Recursion Pharmaceuticals Inc.

05/06/2026 | Press release | Distributed by Public on 05/06/2026 04:33

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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 unaudited Condensed Consolidated Financial Statements and accompanying notes appearing in Item 1, "Financial Statements" and the Company's audited consolidated financial statements and accompanying notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Annual Report on Form 10-K for the year ended December 31, 2025 (the 2025 Annual Report). 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 Quarterly Report on Form 10-Q. You should review the disclosure under the heading "Risk Factors" in the 2025 Annual Report and in our subsequent Quarterly Reports on Form 10-Q, including this Quarterly Report on Form 10-Q, for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this Quarterly Report on Form 10-Q, unless required by law.
Investors and others should note that we announce material financial and other information to our investors using our investor relations website (https://ir.recursion.com/), SEC filings, press releases, public conference calls and webcasts. We use these channels as well as social media and blogs to communicate with our stakeholders and the public about our company, our services and other issues. It is possible that the information we post on social media and blogs could be deemed to be material information. Therefore, we encourage investors, the media and others interested in our company to review the information we post on the social media channels and blogs listed on our investor relations website. Information contained in, or that can be accessed through, our website is not a part of, and is not incorporated into, this report.
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 powered by 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.
Wholly Owned Pipeline Updates
Favorable Safety and PK Data for REC-1245 (RBM39):
Preliminary safety and pharmacokinetic (PK) data from REC-1245, a potential first-in-class RBM39 degrader discovered and developed using Recursion's platform, highlight early clinical progress for a novel approach to targeting cancer vulnerabilities linked to replication stress and DNA repair.
REC-1245 advanced from biological discovery to development candidate in 18 months, more than twice as fast as the industry average, demonstrating Recursion's ability to identify novel targets and design differentiated molecules using its integrated AI-enabled platform.
Early data from the ongoing Phase 1/2 DAHLIA study show:
•REC-1245 was well-tolerated across select solid tumors (n=16)
•No dose-limiting toxicities (DLTs) have been observed to date, and the maximum tolerated dose has not yet been reached
•The majority of TRAEs were Grade 1 or 2, most common GI-related events were constipation, nausea, and vomiting
•Pharmacokinetic analysis demonstrates predictable, dose-dependent exposure across evaluated patients
•Pharmacodynamic assessments demonstrate target engagement
•Dose escalation is ongoing to determine the recommended Phase 2 dose for monotherapy expansion cohorts
Treatment-Related Adverse Event (TRAE)
Patients (n=16)
Patients with any TRAE 10 (62.5%)
Grade 1-2 9 (56.3%)
Grade 3 1 (6.2%)
Grade 4-5 0 (0.0%)
Continued Momentum for REC-4881 (MEK1/2):
REC-4881 is an allosteric MEK1/2 inhibitor being developed for familial adenomatous polyposis (FAP), a genetically defined disease driven by APC loss. Based on platform insights into MAPK pathway modulation in APC-deficient systems, REC-4881 represents a targeted approach to addressing the underlying biology of disease progression:
•Phase 2 positive proof-of-concept clinical data showed a median 43% reduction in polyp burden at Week 13, deepening to 53% at Week 25 following a treatment break, with 40% of patients demonstrating improvement in Spigelman stage, supporting a differentiated and durable profile in FAP.
•Safety was consistent with MEK1/2 inhibition, with mostly Grade 1-2 TRAEs, Grade 3 events in 15.8% of patients, no Grade ≥4 TRAEs, and commonly including dermatitis acneiform/rash and increased CPK.
Recursion has initiated FDA engagement to align on a potential registrational study design, with an update expected in the second half of 2026. Expansion of TUPELO to include patients aged 18+ to support a broader development strategy is also ongoing.
First Patient Dosed in REC-4539 (LSD1 inhibitor):
REC-4539, an AI-designed, LSD1 inhibitor, highlights early progress for a differentiated approach to targeting epigenetic drivers in cancer. In April, the first patient was dosed in the ENLYGHT Phase 1 clinical study for solid tumors, including small cell lung cancer (SCLC).
REC-4539 was precision designed to have a reversible mechanism and shorter predicted human half-life to address treatment-limiting platelet toxicity observed with other LSD1 inhibitors, enabling a potentially differentiated profile across solid tumors and hematologic malignancies.
The differentiated, CNS-penetrant development candidate was delivered in approximately 20 months through Recursion's AI-native design platform, demonstrating the Company's ability to rapidly translate platform insights into optimized clinical candidates.
For the rest of the portfolio, programs continue to progress as planned.
Expected upcoming milestones across Recursion's wholly-owned pipeline:
•REC-4881 (MEK1/2):
◦Regulatory update expected in 2H26
◦Additional Phase 1b/2 clinical data expected in 1H27
•REC-1245 (RBM39): Additional Phase 1 dose escalation data expected in 2H26
•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 and upfront payments achieved to date:
Meaningful upcoming milestones across partnered discovery:
Recursion continues to advance partnered programs that leverage complementary strengths of the Recursion OS.
