Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) Q3 2025 Earnings Call Transcript

Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) Q3 2025 Earnings Call Transcript November 5, 2025

Recursion Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-0.36, expectations were $-0.38.

Christopher Gibson: “

Najat Khan: “

Ben Taylor: “

Christopher Gibson: Hello, everybody, and welcome to Recursion’s Third Quarter 2025 (L)earnings Call. My name is Chris Gibson. I’m the Co-Founder and current CEO of Recursion, and I’m so delighted to have you all joining us today. I want to start off by talking about something that I’m really excited about, which is our executive leadership updates. And it’s my pleasure to share with all of you that beginning January 1, the amazing Najat Khan is going to take over the role of CEO, President and Director of Recursion. I’ve been working with Najat for the past 18 months in an incredible partnership to build our platform to deliver on our pipeline and our partnerships. And everything that I have seen has convinced me that she is absolutely the right leader to take Recursion through its next chapter.

And I’m so delighted that she has agreed to take on that role. I’m also incredibly excited that I’m going to continue bringing my passionate unapologetic founder energy to Recursion as the Chairman of the Board and as an Executive Adviser. And finally, I want to say a huge thank you to our entire Board and especially to our Chairman, Rob Hershberg. He’s been an amazing Chair and an incredible mentor to myself and Najat, and I am delighted that he’s going to continue on with us, I hope, for a very long time as our Vice Chairman and Lead Independent Director. These are really exciting changes that I believe are going to position Recursion to affect our mission to lead the Tech-Bio space, and I am so, so thrilled to get to share them with you today.

Q&A Session

Najat?

Najat Khan: Thank you, Chris. It is such an honor to step into the big role to be CEO and President of Recursion. And I want to thank you. I want to thank the Board and just our incredible team for their trust and partnership. And Chris, first for a few minutes, I want to say, look, your vision and the courage with which you have taken this from 0 to what Recursion is today is unparalleled. And you’ve not just been instrumental in building the company, of course, but also creating a new sector that never existed before, really truly blending the best of technology and science to make medicines and radically improve patient lives. There’s so much to do. So I’m really — I’m deeply grateful, of course, for your leadership, but even more so for your friendship which I’m looking forward to doubling down on as you work together in all of your many roles.

When I — I just want to say a few other words, too. Look, when I joined Recursion 18 months ago, I was drawn to the bold ambition, but an ambition in action. And what an 18 months it’s been. Step 1 was the special combination with [ Excientia ] to really truly build that end-to-end tech stack, as we like to call it, engine and also the data generation. We’ve talked a lot about models, but proprietary high-quality data is critical and a critical moat to what we do. Building out clin tech platform, we’re in the clinic. This is going to be a critical part of what we do and also sharpening our portfolio, advancing multiple programs internally with our partners. Chris will share a little bit more of some of the latest updates there from Roche and doing so with a discipline and urgency that I think patients will be proud of.

And this is a pivotal chapter for Recursion, one that will require bold focus. The boldness will never go away, but also navigating the complexity that, quite frankly, is drug discovery and development, having seen that for many years and the relentless sense of urgency and good capital stewardship that’s going to be critical for us to fully realize our mission. My focus, and I’ll listen more and think more over the coming weeks, but really it’s going to be translating these platform insights into repeatable clinical proof, whether it’s through our wholly owned programs or with partners, scaling the platform that we have, where we have a clear, clear, clear advantage and building a company that delivers sustainable value. The foundation is strong.

The vision is clear. The opportunity ahead is extraordinary, and I couldn’t be excited. The work will be hard. I am clear-eyed about that. And there will be bumps in the road, but it should be because it’s deeply worth it because we’re doing something that there’s no blueprint for. It hasn’t been done before. It’s also deeply meaningful for the patients that we serve and for the future that we’re building together. So I’m so excited. I couldn’t be prouder of the next phase. Looking forward to partnering with Chris and the rest of the broader team, exceptional team, if I say so, to define that next phase and the next chapter for Recursion.

