Recursion Pharmaceuticals Inc.
02/25/2026 | Press release | Distributed by Public on 02/25/2026 05:35
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following is a discussion and analysis of the financial condition of Recursion Pharmaceuticals, Inc. (Recursion, the Company, we, us or our)and the results of our operations. This commentary should be read in conjunction with the Consolidated Financial Statements and accompanying notes appearing in Item 8, "Financial Statements." This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Note About Forward-Looking Statements" in this Annual Report on Form 10-K. You should review the disclosure under the heading "Risk Factors" in our Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.
Overview
Recursion is a clinical-stage TechBio company with a mission to decode biology to radically improve lives. We have advanced a portfolio of differentiated internal programs and strategic partnerships that leverage our integrated drug discovery and development platform, the Recursion Operating System (OS). This platform provides end-to-end, AI-native capabilities that span from novel biological ideas through the clinic, integrating multimodal biological data generation, AI-powered small molecule synthesis, and AI-enabled clinical development. All of our technologies are designed to translate complex science into medicines that matter - faster, better, and at scale - for patients who are waiting.
Summary of Business Highlights: Driving a diversified pipeline powered by the end-to-end AI-native Recursion OS - wholly-owned and partnered programs
2025 Wholly Owned Pipeline Achievements: Advancing programs with strong therapeutic rationale, powered by the Recursion OS
•REC-4881 (MEK1/2): Provided the first clinical validation of the Recursion OS from a novel phenotypic insight, with positive preliminary efficacy results from the ongoing Phase 2 portion of the TUPELO study in FAP, a disease with no approved pharmacotherapies
◦REC-4881 (4 mg QD) achieved rapid clinical activity, with 75% of evaluable patients showing reductions in total polyp burden and a 43% median reduction after 12 weeks of treatment (n=12).
◦After 12 weeks off therapy (week 25 of the study), 82% of evaluable patients (9 of 11) maintained a durable reduction in total polyp burden, with a 53% median reduction observed from baseline.
◦REC-4881 (4 mg QD) has a safety profile consistent with MEK1/2 inhibition, with the majority of treatment-related adverse events being Grade 1 or 2, Grade 3 events occurring in 15.8% of the safety-evaluable patients, and no Grade ≥4 TRAEs reported to date. The most frequent TRAEs (at ≥10%) included dermatitis acneiform / rash and blood CPK increase.
•REC-617 (CDK7): A potential best-in-class CDK7 inhibitor optimized for improved therapeutic index using our AI-driven precision design platform and identified as lead candidate in under 11 months with 136 novel compounds synthesized, delivered further Phase 1/2 results in November 2025, demonstrating promising safety and preliminary efficacy signals. The program is currently advancing in ongoing Phase 1 combination studies in 2L+ platinum-resistant ovarian cancer (PROC) alongside Phase 2 monotherapy expansion.
•REC-7735 (PI3Kα H1047R):Recursion announced new preclinical efficacy data on REC-7735, a potential best-in-class PI3K⍺ H1047R inhibitor, precision designed with 242 compounds synthesized from first novel hit to REC-7735 in 10 months using the Recursion OS platform. Current pan-PI3K⍺ inhibitors lack selectivity over the wild-type protein, resulting in metabolic liabilities, including hyperglycemia, that often necessitate dose reductions in a significant portion of non diabetic patients and the exclusion entirely of diabetic patients from treatment. REC-7735 demonstrates >100-fold selectivity for the H1074R mutation over WT PI3K⍺ suggesting potential improved tolerability and is currently in IND-enabling studies.
Expected upcoming milestones across Recursion's wholly-owned pipeline:
•REC-1245 (RBM39): Early Phase 1 safety and PK monotherapy data expected in 1H26
•REC-4881 (MEK1/2):
◦Initiate FDA engagement in 1H26 to align on a potential registration pathway for REC-4881, alongside ongoing dosing optimization and expansion of TUPELO to include patients aged 18+ to support a broader development strategy.
