Read my thesis on AI In Drug Discovery

Read my Deep Dive on Recursion Pharmaceuticals

Read my Deep Dive on Recursion OS

This quarter’s earnings reveal a company that has tightened its focus, streamlined its portfolio and fortified its bank account, all while continuing to invest in its ever-learning drug discovery engine.

As CEO Chris Gibson put it, Recursion is

“running this critical experiment for the biopharma industry…to build the first great TechBio company”

See Q1-2025 (L)Earnings Call:

1. TL;DR

   1. Clinical/Preclinical Programs - 10 (plus 10+ advanced discovery programs).

   2. Key Clinical Milestones - 10 expected in next 18 months; Q2 2025 clinical calendar is catalyst-rich, with five major program milestones expected to drive the pipeline forward

   3. Cash Position - $509 million

   4. Cash Burn - $131 million in Q1 2025

   5. Runway - 12 months at current quarterly run rate

   6. Platform Highlights -

      1. BioHive-2: The most advanced supercomputer in pharma, wholly owned and operated by Recursion;

      2. Foundation Models: Including Phenom, MoIPhenix, and MolGPS, which enable high-confidence predictions in therapeutic programs;

      3. Causal AI Models: Integration of real-world patient data (via Tempus and Helix partnerships) to deepen biological insights and improve patient targeting;

      4. ClinTech Platform: AI-driven clinical development tools for trial design optimisation, patient recruitment automation, and evidence generation.

   7. Partnerships - Roche/Genentech, Sanofi, Bayer, Merck KGaA; $450M+ received, $20B+ potential

   8. Internal vs. Partnered Focus - Balanced; internal for oncology/rare, partnered for broader indications

   9. Regulatory Approach - AI-driven trial design, patient selection, proactive engagement with regulators

   10. Investment Thesis - Despite the cash burn and the odd regulatory speed bump, Recursion’s blend of AI ambition and clinical momentum makes it one of the most intriguing bets in TechBio. Just don’t expect a smooth ride.

       Full Disclosure: I do indeed own shares in Recursion Pharmaceuticals, so you might say I’m emotionally-and financially-vested in its success (and occasional misadventures). This little confession is my way of ensuring you know I’m not some impartial oracle heralding the dawn of AI drug discovery. I am instead a willing participant in Recursion’s experiment-complete with all the attendant risks of biotech’s roller-coaster ride. Nothing here constitutes professional financial advice, investment counsel, or a crystal-ball reading. I haven’t been knighted by the Financial Conduct Authority, nor have I ever donned a bowler hat while dispensing portfolio tips. You’ll find no guarantees that Recursion’s “virtual cell” will outperform the real thing, nor assurances that past milestones will predict future glory. In fact, if their BioHive-2 supercomputer could compute certainty, we’d all be sipping Pimm’s on Mars by now. So, please do your own research-dig through those quarterly filings, interrogate management’s tone, and maybe even run your CV through Recursion’s models if you fancy a shot at discovering your own hidden talents. After all, the only thing more British than queuing politely is making sure you’ve done your homework before jumping aboard any biotech bandwagon.

2. Introduction

   “We are building a learning system, not just a set of experiments, so that each programme makes the next generation better and better.” - Chris Gibson, CEO

   Recursion was founded on the bold premise that biology can be decoded at scale through high-content phenomics and machine learning. Unlike traditional biotechs that build one programme at a time, Recursion’s ambition is to create a self-improving platform - the Recursion Operating System - that harvests insights from every experiment to accelerate the next one. Q1 2025 matters because it marks the first full quarter post-Exscientia merger, testing whether the combined prowess of two leading AI drug discovery engines can translate into tangible clinical and financial progress. My thesis: this quarter confirms that Recursion’s AI-driven approach is shifting from “promising” to “performing,” even as it disciplines capital allocation to extend its runway well beyond the next set of clinical catalysts.

