Recursion — Q3 2026 Earnings Summary

Financial Performance

• Sanofi triggered a $10 million milestone payment, bringing total upfront and milestone payments received from Sanofi under the collaboration to $144 million to date.
• Recursion remains eligible for more than $300 million in additional milestones for the optioned program.
• The company is eligible for double-digit royalties on net product sales if the candidate is successfully commercialized.
• The $10 million milestone payment will be recognized as revenue in the third quarter of 2026.
• Future payments related to this candidate will result in profit for Recursion as operational requirements have ended.

Guidance and Future Outlook

• The optioned development candidate is expected to enter Phase 1 clinical trials in 2027.
• Sanofi will fund and lead further development and commercialization of the candidate.
• Over the next 12 months, other programs in the joint portfolio have the potential to reach development candidate and other progress-based milestones.

Business Segments and Product Lines

• Sanofi has optioned the first development candidate from the multi-program research collaboration between Recursion and Sanofi.
• The candidate is a potential first-in-class dual targeting inhibitor oral small molecule designed for inflammatory disease.
• The collaboration focuses on discovering and advancing first- and best-in-class small molecule medicines across immunology and oncology.
• The collaboration has achieved six progress-based milestones across five programs.
• Recursion's platform combines AI-enabled drug design, small-molecule chemistry, and proprietary data generated at industrial scale in Salt Lake City and Milton Park.

Market and Competitive Landscape

• The candidate targets a challenging dual target implicated in inflammatory disease, aiming to address a space where balancing drug-like properties is notoriously difficult.
• The molecule aims to provide a differentiated oral medicine with highly selective dual targeting for patients lacking adequate treatment options.
• Recursion operates in a competitive environment involving other therapies and platforms, with risks including the potential for Sanofi to delay, deprioritize, or discontinue development.

Risks and Challenges

• Pharmaceutical research and development carry high risks of failure at any stage prior to or after regulatory approval due to lack of efficacy, safety considerations, or other factors.
• Risks include the performance and limitations of AI and machine learning models, reliance on third parties, and the ability to initiate clinical trials on expected timelines.
• There is a risk that Sanofi may delay, deprioritize, or discontinue development of the optioned candidate.
• Other risks include the ability to obtain regulatory approval, enforce intellectual property protections, and secure financing for development activities.

Management Commentary and Tone

• Najat Khan, President and CEO of Recursion, stated that the milestone demonstrates the platform's ability to translate computational capabilities into differentiated medicines repeatedly.
• Khan emphasized that the most important test of the technology platform is translating it into differentiated medicines, noting the successful delivery of a molecule selected for Sanofi's pipeline.
• Alyssa Johnsen, Therapeutic Area Head at Sanofi, highlighted the speed and precision achieved by combining Sanofi's immunology expertise with Recursion's AI-driven platform.
• Johnsen noted the candidate has potential to be a meaningful advance for people living with inflammatory diseases.

Other Key Points

• The collaboration was established to combine Sanofi's therapeutic-area and drug-development expertise with Recursion's integrated capabilities across biology, AI-enabled molecular design, and chemistry.
• Recursion's operational requirements related to the optioned candidate have ended, with all future payments resulting in profit.
• Recursion maintains offices in Salt Lake City, Milton Park, New York, Montréal, and London.
• The document includes standard forward-looking statements regarding the timing of clinical trials, potential of the development candidate, and future milestone eligibility.