◦Additional Phase 1b/2 clinical data expected in 1H27
•REC-7735 (PI3Kα H1047R) and REC-102 (ENPP1): IND-enabling studies ongoing; data-driven go/no-go decision on Phase 1 initiation expected in 2H26
•REC-617 (CDK7): Early Phase 1 safety and PK combination data expected in 1H27
•REC-3565 (MALT1): Early Phase 1 safety and PK monotherapy data expected in 1H27
•REC-4539 (LSD1): Early Phase 1 safety and PK monotherapy data expected in 2H27
Advancing Partnered Discovery, with Over $500 Million in Milestone Payments Achieved to Date:
•Sanofi:
◦Advancing programs for complex targets: Recursion is using its platform to discover, design, and advance a joint portfolio of 5+ AI-driven novel small molecule programs across immunology and oncology. Recursion continues to design against challenging and diverse protein targets.
◦The collaboration has the potential for up to 15 AI-designed small molecule programs.
◦Milestone payments: Recursion has now received $134 million in upfront and progress-based milestones from this partnership to date.
•In the next 12-18 months, there is potential for additional near-term milestones as the first programs advance towards development candidates and earlier-stage programs progress.
◦Fifth progress-based milestone:In February 2026, Recursion achieved its fifth milestone across the collaboration, generating a $4M payment from Sanofi. This 5th milestone reflects a first-in-class Sanofi-partnered oncology program against a historically difficult and novel biological space.
▪Recursion's AI-driven design coupled with Recursion's physics-based capabilities has produced selective, orally active lead series.
•Roche and Genentech:
◦Neuron Map:In partnership with Roche and Genentech, Recursion built the first whole-genome CRISPR knockout map generated from a subset of 1 trillion internally manufactured iPSC-derived neuronal cells ($30 million milestone payment, accepted in 2024). This proprietary dataset is being used in partnership with Roche and Genentech to identify potential new targets in neuroscience, a field which has historically suffered from limited new discoveries.
◦Microglia Map:Recursion built and Roche and Genentech accepted a second neuroscience Phenomap, a first-of-its-kind whole-genome CRISPR knockout map generated from over 100 billion internally manufactured iPSC-derived microglial cells ($30 million milestone payment, accepted in 2025). With approximately 46 million images, the scale and quality of this proprietary map enables us, in partnership with Roche and Genentech, to leverage the power of AI to explore novel targets and pathways.
◦Gastrointestinal-Oncology Advancements:We have built four proprietary Phenomaps which are being leveraged under the collaboration to identify novel insights that can be used to initiate programs for a gastrointestinal-oncology indication including continuing to advance one program optioned by Roche and Genentech.
◦Milestones and Collaboration:In total, Recursion has received $213 million in upfront and milestone payments from the collaboration. Roche and Genentech have accepted 6 Phenomaps and initiated one small molecule program based on Phenomap insights to date. The companies have also identified a number of biological insights from Phenomaps that are now being validated or advanced as potential novel targets.
Meaningful Potential Upcoming Milestones Across Partnered Discovery:
•Sanofi programs continue advancing towards potential lead series and development candidate designation milestones in the next 12-18 months.
•The Company expects to translate biological insights from maps delivered to Roche and Genentech to early stage programs across 2026 and beyond.
2025 Recursion OS Advances: Driving Platform Innovations, Grounded in Impact
Full stack AI-powered platform: The Recursion Operating System (OS) is continuing to drive program development by integrating AI across multimodal biology, precision design, and next-generation clinical development-enabling faster, more efficient, and more innovative drug discovery and development from biology to insight, insight to molecule, and molecule to patient.
•Biology to Insight:Initiating programs with deep biological grounding
◦Unmatched multimodal scale:At-scale cellular imaging, integrated with proprietary and partner omics datasets, has created one of the most comprehensive and relatable biological datasets in biopharma.