3. The Numbers That Matter

   “We ended the quarter with $509 million in cash, cash equivalents, and investments, which we believe provides us with a runway through mid-2027 under current operating plans.” - Ben Taylor, CFO

   Recursion reported a net loss of $203 million for Q1 2025, more than doubling from $91.4 million in Q1 2024, reflecting stepped-up R&D activities and integration costs post-merger. Revenue came in at $14.82 million, narrowly missing consensus of $14.98 million and translating to an EPS of –$0.50 versus forecasts of –$0.49. The company exited the quarter with a formidable cash position of $509 million, down from $603 million at year-end 2024, driven by a Q1 cash burn of $131 million-nevertheless securing $40 million funding through issuance of common shares. These headline figures underscore two realities: Recursion is deepening its investment in high-leverage programmes, and it has engineered sufficient runway to weather typical biotech volatility while Birkenstock-ing through regulatory gauntlets.

4. Pipeline Progress

   “This disciplined cull sharpens our probability of success, concentrating resources on first-in-class degrader and precision-chemistry candidates.” - Chris Gibson, CEO

   This quarter saw Recursion “deliver on our commitment to a more focused R&D strategy” by advancing a streamlined portfolio of over five clinical and preclinical programmes in oncology and rare diseases, while deprioritising three clinical and one preclinical asset following a rigorous, data-driven review. The fourth option milestone under the Sanofi collaboration generated $7 million in upfront payments, bolstering non-dilutive funding for internal efforts. Management highlighted that this disciplined cull sharpens the pipeline’s probability of success, concentrating resources on first-in-class degrader and precision-chemistry candidates that best leverage the Recursion Operating System’s predictive power.

5. AI Platform Integration

   “Our platform orchestrates experiments from target nomination through IND-enabling studies, with continuous model retraining on weekly assay outputs, We can now move from in silico hypothesis to custom compound synthesis in under nine days.” - Chris Gibson, CEO

   This industrialisation is not just a slogan; it’s manifest in the rapid progression of assets like REC-617, which advanced from hit to candidate in record time. Behind these clinical advances lies the fully integrated Recursion OS 2.0, marrying Recursion’s phenomics-driven discovery engine with Exscientia’s generative chemistry capabilities. The platform now orchestrates experiments from target nomination through IND-enabling studies, with continuous model retraining on weekly assay outputs. This end-to-end pipeline enables in silico vetting of molecular hypotheses, followed by rapid automated synthesis cycles-sometimes delivering custom compounds in under nine days. CEO Chris Gibson summarised the vision: “We’re building a learning system…so that each programme makes the next generation better and better”.

6. Reading Between the Lines

   “We are adjusting our capacity over our capabilities, and focusing our capital on the highest-leverage programmes.” - Ben Taylor, CFO

   A subtle tonal shift emerged during the Q1 call: the rhetoric pivoted from lofty ambition to operational rigour. While Gibson reiterated the mission to “decode biology to radically improve lives,” CFO Ben Taylor emphasised “adjusting our capacity over our capabilities,” signalling a newfound emphasis on efficiency rather than infinite scale. This linguistic tightening suggests that, beyond touting platform advancements, management is equally fixated on execution discipline-an acknowledgement that AI-driven biotech must marry innovation with sustainability. This is a subtle but important shift: Recursion is signalling that it will not chase every shiny object, but will instead be ruthless in prioritising assets with the best chance of success.

7. What Wall Street Missed

   “Each programme we advance makes the platform smarter, and that compounds our advantage over time.” - Chris Gibson, CEO

   Analysts understandably honed in on the EPS and revenue misses, yet overlooked the strategic elegance of Recursion’s portfolio pruning and capital stewardship. The decision to shelve lower-probability assets and direct resources toward five core programmes not only extends runway but also intensifies the platform’s learning loops. Equally underappreciated is the $7 million milestone from Sanofi, which underscores the commercial validation of Recursion’s discovery engine and provides a cold, hard vote of confidence from Big Pharma. This non-dilutive cash infusion buys additional time for internal programmes to mature. Sanofi is more than just a cheque; it’s a signal that Recursion’s discovery engine is seen as credible and valuable by industry leaders.

