Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) Q1 2024 Earnings Call Transcript

Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) Q1 2024 Earnings Call Transcript May 9, 2024

Recursion Pharmaceuticals, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Chris Gibson: Hi, everybody. I’m Chris Gibson, Co-Founder and CEO of Recursion, and I’m so delighted you’ve joined us today for our Q1 2024 Earnings Call — L(earnings) Call, as we call it. And I want to run through some of the exciting updates from the company over the last quarter as we move forward to achieve our mission of decoding biology to radically improve lives. And so with that, of course, some disclaimers. And Recursion, I think, is uniquely positioned to hit the TechBio escape velocity. And what I mean by that is I think we have pretty uniquely put together the pipeline, the platform, and the people that are giving us the opportunity over the coming quarters and years to really start to demonstrate a shift in the pace, the scale and hopefully, also the probability of success of drug discovery and development.

And we’re just delighted to be in this position to be helping to lead TechBio because we feel so confident about what the future looks like. We feel that the future of TechBio is the inevitable future of biotech. And we are delighted to be leading that and so thankful that all of you are supporting us. So, with that, I’m going to go ahead and dive in to a little bit of what we’re working on, and I’m going to start with the pipeline. And the pipeline, in particular, I think, is very exciting because we have an opportunity to start to demonstrate catalysts on a roughly quarterly cadence. These catalysts are going to start in Q3 with our first Phase 2 readout and then again, we’re going to start to be able to demonstrate Phase 2 POC readouts on a quarterly cadence.

We’ll kick off with REC-994, the SYCAMORE trial and cerebral cavernous malformation. This is a first-in-disease opportunity where we’re really leading out. As the first institutional sponsored program that’s gone through the FDA, we are nearly complete not only with the study, but enrolling almost all of the patients into a long-term extension. And what we’ll be looking for in the context of this trial is that looking across all the evidence from all of these exploratory end points, not only at safety and tolerability, where we believe we’ve got a really strong opportunity, but certainly at a variety of different potential efficacy readouts that we could work with the FDA to move forward with to try and get this medicine to patients as quickly as we can.

We’ll follow that up with another program, REC-2282 and neurofibromatosis type 2, where we’ve given guidance that we think we’ll be reading out the preliminary safety and efficacy in Q4. We’ve got then REC-4881 with a preliminary safety and efficacy readout in the first half of 2025. We’ve got another REC-4881 program, again with another preliminary safety and efficacy readout in the first half of 2025. And then a number of other programs coming behind that, either initiating Phase 2 studies or moving into IND submission in the near-term. So, really excited about this pipeline. I think it gives Recursion a unique opportunity to start to demonstrate in a really robust way, shots on goal. And of course, we know all of these programs won’t be successful, but we believe some may be — and ultimately, what’s exciting to us is not only the opportunity to bring medicines to patients in many cases, first-in-disease, but the opportunity to begin to learn, the opportunity to begin to take the data from these trials, feed it back into the platform, and whether it’s a success or a failure to be able to improve the platform because we really are in a multi-decade journey to build what we think will be the TechBio company that defines the future.

And it’s not only our pipeline that we’re excited about, it’s our platform, and we’re delighted to share with today’s earnings a lot like the deal we did with Tempus back in December, a deal here with Helix. Helix is a fantastic company. We’ve been getting to know them for a while. They’ve partnered with health care systems all across the country to bring really significant scale of exome, genomics and longitudinal health data into a robust software environment where like we did with the Tempus data, we’ve now signed a collaboration with Helix. That’s going to give us access to hundreds of thousands of de-identified records along with omics data that we can put together with all of the rest of the data we generated at Recursion and start to continue to train these causal AI models to help understand the gene networks that are underlying now, not only oncology diseases but also non-oncology diseases.

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Q&A Session

And what’s fantastic about this collaboration is that, as you know, we’ve got large partnerships in the context of Roche-Genentech and neuroscience and maybe other partnerships coming down the line in non-oncology areas and this collaboration will allow us to be generating even more robust hypotheses using patient data to help drive our really, really exciting platform internally. So very excited to announce this collaboration with the Helix team, multiyear collaboration here, and we’re going to be kicking that off imminently. Second, we shared this on social a couple of weeks ago, but I just want to emphasize. Recursion pioneered the use of phenomics to try and understand biology, but we now also have started to scale multiple other layers of omics, transcriptomics, working on proteomics.