◦From signal to selection: This foundation enables systematic discovery of novel biology - over 100 novel insights triaged into 10 actionable and translatable targets.
•Insight to Molecule: Designing differentiated molecules more efficiently
◦Proven platform productivity and reproducibility: To date, the platform has delivered >10 development candidates that address a wide variety of previously unsolved biology or chemistry problems.
◦Advanced candidates have been delivered by synthesizing ~330 compounds per program in ~17 months, compared to industry averages of over 2,500 compounds and 42 months, respectively.
◦Leverages an AI-native engine for the industrialized generation of over 100 million molecules annually through synthetically aware design, generating novel and patentable compounds.
•Molecule to Patient:Advancing medicines into the clinic with improved patient relevance.
◦Integrated high-quality, linked patient datasets to strengthen programs, bolster preclinical and early clinical data to select patients and optimize recruitment: Contextualized the single-arm efficacy of REC-4881 in the TUPELO study through real-world evidence analytics and AI-enabled data extraction, to build a comprehensive view of the lived, progressive-disease FAP patient experience, to directly inform clinical development strategy.
◦Rapid, data-driven optimization of clinical trial operations: Deployed global clinical trial site intelligence database, covering a wide swath of historical clinical trials, to reduce trial country and site selection from months to hours.
Financing and Operations
Since 2023, our financing and operating activities include the following: In July 2023, we issued an aggregate of 7.7 million shares of our Class A common stock at a purchase price of $6.49 per share in the 2023 Private Placement with NVIDIA Corporation for net proceeds of approximately $49.9 million. In August 2023, Recursion entered into an Open Market Sales Agreement with Jefferies LLC to provide for the offering, issuance and sale of up to an aggregate amount of $300.0 million of its Class A Common stock. The Company sold 26.8 million shares and received net proceeds of $199.1 million under the agreement. In June 2024, we issued an aggregate of 35.4 million shares of our Class A Common stock at a purchase price of $6.50 per share and received net proceeds of $216.4 million, after deducting transaction costs of $13.6 million. See Note 8, "Common Stock" to the Consolidated Financial Statements for additional information on the public offering. In September 2024, we received a Phenomap acceptance fee of $30.0 million from our collaboration with Roche. In February 2025, the Company terminated the Sales Agreement with Jefferies LLC and entered into a Sales Agreement with Citigroup Capital Markets Inc., to provide for the offering, issuance and sale of up to an aggregate amount of $500 million of its Class A common stock. For year ended December 31, 2025, the Company sold 99.9 million shares and received net proceeds of $491.7 million under the agreement. Pursuant to its terms, the Sales Agreement has completed and no amount
remained available for future sales as of December 31, 2025. For the year ended December 31, 2025, we received multiple milestone payments related to our collaborative development contracts totaling $37.0 million.
We use the capital we have raised to fund operating and investing activities across platform research operations, drug discovery, clinical development, digital and other infrastructure, creation of our portfolio of intellectual property and administrative support. We do not have any products approved for commercial sale and have not generated any revenues from product sales. Cash, cash equivalents and restricted cash totaled $753.9 million as of December 31, 2025. Based on our current operating plan, we believe that our cash and cash equivalents will be sufficient to fund our operations for at least the next twelve months.
Since inception, we have incurred significant operating losses. Our net losses were $644.8 million, $463.7 million and $328.1 million during the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, our accumulated deficit was $2.1 billion.
As of December 31, 2025, we did not have any unconditional outstanding commitments for additional funding. We anticipate that we will need to raise additional financing in the future to fund our operations, including the potential commercialization of any approved product candidates. Until such time, if ever, as we can generate significant product revenue, we expect to finance our operations with our existing cash and cash equivalents, any future equity or debt financings and upfront, milestone and royalty payments, if any, received under current or future license or collaboration agreements. We may not be able to raise additional capital on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition may be adversely affected.