8. The Road Ahead

   “We expect multiple clinical readouts over the coming months, including first-patient dosing and early safety data from our precision-designed candidates.” - Chris Gibson, CEO

   Looking to Q2 and beyond, the spotlight will fall on early clinical readouts-particularly first-patient dosing and safety data from precision-designed candidates. Investors should watch for efficacy signals from degrader and superoxide scavenger programmes, as well as next Sanofi milestones that could trigger further payments. With BioHive-2 computing capacity now fully operational, management will also aim to showcase advanced generative AI workflows in drug design, translating code into candidate nominations and synthetic plans in record time. Should these developments align, Recursion will demonstrate that its AI-centric model can accelerate timelines while de-risking early-stage assets.

9. Investment Takeaway

   “Despite the increased burn, our extended runway and focused portfolio provide a sturdy chassis for future growth,” - Ben Taylor, CFO

   This quarter crystallises a compelling dichotomy: an aggressive burn reflecting deep-tech investment alongside strategic discipline that conserves cash and elevates success probabilities. The merger with Exscientia has fortified the platform’s precision-chemistry arm, while partnerships with Sanofi and others validate its commercial appeal. Even as headline losses swell, the extended runway to mid-2027 and a focused clinical portfolio provide a sturdy chassis for future growth. On balance, Q1 2025 strengthens Recursion’s investment case, transforming it from an ambitious “what if” to a demonstrable “what’s next.”

10. Closing Thoughts

    “We are not just building a company; we are running the experiment that could change how medicines are made.” - Chris Gibson, CEO

    Recursion has long promised to industrialise drug discovery; Q1 2025 shows it is well on its way to doing just that. With an ever-learning AI engine, a leaner pipeline and robust financial backing, the company is shifting from proof-of-concept to proof-of-performance. Whether it can sustain this blend of scientific daring and fiscal restraint remains to be seen, but for now, Recursion’s experiment is producing data worth investors’ attention —complete with algorithmic insights and the occasional quip about supercomputers that probably dream in molecules.

Fancy more of this deep dive delivered straight to your inbox each month? Sign up for a monthly subscription at $45, or lock in the annual rate of $450 for a year’s worth of exclusive analysis, pipeline updates and the odd supercomputer quip. Your future self-and your portfolio-might just thank you.

Subscribe now

Read my thesis on AI In Drug Discovery

Read my Deep Dive on Recursion Pharmaceuticals

Read my Deep Dive on Recursion OS

This quarter’s earnings reveal a company that has tightened its focus, streamlined its portfolio and fortified its bank account, all while continuing to invest in its ever-learning drug discovery engine.

As CEO Chris Gibson put it, Recursion is

“running this critical experiment for the biopharma industry…to build the first great TechBio company”

See Q1-2025 (L)Earnings Call:

1. TL;DR

   1. Clinical/Preclinical Programs - 10 (plus 10+ advanced discovery programs).

   2. Key Clinical Milestones - 10 expected in next 18 months; Q2 2025 clinical calendar is catalyst-rich, with five major program milestones expected to drive the pipeline forward

   3. Cash Position - $509 million

   4. Cash Burn - $131 million in Q1 2025

   5. Runway - 12 months at current quarterly run rate

   6. Platform Highlights -

      1. BioHive-2: The most advanced supercomputer in pharma, wholly owned and operated by Recursion;

      2. Foundation Models: Including Phenom, MoIPhenix, and MolGPS, which enable high-confidence predictions in therapeutic programs;

      3. Causal AI Models: Integration of real-world patient data (via Tempus and Helix partnerships) to deepen biological insights and improve patient targeting;

      4. ClinTech Platform: AI-driven clinical development tools for trial design optimisation, patient recruitment automation, and evidence generation.

   7. Partnerships - Roche/Genentech, Sanofi, Bayer, Merck KGaA; $450M+ received, $20B+ potential

   8. Internal vs. Partnered Focus - Balanced; internal for oncology/rare, partnered for broader indications

   9. Regulatory Approach - AI-driven trial design, patient selection, proactive engagement with regulators

   10. Investment Thesis - Despite the cash burn and the odd regulatory speed bump, Recursion’s blend of AI ambition and clinical momentum makes it one of the most intriguing bets in TechBio. Just don’t expect a smooth ride.

