Recursion surges 6.8% on earnings beat, first AI-OS clinical validation
Q4 revenue more than doubles to $35.5M as FAP drug demonstrates 75% patient response rate
Recursion Pharmaceuticals shares jumped 6.8% on Wednesday after the company reported fourth-quarter results that handily exceeded analyst expectations and delivered the first clinical validation of its AI-powered drug discovery platform.
The Salt Lake City-based biotechnology company reported revenue of $35.5 million for the quarter, up sharply from $4.5 million in the same period a year earlier and significantly above the consensus estimate of roughly $24.5 million. The stock closed at $3.77, adding approximately $117 million to the company's market capitalization.
"This quarter marks a significant inflection point for Recursion as we delivered the first clinical validation of our full-stack AI Operating System," said Chris Gibson, co-founder and chief executive officer. "The data from our REC-4881 program in FAP demonstrates the potential of our platform to translate AI-driven biological insights into meaningful clinical outcomes."
The earnings beat was driven primarily by a $30 million milestone payment from Roche and Genentech for a second phenomap, along with increased revenue from the company's ongoing collaboration with Sanofi. Recursion achieved its fifth program milestone with Sanofi in February, triggering a $4 million payment that brings total cash inflows from that partnership to $134 million since its inception.
The clinical data presented Wednesday may prove more consequential for the company's long-term trajectory. Recursion's lead candidate REC-4881, a MEK1/2 inhibitor being developed for familial adenomatous polyposis (FAP), showed that 75% of evaluable patients experienced reductions in total polyp burden after 12 weeks of treatment, with a median reduction of 43%. Even more notably, 82% of patients maintained a durable reduction in polyp burden even after 12 weeks off therapy.
FAP is a rare genetic disorder characterized by the development of hundreds to thousands of polyps in the colon and rectum, which can progress to cancer if left untreated. There are currently no approved pharmacotherapies for the disease, with surgical removal of the colon remaining the standard of care.
"The preliminary efficacy signals from REC-4881 are compelling, particularly the durability of response after treatment cessation," said analysts at JPMorgan in a recent research note upgrading the stock to Overweight with an $11 price target. "This represents the first proof-of-concept for Recursion's AI-driven drug discovery platform and could unlock significant value if confirmed in larger studies."
The company reported a net loss of $108.1 million for the fourth quarter, or $0.21 per share, compared to the estimated loss of $0.28 to $0.32 per share. For the full year 2025, Recursion recorded total revenue of $74.7 million and a net loss of $644.8 million.
Despite the widening net loss, Recursion's balance sheet remains robust. As of December 31, the company held $753.9 million in cash, cash equivalents, and restricted cash, up from $603 million at the end of 2024. Management indicated this cash position provides a runway into early 2028 without additional financing.
The company also made progress on cost containment, reducing cash operating expenses to approximately $399 million for 2025. Recursion noted that platform-driven milestones across its partnerships now exceed $500 million in total, providing additional validation of its technology from pharmaceutical partners.
Wednesday's rally provides some relief for investors after a challenging period for the stock. NVIDIA previously sold its entire stake in Recension in early February, which had put downward pressure on the shares. However, other institutional investors, including Cathie Wood's ARK ETF, have been accumulating positions in recent weeks.
Analysts remain divided on the stock, with a consensus "Hold" rating and an average price target of $9.40, according to MarketBeat data. The stock remains well below its 52-week high of $8.69 reached in April 2025, but has recovered from its 52-week low of $2.98 touched in October.
Looking ahead, investors will be focused on further data readouts from the TUPELO study in FAP, as well as updates on REC-617, the company's CDK7 inhibitor currently in Phase 1 combination studies for platinum-resistant ovarian cancer. Recursion also continues to advance its joint portfolio with Sanofi, which now includes five or more AI-designed programs across immunology and oncology, with potential for up to 15 programs under the collaboration agreement.