Financial Data and Key Metrics Changes - The company ended the quarter with $509 million in cash, with a cash burn of approximately $118 million for Q1 2025, excluding partnership inflows and non-cash effects [67][68][70] - The expected cash runway extends into mid-2027, based on a budget of $450 million or less for the current year [70][72] Business Line Data and Key Metrics Changes - The company is focusing on five clinical and preclinical programs with a higher probability of success, particularly in oncology and rare diseases [12][13] - Three programs (NF2, CCM, and C. Diff) have been deprioritized due to limited clinical activity and lack of differentiation [23][24][28] Market Data and Key Metrics Changes - The company has generated over $450 million from partnerships, including four milestones achieved with Sanofi and a major milestone with Roche [7][69][61] - The unmet need for certain diseases, such as FAP and rare metabolic bone diseases, remains high, driving the focus on differentiated medicines [21][52] Company Strategy and Development Direction - The company aims to build a learning system, the Recursion Operating System, to improve drug discovery and development efficiency [2][6] - There is a commitment to sharpen the R&D portfolio and focus on programs that meet high standards of differentiation and address significant unmet needs [12][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging macroeconomic environment and emphasizes disciplined decision-making to ensure long-term mission success [6][30] - The company anticipates meaningful readouts and catalysts across its internal pipeline in 2025 and 2026, with a focus on advancing clinical studies [33][34] Other Important Information - The company is leveraging AI and advanced analytics to enhance drug discovery and development processes [32][60] - The integration of the Recursion and Exensia platforms is expected to yield significant advancements in early-stage discovery programs [4][6] Q&A Session Summary Question: What burn rate do you anticipate exiting 2025 or entering 2026 with? - The company targets a budget of $450 million or less for the current year, with additional details to be provided as the year progresses [76][77] Question: When can we see an option on a molecule candidate from one of your partnerships? - The company has already optioned four programs in collaboration with Sanofi and is optimistic about future options moving into partners' pipelines [81] Question: What new levers in the OS are being used to accelerate partnership programs to commercialization? - The company is utilizing multimodal data to better understand patient populations and enhance the differentiation of target product profiles [82][84]

Clinical Programs and Collaborations - Recursion Pharmaceuticals has over 5 high potential clinical and pre-clinical programs across oncology and rare disease indications, with partnerships generating $130 million in cash inflows to date[126][134] - In the Phase 2 study of REC-4881 for familial adenomatous polyposis, a preliminary median 43% reduction in polyp burden was observed, with 83% of patients showing reductions[133] - The collaboration with Sanofi has resulted in a $7 million milestone payment, with potential for over $300 million in additional milestone payments[134] - The ongoing collaboration with Roche and Genentech has generated five phenomaps from over one trillion iPSC-derived cells, enhancing insights for potential programs[135] - REC-7735, targeting PI3Kα H1047R mutant breast cancer, is expected to have a development candidate nominated in the second half of 2025[133][138] - REC-617 and REC-1245 are in ongoing Phase 1/2 studies, with additional data expected in 2025[138] Financial Performance - The company reported a net loss of $202.5 million for the three months ended March 31, 2025, compared to a net loss of $91.4 million for the same period in 2024, representing an increase of over 100%[2] - Total revenue for the three months ended March 31, 2025, was $14.745 million, a 7% increase from $13.794 million in the prior year[3] - Operating revenue increased by 10% to $14.818 million, driven by strategic partnerships with Sanofi and Merck[4] - Research and development expenses rose by 92% to $129.634 million, primarily due to costs associated with the acquisition of Exscientia and increased personnel costs[5] - General and administrative expenses increased by 74% to $54.650 million, influenced by the inclusion of Exscientia's results and higher salaries[6] - Cash used in operating activities for the three months ended March 31, 2025, was $131.957 million, up from $102.300 million in the prior year[8] - The company incurred a total cost of revenue of $21.829 million, a 96% increase from $11.166 million in the previous year[9] - The accumulated deficit as of March 31, 2025, was $1.6 billion, reflecting significant operating losses since inception[10] Cash Position and Future Financing - As of March 31, 2025, the company had cash and cash equivalents of $500.5 million, sufficient to fund operations for at least the next twelve months[1] - The company anticipates needing additional financing in the future to support operations and potential product commercialization[7] Strategic Focus - The company plans to focus on high-value programs in oncology and rare diseases while discontinuing less promising clinical programs[133] - The integration of Tempus data and HealthVerity's de-identified data aims to enhance clinical trial design and operational workflows[139] - The Recursion OS utilizes approximately 65 petabytes of proprietary data to enhance drug discovery processes[125]