       Full Disclosure: I do indeed own shares in Recursion Pharmaceuticals, so you might say I’m emotionally-and financially-vested in its success (and occasional misadventures). This little confession is my way of ensuring you know I’m not some impartial oracle heralding the dawn of AI drug discovery. I am instead a willing participant in Recursion’s experiment-complete with all the attendant risks of biotech’s roller-coaster ride. Nothing here constitutes professional financial advice, investment counsel, or a crystal-ball reading. I haven’t been knighted by the Financial Conduct Authority, nor have I ever donned a bowler hat while dispensing portfolio tips. You’ll find no guarantees that Recursion’s “virtual cell” will outperform the real thing, nor assurances that past milestones will predict future glory. In fact, if their BioHive-2 supercomputer could compute certainty, we’d all be sipping Pimm’s on Mars by now. So, please do your own research-dig through those quarterly filings, interrogate management’s tone, and maybe even run your CV through Recursion’s models if you fancy a shot at discovering your own hidden talents. After all, the only thing more British than queuing politely is making sure you’ve done your homework before jumping aboard any biotech bandwagon.

2. Introduction

   “We are building a learning system, not just a set of experiments, so that each programme makes the next generation better and better.” - Chris Gibson, CEO

   Recursion was founded on the bold premise that biology can be decoded at scale through high-content phenomics and machine learning. Unlike traditional biotechs that build one programme at a time, Recursion’s ambition is to create a self-improving platform - the Recursion Operating System - that harvests insights from every experiment to accelerate the next one. Q1 2025 matters because it marks the first full quarter post-Exscientia merger, testing whether the combined prowess of two leading AI drug discovery engines can translate into tangible clinical and financial progress. My thesis: this quarter confirms that Recursion’s AI-driven approach is shifting from “promising” to “performing,” even as it disciplines capital allocation to extend its runway well beyond the next set of clinical catalysts.

3. The Numbers That Matter

   “We ended the quarter with $509 million in cash, cash equivalents, and investments, which we believe provides us with a runway through mid-2027 under current operating plans.” - Ben Taylor, CFO

   Recursion reported a net loss of $203 million for Q1 2025, more than doubling from $91.4 million in Q1 2024, reflecting stepped-up R&D activities and integration costs post-merger. Revenue came in at $14.82 million, narrowly missing consensus of $14.98 million and translating to an EPS of –$0.50 versus forecasts of –$0.49. The company exited the quarter with a formidable cash position of $509 million, down from $603 million at year-end 2024, driven by a Q1 cash burn of $131 million-nevertheless securing $40 million funding through issuance of common shares. These headline figures underscore two realities: Recursion is deepening its investment in high-leverage programmes, and it has engineered sufficient runway to weather typical biotech volatility while Birkenstock-ing through regulatory gauntlets.

4. Pipeline Progress

   “This disciplined cull sharpens our probability of success, concentrating resources on first-in-class degrader and precision-chemistry candidates.” - Chris Gibson, CEO

   This quarter saw Recursion “deliver on our commitment to a more focused R&D strategy” by advancing a streamlined portfolio of over five clinical and preclinical programmes in oncology and rare diseases, while deprioritising three clinical and one preclinical asset following a rigorous, data-driven review. The fourth option milestone under the Sanofi collaboration generated $7 million in upfront payments, bolstering non-dilutive funding for internal efforts. Management highlighted that this disciplined cull sharpens the pipeline’s probability of success, concentrating resources on first-in-class degrader and precision-chemistry candidates that best leverage the Recursion Operating System’s predictive power.

5. AI Platform Integration

   “Our platform orchestrates experiments from target nomination through IND-enabling studies, with continuous model retraining on weekly assay outputs, We can now move from in silico hypothesis to custom compound synthesis in under nine days.” - Chris Gibson, CEO

   This industrialisation is not just a slogan; it’s manifest in the rapid progression of assets like REC-617, which advanced from hit to candidate in record time. Behind these clinical advances lies the fully integrated Recursion OS 2.0, marrying Recursion’s phenomics-driven discovery engine with Exscientia’s generative chemistry capabilities. The platform now orchestrates experiments from target nomination through IND-enabling studies, with continuous model retraining on weekly assay outputs. This end-to-end pipeline enables in silico vetting of molecular hypotheses, followed by rapid automated synthesis cycles-sometimes delivering custom compounds in under nine days. CEO Chris Gibson summarised the vision: “We’re building a learning system…so that each programme makes the next generation better and better”.