Christopher Gibson: Thanks, Najat. And with that out of the way, I think we should get back to work. And one of the things that I’m extremely excited about is that Recursion has a tremendous amount of potential catalysts coming in the next 18 months. From our pipeline to our partnerships to advancements of our platform, we are going to continue to deliver exciting updates, I hope, on a really regular cadence to all of our shareholders, all of our stakeholders and ultimately, advancements and milestones that I think take us on a path towards really affecting patient lives. And we’re going to do all of that with a pro forma cash balance of almost $800 million as of a few weeks ago. And what I’m excited about is that gives us runway through the end of 2027 without any additional financing.

This means we’re in an incredibly robust position from a balance sheet perspective to deliver across all of these catalysts. Now let me talk a little bit about something that was really exciting that we got to share last week, which is how our platform is fueling all of our partners, but in particular, our Roche and Genentech colleagues. We shared last week that we had earned a $30 million milestone payment. This is our second such milestone from Roche and Genentech for the delivery of a whole genome neuro map. And I want to point out that this brings our total cash inflows from partnerships to more than $0.5 billion. And I think that is a milestone that few pre-commercial biotech companies ever achieved and one that I think is a leading indicator of the kind of value that we are going to continue to deliver here at Recursion.

So let’s talk a little bit about the Roche and Genentech collaboration. This is a collaboration that’s a decade-long focus in neuroscience and GI oncology. We’ve already been able to deliver 4 whole genome phenom maps in our GI oncology space, generating over 100 billion GI oncology relevant cells. And we already have a program that’s been optioned out of that particular set of maps and heading toward lead series, and I hope many more in the future as well. But what we announced last week was that in addition to the whole genome arrayed CRISPR knockout map of iPSC-derived neurons that we delivered last year, where we became, we believe, one of, if not the world’s largest producers of these iPSC-derived neuronal cells. We have now delivered a second whole genome map this time in the incredibly challenging microglial cells, the immune cell of our brain.

And what we are excited about is the number of incredibly novel potential targets that we have identified in both of these pheno map that we believe have real potential not only to lead to novel target options in the future with our colleagues at Roche and Genentech, but I hope really meaningful medicines for patients in the field of neuroscience where all of us agree, there’s a lot, a lot of work to do. So I want to talk a little bit more about this work. And I want to remind everybody what do I mean when I talk about a map of biology. We have knocked out nearly every gene in the genome in these microglial cells. And we have leveraged machine learning and AI techniques to turn images of these cells into functional maps of the relationships between every single gene.

And these digital maps allow us to move from this empirical sort of one-in-a-time approach into really a search function where today, our colleagues at Roche and Genentech, our team can just type in any gene in the microglial map or the neuronal — or the iPSC-derived neuronal map, and they can see the relationships across the rest of the genome. This gives us incredible insight, novel pathways, novel targets. And it’s extraordinarily significant, I think, for our teams to now be able to do this not just in the neuron, but in the immune cell of the brain. So really, really excited about this. I know our colleagues at Roche and Genentech are too. And to give you a sense of the road that we’ve taken to get here, this was something that I think many people did not think would be possible.

First, our team had to generate more than 100 billion microglial cells. Then we had to figure out how to get more than 100,000 different sgRNAs into these cells, so we could knock out 17,000-plus genes with multiple guides per gene and we were able to do this generating nearly 50 million microglial cell images. And we used our supercomputer, BioHive-2, still, we believe, the fastest supercomputer wholly owned by any biopharma company, at least for a couple of more weeks or months until [ Lilly ] potentially overtakes us to generate this first-of-its-kind microglial map. And from this map, we’ve already started mining for novel biological insights, and we have the team and the equipment and the expertise to validate those insights to deliver programs to our colleagues at Roche and Genentech.

And our hope is that, that will lead to potential new therapeutic approaches. So I’m so proud of the team for all the work they’ve done. I’m so proud of this particular map because I think it has extraordinary potential in the field of neuroscience. With that, I’m going to turn it over to Najat to talk a little bit about how our platform is fueling our pipeline.

Najat Khan: Thank you, Chris. And just the example that you mentioned in terms of microglia is such a phenomenal example of how our platform and the combination of the wet lab and the depth of the wet lab approaches that we have at Recursion with, of course, our dry lab really creates something of unique value. So if you go to the next slide, we shared this slide before. And I just wanted to spend a little bit of time on it today and double-click on a couple of areas. So first of all, this represents the heart of how Recursion operates. You hear a lot about the Recursion OS. And I love to kind of pull the hood and like really show what are the various components that we’re focusing on here. Step one, we’re applying AI where it matters, where it can truly change either quality, speed or the impact of our decision-making.

