Recursion — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for the quarter ended September 30, 2026, was $18.6 million, compared to $5.2 million in the same period of 2025, driven by a $10.0 million milestone payment from the Sanofi collaboration.
• Research and development expenses were $99.1 million for the quarter, down from $121.1 million in the prior year period, primarily due to the non-recurring $22.8 million in-process research and development cost recognized in Q3 2025 related to the REC-102 acquisition.
• General and administrative expenses were $32.6 million for the quarter, a decrease from $41.6 million in the prior year period, driven by lower infrastructure technology expenses and professional service costs.
• Net loss was $119.0 million for the quarter, compared to a net loss of $162.3 million in the prior year period.
• Net cash used in operating activities was $77.4 million for the quarter, a reduction from $117.4 million in the prior year period, attributed to operating efficiencies and working capital movements.
• Cash operating expense for the nine months ended September 30, 2026, was $271.5 million, compared to $323.2 million for the same period in 2025.
• Cash, cash equivalents, and restricted cash were $561.5 million as of September 30, 2026. Pro forma cash position, including $187.2 million in net proceeds from the October 2026 offering, was approximately $748.7 million.

Guidance and Future Outlook:

• 2026 cash operating expense guidance is reiterated at less than $375 million.
• 2027 cash operating expense guidance is set at less than $360 million.
• The company expects its cash runway to extend into 2029 based on current operating plans and no additional financing.
• A registrational trial for REC-4881 is anticipated to initiate in the second half of 2027, pending ongoing FDA discussions.
• Preliminary dose expansion data for REC-1245 in endometrial cancer are expected in the second half of 2027.
• Phase 1 clinical studies for the Sanofi-optioned immunology candidate are expected to begin in 2027.

Business Segments and Product Lines:

• REC-4881 (FAP): Phase 2 TUPELO trial data in an expanded adult population (18+) showed 87% of patients (13 of 15) achieved a reduction in total polyp burden with a 47% median reduction; approximately 1 in 3 achieved reductions of ≥65%. Twelve weeks post-treatment, 85% of evaluable patients remained below baseline. Activity was observed across the upper GI (55% median reduction) and lower GI (50% median reduction). In the upper GI, 92% of patients (12 of 13) had reductions, with two achieving ≥98% reductions. Six of eight patients with polyps >5 mm at baseline had reductions, with four achieving ≥80% reductions.
• REC-1245 (Solid Tumors): Phase 1 DAHLIA trial data showed 2 confirmed partial responses and 1 unconfirmed partial response in heavily pretreated patients with endometrial and liver cancer at doses ≥45 mg. The disease control rate was 91.7% (11 of 12) at these doses. The 45 mg QD dose was selected for exploratory expansion cohorts based on efficacy and a manageable safety profile with predominantly Grade 1/2 adverse events.
• REC-7735: Phase 1/2 ZINNIA clinical study initiated in the second half of 2026 for patients with select PIK3CA H1047R-mutant solid tumors.
• Strategic Focus: Recursion plans to concentrate resources on REC-4881, REC-1245, REC-4539, REC-7735, and REC-102, while pursuing partnership opportunities for REC-617 and REC-3565.
• Sanofi Collaboration: Sanofi optioned the first development candidate from the collaboration, a potential first-in-class dual-targeting inhibitor in immunology, triggering a $10 million milestone payment. Total upfront and milestone payments from Sanofi now reach $144 million, with potential for over $300 million in additional milestones and double-digit royalties.
• Genentech Collaboration: Genentech exercised the first Validated Target Option for a neuroscience target, advancing it into an early discovery program. Total upfront and milestone payments from the Roche and Genentech collaboration now total $216 million.

Market and Competitive Landscape:

• Familial Adenomatous Polyposis (FAP) affects over 50,000 patients in the US and EU5, representing a potential $15 billion opportunity based on company estimates, with no approved therapies currently available.
• REC-4881 targets the upper GI tract, the area of greatest unmet need in FAP, where patients face risks of bleeding, perforation, and higher cancer risk from polyp removal.
• The company highlights the repeatability of its AI-native engine through multiple programs advancing to development candidates or validated targets with partners like Sanofi and Genentech.

Risks and Challenges:

• Clinical trial outcomes remain subject to risks of failure, including lack of efficacy or safety considerations, which could occur at any stage prior to or after regulatory approval.
• Interim or preliminary data may change as more patient data becomes available and may not be predictive of final results.
• The company relies on third parties, including collaborators, contract research organizations, and manufacturers.
• Success depends on the ability to obtain regulatory approval and commercialize drug candidates.
• Risks include the performance and limitations of AI models, the ability to attract and retain key employees, and macroeconomic issues such as inflation.

Management Commentary and Tone:

• Najat Khan, President and CEO, stated the company is tying together three core capabilities: uncovering novel biology, designing differentiated molecules, and generating clinical evidence that matters.
• Management described the REC-4881 data as "important clinical evidence" showing deep polyp burden reductions that persist after treatment stops.
• CEO Khan noted that REC-1245 is an "encouraging early example" of the platform engine coming together, from biological insight to molecule design and early clinical signals.
• Management emphasized concentrating capital where evidence is strongest to turn innovation into patient impact.

Other Key Points:

• Fred Hassan was appointed Chair of the Board, effective October 31, 2026, bringing over four decades of pharmaceutical leadership and experience in company transformation and drug development.
• Recursion achieved its 9th milestone in the past two years, with the Sanofi option triggering a $10 million payment.
• The company completed an underwritten offering in October 2026, generating approximately $187.2 million in net proceeds.
• The Sanofi optioned candidate is a potential first-in-class oral small molecule designed against a challenging dual target in immunology.
• Genentech advanced a previously unexplored neuroscience target using Recursion's whole-genome CRISPR knockout map built in partnership with Roche.