Financial Performance - Total revenue for Q1 2025 was $15 million, a 7% increase from $14 million in Q1 2024, primarily due to collaborative agreements with Sanofi, Roche, and Merck KGaA[15] - Total revenue for Q1 2025 was $14,745,000, a 6.9% increase from $13,794,000 in Q1 2024[21] - Operating revenue increased to $14,818,000 in Q1 2025 from $13,491,000 in Q1 2024, reflecting a growth of 9.8%[21] - Net loss for Q1 2025 was $202.5 million, compared to a net loss of $91.4 million in Q1 2024[15] - Net loss for Q1 2025 was $202,487,000, compared to a net loss of $91,373,000 in Q1 2024, representing an increase in loss of 121.5%[21] Research and Development - Research and development expenses rose to $130 million in Q1 2025, up 91% from $68 million in Q1 2024, driven by the agreement with Tempus and the business combination with Exscientia[15] - Research and development expenses surged to $129,634,000 in Q1 2025, up 91.9% from $67,560,000 in Q1 2024[21] - Preliminary data from the REC-4881 study showed a median 43% reduction in polyp burden in familial adenomatous polyposis patients[6] - The collaboration with Roche and Genentech has generated five phenomaps from over one trillion iPSC-derived cells, enhancing the company's AI/ML models[9] Cash and Assets - Cash and cash equivalents were $509 million as of March 31, 2025, down from $603 million at the end of 2024[15] - Total current assets decreased to $584,145,000 as of March 31, 2025, down from $714,269,000 at the end of 2024[23] - The expected cash burn for 2025 is projected to be equal to or less than $450 million, down from approximately $606 million in 2024[15] - Cash burn for Q1 2025 was reported at $118,000,000, a decrease from $606,000,000 in 2024[25] - The company has a projected cash runway into mid-2027 based on its current business plan[15] Equity and Liabilities - Total liabilities decreased to $371,287,000 as of March 31, 2025, compared to $413,816,000 at the end of 2024[23] - Stockholders' equity decreased to $933,947,000 as of March 31, 2025, down from $1,034,782,000 at the end of 2024[23] - The company reported a weighted-average share count of 402,771,972 for Q1 2025, an increase from 236,019,349 in Q1 2024[21] Strategic Focus - Recursion is focusing on a streamlined portfolio of 5+ clinical and preclinical programs in oncology and rare diseases, deprioritizing 3 clinical and 1 preclinical program[5] - The company is focused on leveraging technology-driven approaches to enhance drug discovery and aims to deliver effective therapies in high-need areas[26] - The company achieved a $7 million milestone payment from its collaboration with Sanofi, with potential for over $300 million in additional milestone payments[8]

Core Insights - Recursion reported business updates and financial results for Q1 2025, emphasizing its commitment to advancing medicines in high unmet need areas through a streamlined portfolio strategy [1][3][5] Business Highlights - The company is focusing on high-potential programs to accelerate treatments, leveraging its integrated Recursion OS platform [3][5] - Recursion has deprioritized three clinical programs and one preclinical program after a strategic review, aiming to concentrate resources on programs with the strongest scientific rationale [5][9] - The pipeline includes several candidates in various stages, with REC-4881 showing promising preliminary data in familial adenomatous polyposis [6][8] Financial Results - Total revenue for Q1 2025 was $15 million, a slight increase from $14 million in Q1 2024, primarily due to collaboration agreements [16] - Research and development expenses rose to $130 million in Q1 2025 from $68 million in Q1 2024, driven by agreements with Tempus and the business combination with Exscientia [16] - The net loss for Q1 2025 was $203 million, compared to a net loss of $91.4 million in Q1 2024 [21] Cash Position - As of March 31, 2025, cash and cash equivalents were $509 million, down from $603 million at the end of 2024 [16][24] - The company expects a cash burn of up to $450 million for 2025, with a projected cash runway extending into mid-2027 [21][12] Partnerships and Collaborations - Recursion achieved a milestone in its collaboration with Sanofi, generating $7 million, with potential for over $300 million in additional milestone payments [9] - The partnership with Roche and Genentech continues to yield novel biological insights, with significant data generated from over one trillion iPSC-derived cells [10] Pipeline Updates - The company is advancing a focused set of clinical and preclinical programs in oncology and rare diseases, with several candidates expected to progress through various phases in the coming years [5][8][14] - REC-7735 is targeting PI3Kα H1047R mutant breast cancer, with candidate profiling ongoing and a development candidate expected in 2H25 [8][14]