There are 3 specific modules here. The first is focused on deep biological understanding that’s actually connected to patient outcomes. The second, how do we leverage AI to design better molecules that are more drug-like. And then the third is a ClinTech approach on picking the right patients as well as recruitment — fast recruitment so we can get through our trials faster. All right. Having said that, I wanted to double-click on a couple of areas that we’re really focusing on. Next slide. Scientific agents. So we’ve heard a lot about agentic agents. One of the most exciting parts of the OS is how we are using scientific agents, AI systems that actively participate in the entirety of the scientific process. And these agents are helping us thinking about the data that Chris just mentioned, genomics, transcriptomics, real-world data with partners like Tempus and others public data sets like PubMed, [ JetMa ] and so much the list goes on and on.

And we have early proof-of-concept agents that we’re leveraging in order to really not just analyze and interpret the data real time, but to actually select the optimal tools, workflows, generate hypothesis and design new experiment. This is going to supercharge our already extraordinary talent. The other reason I’d like to mention this is also around it captures the decision-making trail. That’s really important. The way you get these agents to be highly effective is to actually understand the logic behind the recommendations and iterate in real time with our scientists and our clinicians. And that is something that we’re doing. And having that inherent data, this platform helps us do it in action, not just theoretically. I often get the question in terms of how do we drive economies of scale.

We are a tech bio company. This is going to be one of the very important levers for us as to how do we do more given a lot of the insights that we’re generating with what we have today. So just keep an eye on this, but I wanted to double-click on a really important area of progress for us that is truly applied to what we need to do to create programs that are differentiated. The second area, if we go to the — one more click, I will do it, is really around automated ADMET. Look, we talked a lot before around [ Bolts 2 ] and other programs that really help you understand binding affinity and so forth. But as we all know, in order to actually design programs, a critical element of it is to ensure that they are drug-like. So this is an area that is critical for us.

And what we are doing, this is the automated platform that we have in Salt Lake City, combining high-throughput experimental automation with advanced machine learning. It’s a fully automated closed-loop system that integrates ADMET property predictions directly into that middle module that we have, which is our AI-enabled precision design. So it does a couple of things. Number one, we are generating proprietary data around ADMET, not just what’s been published, but all of the successes and failures that we see as we are generating our own data. Failures are incredibly important to design better models. Second, the comprehensiveness of the ADMET properties over 50 or so is just a starting point, and that’s only going to increase is important in order to ensure the algorithms are actually generalizable.

And then the third, you’ve heard about models such as [ Mole GPS ], and there’s new models that are coming up all the time. But these data feed directly into the model, which is actually iterating and helping our models to be retrained real time. So both examples of real-time iteration is critical for us to not just have a platform that’s useful, but a platform that stays ahead of the curve and learns from both our successes and our mistakes. So with that, I want to walk to the next part, which is how is the platform being leveraged to actually generate programs. And this actually slide came to my mind during the flight post popular demand from analyst questions and investor questions. Here’s what you have. I’ll just walk you through it. On rows, the 3 design components that I just mentioned, the biology, the chemistry and the clinical development that you saw on the last slide, everything from phenomics, transcriptomes, et cetera.

And as I do the build for the columns, these are the various iterations generations of our platform. So just to give you a clear view on which programs using what component of our platform. So it’s important to note, as you’ll see, the earliest programs built on our first-generation platform, which I will call V0.1, and we’ve shared that before, the programs that are now in the clinic, tangible proof that we are generating programs and also learning fast, the flywheel with every turn of the crank, we’re learning really, really fast as to how to improve on what we’re doing well and what we need to do better. So the first one here, MEK1/2, more data coming in December. I’ll share a little bit more of our plan there. This is a proof point around how are we leveraging genomics, an unbiased approach to drug discovery in order to really ascertain which compound, which mechanism, which we do not know going in, could actually help attenuate the hallmark of the disease, which is polyps, hundreds to thousands of polyps.

