RXRX Q2 Loss Widens, Revenues Climb Y/Y, Stock Slumps

Overview of Recursion Pharmaceuticals' Q2 2025 Performance

Recursion Pharmaceuticals reported a loss of 41 cents per share in the second quarter of 2025, which was worse than the Zacks Consensus Estimate of a 35-cent loss. This marks an increase in losses compared to the previous year's quarter, where the company lost 40 cents per share. The company has yet to secure any approved products, so it relies on collaboration and grant revenues from its partners.

In the quarter, total revenues reached $19.2 million, a 33% increase from the previous year. This growth was primarily driven by a $7 million milestone payment from Sanofi for an immunology program. Additionally, the company earns periodic revenues from ongoing collaborations with Roche, Bayer, and Merck KGaA. These figures surpassed the Zacks Consensus Estimate of $14 million, indicating better-than-expected performance.

However, investor sentiment was negative, as shares of Recursion Pharmaceuticals fell 4.7% on Tuesday. This decline is likely due to the mixed results of the second-quarter report.

Detailed Breakdown of Q2 2025 Results

Research and development (R&D) expenses surged by 74% to $128.6 million in the second quarter of 2025, compared to $73.9 million in the same period last year. This significant increase is attributed to the company’s agreement with Tempus to upgrade its therapeutic development platform and its business combination with Exscientia in November 2024.

General and administrative (G&A) expenses also rose by 47% to $46.7 million, mainly due to the inclusion of G&A expenses from the Exscientia acquisition. Furthermore, the cost of revenues increased to $20.2 million in the quarter.

As of June 30, 2025, the company had $533.8 million in cash, cash equivalents, and restricted cash, up from $509 million at the end of March 2025. Based on its current business plan, Recursion Pharmaceuticals expects this cash to support operations through the fourth quarter of 2027.

The stock has experienced a significant drop, falling 18.2% year to date, while the industry saw a modest 0.2% growth.

Pipeline Updates and Strategic Shifts

In May 2025, Recursion Pharmaceuticals faced a setback when it announced the discontinuation of three key drug candidates: REC-994, REC-2282, and REC-3964. These were being developed for cerebral cavernous malformation, neurofibromatosis type II, and Clostridioides difficile infection, respectively. As part of a broader strategic reprioritization, the company shifted focus to more promising candidates.

One such candidate is REC-4881, currently being evaluated in a phase Ib/II TUPELO study for familial adenomatous polyposis. Preliminary data from this study was reported in May 2025, with additional data expected in the second half of 2025.

In 2024, the company initiated a phase I/II DAHLIA study of REC-1245, a new chemical entity for treating biomarker-enriched solid tumors and lymphoma. Data from the phase I portion of this study is anticipated in the first half of 2026. Other early-stage studies include REC-617 for advanced solid tumors and REC-3565 for B-cell malignancies, with data readouts expected in the second half of 2025 and 2026, respectively.

In July 2025, Recursion Pharmaceuticals acquired Rallybio’s full stake in their joint venture for developing REV102 (now REC102) and an associated backup molecule for hypophosphatasia. REC102, an ENPP1 inhibitor with strong preclinical safety data, is expected to enter phase I trials by late 2026. Its oral formulation offers advantages over current enzyme replacement therapies, potentially improving patient adherence and reducing treatment risks.

Zacks Rank and Comparison with Other Biotech Stocks

Recursion Pharmaceuticals currently holds a Zacks Rank of #3, indicating a "Hold" rating. In comparison, several biotech stocks have higher rankings. For example, Arvinas (ARVN), CorMedix (CRMD), and Immunocore (IMCR) all hold a Zacks Rank of #1, which is classified as "Strong Buy."

Arvinas has seen a 60.3% decline year to date, but its earnings have consistently beaten estimates in the past four quarters, with an average surprise of 82.09%. CorMedix has performed well, with a 48.8% increase year to date. Its earnings have also exceeded estimates in the past four quarters, with an average surprise of 25.82%.

Immunocore has seen a 10.2% increase year to date, with earnings beating estimates in three out of the last four quarters. The average surprise for these results is 76.18%.