Group 1 - The core viewpoint is that artificial intelligence (AI) is not a passing trend but is increasingly integrated into various sectors, including healthcare [2] - AI is making significant advancements in healthcare, indicating its growing importance in the industry [2] - The investing group Compounding Healthcare focuses on innovative companies in biotech and life sciences, particularly those developing breakthrough therapies and pharmaceuticals [2] Group 2 - The article emphasizes the potential of AI to transform healthcare, suggesting that it will play a crucial role in future developments [2] - The leader of the investing group has a background in the medical field, which informs their investment strategy in healthcare [2]

Core Insights - Recursion announced preliminary safety and efficacy results from its Phase 1b/2 TUPELO trial of REC-4881, an investigational MEK1/2 inhibitor for Familial Adenomatous Polyposis (FAP) [1][5] Company Overview - Recursion is a clinical-stage TechBio company focused on decoding biology to improve lives, utilizing its Recursion OS platform to analyze biological and chemical datasets [23] - The company has received Fast Track and Orphan Drug designations from the U.S. FDA for REC-4881, which is aimed at treating FAP, a rare inherited disorder [2] Clinical Trial Details - The TUPELO trial is evaluating the safety, tolerability, pharmacokinetics, and preliminary efficacy of REC-4881 in patients with FAP [6][8] - The Phase 1b portion was a randomized, double-blind, placebo-controlled safety run-in, while the ongoing Phase 2 portion is open-label [7][8] Efficacy Results - As of March 17, 2025, REC-4881 treatment led to a preliminary median 43% reduction in polyp burden at Week 13 among six efficacy-evaluable patients [3][10] - Five out of six patients (83%) experienced reductions in polyp burden ranging from 31% to 82%, while one patient showed a 595% increase from baseline [3][10] - Three of six patients (50%) achieved a ≥1-point reduction in Spigelman stage, indicating improvement in disease severity [11] Safety Profile - Among 19 safety-evaluable patients, 79% experienced at least one treatment-related adverse event (TRAE), with the majority being Grade 1 or 2 [4][16] - The most frequent TRAEs included acneiform rash, diarrhea, and decreased left ventricular ejection fraction (LVEF) [4][17] - Grade 3 TRAEs occurred in 16% of patients, with no Grade ≥4 events reported [4][18] Next Steps - Patient enrollment in the TUPELO trial is ongoing, with additional efficacy and safety analyses anticipated in the second half of 2025 [21]

Core Insights - Recursion will host a public earnings call on May 5, 2025, to provide business updates and report its Q1 2025 financial results [1][2] - The earnings call will be accessible via live stream on Recursion's social media platforms, allowing investors and the public to submit questions [2] - Recursion is a clinical stage TechBio company focused on decoding biology to improve lives, utilizing a platform that generates extensive biological and chemical datasets [3] Company Overview - Recursion is headquartered in Salt Lake City and is a founding member of BioHive, a collective for the Utah life sciences industry [4] - The company operates multiple offices in major cities including Toronto, Montréal, New York, London, Oxford, and the San Francisco Bay area [4] - Recursion employs advanced machine-learning algorithms to analyze its vast datasets, conducting millions of wet lab experiments weekly and operating one of the world's most powerful supercomputers [3]

