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]

Group 1 - Artificial intelligence (AI) has the potential to transform all sectors and industries throughout the economy, presenting significant long-term investment opportunities [1] - Recursion Pharmaceuticals (NASDAQ: RXRX) is a healthcare company aiming to leverage AI to revolutionize drug discovery, partnering with major pharmaceutical companies to enhance innovation and reduce costs [2] - The CEO of Recursion claims that the company can significantly shorten the drug development timeline and reduce costs, potentially bringing drugs to market in one to two years for $10 million to $20 million, compared to the traditional five to six years and hundreds of millions of dollars [3] Group 2 - Despite the potential, Recursion's business remains unproven, with no treatments reaching late-stage trials, leading to speculation driving its share price [3] - The company is currently facing substantial financial challenges, with revenue of $64.5 million over the past 12 months against R&D expenses of $431.2 million, resulting in a net loss of $649.1 million [5] - Management is optimistic about reducing the time and cost to bring drugs to market, but rising losses and increasing share count are concerns for investors [6]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Recursion Pharmaceuticals due to lower revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Company Summary - Recursion Pharmaceuticals is expected to report a quarterly loss of $0.38 per share, reflecting an 11.8% decrease year-over-year [3]. - Projected revenues for the quarter are $17.45 million, down 33.1% from the same quarter last year [3]. - The consensus EPS estimate has been revised down by 4.27% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Most Accurate Estimate for Recursion Pharmaceuticals is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +18.42% [11]. - Despite the positive Earnings ESP, the stock has a Zacks Rank of 4, complicating predictions of an earnings beat [11]. - The company has not surpassed consensus EPS estimates in the last four quarters, with a previous surprise of -17.14% [12][13]. Industry Context - Niagen Bioscience, another player in the Zacks Medical - Biomedical and Genetics industry, is expected to report an EPS of $0.02, unchanged from the previous year, with revenues projected at $31.3 million, up 22.4% [17]. - Niagen Bioscience has an Earnings ESP of -33.33% and a Zacks Rank of 4, making it difficult to predict an earnings beat [19].