In AI-enabled chemistry, Sanofi and Recursion joint programs continue progressing toward development candidate designation and earlier-stage milestones over the next 12 months, including programs designed against challenging targets in immunology and oncology.
In AI-enabled biology, Recursion expects to continue jointly translating insights from its large-scale maps of biology delivered to Roche and Genentech into potential target validation milestones over the next 12 months. The maps, jointly built by Recursion, Roche and Genentech are disease-relevant high-content maps built at large scale, including a Neuron map generated from a subset of 1 trillion internally manufactured iPSC-derived neuronal cells and a Microglia map generated from more than 100 billion internally manufactured iPSC-derived microglial cells. Additionally, we are combining our phenomics dataset with Roche and Genentech's proprietary transcriptomics data to build multi-modal maps designed to explore potential novel targets and pathways by systematically linking gene perturbations to cellular phenotypes
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.
State of the Art Transcriptomics Models: Built to better connect Recursion's proprietary perturbational biology with patient biology to find novel insights and medicines, the integration of these models help bridge the translation gap between what we see in the lab and what matters in disease:
•TxPert, recently featured in Nature Biotechnology, is a proof-of-principle model for predicting transcriptomic responses to perturbations. The model can generalize beyond its training data, including predicting responses to unseen single-gene perturbations, novel combinations, and known perturbations in new cell types-enabling more efficient hypothesis generation and experimental prioritization, and laying the foundation for Recursion's Virtual Cell.
•TxFM, presented at the ICLR Workshop on Foundation Models for Science, is a transcriptomics foundation model designed to connect lab perturbations with patient biology within the Recursion OS. Trained on a large, curated dataset of public and proprietary data, it outperforms 16 leading foundation models and baselines, including models trained on datasets 10-100x larger. Beyond enabling target identification, mechanistic understanding, and patient stratification, TxFM's superior batch correction and denoising drive operational efficiency-reducing experimental re-runs, enabling cross-experiment comparisons, and increasing the value of every sequencing dollar spent.
Financing and Operations
Since 2024, our financing and operations activities include the following: 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. 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 $500.0 million of its Class A common stock. In 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 was completed and no amount remained available for future sales. In 2025, we received multiple milestone payments related to our collaborative development contracts totaling $37.0 million, with aggregate milestone inflows in 2026 of $4.0 million. In February 2026, the Company entered into a Sales Agreement with TD Securities (USA) LLC (TD Cowan), to provide for the offering, issuance and sale of up to an aggregate amount of $300.0 million of its Class A common stock. As of March 31, 2026, no amounts have been sold under the Sales Agreement with TD Cowan.
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 $665.2 million as of March 31, 2026. 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 $117.5 million and $202.5 million during the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, our accumulated deficit was $2.2 billion.
As of March 31, 2026, 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 March 31, 2026, and December 31, 2025. 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) Three months ended March 31, Change
2026 2025 $ %
Revenue
Operating revenue $ 6,301 $ 14,818 $ (8,517) (57) %
Grant revenue 171 (73) 244 n/m
Total revenue 6,472 14,745 (8,273) (56) %
Operating costs and expenses
Cost of revenue 12,490 21,829 (9,339) (43) %
Research and development 87,896 129,634 (41,738) (32) %
General and administrative 34,591 54,650 (20,059) (37) %
Total operating costs and expenses 134,977 206,113 (71,136) (35) %
Loss from operations (128,505) (191,368) 62,863 33 %
Other income, net 6,397 (11,277) 17,674 >100%
Loss before income tax benefit (122,108) (202,645) 80,537 40 %
Income tax benefit (expense) 4,604 158 4,446 n/m
Net loss $ (117,504) $ (202,487) $ 84,983 42 %
n/m = Not meaningful
Revenue
The following table summarizes our components of revenue:
Three months ended March 31, Change
(in thousands, except percentages) 2026 2025
$
%
Revenue
Operating revenue $ 6,301 $ 14,818 $ (8,517) (57) %
Grant revenue 171 (73) 244 n/m
Total revenue $ 6,472 $ 14,745 $ (8,273) (56) %
n/m = Not meaningful
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 three months ended March 31, 2026, the decrease in revenue compared to the prior period was due to a decrease in revenue recognized from Roche due to the successful completion of certain project phases in the prior period.
Cost of Revenue
The following table summarizes our cost of revenue:
(in thousands, except percentages) Three months ended March 31, Change
2026 2025
$
%
Total cost of revenue $ 12,490 $ 21,829 $ (9,339) (43) %
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 three months ended March 31, 2026, the change in cost of revenue compared to the prior period was due to a decrease in costs of revenue recognized from Roche, which was due to the shifting scope of work across our various performance obligations as certain phases of the projects reached completion.