Core Insights - Recursion is set to present preliminary data from its Phase 1b/2 clinical trial, TUPELO, evaluating the safety and preliminary activity of REC-4881 for treating familial adenomatous polyposis (FAP) at the 2025 Digestive Disease Week meeting [1][2] - FAP is a rare hereditary condition affecting approximately 50,000 individuals across the US and Europe, with no FDA-approved therapies currently available [2][4] - REC-4881 is a non-ATP-competitive allosteric small molecule MEK 1/2 inhibitor identified through Recursion's AI-powered platform [3][4] Clinical Trial Details - The TUPELO trial is a multicenter, open-label study assessing REC-4881's efficacy, safety, and pharmacokinetics in patients with FAP post-colectomy/proctocolectomy [5] - As of February 7, 2025, 13 patients received 4 mg of REC-4881 daily, with 84.6% experiencing at least one treatment-related adverse event, primarily mild rashes [4] - Among 5 efficacy-evaluable patients, there was a greater than 30% median reduction in total polyp burden after 12 weeks of treatment [4] Upcoming Presentation - The presentation titled "Ongoing Phase 1b/2 Trial of the Allosteric MEK1/2 Inhibitor REC-4881 as Monotherapy in Familial Adenomatous Polyposis (FAP): Preliminary Safety and Efficacy Data" is scheduled for May 4, 2025, from 9:15 AM to 9:30 AM PDT [5] Company Overview - Recursion is a clinical stage TechBio company focused on decoding biology to improve lives, utilizing its Recursion OS platform to analyze vast biological and chemical datasets [7][8] - The company operates one of the most powerful supercomputers globally, enabling extensive experimental and computational capabilities [8] - Recursion is headquartered in Salt Lake City and has multiple offices across North America and Europe [9]

Core Viewpoint - The FDA's decision to phase out animal testing in drug development in favor of AI-based methods presents a significant opportunity for Recursion Pharmaceuticals, a biotech company leveraging AI in its drug development processes [1][5]. Company Overview - Recursion Pharmaceuticals has developed the largest AI supercomputer in the pharmaceutical industry, in collaboration with Nvidia, which aids in predicting the effectiveness of clinical compounds against diseases [2]. - The company's operating system features a library of human genes, allowing for the identification of promising compounds that can advance to clinical trials [2]. Drug Development Efficiency - Recursion claims its AI-driven approach can significantly reduce the time and costs associated with moving drug programs to clinical studies, potentially leading to increased revenue for drugmakers as therapies spend more time on the market before patent expiration [3]. - Lower development costs could result in higher profits and margins for pharmaceutical companies [3]. Network Effect and Licensing - Recursion aims to create a network effect within its operating system by refining it based on the outcomes of clinical trials, which could enhance its predictive capabilities [4]. - The company plans to license its operating system to other pharmaceutical firms, a strategy that could yield higher margins compared to direct drug development [5]. Competitive Landscape - The FDA's shift towards AI in drug development may encourage other companies to invest in their own AI initiatives, potentially increasing competition for Recursion [8]. - Major pharmaceutical companies like Novo Nordisk are already making significant advancements in AI, which could pose challenges for Recursion [8]. Partnerships and Funding - Recursion has established partnerships with several major players in the pharmaceutical industry, including Roche Holding, Bayer, Merck, and Sanofi, which may mitigate funding risks [9]. - Despite these partnerships, the stock remains speculative, as Recursion has yet to bring any drugs to market or advance candidates to phase 3 studies [7][9].

Core Insights - HealthVerity has partnered with Recursion to license real-world data (RWD) to enhance clinical trial design and analytics [1][2] - Recursion will integrate HealthVerity's de-identified data covering over 340 million lives in the US into its data science and machine learning platforms, aiming to improve insights into patient populations and streamline clinical operations [2][4] - The partnership emphasizes the transformative potential of RWD in optimizing clinical trials and accelerating the development of novel therapeutics [3][4] Company Overview - HealthVerity is a leader in privacy-protected RWD exchange, facilitating connections and analysis of disparate patient data for healthcare and life sciences organizations [6] - Recursion is a clinical stage TechBio company focused on decoding biology to improve lives, utilizing its Recursion OS platform to generate extensive biological and chemical datasets [7] Strategic Goals - The collaboration aims to industrialize clinical development, reduce costs, and enhance trial design through in silico simulations and a patient-centric approach [2][4] - Recursion's integration of HealthVerity's data will strengthen its ability to predict patient responses and refine study designs, ultimately improving clinical trial enrollment [3][4]