Recursion Pharmaceuticals Cuts Workforce by 20% to Extend Cash Runway

Recursion Pharmaceuticals, a Utah-based biotech company, announced a significant reduction in its workforce as part of a strategic initiative to streamline operations and extend its financial runway. The company, which specializes in AI-driven drug discovery, disclosed the layoffs in an SEC filing on Tuesday, revealing plans to cut approximately 20% of its staff, affecting around 160 employees.

Financial Impact and Cash Position

The workforce reduction is expected to result in one-time charges of approximately $11 million, primarily related to severance payments and benefits. Despite these costs, Recursion projects that this move will substantially extend its cash runway. As of March 31, 2025, the company reported a cash position of $509 million, and following the layoffs, it now anticipates its financial resources to last into the fourth quarter of 2027.

Recursion has revised its financial outlook, projecting a lower cash burn for the current year. Excluding severance expenses and partnership inflows, the company expects its cash burn to be below $450 million in 2025, with a further reduction to less than $390 million anticipated in 2026.

Strategic Realignment and Pipeline Adjustments

The latest round of layoffs comes in the wake of Recursion's merger with AI specialist Exscientia in August 2024. This consolidation was initially touted as a move that would yield annual synergies exceeding $100 million. However, the integration process has led to significant restructuring, including multiple rounds of workforce reductions.

In addition to the staffing cuts, Recursion has announced the discontinuation of several drug development programs. Notable among these are:

• REC-2282: An oral inhibitor of the HDAC enzyme for the treatment of NF2-mutated meningiomas
• REC-994: A superoxide scavenger small molecule drug being trialed for cerebral cavernous malformation
• REC-3964: An oral non-antibiotic drug for C. difficile infection, for which out-licensing opportunities will be considered

The company cited that the "totality of data supports the discontinuation" of development for both REC-2282 and REC-994.

Financial Performance and Future Outlook

Recursion's financial performance has been challenging, with the company reporting a net loss of $203 million in the first quarter of 2025, a significant increase from the $91.4 million loss reported in the same period last year. These financial pressures have likely contributed to the company's decision to implement cost-cutting measures and refocus its development pipeline.

As Recursion navigates through this period of restructuring and strategic realignment, the pharmaceutical industry will be watching closely to see how these changes impact the company's ability to leverage its AI-driven approach to drug discovery and development in the coming years.