More to come on that in a second. Now often, I get the question that if this is part of platform 0.1 is that it? The story never ends there. As you will see with ClinTech, if you go to the third row, we are actually leveraging recruitment solutions as well as patient selection and stratification. So even programs that are in the early part of the platform, we’re leveraging some of our recent components in CinTech to add more value creation. The second iteration of our platform, I’ll call this is V1.0, we’re beginning to combine genomics and biology as well as chemistry design as well. So examples such as RBM39, CDK7, et cetera, and of course, components of the CinTech platform. And then one more click. These are programs in discovery, which I hope to be able to — we hope to be able to talk about soon that, as you can see, is incorporating all of the various components of the platform from discovery, biology, novel insights, chemistry and CinTech and not just for our wholly owned programs, but also for our partner programs.

So more to come on that. So where are we making progress? You’ve seen this slide before. I’d like to update it every time that we meet. So first of all, CDK7 combination cohorts have been initiated. I’ll speak a little bit more in a moment in terms of some of the analysis and some of the data that we have from the monotherapy dose escalation. PI3K 1047R, the development candidate has been nominated, which was again one of our milestones for this year. And MEK1/2, we’ll have a webinar in December in order to share some of the additional data from our 4 milligram cohort. As you also heard from Chris, the $30 million option milestone received for the microglia map. This is in addition to the 6 Phenomaps and also some of the programs that we’re generating and great traction across the other programs and partnerships, including Sanofi.

I just want to pause and take a moment to say both of our internal and our partner programs are critical, critical to us delivering tangible proof as well as also learning fast to keep evolving our platform. All right. So I’ll take a moment to go through CDK7. So just a quick context, we’ve talked about this before. CDK7, really important master regulator, transcriptional kinase that has generated significant interest in oncology for some time, but has been plagued with historical challenges. And the main — one of the main reasons for those challenges is the narrow therapeutic window and just the molecular properties that limited tolerability and efficacy. So what are we doing leveraging our platform that’s different? Number one, leveraging our platform, we set out to design a molecule that directly addresses one of these core limitations around therapeutic index, which is optimizing permeability and [ eflux ] so that we reduce the GI-related toxin variability that others have seen before.

That’s number one. Number two, we are also leveraging preclinical data as well as multimodal real-world data, causal AI, all of those components of our platform in order to hone in on patients that might most benefit, how do we steer a product into the right patients, patient stratification. That’s another area of differentiation that we’re focused on. And of course, from preclinical models, we’ve seen tumor regression in both ovarian and breast cancer. We also shared some early data last year, early clinical data from last year that showed manageable safety profile as well as some partial response as well. What is our next focus? So in terms of our next focus, next slide. We have completed our Phase 1 dose escalation. So MTD has been achieved in advanced solid tumors.

I’ll get to that in a second. In addition to that, concurrently, the team is also looking into alternate dosing schedule just to figure out ways to even further optimize the therapeutic index, especially for long-term dosing. The other areas of near-term focus for us, which is already well underway, is a Phase 2 dose expansion in the cohort that we had mentioned, the platinum-resistant ovarian cancer as well as combination, which is going to be key in this space with a couple of combination standard of care that you can see on the slide. Recruitment ongoing across all of these cohorts. The other thing that’s important to note is a lot of the trial design is focused on rapid and efficient go/no-go. And we’ll share more in terms of the Phase 1 dose escalation data at a medical congress next year.

And then in addition to that, we should have some of the ovarian combination data in 2027, safety, PK/PD, maybe early signs of efficacy, more to come in next year as we see the recruitment shaping up in terms of details on when in 2027. So stay tuned. All right. So let’s go into the monotherapy dose escalation. So a couple of things to note. As of September 29, which is the cutoff date, we have 29 heavily pretreated patients with advanced solid tumors that have received 617 across 6 dose levels. Just as context, these patients represent a rather challenging population, most with multiple prior lines of therapy and limited standard options. We have now established a 10-milligram once-daily MTD, maximum tolerated dose with a manageable safety profile, we’ll talk about in a second and also preliminary antitumor activity that’s consistent with what we shared in the 2024 update.

The most common dose-limiting toxicities were nausea, which is to be expected and some thrombocytopenia, which are both on-target effects for this target class. If you go into safety. Look, the safety data is consistent with what we saw last year. First of all, we have about 30% of patients that experienced Grade 3 treatment-related adverse events, and the majority were low grade 1 or 2. There were no grade 4 or 5 treatment-related events and only 2 patients, about 7% discontinued due to an AE. One thing I want to note here, and again, this is early, we’re learning more, of course, the GI-related toxicities that we have seen, diarrhea, nausea, vomiting were relatively manageable and in line with class expectations. And to just put that in context a little bit more.