We had a valuation allowance against all of our Canadian subsidiary deferred tax assets (DTAs) as of December 31, 2025, and December 31, 2024 of $26.9 million and $25.3 million respectively. We intend to continue maintaining a full valuation allowance on the Canadian DTAs until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings of our Canadian operations, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain DTAs and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.
Results of Operations
The following table summarizes our results of operations:
| (in thousands, except percentages) | Years ended December 31, |
2025 compared to 2024
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2024 compared to 2023
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| 2025 | 2024 | 2023 |
$
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%
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$
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%
|
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| Revenue | ||||||||||||||||||||||||||
| Operating revenue | $ | 74,256 | $ | 58,488 | $ | 43,876 | $ | 15,768 | 27.0 | % | $ | 14,612 | 33.3 | % | ||||||||||||
| Grant revenue | 425 | 351 | 699 | 74 | 21.1 | % | (348) | (49.8) | % | |||||||||||||||||
| Total revenue | 74,681 | 58,839 | 44,575 | 15,842 | 26.9 | % | 14,264 | 32.0 | % | |||||||||||||||||
| Operating costs and expenses | ||||||||||||||||||||||||||
| Cost of revenue | 70,953 | 45,238 | 42,587 | 25,715 | 56.8 | % | 2,651 | 6.2 | % | |||||||||||||||||
| Research and development | 475,271 | 314,421 | 241,226 | 160,850 | 51.2 | % | 73,195 | 30.3 | % | |||||||||||||||||
| General and administrative | 176,589 | 178,184 | 110,822 | (1,595) | (0.9) | % | 67,362 | 60.8 | % | |||||||||||||||||
| Total operating costs and expenses | 722,813 | 537,843 | 394,635 | 184,970 | 34.4 | % | 143,208 | 36.3 | % | |||||||||||||||||
| Loss from operations | (648,132) | (479,004) | (350,060) | (169,128) | 35.3 | % | (128,944) | 36.8 | % | |||||||||||||||||
| Other income, net | 3,237 | 14,216 | 17,932 | (10,979) | (77.2) | % | (3,716) | (20.7) | % | |||||||||||||||||
| Loss before income tax benefit | (644,895) | (464,788) | (332,128) | (180,107) | 38.8 | % | (132,660) | 39.9 | % | |||||||||||||||||
| Income tax benefit | 136 | 1,127 | 4,062 | (991) | (87.9) | % | (2,935) | (72.3) | % | |||||||||||||||||
| Net loss | $ | (644,759) | $ | (463,661) | $ | (328,066) | $ | (181,098) | 39.1 | % | $ | (135,595) | 41.3 | % | ||||||||||||
Revenue
The following table summarizes our components of revenue:
| Years ended December 31, |
2025 compared to 2024
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2024 compared to 2023
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| (in thousands, except percentages) | 2025 | 2024 | 2023 |
$
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%
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$ | % | |||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Operating revenue | $ | 74,256 | $ | 58,488 | $ | 43,876 | $ | 15,768 | 27.0 | % | $ | 14,612 | 33.3 | % | ||||||||||||
| Grant revenue | 425 | 351 | 699 | 74 | 21.1 | % | (348) | (49.8) | % | |||||||||||||||||
| Total revenue | $ | 74,681 | $ | 58,839 | $ | 44,575 | $ | 15,842 | 26.9 | % | $ | 14,264 | 32.0 | % | ||||||||||||
Operating revenue is generated through research and development agreements derived from strategic alliances.
We are entitled to receive variable consideration as certain milestones are achieved. The timing of revenue recognition is not directly correlated to the timing of cash receipts.