6. Reading Between the Lines

   “We are adjusting our capacity over our capabilities, and focusing our capital on the highest-leverage programmes.” - Ben Taylor, CFO

   A subtle tonal shift emerged during the Q1 call: the rhetoric pivoted from lofty ambition to operational rigour. While Gibson reiterated the mission to “decode biology to radically improve lives,” CFO Ben Taylor emphasised “adjusting our capacity over our capabilities,” signalling a newfound emphasis on efficiency rather than infinite scale. This linguistic tightening suggests that, beyond touting platform advancements, management is equally fixated on execution discipline-an acknowledgement that AI-driven biotech must marry innovation with sustainability. This is a subtle but important shift: Recursion is signalling that it will not chase every shiny object, but will instead be ruthless in prioritising assets with the best chance of success.

7. What Wall Street Missed

   “Each programme we advance makes the platform smarter, and that compounds our advantage over time.” - Chris Gibson, CEO

   Analysts understandably honed in on the EPS and revenue misses, yet overlooked the strategic elegance of Recursion’s portfolio pruning and capital stewardship. The decision to shelve lower-probability assets and direct resources toward five core programmes not only extends runway but also intensifies the platform’s learning loops. Equally underappreciated is the $7 million milestone from Sanofi, which underscores the commercial validation of Recursion’s discovery engine and provides a cold, hard vote of confidence from Big Pharma. This non-dilutive cash infusion buys additional time for internal programmes to mature. Sanofi is more than just a cheque; it’s a signal that Recursion’s discovery engine is seen as credible and valuable by industry leaders.

8. The Road Ahead

   “We expect multiple clinical readouts over the coming months, including first-patient dosing and early safety data from our precision-designed candidates.” - Chris Gibson, CEO

   Looking to Q2 and beyond, the spotlight will fall on early clinical readouts-particularly first-patient dosing and safety data from precision-designed candidates. Investors should watch for efficacy signals from degrader and superoxide scavenger programmes, as well as next Sanofi milestones that could trigger further payments. With BioHive-2 computing capacity now fully operational, management will also aim to showcase advanced generative AI workflows in drug design, translating code into candidate nominations and synthetic plans in record time. Should these developments align, Recursion will demonstrate that its AI-centric model can accelerate timelines while de-risking early-stage assets.

9. Investment Takeaway

   “Despite the increased burn, our extended runway and focused portfolio provide a sturdy chassis for future growth,” - Ben Taylor, CFO

   This quarter crystallises a compelling dichotomy: an aggressive burn reflecting deep-tech investment alongside strategic discipline that conserves cash and elevates success probabilities. The merger with Exscientia has fortified the platform’s precision-chemistry arm, while partnerships with Sanofi and others validate its commercial appeal. Even as headline losses swell, the extended runway to mid-2027 and a focused clinical portfolio provide a sturdy chassis for future growth. On balance, Q1 2025 strengthens Recursion’s investment case, transforming it from an ambitious “what if” to a demonstrable “what’s next.”

10. Closing Thoughts

    “We are not just building a company; we are running the experiment that could change how medicines are made.” - Chris Gibson, CEO

    Recursion has long promised to industrialise drug discovery; Q1 2025 shows it is well on its way to doing just that. With an ever-learning AI engine, a leaner pipeline and robust financial backing, the company is shifting from proof-of-concept to proof-of-performance. Whether it can sustain this blend of scientific daring and fiscal restraint remains to be seen, but for now, Recursion’s experiment is producing data worth investors’ attention —complete with algorithmic insights and the occasional quip about supercomputers that probably dream in molecules.

Fancy more of this deep dive delivered straight to your inbox each month? Sign up for a monthly subscription at $45, or lock in the annual rate of $450 for a year’s worth of exclusive analysis, pipeline updates and the odd supercomputer quip. Your future self-and your portfolio-might just thank you.

Subscribe now