Recursion Pharmaceuticals (RXRX) Q2 FY26 earnings call: guidance and Q&A

How does the Roche-Genentech collaboration serve as a transferable template for leveraging Recursion's platform with other partners, highlighting 2-3 key aspects?

Najat Khan explained that the core Lab-in-the-Loop process, from novel data sets to compound design and clinical validation, is scalable for all partners. Key differentiators include the proprietary data factory (50 petabytes, 1 trillion iPSC-derived neuronal cells), the integrated Lab-in-the-Loop for experimental validation, and the ability to produce differentiated assets. She emphasized the difficulty of replicating the data generation and validation expertise built over years.

“Big picture, the way we develop our novel data sets for creating novel maps, and then we take those novel targets and design compounds all the way into the clinic, that sort of Lab-in-the-Loop is something we use for both our internal programs and for our partner programs.”

asked by Alec from BofA, Sean from Morgan Stanley · answered by Najat Khan

Provide an update on FDA engagement for REC-4881 in FAP, the registrational pathway, and details on the upcoming CGA-IGC data presentation.

Vicki Goodman stated that updated Phase II data for REC-4881 will be presented in an oral presentation at the Presidential Plenary session of the CGA-IGC Conference in November, potentially including additional analyses and patients. She noted that FDA discussions are ongoing and productive, focusing on derisking study design and appropriate primary endpoints, given the limited regulatory precedent in FAP.

“So we presented data from the Phase II TUPELO trial for the first time back in December of last year via a webinar. We do think it's really important to put these data in front of the physicians who treat patients with FAP. And so this will be an updated data set, again, presented in an oral presentation at the Presidential Plenary session at that meeting, which occurs in November where you may see additional analyses that help contextualize the clinical relevance of the data as well as potentially additional patients in that analysis as well.”

asked by Sean from Morgan Stanley, Gil from Needham, Brendan from Cowen · answered by Vicki Goodman

Provide more color on the operating efficiencies leading to the reduced OpEx guidance and the potential for further belt-tightening in H2 2026.

Ben Taylor explained that the OpEx reduction to $375 million for FY26 is due to achieving the same or more outcomes with less, by focusing on getting to important answers faster and more cheaply through technology. He highlighted the impact of internal discovery systems and efficient clinical trial planning. Najat Khan added that the engine's velocity improvements, such as designing 90% fewer compounds and faster target-to-candidate timelines, translate into spend efficiencies. The company's commitment to an outcomes-based budget and pressure on G&A will continue.

“I think the numbers that everyone should use are the numbers that we give in guidance, which is the $375 million. That is our expectation of where we will be operating. But at our core, we are always looking for a better and faster way to do everything that we do.”

asked by Priyanka from JPM, Gil from Needham · answered by Ben Taylor

With increasing competition from tech companies and generative AI, how does Recursion differentiate itself today and in the future, and what are its durable competitive advantages?

Najat Khan identified three key differentiators: the proprietary data factory (50 petabytes, 1 trillion iPSC-derived neuronal cells) built over years, the integrated Lab-in-the-Loop operating model for experimental validation and feedback, and the ability to produce differentiated, high-value assets like REC-4881 and RBM39. She emphasized that the data moat grows weekly with millions of experiments, and the culture of bilingual scientists and open-mindedness is crucial.

“I think number one is the data factory. Look, you just said Generative AI is becoming increasingly available, maybe some would say even commoditized. Where does the differentiation come from? If 80%, 90% of biology, as I've known, it has to come from high-quality data generation.”

asked by Alec from BofA and others · answered by Najat Khan

Describe the go/no-go process for REC-7735, the preclinical profile confidence, and how the AI platform informs its development path, including patient selection.

Vicki Goodman explained that the go/no-go process involved rigorous evaluation of preclinical data, focusing on REC-7735's >100-fold selectivity for the H1047R mutation, efficacy in preclinical models, and a favorable safety profile (lack of hyperglycemia). The AI platform aids in finding patients with the specific biomarker, identifying optimal geographies and sites for clinical trials, and accelerating enrollment. Najat Khan added that the compound's wild-type sparing nature aims for improved safety and efficacy by allowing increased dose intensity and duration, and the platform helps identify novel patient groups and indications.

“So the go/no-go process really involved a rigorous evaluation and confidence building in our preclinical data set. So the selectivity that allows us to hit the target hard without seeing additional toxicity.”

asked by Brendan at Cowen, Dennis at Jefferies · answered by Vicki Goodman