For the year ended December 31, 2025, the increase in revenue compared to the prior year was due to revenue recognized from our partnership with Sanofi. In 2024, the Sanofi contract was included in Recursion's results beginning on November 20, 2024, the date of the Exscientia combination and therefore the year ended December 31, 2024 results only included revenue starting at that point compared to a full year of revenue for the year ended December 31, 2025. See Note 9, "Collaborative Development Contracts" to the Consolidated Financial Statements for additional information. The increase related to the Sanofi contract was partially offset by a decrease in revenue recognized from Roche, which was due to the timing of our mix of work on the performance obligations. For the year ended December 31, 2024, the increase in revenue compared to the prior year was due to revenue recognized from our partnership with Roche. We recognized revenue related to the acceptance fee for the completion of a Phenomap for one of our neuroscience performance obligations. The consideration did not include the $30 million milestone until the map was accepted, which was during the third quarter of 2024.
Cost of Revenue
The following table summarizes our cost of revenue:
| (in thousands, except percentages) | Years ended December 31, |
2025 compared to 2024
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2024 compared to 2023
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| 2025 | 2024 | 2023 |
$
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%
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$ | % | ||||||||||||||||||||
| Total cost of revenue | $ | 70,953 | $ | 45,238 | $ | 42,587 | $ | 25,715 | 56.8 | % | $ | 2,651 | 6.2 | % | ||||||||||||
Cost of revenue consists of the Company's costs to provide services for drug discovery required under performance obligations with partnership customers. These primarily include materials costs, service hours performed by our employees and depreciation of property and equipment.
For the year ended December 31, 2025, the increase in cost of revenue compared to the prior year was due to our Exscientia acquisition for which the cost of revenue is now included for the full year. For the year ended December 31, 2024, the increase in cost of revenue compared to the prior year was due to our Exscientia acquisition for which our results now also include additional customers.
Research and Development
The following table summarizes our components of research and development expense:
| (in thousands, except percentages) | Years ended December 31, |
2025 compared to 2024
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2024 compared to 2023
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| 2025 | 2024 | 2023 |
$
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%
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$
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%
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| Research and development expenses | ||||||||||||||||||||||||||
| Platform | $ | 232,557 | $ | 144,413 | $ | 96,796 | $ | 88,144 | 61.0 | % | $ | 47,617 | 49.2 | % | ||||||||||||
| Discovery | 81,808 | 69,957 | 62,142 | 11,851 | 16.9 | % | 7,815 | 12.6 | % | |||||||||||||||||
| Clinical | 81,102 | 62,916 | 57,564 | 18,186 | 28.9 | % | 5,352 | 9.3 | % | |||||||||||||||||
| Acquired IPR&D | 22,840 | - | - | 22,840 | n/m | - | n/m | |||||||||||||||||||
| Stock based compensation | 63,177 | 37,331 | 22,761 | 25,846 | 69.2 | % | 14,570 | 64.0 | % | |||||||||||||||||
| UK R&D tax credit | (7,710) | (1,769) | - | (5,941) | >100% | (1,769) | n/m | |||||||||||||||||||
| Other | 1,497 | 1,573 | 1,963 | (76) | (4.8) | % | (390) | (19.9) | % | |||||||||||||||||
| Total research and development expenses | $ | 475,271 | $ | 314,421 | $ | 241,226 | $ | 160,850 | 51.2 | % | $ | 73,195 | 30.3 | % | ||||||||||||
n/m = Not meaningful
Research and development expenses account for a significant portion of our operating expenses. We recognize research and development expenses as they are incurred. Research and development expenses consist of costs incurred in performing activities including:
•costs to develop and operate our platform;
•costs of discovery efforts which may lead to development candidates, including research materials and external research;
•costs for clinical development of our investigational products;
•costs for materials and supplies associated with the manufacture of active pharmaceutical ingredients, investigational products for preclinical testing and clinical trials;
•personnel-related expenses, including salaries, benefits, bonuses and stock-based compensation for employees engaged in research and development functions;
•costs associated with operating our digital infrastructure; and
•other direct and allocated expenses incurred as a result of research and development activities, including those for facilities, depreciation, amortization and insurance.
