Business Context and Reporting Period
Company: Recursion Pharmaceuticals, Inc. (RXRX)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and six months ended June 30, 2026
Business Overview: Recursion is a clinical-stage TechBio company utilizing an AI-native platform (Recursion OS) to decode biology and industrialize drug discovery. The company operates as a single segment and has not yet commercialized any products, relying on strategic partnerships and equity financing.
Key Financial Metrics
| Metric (in thousands) | 3 Months Ended June 30, 2026 | 6 Months Ended June 30, 2026 | 6 Months Ended June 30, 2025 |
|---|---|---|---|
| Total Revenue | $7,670 | $14,143 | $33,968 |
| Net Loss | $(131,005) | $(248,509) | $(374,384) |
| Net Loss Per Share (Basic & Diluted) | $(0.25) | $(0.47) | $(0.91) |
| Operating Cash Flow | N/A | $(187,048) | $(208,375) |
| Cash, Cash Equivalents & Restricted Cash | $556,820 (as of June 30, 2026) | N/A | N/A |
| Total Debt (Notes & Leases) | $14,196 (as of June 30, 2026) | N/A | N/A |
Liquidity: As of June 30, 2026, the company held $556.8 million in cash and cash equivalents. Management believes this is sufficient to fund operations for at least the next 12 months.
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased 60% year-over-year for the three months ended June 30, 2026 ($7.7M vs. $19.2M) and 58% for the six-month period ($14.1M vs. $34.0M). This was primarily due to the completion of certain project phases with Roche, reducing revenue recognition.
- Expense Reduction: Operating expenses decreased significantly. Research and Development (R&D) expenses fell 30% QoQ and 31% YoY (six months), driven by reduced personnel costs and a $46.8 million decrease in Tempus data record purchases. General and Administrative (G&A) expenses dropped 25% YoY (six months) due to headcount reductions and the absence of one-time acquisition-related costs present in the prior year.
- Improved Net Loss: Net loss improved by 24% for the quarter and 34% for the six-month period compared to the prior year, reflecting the reduction in operating costs.
- Other Income: Other income (loss), net turned positive for the six months ended June 30, 2026 ($10.4M) compared to a loss of $6.9M in the prior year, largely due to the absence of the $4.5 million loss on the disposal of Exscientia GmbH recorded in 2025.
Guidance, Outlook, and Risks
Management Commentary & Outlook
- Pipeline Progress:
- REC-4881 (MEK1/2): Phase 1b/2 trial (TUPELO) is enrolling; updated data expected at CGA-IGC in November 2026. FDA discussions initiated in 1H26.
- REC-7735 (PI3Kα): Phase 1/2 trial (ZINNIA) expected to initiate in 2H26.
- Partnerships: Genentech exercised the first Validated Target Option under the neuroscience collaboration. Sanofi collaboration continues with potential milestones in the next 6-12 months.
- Technology: Deployment of "Agentic AI" to accelerate target discovery and drug design, reducing structural analysis time from 4 hours to 30 minutes.
- Financing: Entered a new $300 million At-The-Market (ATM) sales agreement with TD Cowen in February 2026; no shares sold under this agreement as of June 30, 2026.
Risks and Contingencies
- Capital Requirements: The company has an accumulated deficit of $2.3 billion and expects to incur substantial losses in the future. Additional capital will be required to advance drug candidates.
- Internal Controls: Disclosure controls and procedures were deemed ineffective as of June 30, 2026, due to material weaknesses related to the integration of the acquired Exscientia business. Remediation efforts (new ERP/P2P systems) are underway but not yet fully tested.
- Legal Proceedings: Ongoing litigation with Industry Office SLC, LLC regarding a lease dispute; no liability recorded as an unfavorable outcome is not currently probable.
- Forward-Looking Statements: Risks include clinical trial outcomes, regulatory approvals, and the ability to raise additional funding.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the $556.8 million cash balance against the projected burn rate, given the lack of product revenue.
- Internal Control Remediation: Monitor the timeline for testing and concluding the remediation of material weaknesses in internal controls over financial reporting.
- Partnership Milestones: Track the timing and probability of upcoming milestone payments from Sanofi and Roche/Genentech to assess near-term revenue visibility.
- ATM Utilization: Watch for utilization of the new $300 million TD Cowen ATM facility to fund operations.
- Clinical Data Readouts: Confirm the timing and results of the REC-4881 data presentation in November 2026 and the initiation of the REC-7735 trial in 2H26.