Recursion Pharmaceuticals (RXRX -4.43%), a technology-driven biotech company decoding biology using artificial intelligence for drug discovery, released its financial results for the second quarter of 2025 on August 5, 2025. The headline was a notable revenue beat, with GAAP revenue reaching $19.2 million against analyst expectations of $15.37 million, helped by collaboration milestones. However, research and development expenses surged, leading to a larger net loss of $171.9 million (GAAP). Earnings per share (EPS, GAAP) came in at ($0.41), slightly worse than the prior-year period and matching the ($0.35) consensus. Cash reserves were $533.8 million. Overall, the period showcased advances in revenue generation and technology partnerships, but also underscored elevated spending and the ongoing challenge of moving early-stage drug programs toward commercialization.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $(0.41) | $(0.35) | $(0.40) | (2.5 %) |
| Revenue (GAAP) | $19.2 million | $15.37 million | $14.4 million | 33.3 % |
| Research & Development Expenses | $128.6 million | $73.9 million | 74.0% | |
| General & Administrative Expenses | $46.7 million | $31.8 million | 46.9 % | |
| Cash, Cash Equivalents & Restricted Cash (end of period) | $533.8 million | N/A |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Company Overview and Focus Areas
Recursion Pharmaceuticals is known for its Recursion Operating System (Recursion OS), a full-stack platform that uses artificial intelligence (AI), automation, and massive biological datasets to accelerate drug discovery. The company focuses on integrating advanced data analytics and technology to identify and develop new medicine candidates more efficiently.
Its recent business strategy centers on partnerships with major pharmaceutical firms, the expansion and advancement of a diverse drug pipeline in oncology and rare diseases, and targeted investments in AI and clinical technology. Key success factors remain the ability to generate and validate new drug candidates rapidly, secure milestones from high-profile collaborations, and manage cash and operating expenses in line with its ambitious R&D goals.
Quarterly Highlights: Financials, Technology, and Pipeline Progress
The biggest financial story was GAAP revenue outpacing expectations by 24.9%, largely due to milestone payments. Collaboration and partnership revenue, including a $7 million milestone from Sanofi, made up the majority of recognized GAAP revenue. This ongoing trend highlights the company's reliance on achieving technical or clinical milestones in partnered drug programs, as opposed to traditional product sales or licensing fees.
Operating costs (GAAP) grew sharply. Research and development expense jumped 74.0% year-over-year, influenced by the integration of Exscientia (a drug discovery company acquired in late 2024) and higher platform and collaboration costs, including non-cash expenses related to its work with clinical data partner Tempus. General and administrative spending (GAAP) rose 46.5% year-over-year, reflecting expanded business scale and ongoing integration costs.
Net loss (GAAP) grew to $171.9 million, up from $97.5 million a year earlier. The cash position dropped from $603.0 million at December 31, 2024, to $533.8 million as of June 30, 2025, reflecting a high rate of cash use. Net cash used in operating activities was $208.4 million for the first half of 2025, compared to $184.5 million a year earlier. Management projects the current cash runway will stretch into the fourth quarter of 2027, assuming operating plans hold steady and partnership funding continues at a similar pace.
From a technology perspective, Recursion continued the rollout of Recursion OS 2.0, a platform upgrade integrating Exscientia’s AI-driven chemistry capabilities and large-scale multimodal clinical datasets from partners including Tempus, HealthVerity, and Helix. The release and rapid adoption of the Boltz-2 open-source molecular modeling tool, which has exceeded 40,000 unique users to date, demonstrated the company’s expanding influence in computational drug discovery.
Strategic partnerships remained central to the company's revenue and pipeline. Its collaboration with Sanofi produced the fourth milestone payment in 18 months, bringing the total received from Sanofi to $130 million as of Q2 2025. Partnerships with Roche and Genentech focused on generating large biological datasets and advancing neurology and cancer programs. Relationships with Bayer and Merck KGaA contributed to early-stage oncology projects. Management estimates that partnership milestones due by the end of 2026 could surpass $100 million, though the timing remains uncertain and lumpy.
Pipeline activity featured dose escalation and initial efficacy results for clinical-stage assets such as REC-617 (a CDK7 inhibitor for ovarian and other cancers) and REC-1245 (an RBM39 degrader for solid tumors). The company also advanced REC-4881 (a MEK1/2 inhibitor for familial adenomatous polyposis), which is showing early signs of activity, as well as REC-102 (an ENPP1 inhibitor for the rare disease hypophosphatasia), with plans for Phase 1 initiation in 2H26. Several earlier programs were strategically deprioritized or paused based on data reviews and commercial considerations, highlighting a shift to focus on assets with the strongest differentiation and highest value proposition.
Notably, Recursion’s business model remains tied to earning milestone-based revenue from its collaboration partners. These milestone payments are variable and depend on meeting predefined technical or clinical goals within each partnership. There is no recurring product revenue at this stage. As a result, future revenue is unpredictable, and delays or failures in partner programs could impact the company's projected cash runway.
Looking Ahead: Outlook and Investor Considerations
Management stated that current cash reserves are expected to support operations into the fourth quarter of 2027, with full-year 2025 cash burn forecast at or below $450 million, excluding partnering or financing inflows. No detailed revenue or earnings guidance was provided for the remainder of the year. Recursion continues to expect partnership milestones to be a key revenue contributor, but did not offer a timeline for commercial launches of proprietary drugs.
Looking forward, investors will track the cadence of partnership milestones, the progress of the pipeline into later clinical phases, and efforts to control operational spending. The growing cash burn, offset by milestone payments, will be a focal point in the coming quarters. The company's full pivot to a milestone- and collaboration-driven model, along with the increasing role of AI in clinical development, presents both new opportunities and ongoing risks. RXRX does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
