector [1][2] Group 1: Drug Discovery and Development - Traditional biotech companies face high costs and failure rates due to a "trial-and-error" approach, leading to financial instability [2] - AI models can identify promising drug candidates with higher success probabilities, reducing research costs and improving efficiency [3] - Both companies generate additional revenue by licensing their AI platforms, allowing them to refine their models even when clinical candidates fail [4] Group 2: Recursion Pharmaceuticals (RXRX) - RXRX employs its AI-driven platform, Recursion OS, developed with NVIDIA, to test clinical compounds against a virtual library of human biology [5] - The company faced setbacks after discontinuing three key drug candidates but is now focusing on more promising candidates like REC-4881, which showed a 43% reduction in polyp burden in early phase II data [6][7] - RXRX has expanded its pipeline by acquiring Rallybio's stake in a joint venture for developing REV102, a potential first oral treatment for hypophosphatasia [8] - The company ended Q1 2025 with a cash balance of $509 million, expected to sustain operations into mid-2027 [9] - RXRX has collaboration agreements with major pharmaceutical companies, generating $15 million in collaboration revenues in Q1 2025, a slight increase from the previous year [10] Group 3: Relay Therapeutics (RLAY) - RLAY utilizes its proprietary Dynamo platform to target difficult protein targets, focusing on small-molecule therapies for oncology and genetic diseases [12] - The company has a narrower pipeline and implemented cost-cutting measures, reducing research costs by 80% and workforce by approximately 70 people [13] - RLAY ended Q1 2025 with a cash balance of $710.3 million, expected to fund operations into 2029 [13] - The company is preparing to initiate a phase III study for its lead candidate, RLY-2608, for metastatic breast cancer [14] - RLAY entered a licensing agreement with Elevar Therapeutics for lirafugratinib, allowing it to receive milestone payments and royalties [15] - The termination of a partnership with Roche has limited RLAY's revenue streams, as it no longer receives collaboration payments from Roche [16][17] Group 4: Financial Estimates and Performance - The Zacks Consensus Estimate for RXRX's 2025 revenues implies a 16% year-over-year improvement, while the loss per share estimate has widened slightly [18] - RLAY's 2025 revenue estimate suggests a 91% year-over-year improvement, but the loss per share estimate has also widened [21] - Year-to-date, RXRX's stock has decreased by 7.4%, while RLAY's stock has declined by 10.7%, compared to a 2% decline in the industry [23] Group 5: Valuation Comparison - RXRX is trading at 2.73 times its book value, while RLAY is at 0.88 times, making RLAY more attractive from a valuation perspective [25] - Both companies are trading below their respective five-year averages, indicating potential investment opportunities [25] Group 6: Competitive Landscape - RXRX and RLAY face competition from other biotech firms and tech-driven drug discovery companies, which may challenge their market position [29] - Despite challenges, both companies have the potential to revolutionize drug discovery and deliver breakthrough therapies at lower costs [30]

Recursion Pharmaceuticals (RXRX) shares soared 5.8% in the last trading session to close at $5.84. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 8% gain over the past four weeks.The sudden soaring of the stock price can be attributed to the postive investor mindset regarding the potential of Recursion's early-stage oncology pipeline being developed using its AI-driven platform technology. This biotechnology company is expected ...

Company Performance - Recursion Pharmaceuticals (RXRX) closed at $5.52, with a +2.41% increase from the previous day, outperforming the S&P 500's gain of 0.54% [1] - The stock has risen by 5.48% over the past month, contrasting with the Medical sector's decline of 2.12% and the S&P 500's increase of 4.2% [1] Upcoming Earnings - Recursion Pharmaceuticals is expected to report earnings of -$0.34 per share, indicating a year-over-year growth of 15% [2] - The projected revenue for the upcoming earnings disclosure is $15.58 million, reflecting an 8.02% increase from the previous year [2] Fiscal Year Estimates - For the entire fiscal year, earnings are projected at -$1.34 per share, with revenue expected to reach $73.39 million, representing increases of +20.71% and +24.73% respectively from the prior year [3] - Changes in analyst estimates for Recursion Pharmaceuticals are noted to correlate with near-term stock prices, indicating analyst optimism regarding business and profitability [3] Zacks Rank and Industry Performance - Recursion Pharmaceuticals currently holds a Zacks Rank of 3 (Hold), with the Zacks Consensus EPS estimate remaining unchanged over the last 30 days [5] - The Medical - Biomedical and Genetics industry ranks in the top 34% of all industries, with a Zacks Industry Rank of 83, suggesting that top-rated industries outperform lower-rated ones by a factor of 2 to 1 [6]

Core Insights - Recursion Pharmaceuticals (RXRX) has seen a 5.5% increase in stock price over the past month following the acquisition of Rallybio's full stake in their joint venture for developing REV102, a treatment for hypophosphatasia (HPP) [1][2][6] - The acquisition allows RXRX to independently advance the program, with a total payment of $25 million to Rallybio, including upfront and contingent equity [2] - Despite a significant setback in May 2025, where the company discontinued three key drug candidates, RXRX retains a robust pipeline and $509 million in cash, which is expected to sustain operations into mid-2027 [3][12][13] Company Strategy - RXRX aims to revolutionize drug discovery by leveraging AI-powered models to identify promising clinical candidates, potentially reducing research costs and improving efficiency [9][10] - The company is focusing on developing candidates like REC-4881 for familial adenomatous polyposis and REC-1245 for solid tumors, with data readouts expected in the coming years [12][13] - RXRX has ongoing collaborations with major pharmaceutical companies, which could enhance its pipeline and revenue potential [14] Market Position - RXRX's stock has underperformed compared to the industry and the S&P 500, with a year-to-date decline of 20.3% [4][5] - The company is trading at a discount to the industry, with a price-to-book value ratio of 2.35 compared to the industry average of 3.08 [17] - Loss estimates for 2025 remain constant at $1.34 per share, while estimates for 2026 have narrowed from $1.17 to $1.08 [21] Future Outlook - The successful development and approval of RXRX's pipeline candidates could validate its AI platform and significantly enhance shareholder value [25] - The recent volatility in RXRX's stock is viewed as temporary, with potential for multi-bagger returns as clinical studies progress [26] - The company's discounted valuation presents an attractive entry point for new investors looking to capitalize on long-term growth potential [26]