•certain cash refundable research and development tax credits including the research and development expenditure credit (RDEC) in the United Kingdom
We recognize expenses associated with third-party contracted services as they are incurred. Upon termination of contracts with third parties, our financial obligations are generally limited to costs incurred or committed to date. Any advance payments for goods or services to be used or rendered in future research and product development activities pursuant to a contractual arrangement are classified as prepaid expenses until such goods or services are rendered.
Significant components of research and development expense include the following allocated by development phase: Platform, which refers primarily to expenses related to screening of product candidates through hit identification, this also includes expenses related to Tempus records purchased; Discovery, which refers primarily to expenses related to hit identification through development of candidates; and Clinical, which refers primarily to expenses related to development of candidates and beyond.
For the year ended December 31, 2025, the increase in research and development expenses compared to the prior year was driven by Tempus record purchases of $49.9 million, acquired IPR&D purchases of $22.8 million and the inclusion of Exscientia's results of $102.4 million.
For the year ended December 31, 2024, the increase in research and development expenses compared to the prior year was driven by our platform and personnel costs as we continued to expand and upgrade our platform, including our chemical technology, machine learning and transcriptomics platform.
General and Administrative Expense
The following table summarizes our general and administrative expense:
| (in thousands, except percentages) | Years ended December 31, |
2025 compared to 2024
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2024 compared to 2023
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| 2025 | 2024 | 2023 |
$
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%
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$
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%
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| Total general and administrative expense | $ | 176,589 | $ | 178,184 | $ | 110,822 | $ | (1,595) | (0.9) | % | $ | 67,362 | 60.8 | % | ||||||||||||
We expense general and administrative costs as incurred. General and administrative expenses consist primarily of salaries; including employee benefits and stock-based compensation. General and administrative expenses also include facilities, depreciation, information technology, professional fees for auditing and tax, legal fees for corporate and patent matters and insurance costs.
For the year ended December 31, 2025, the decrease in general and administrative expense compared to the prior year was not significant.
For the year ended December 31, 2024, the increase in general and administrative expense compared to the prior year was primarily driven by an increase in salaries and wages of $21.1 million, transaction costs of $20.5 million and the inclusion of Exscientia's results of $11.3 million. We also had increases in software and lease expense.
Other Income, Net
The following table summarizes our components of other income, net:
| (in thousands, except percentages) | Years ended December 31, |
2025 compared to 2024
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2024 compared to 2023
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| 2025 | 2024 | 2023 |
$
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%
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$
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%
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| Interest income | $ | 22,788 | $ | 15,758 | $ | 19,116 | $ | 7,030 | 44.6 | % | $ | (3,358) | (17.6) | % | ||||||||||||
| Interest expense | (1,810) | (1,572) | (97) | (238) | 15.1 | % | (1,475) | >100% | ||||||||||||||||||
| Other | (17,741) | 30 | (1,087) | (17,771) | n/m | 1,117 | n/m | |||||||||||||||||||
| Other income, net | $ | 3,237 | $ | 14,216 | $ | 17,932 | $ | (10,979) | (77.2) | % | $ | (3,716) | (20.7) | % | ||||||||||||
n/m = Not meaningful
For the year ended December 31, 2025, the decrease in other income, net compared to the prior year related to our loss on disposal of Exscientia GmbH of $4.5 million and our Vienna lease termination fee of $5.2 million. The
decrease was partially offset by an increase in interest income driven by our increase in earnings on cash and cash equivalents.
For the year ended December 31, 2024, the decrease in other income, net compared to the prior year was related to a decrease in earnings on cash and cash equivalents in money market funds.
Liquidity and Capital Resources
Sources of Liquidity
We have not yet commercialized any products and do not expect to generate revenue from the sales of any product candidates for at least several years. Cash, cash equivalents and restricted cash totaled $753.9 million and $603.0 million as of December 31, 2025 and 2024, respectively.
