AI Biotech Recursion Pharmaceuticals Announces Layoffs Amid Pipeline Restructuring

Recursion Pharmaceuticals, a leading AI-driven biotech company, has announced a significant workforce reduction as part of its ongoing efforts to streamline operations and focus on key therapeutic areas. The move comes in the wake of recent pipeline cutbacks and follows the company's high-profile acquisition of Exscientia in 2024.

Layoffs and Financial Impact

Recursion revealed plans to lay off 20% of its staff, a decision that will affect approximately 160 employees based on the company's reported headcount of around 800 at the beginning of 2025. The restructuring is expected to incur costs of about $11 million in severance fees and related expenses, as disclosed in a recent Securities and Exchange Commission filing.

Despite these immediate costs, Recursion projects that the workforce reduction will extend its cash runway. The company anticipates having $500 million in cash reserves by the end of the month, which it expects will now sustain operations into 2027, reaffirming its previous financial guidance.

Pipeline Refocus and Program Deprioritization

The layoffs are directly tied to Recursion's strategic decision last month to narrow its R&D focus on oncology and rare diseases. This refocusing has led to the deprioritization of several clinical-stage programs, including:

• Neurofibromatosis type 2
• Cerebral cavernous malformation
• C. difficile infection

Additionally, Recursion has paused development of an asset targeting reversibility and central nervous system penetration in solid tumors, and wound down a preclinical program for an undisclosed target.

Post-Merger Strategy and Partnerships

These changes come in the aftermath of Recursion's acquisition of AI development peer Exscientia in late 2024. At the time of the merger announcement, Recursion had projected approximately 10 clinical readouts over an 18-month period for the combined entity. The merged company also boasted 10 partnered programs with potential milestone payments exceeding $20 billion following potential approvals.

Recursion's partnerships continue to yield results, with the company recently reporting a $7 million milestone payment from Sanofi. This payment was triggered by the successful use of Recursion's platform to identify an oral small molecule against what the company described as a "high-interest immune cell target."

As Recursion navigates this period of transition, the biotech industry watches closely to see how the company's AI-driven approach will shape its future in the competitive landscape of drug discovery and development.