We have enviromics. We have the patient data, like I just talked about, but I really want to emphasize here our work in transcriptomics. We’ve now sequenced our one millionth transcriptome at Recursion and we are leveraging our unique take on doing transcriptomes in order to work across a whole genome, transcriptomic map, the first of potentially many in that space and also starting to layer in data from transcriptomics across chemical perturbations as well. We think this will be a really exciting orthogonal data layer to what we’re building with phenomics, what we’re going to build with proteomics, what we’re building with enviromics in the animal organism step and what we’ve got with genome scale, population scale data, not only with Tempus but now with Helix.

And so not only are we training our AI models within each of these data layers, but increasingly starting to train AI models between and across these different data layers, these multimodal omics data sets that we’re generating, I think, pretty uniquely here at Recursion. So really exciting, and congratulations to the team for the incredible scale that they put together with our transcriptomics technology. Finally, another exciting opportunity on the platform side, we’ve really been leaning into active learning over the past quarter. And I think you’re going to see us continue to increase the cadence of this work as research work coming out of the team at Valence Labs and being done here at Recursion, which is allowing us to move away from having to do every experiment towards making predictions about what experiment would give us the highest amount of learning and what you can see here is one of our early pilots looking across just about 50 or 100 genes where by using this iterative approach of active learning, we can get about 80% of the value, 80% of the information you see on that top line only doing about 40% of the experiments.

And we think this is going to be a transformational tool for us to deploy with our unique scaled wet lab environment because what this is going to allow us to do is start to explore this incredible sort of high-dimensional space of biological perturbations, chemical perturbations, time-based perturbations across multiple different layers of omics and it starts to become trillions and trillions and trillions, in fact, trillions times, trillions times, trillions of different possible combinations one could explore, far too much to ever brute force and using these kinds of tools and technologies we’re building out of Recursion. I think we’re going to be uniquely positioned to do the best next experiment to use our resources in the most efficient way to broadly map drug discovery, to broadly map biology, to broadly map chemistry, and ultimately bring medicines to patients more quickly.

And then I also want to talk a little bit about some exciting news around BioHive 2. Again, we announced a little bit of this on social. We partnered with NVIDIA last year. They brought an equity investment in. And since then, we’ve been working so closely with that team, announced in the fall that we were going to build a BioHive 2 to our next supercomputer. And you can see here that we actually now have built out this supercomputer. We benchmarked the supercomputer at 23.32 petaflops, we did that once all the materials were in place, we built it out and benchmarked it in three weeks, thanks to an incredible partnership with the NVIDIA team. And if we were to take that benchmark and compare it to the previous top 500 list, it would put us right around 30th position there.

So we’ll see as the new top 500 list comes out where we end up probably in the top 50. But this means Recursion now owns and operates the two of the fastest supercomputers in all of biopharma will be combining BioHive 1 with BioHive 2, we’ll rebenchmark that later and see if we can continue to move up the path. But I think in the in the space of TechBio, where we know scaling law supply, where we know both data and computer are going to be critical recursion, really uniquely positioned with one of the most compelling data sets, one of the fastest-growing data sets, one of the most purpose-built for machine learning data sets alongside one of the most robust sets of on-premise compute in the industry. And putting those two things together, we think gives us a really, really robust mode.

So kudos to the team for all of their hard work getting this done. And now I want to finish by talking just a little bit about the people because ultimately, without the people, we can’t drive this mission forward. We had a couple of really big announcements this last quarter. The first was Najat Khan, I think one of the icons of TechBio moving from J&J to join us here at Recursion. She’s already joined our Board of Directors — and in the next sort of 6 to 10 weeks, she’ll be moving over as our Chief R&D Officer and Chief Commercial Officer here at Recursion. She brings, I think, incredible vision from hit and target discovery all the way through to using digital tools for commercialization, marketing and distribution problems. And that visionary arc across every step of drug discovery and development, her experience doing pipeline strategy at J&J, I think J&J really one of the leaders in thinking about digital tools in the biopharma space, we’re just delighted to have Najat join us here at Recursion and can’t wait for the next stage with her.

And then we also announced Michael Bronstein, the deep mine Professor of artificial intelligence at Oxford has joined us as a Recursion valence adviser, and we’re so excited to join him in London in a few weeks as we formally open our London office, where we think there’s just such an exciting talent arbitrage, so much great talent in the computational biology space exists in London, and we aim to consolidate a lot of that great talent as we advance this exciting mission forward for Recursion. Before I move to questions, I just want to end with some high-level guidance, I think, as I shared before, Recursion really uniquely leading TechBio. And we believe that over the coming quarters and coming years, I think Recursion has the opportunity with a wide variety of catalysts to really start to demonstrate the potential of our philosophy for drug discovery.