Okay. To put that in context a little bit more, in terms of diarrhea, we saw about 69%, nausea 41%, vomiting 28%. Of course, looking at some of our peers also in the space, the numbers for diarrhea are about 82%, 77% for nausea and vomiting for 80%. So it’s trending in the right direction, but of course, much more work to be done, but trending to be slightly lower than what we have seen in other prior published data. All right. In terms of efficacy, first of all, on the left-hand side, this highlights the PK profile. highly selective inhibitor potent and also flexibility in terms of how we can dose it given the short half-life — the relatively short half-life of around 5 hours. One thing that’s important to note, so going back to the established MTD, which is 10-milligram once daily dose, the exposures exceed, as you can see, the CDK7 IC80 while remaining below CDK2 IC80, supporting the selective inhibition that we wanted to see.

In preclinical models — what does that mean? In preclinical models, 10-milligram equivalent QD showed robust tumor regressions with about 2 to 4 hours to target coverage. And the early PD data that we have indicates that this is about 80% to 90% of transient [ POLR 2A ] engagement, which is one of the key PD markers that we are tracking in this space, again, consistent with that hypothesis. So from all of the data that we’ve seen so far, 10-milligram QD is pharmacologically active dose. In addition to that, we’re also looking into alternate intermittent schedules such as second day on off to further maximize the dose intensity while maintaining tolerability for long-term dosing. On the right-hand side, you’re also seeing some of the early clinical translation.

Look at 10 milligram is where we see stable dose and also the patient that had the PR. Of course, in this patient cohort, monotherapy is not an area that we were expecting outcomes and which is consistent with what we’ve seen with other CDK inhibitors, which is why our combination is going to be incredibly important. So stay tuned, more to come on that. And last thing, speaking about the combination, I’ve shared this — we’ve shared this data before, but ovarian cancer is the current area of focus, which is different from where others have gone, which has been much more primarily in breast cancer or a broad basket of solid tumors. pulling together everything that we have seen in cell lines on the left, in terms of ovarian cancer models, the sensitivity to CDK inhibition, combining that with what we have seen in vivo at 10-milligram dose, we saw complete tumor regression by day 27 as well as on the right, leveraging our patient level data from over 30,000 ovarian cancer samples, integrating DNA, RNA and clinical outcomes to really showcase that CDK7 is a likely driver of poor survival and some of the work we’ve done with our causal and friends and AI works.

So — but again, the proof is always in the pudding. So much more to be done and expect more on the full data set I just mentioned for the monotherapy dose escalation next year at a medical congress as well as combination data in 2027. We’ll give you narrow guidance or more specific guidance as we get full flow into our recruitment. All right. And just wanted to heads up on REC-4881, which is our other program that has an important readout coming out next month. So just as context, high unmet need, 50,000 patients diagnosed across U.S., EU5, rare inherited disorder, APC loss of function. And standard of care is quite challenging. Surgery is a standard of care, [ colectomies ], et cetera, and no approved therapies to date. We also have orphan drug designation for this compound.

Just a recap of some of the earlier data that we’ve seen in May that was shared in DDW, 43% median reduction in total poly burden, that is the hallmark standard of care today, off-label use of celecoxib is usually 20% or so or 25%. But again, there is a range from 30% to almost to actually 83% in the small cohort that we had seen in May. We’ve seen about 6 patients. We expect that to be double or close to double by the end of this year. And what we’re looking for, again, as I mentioned before, is to see if these trends will hold and a significant benefit over the 20% that has been seen so far. In terms of what we’re seeing from a treatment-related AEs, 19% grade 3, majority is rash and the prophylactic approach has really made it much more manageable and cardiac tox more grade 2 so far.

So again, December, we’ll share more information in the coming weeks, exactly when in December. We’ll have the Phase 1b/2 update. This is going to be an important update, as I mentioned, and then we’ll also discuss some of the next steps for the program. If the trends hold, one of the core next steps will be to actually have discussions with regulators on a pivotal study. And I just want to say this is one of those, as I like to call green shoots in terms of leveraging our platform to see color burden reduction, both in vivo and then also starting to see in patients. But again, small data set, more to come. We’re looking forward to the data cut in December. With that, I’m going to hand it over to Ben for our financial update.