Research and Development
The following table summarizes our components of research and development expense:
(in thousands, except percentages) Three months ended March 31, Change
2026 2025
$
%
Research and development expense
Platform $ 41,154 $ 68,753 $ (27,599) (40) %
Discovery 17,940 20,849 (2,909) (14) %
Clinical 17,595 17,557 38 - %
Stock based compensation 12,915 17,800 (4,885) (27) %
UK R&D tax credit (1,760) (2,281) 521 (23) %
Other 52 6,956 (6,904) (99) %
Total research and development expense $ 87,896 $ 129,634 $ (41,738) (32) %
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;
•other direct and allocated expenses incurred as a result of research and development activities, including those for facilities, depreciation, amortization and insurance; and
•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 three months ended March 31, 2026, the decrease in research and development expenses compared to the prior period was primarily driven by platform expense. Platform expense decreased due to Tempus record purchases, which were $27.1 million for the three months ended March 31, 2025. There were no Tempus record purchases for the three months ended March 31, 2026.
General and Administrative Expense
The following table summarizes our general and administrative expense:
(in thousands, except percentages) Three months ended March 31, Change
2026 2025
$
%
Total general and administrative expense $ 34,591 $ 54,650 $ (20,059) (37) %
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 three months ended March 31, 2026, the decrease relative to the three months ended March 31, 2025, was primarily driven by a decrease in salaries of $6.7 million as a result of headcount reductions in the year, in addition to one-time transaction costs in the prior year associated with the Exscientia acquisition including impairment charges of $6.0 million in relation to leasehold improvements.
Other Income (loss), Net
The following table summarizes our components of other income (loss), net:
(in thousands, except percentages) Three months ended March 31, Change
2026 2025
$
%
Interest income $ 5,963 $ 5,558 $ 405 7 %
Interest expense (350) (508) 158 (31) %
Other 784 (16,327) 17,111 n/m
Other income (loss), net
$ 6,397 $ (11,277) $ 17,674 n/m
n/m = Not meaningful
For the three months ended March 31, 2026, the decrease in other income (loss), net compared to the prior period related to our loss on disposal of Exscientia GmbH and our Vienna lease termination for the three months ended March 31, 2025.
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 $665.2 million and $753.9 million as of March 31, 2026 and December 31, 2025, 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 $117.5 million and $202.5 million during the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, we had an accumulated deficit of $2.2 billion.
Since 2024, we have financed our operations primarily through Class A common stock issuances. As of March 31, 2026, we have received net proceeds of $829.0 million from Class A common stock issuances. See Note 8, "Common Stock" to the Condensed Consolidated Financial Statements for additional details on Class A common stock issuances. Additionally, as of March 31, 2026, we have received proceeds of $78.0 million from our strategic partnerships. See Note 9, "Collaborative Development Contracts" to the Condensed Consolidated Financial Statements for additional details on the strategic partnerships.
Cash Flows
The following table is a summary of the Condensed Consolidated Statements of Cash Flows for each of the periods presented below:
Three months ended
March 31,
(in thousands) 2026 2025
Cash used in operating activities (81,101) $ (131,957)
Cash used in investing activities (338) (7,270)
Cash provided by (used in) financing activities
(3,470) 40,527
Operating Activities
Cash used by operating activities decreased during the three months ended March 31, 2026 as a result of lower costs incurred for research and development and general and administrative primarily due to improved operating efficiency and the strategic reprioritization of our clinical portfolio.
Cash used by operating activities increased during the three months ended March 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 Exscientia GmbH disposal related payments of $9.7 million and severance payments of $6.5 million.
Investing Activities
Cash used by investing activities during the three months ended March 31, 2026 was not significant.
Cash used by investing activities during the three months ended March 31, 2025 consisted of the disposal of Exscientia GmbH of $4.4 million and property and equipment purchases of $1.8 million.
Financing Activities
Cash used by financing activities during the three months ended March 31, 2026 primarily included repayment of long-term debt and financing lease liabilities of $2.2 million from common stock issuances.
Cash provided by financing activities during the three months ended March 31, 2025 primarily included proceeds of $41.0 million from common stock issuances. Financing outflows included a $1.6 million payment for the purchase of an intangible asset that was not soon after the purchase.
Critical Accounting Estimates and Policies
A summary of the Company's significant accounting estimates and policies is included in Note 2, "Summary of Significant Accounting Policies" in our 2025 Annual Report. There were no significant changes in the Company's application of its critical accounting policies during the three months ended March 31, 2026.
Recently Issued and Adopted Accounting Pronouncements
See Note 2, "Basis of Presentation" in Item 1 of this Quarterly Report on Form 10-Q for information regarding recently issued and adopted accounting pronouncements.
Recursion Pharmaceuticals Inc. published this content on May 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 06, 2026 at 10:39 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]