Industry: TechBio / Biotechnology

About Company:

Recursion is a clinical‑stage TechBio company using AI, automation, and vast biological data to accelerate drug discovery. Its ecosystem—Recursion Operating System (OS)—integrates robotics, phenomics, transcriptomics, computational models, and proprietary datasets to industrialize identification and development of novel drug candidates

Their pipeline includes drug candidates for oncology and rare diseases such as REC‑617 (CDK7 inhibitor), REC‑1245, REC‑4539, REC‑3565, plus treatment for hypophosphatasia via the acquired REV102/backup program

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Company History:

• Founded in 2013 on the premise of using cellular imaging and AI to decode disease biology from high‑throughput data recursion.comPitchBook.
• IPO in 2021, transitioning to public markets as a biotech innovator
• On August 8, 2024, announced acquisition of UK‑based Exscientia for $688M in all‑stock, expected to close in early 2025—expanding its AI‑driven discovery platform and pipeline
• In 2025, acquired full rights to REV102 oral ENPP1 inhibitor from Rallybio, advancing its rare disease portfolio
• Developed and launched BioHive‑2, an NVIDIA‑powered supercomputer, and co‑released Boltz‑2, a high‑speed, high‑accuracy binding‑affinity AI model in collaboration with MIT

Company Advantage Over Competitors:

• Proprietary Recursion OS combines massive datasets (~65 PB), automated wet labs, and machine learning to enable faster design → test → learn cycles in drug discovery, surpassing traditional pharma timelines and cost inefficiencies
• Cutting‑edge hardware infrastructure: BioHive‑2 supercomputer enables ultra‑fast virtual screening and model training, positioning Recursion at the AI‑biotech frontier
• Strategic pharma partnerships: collaborations with Sanofi, Roche/Genentech, Bayer, Merck KGaA; milestone payments help fund pipeline progress—received a $7M payment from Sanofi in Q1/Q2 2025
• Expansion via the Exscientia acquisition, adding AI-driven chemistry capabilities and new partner relationships, accelerating scale and drug candidate generation

Risk Factors to Consider:

• High burn, net losses: Q2 2025 net loss widened to $171.9M, with Q1 loss at $203M; full‑year 2024 net loss was $463.7M despite revenue of $58.8M—recurring losses in speculative clinical R&D
• Dependence on partnerships and milestone revenues: recurrent inflows from collaborators like Sanofi or Merck are critical, but uncertain in timing and scale.
• Regulatory and clinical risk: drug candidates remain in mid‑stage or early trials; approvals and safety outcomes remain uncertain.
• Valuation fluctuations: shares are volatile; 52‑week range of $3.79 to $12.36, and institutional short interest is elevated (~26 %)

What Makes This Company Special or a Good Investment?

• AI‑first drug discovery model: Recursion blends automation and deep learning to accelerate development cycles, aiming to reduce failure rates dramatically.
• Scale and infrastructure: Proprietary data pipelines and the BioHive‑2 compute platform offer a competitive moat.
• Near-term catalysts: progress in FAP candidate REC‑4881 (43 % reduction in polyps median), and other programs such as REC‑3565 and REV102 offer potential data inflection points
• Strong cash runway: Cash position as of Q2 2025 is $533.8M, with runway projected into Q4 2027, giving funding buffer for continued development
• Strategic acquisition of Exscientia enhances its chemistry AI stack and pipeline breadth, signifying ambition and scale potential