Ben Taylor: Terrific. Thank you, Najat. Another thing that we are very excited about is going into that FAP data as well as the milestones in 2026 in a really strong financial position. So over the course of the year, you’ve seen us do a number of things. In May, we laid out a strategic plan that allowed us not only to hit on multiple high-value milestones, but also reduce our expense base by 35% from 2024. This was a really important step in us trying to put that discipline in place that Najat was talking about earlier. And then you started to see us hit those milestones. We’ve brought in almost $40 million from our partnership inflows over the course of this year so far, and we expect more of that to come in the future. So with today, our announcement of having $785 million of cash in the bank as of October 9 is a really strong step in creating that foundation so we can look forward into the future milestones and say, we don’t have that financing need to be able to achieve our near-term milestones and really deliver a lot of value to shareholders.

And so when we look forward we’ve looked at how we can bring that financing together in a way that was going to minimize our dilution to all of the shareholders as well as really continue to allow us to focus on the business and move it forward. We are also reaffirming our guidance for 2025 on an expense base of less than $450 million. That’s excluding all of the partnership inflows. In 2026, we’re also reaffirming less than $390 million over that time period. One note on that 35% expense reduction, that actually equates to over $200 million in expenses coming off of that 2024 base. And we’ve done that by really focusing in on what is going to be the aspects of the business that deliver the highest value and efficiently bringing that together.

We will continue to look at our expense base. We are completed with all of the restructuring that was associated with the transaction, but we will continue to look at our operations and think about how can we do this better? How can we do this more efficiently? How can we get more out of every dollar that we spend and really focus in on the high-value partnerships — or high-value projects. From a partnership perspective, the $30 million in milestone from microglia that we achieved with Roche and Genentech was not included in the $785 million in cash. Importantly, we do not give guidance on revenue, but I know a lot of the services track it. So we just want to be really clear. First of all, we don’t consider the lumpiness in our revenue to be any indication of our business.

But what we do know is the timing of our milestones can impact how we recognize some of that revenue. For example, last year, we had a milestone associated with the neuronal map. And so we had a larger piece of revenue that was recognized in that quarter last year, in the third quarter of last year. The Roche microglia milestone is going to be recognized partially in the fourth quarter, and it is important that’s partial, not full. And so you would see some of that lumpiness come into our fourth quarter numbers there as well. Really importantly, the nearly $40 million that we’ve recognized this year from our partnership inflows actually brings us over $500 million in partnership inflows over the course of the company. That shows just what an important piece of nondilutive capital that part of the business and platform has become to the overall company.

We are also maintaining our guidance of over $100 million in partnership inflows by year-end 2026 that we laid out in May of this year. So we’re making great progress along that and expect to continue to see a lot of that come through in the next year as well. And with that, I will turn it back over to Najat to talk about some of the upcoming milestones.

Najat Khan: Great. Thank you so much, Ben. And we wanted to just capture both looking at this year as well as what’s coming up next year. For this year, one big thing that as I look at the slide, which is missing is really the successful integration of the 2 companies coming together. It’s been an incredible amount of work. And also the financial discipline that we’ve gone through internally to really extend our runway so that we can see through a lot of these catalysts. So look, on the internal pipeline highlights, CDK7, I just mentioned the monotherapy update and the combo that’s initiated. REC-4881, the Phase 2 initial update, potential first POC for our platform, [ MALS-1 ] monotherapy initiation and the PI3KDC nomination.

I will also talk a little bit about our platform and then go to our partnership. On the platform front, a ton of work, like 3 words on a slide, integrated design platform, but actually, I should say integrated our end-to-end platform, the amount of migration work, I have seen this across other companies before with the speed with which that was done and the utility, the fact that we had no slowdown in our productivity of our platform speaks to our fantastic engineering data science teams that exist. And then also the work with MIT and NVIDIA on both 2, but much more that’s going on in-house, which I would be a pleasure to share next time, especially with our Frontier team, which is our 0 to 1 cutting-edge AI team, really, really proud of the work that they’re doing, Valence and Inception Labs.