We have incurred operating losses and experienced negative operating cash flows and we anticipate that the Company will continue to incur losses for at least the foreseeable future. Our net loss was $644.8 million, $463.7 million and $328.1 million during the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, we had an accumulated deficit of $2.1 billion.
Since 2023, we have financed our operations primarily through Class A common stock issuances. As of December 31, 2025, we have received net proceeds of $957.1 million from Class A common stock issuances. See Note 8, "Common Stock" to the Consolidated Financial Statements for additional details on Class A common stock issuances. Additionally, since 2023, we have also received proceeds of $74.0 million from our strategic partnerships. See Note 9, "Collaborative Development Contracts" to the Consolidated Financial Statements for additional details on the strategic partnerships.
Cash Flows
The following table is a summary of the Consolidated Statements of Cash Flows:
| Years ended December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||
| Cash used in operating activities | $ | (371,808) | $ | (359,174) | $ | (287,780) | |||||
| Cash provided by (used in) investing activities | (16,871) | 260,059 | (10,228) | ||||||||
| Cash provided by financing activities | 521,532 | 304,120 | 140,133 | ||||||||
Operating Activities
Cash used in operating activities increased during the year ended December 31, 2025 as a result of higher costs incurred for research and development and general and administrative primarily due to the Company's acquisition of Exscientia. This included partnership inflows of $37.0 million, Exscientia GmbH disposal related payments of $9.7 million and severance payments of $15.1 million. See Note 4, "Acquisitions" to the Consolidated Financial Statements for additional details related to the Exscientia acquisition and Exscientia GmbH disposal.
Cash used in operating activities increased during the year ended December 31, 2024 as a result of higher costs incurred for research and development and general and administrative due to the Company's expansion and upgraded capabilities. Additionally, cash used increased as a result of our acquisition of Exscientia. See Note 4, "Acquisitions" to the Consolidated Financial Statements for additional details.
Investing Activities
Cash used in investing activities during the year ended December 31, 2025 primarily consisted of the disposal of Exscientia GmbH of $4.4 million and property and equipment purchases of $6.5 million.
Cash provided by investing activities during the year ended December 31, 2024 consisted of $277.1 million as part of the Exscientia acquisition. This was partially offset by property and equipment purchases of $13.7 million, which included $2.9 million to upgrade the BioHive-2 supercomputer and lab equipment purchases. Additionally, investing activities included the purchase of an intangible asset of $3.0 million from Helix.
Financing Activities
Cash provided by financing activities during the year ended December 31, 2025 primarily included proceeds of $528.9 million from Class A common stock issuances related to our at-the-market offerings (ATMs) which was partially offset by our repayment of long-term debt and finance lease liabilities of $8.4 million.
Cash provided by financing activities during the year ended December 31, 2024 primarily included proceeds of $300.4 million from common stock issuances.
Critical Accounting Estimates and Policies
Our management's discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and expenses in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in the notes to our consolidated financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Revenue Recognition
We have generated revenue from our contracts with partners. Our partnerships often contain multiple components, including research and development services, licenses, options to obtain development and commercialization rights and options to obtain additional research and development services. Such arrangements may provide for various types of payments to us, including upfront fees, technical, development, regulatory and commercial milestone payments, licensing fees, option exercise fees and royalty and milestone payments on product sales. Determining how to recognize revenue from these partnerships involves judgment about whether promised goods and services are distinct from one another or should be accounted for as combined performance obligations, how to estimate and allocate various payment streams to performance obligations and how to measure performance on each performance obligation. Because of these judgments, payments are often not commensurate with the timing of revenue recognition.
Our operating revenue has primarily been generated through research and development agreements. Revenue from research and development agreements is recognized as we satisfy the performance obligation by transferring the promised services to the customer. We recognize revenue over time by measuring the progress toward complete satisfaction of the relevant performance obligation using an appropriate input or output method based on the services promised to the customer. This method of recognizing revenue requires us to make estimates to determine the progress towards completion. A significant change in these estimates could have a material effect on the timing and amount of revenue recognized in future periods.
