RECURSION PHARMACEUTICALS, INC. (RXRX)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue was $14.745M, below Wall Street consensus of $18.083M*, and diluted EPS was ($0.50), slightly better than consensus of ($0.516)* .
• Management executed a portfolio prioritization: discontinued REC-2282 (NF2), REC-994 (CCM), and REC-3964 (C. difficile); strategically paused REC-4539 (LSD1), and doubled down on oncology and rare disease programs (CDK7, RBM39, MALT1, PI3Kα H1047R, ENPP1, FAP) .
• Cash burn guidance set at ≤$450M (non-GAAP) for FY2025; Q1 burn ~$118M; cash and restricted cash $509M; runway into mid-2027, supported by partnerships (e.g., Sanofi $7M milestone) .
• Early clinical data in FAP (REC-4881) showed 43% median reduction in polyp burden (n=6) and 50% Spigelman stage improvement in 3/6 patients; safety consistent with MEK class—supporting a potential first-in-disease program catalyst in 2H25 .
• Narrative/catalysts: pipeline focus and cost discipline, Sanofi milestone, and upcoming CDK7 combination initiation (1H25) and FAP data (2H25) are key stock drivers near term .

What Went Well and What Went Wrong

• What Went Well

  • Portfolio sharpened post-Exscientia integration; advancing “5+” focused programs with higher probability of success across oncology and rare disease .
  • Partnerships advancing; fourth Sanofi milestone ($7M) achieved and continued progress with Roche/Genentech phenomaps; total Sanofi cash inflows to date $130M .
  • FAP signal-seeking study: “REC-4881 (4 mg QD) led to a preliminary median 43% reduction (n=6) in polyp burden at week 13… 50% achieved ≥1-point Spigelman improvement” .
  • Management quote: “We are prioritizing high-potential programs… building on our platform’s unique ability to learn and lead this transformative shift in drug discovery” .
  • CFO emphasized discipline: Q1 operational cash burn (non-GAAP) ~$118M and expectation to maximize runway via efficiency and partnerships .
  • Clear near-term catalysts: CDK7 combo initiation (1H25), additional FAP data (2H25), PI3Kα H1047R DC nomination (2H25) .

• What Went Wrong

  • Topline miss vs consensus: revenue undershot estimates; quarter-to-quarter revenue timing remains variable due to partnership accounting .
  • Opex elevated YoY from Exscientia combination and Tempus agreement; R&D $129.6M (includes $27M non-cash data expense), G&A $54.7–$55.0M .
  • Program discontinuations highlight mixed efficacy signals: NF2 failed futility in key arms; CCM LTE did not sustain prior trends; C. difficile unmet need diminished (~5% recurrence) .
  • Analyst concern: pipeline skew to oncology and resource allocation; mgmt reiterated dual focus but pivot reflects data and commercial landscape .
  • Continued net losses: Q1 2025 net loss ($202.5M) vs ($91.4M) in Q1 2024 .

Financial Results

Values with * retrieved from S&P Global.

KPIs

Note: No segment revenue breakdown disclosed; revenue primarily from collaboration agreements .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO message on strategy: “We are prioritizing high-potential programs… building on our platform’s unique ability to learn and lead this transformative shift in drug discovery” .
• CFO on burn discipline: “During the first quarter… about $118 million… We expect a cash runway into mid-2027” .
• Chief R&D/Commercial on portfolio: “We are doubling down in oncology and… rare diseases… deprioritizing NF2, CCM and C. diff… placing LSD1 on a strategic pause” .
• CEO on platform evolution: “We believe… Recursion will continue to lead the tech bio space… increasing efficiency… never stopping our investment in the Recursion operating system” .

Q&A Highlights

• Capital and runway: Budget ≤$450M for 2025; efficiency actions; ATM facility may be used opportunistically; runway targeted “mid-2027” .
• Partnerships optionality: Four programs optioned at Sanofi; Roche/Genentech program options; potential for later-stage options with higher economics .
• Pipeline focus (oncology vs rare): Management sees both as strong fits; balance driven by data; not abandoning rare disease .
• FAP dataset detail: 43% median polyp burden reduction; safety consistent with class; considering dose and endpoints; additional data 2H25 .
• Discontinued programs rationale: NF2 limited clinical activity; CCM LTE indistinguishable from natural history; C. diff unmet need reduced (~5% recurrence) .

Estimates Context

• Q1 2025 results vs consensus: Revenue $14.745M vs $18.083M* (miss); EPS ($0.50) vs ($0.516)* (beat). Consensus counts: EPS 5*, Revenue 6*. Partnership revenue timing and accounting contribute to variability quarter-to-quarter per CFO commentary .
  Values with * retrieved from S&P Global.

Key Takeaways for Investors

• Near-term catalysts: CDK7 combination initiation (1H25), FAP further data (2H25), PI3Kα H1047R DC nomination (2H25) provide tangible proof points and potential narrative shifts .
• Operating discipline: FY2025 non-GAAP burn ≤$450M and Q1 burn ~$118M, with runway mid-2027, de-risks funding timeline; monitor milestone cadence for cash inflows .
• Portfolio quality over quantity: Discontinuations and strategic pauses raise the bar on differentiation; focus on biomarker-enriched oncology and targeted rare disease .
• Partnership leverage: Continued Sanofi and Roche/Genentech progress validates platform and provides non-dilutive funding; watch for additional options and DC milestones .
• Revenue modeling caution: Collaboration accounting can skew quarterly revenue; prioritize multi-quarter trend and milestone flow over single-quarter prints .
• Clinical execution: FAP preliminary efficacy and oncology precision-selection approach underscore ClinTech integrations (Tempus, HealthVerity) for better signal-to-noise .
• Medium-term thesis: If platform efficiencies persist and proof points accumulate, RXRX’s tech-enabled approach may improve discovery productivity, with optionality from partners and internal programs .