And then ClinTech, this has been a core focus for us in the last several months to really build out the tech stack end-to-end also into clinical development, crucial pillar as we execute on these programs. And on the partnership highlight, Chris and Ben mentioned, of course, the Roche $30 million from microglia, but the real work that we’re doubling down on is both of the maps in neuroscience and the additional maps in GI onc and really turning and Chris showed this really beautifully in his slides, turning those into insights with a deep functional validation with our partners to then become programs. That is the core focus for us translating that value. And of course, progress with Sanofi, 4 out of 4 milestones so far in immunology and oncology and much more work ongoing.

We’re so honored to be able to work with our partners, Roche and Genentech, Sanofi, Merck KGaA and Bayer. We learned so much from each and every one of them. So thank you for the partnership. And then looking ahead, stay tuned for the REC-4881. We’ll share more data in terms of our Phase 2 in December. In addition to that, for next year, RBM39, this is our first-in-class compound from the phenomics platform. It’s also leveraging, of course, a lot of our clin tech approaches today. We should have some early safety and PK data from our monotherapy trial. And then in addition to that, ENPP1i, PI3K, both in GLP tox right now and pending that data, Phase 1 initiation, the team is all set up, pending what the data looks like. And from a partnership perspective, as I mentioned, deep focus on turning Maps into insights into programs.

That’s a huge focus for us in addition to some of the programs that we’re already working on and additional Maps as well. So lots to do. There’s never a dull moment at Recursion. I assure you, loving the pace, and we’ll keep you all posted. With that, thank you so much. I’m going to hand it back to Chris for our Q&A.

Christopher Gibson: Thanks, Najat. All right. Let’s go. We’ve got Sean from Morgan Stanley. Ben, this one goes to you. Can you review expectations for cash burn through 2026 and how this works with runway expectations through ’27 without additional financing? I know you just hit that, but maybe break it down for everybody. And then also, do you plan to use any additional ATM financing?

Ben Taylor: Yes, of course. So I think there’s a couple of things that we looked at over the course of the quarter. So one, the most important thing for a growth company is delivering on high-value milestones. And so our role as a management team is to make sure that we have the resources to be able to hit those milestones. So we looked at all of the things that we’ve talked about before. So how do we do the right expense control, how do we prioritize the right programs? And then how do we make sure that we’ve got the right cash balance in place to be able to reach those milestones and really focus on them. So what we decided to do was fully utilize the ATM over the course of the quarter, the remaining balance on the ATM. So that is now closed.

We have not opened up a new ATM. And what that allows us to do is really go in and put in a cash balance that without any additional financing allows us to get to the year-end 2027 and achieve those milestones that Najat was just talking about as well as many others. Just because I know the financing has been a critical question for a lot of shareholders. We really looked at 2 different aspects for that ATM utilization. One was if we look at the biotech financing market, there’s a couple of things that we saw very clearly. One, there is increasing volatility. There are fewer open windows. There’s a much shorter period of hold that we’ve seen from a lot of the investor base. And also the discounts have been increasing as well. And so we looked at the ATM as a very attractive cost of capital that would put us in a position to be able to execute on the plan going forward.

The other part was just there was so much focus that was becoming a part of the financing and the cash balance. It was actually starting to overshadow some aspects of the story. And so with such important data like FAP and some of the other milestones that are upcoming, we wanted people to really be able to focus in on the fundamentals of those events rather than needing to worry about are those events just going to lead to another financing or other aspects like that. And so we hope that this allows investors to focus. It also gives us a lot of ability to really focus on delivering those milestones over the coming months.

Christopher Gibson: Thanks, Ben. So financing overhang has been struck. Alec from B of A, one question on platform utilization. It looks like older programs use parts of Recursion’s capabilities in their development with Platform 2.0 assets, leveraging the full stack. Najat, this one is coming to you. How do you see this feeding into the quality or uniqueness of the newer assets? And anything to be read into for the current pipeline like 481, where it only benefited from phenomics in the version 0.1 of the platform.