Valuation of Goodwill and Intangible Assets
We have acquired and may continue to acquire significant intangible assets and goodwill in connection with business combinations. Amounts allocated to intangible assets and goodwill are based upon fair value estimates. We make estimates of fair value based upon assumptions believed to be reasonable and that of a market participant. These estimates are based on available historical information as well as future expectations and the estimates are inherently uncertain. The use of alternative estimates and assumptions could increase or decrease the estimated fair values, the amounts allocated to identifiable intangible assets acquired, future amortization expense and the value of goodwill.
Accrued Research and Development Expenses
As part of the process of preparing our financial statements, we are required to estimate our expenses resulting from our obligations under contracts with vendors and clinical research organizations. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment terms that do not match the periods over which materials or services are provided under such contracts. Our objective is to reflect the appropriate expenses in our financial statements by matching those expenses with the period in which services are performed and efforts are expended. We account for these expenses according to the timing of various aspects of the expenses and determine accrual estimates by taking into account discussions with applicable personnel and outside service providers as to the progress of clinical trials, or the services completed. During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from estimates. We make estimates of our accrued expenses as of each balance sheet date based on the facts and circumstances known to us at that time. Our clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors. Although we do not expect estimates to be materially different from amounts actually incurred, our understanding of the anticipated status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low for any particular period.
Stock-Based Compensation
We measure stock options and other stock-based awards granted to employees, directors and non-employees based on their fair value on the date of grant and recognize the compensation expense over the requisite service period. We recognize the impact of forfeitures on stock-based compensation expenses as forfeitures occur. We generally apply the straight-line method of expense recognition to awards.
The grant date fair value of stock options is estimated using the Black-Scholes option-pricing model, which requires inputs for the expected term, stock price volatility, dividend yield and the risk-free interest rate of the options. If any assumptions used in the Black-Scholes option-pricing model change significantly, stock-compensation for future awards may differ materially compared with the awards granted previously.
Contractual Obligations
The Company's material cash requirements include the following contractual obligations:
As of December 31, 2025, the Company had $18.7 million of debt outstanding. This balance is related to notes payable for tenant improvement allowances and the supercomputer lease.
As of December 31, 2025, the Company had $72.7 million of future lease commitments. See Note 5 "Leases" to the Consolidated Financial Statements for additional detail on the Company's leases.
As of December 31, 2025, the Company had $147.4 million of future purchase obligations, $117.7 million of which are expected to be payable within the next year. These commitments primarily related to third-party research services, materials and supplies for research and development activities.
As of December 31, 2025, the Company had $55.4 million remaining of its various Gates Commitments. The majority of this commitment is related to the private placement of the Gates Foundation. Concurrent with the Exscientia's IPO on October 5, 2021, the Company completed a private placement to the Gates Foundation for the sale of 1.6 million ADSs at the initial offering price of $22.00 per ADS, for gross proceeds of approximately $35.0 million. Under the terms of the Company's agreement with the Gates Foundation, the Group is committed to spending $70.0 million over a multi-year period to the research, discovery, and development of small molecule anti-infective therapeutics for future pandemic preparedness, with a specific focus on developing therapeutics that can be applied against multiple species of coronaviridae, influenza, and paramyxoviridae (the "Pandemic Preparedness Program"). The Group had incurred $21.7 million relating to the Pandemic Preparedness Program as at December 31, 2025.
Recently Issued and Adopted Accounting Pronouncements
See Note 2, "Summary of Significant Accounting Policies" to the Consolidated Financial Statements for information regarding recently issued and adopted accounting pronouncements.
Recursion Pharmaceuticals Inc. published this content on February 25, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 25, 2026 at 11:35 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]