Najat Khan: Yes. No, thank you, Alec. And by the way, you were one of the voices that inspired us to create that slide. So thank you for always sharing your feedback. So look, 4881 phenomics, our platform today, even if we’re making it multimodal, still leverages genomics a lot, right? And we are very, very excited in terms of some of the data we’ve seen to date and more to come later this year. But in terms of — with every crank, like some of the clinical stage programs that we have come from the earlier stages of the platform in discovery, later stages of our platform. I think that’s just the true iterative nature of drug discovery and development. And the improvement of our compounds doesn’t just stop in discovery. It’s also in development.

So you see some of the innovative approaches that we’re also taking in development for FAP, CDK7, et cetera. So we look at it more holistically. But look, with every crank, the platform gets better, and that’s just what it is for us, and we’re learning fast, and we want to execute and iterate as quickly as possible to get them into the clinic as well.

Christopher Gibson: Thanks, Najat. I’m going to bring this next one over to you as well. From Gil at Needham, Sean at MS and Manny from Leerink on the partnership side. Is Recursion looking to maintain current biopharma partnerships or expand to new partnerships in the near to midterm? And what are some of the milestones that we should be focused on?

Najat Khan: Great question. Our partnerships that we have are deep, highly collaborative and transformational. We are very, very excited about the partnerships that we have. And I mentioned some of the milestones that are critical for us maps to programs, for instance, in our Roche Genentech partnerships. And for Sanofi, we’re really making progress on the various programs that we have in immunology and oncology. We are always having discussions in terms of potential new partnerships. We are being incredibly choiceful. So that is an area that we’ll always be open to, but areas we can drive incredible value as well as our partner. It has to be a win-win. So the answer is yes, the door is always open, but we also — we tend to curate a set of partners that we can really show tangible value with.

Christopher Gibson: Thanks, Najat. Next one I’m going to take. This is from Guy and Alec. Would be interested to hear your thoughts on the evolving AI drug development landscape, especially with companies like Lilly throwing their hat in the ring and also partnering with NVIDIA. So look, I think this is extraordinarily exciting. This is a sign that when we said a couple of years ago, we look like what the future of biopharma will look like that we were right. companies are starting to embrace massively scaled compute. They’re starting to embrace AI. And so this tech bio sector is really, I think, just a harbinger of what the future of biopharma will become. And so this is super exciting to me. I’m so glad that Lilly is making this visionary investment.

I’m so glad to see them partnered with NVIDIA. And I look forward to working alongside many companies in the future that come to the space. We want to move the entire field forward ultimately to bring medicines to patients. So really, really excited by that advance. And then final question, I think, fittingly, over to Najat from Dennis at Jefferies. Congrats on the new role, I mean, effective January 1, we’ve still got a few weeks. Curious what philosophy you’re bringing into the seat as CEO and if there are any near or medium-term priorities that are top of mind.

Najat Khan: Thank you, Dennis. Look, my priority is going to be the core priority is going to be how do we translate the data, the compute, our amazing people, our platform, to tangible proof points that matter, whether it’s our own pipeline, whether it’s with our partners, that is the core element that matters the most. As Chris was saying, look, I’ve been in big pharma before. Now I’m in tech, bio, biotech, AI inspired, whatever term you want to use. At the end of the day, it’s about making differentiated programs and then eventually medicines for patients that matter. That is the core focus for me. It starts with that, it ends with that. We have — this is a tough journey, 90% failure rate. I am aware, clear eyed of how tough it is across industry.

And we’re doing something in a way that’s never been done before. That’s going to be my core focus. The second is going to be really investing where we have a unique ability to win. That’s our platform, that’s our programs. We’re going to make data-driven, and you’ve seen me do that before, go/no-go decision on our programs. That’s why when you say all of the programs we’re doing concurrent targeted, efficient approaches so that we can get to a rapid go no-go because unlike a lot of other companies, there are multiple other programs that we’re bringing from discovery into the clinic. We need to be choiceful in terms of where we go. And then the third is discipline and execution and good capital stewardship. You heard Ben talk through, we are grateful for the capital that we have.

And my intent is to use every single dollar for what will truly create value for our shareholders and our patients. So those are some of my areas of focus. I’m sure I’ll think more on it over the holidays. And with Chris’ counsel, I am so excited to continue partnering with Chris. It’s been such a great journey and so much more to come together.

Christopher Gibson: Thanks, Najat. It’s been an amazing first 12 years, and I’m looking forward to the next 12. Thank you, everybody, for joining us. I hope you have a great day.