Recursion Pharmaceuticals, Inc.: Q3 FY2026 earnings call

What management said about Q3 FY2026, from the documents filed with the SEC on 15 October 2026: press release. Guidance figures: 2 new. The quarter’s numbers.

Key takeaways

Sanofi option triggered $10 million: The option on the first development candidate triggered a $10 million milestone payment to Recursion. Source
Revenue to be recognized in Q3: The release contains no quarterly financial statements. The $10 million is to be recognized as revenue in the third quarter of 2026. Source
More than $300 million still eligible: Recursion remains eligible for more than $300 million of additional milestones for this program, beyond the payments already received. Source
Cumulative Sanofi payments reach $144 million: Upfront and milestone payments from Sanofi under the collaboration now total $144 million, including the $10 million option payment. Source
First-in-class oral dual-targeting candidate: The candidate is a potential first-in-class oral small molecule, designed for a differentiated profile against a dual target in inflammatory disease. Source
Candidate added to Sanofi pipeline: Sanofi has added the candidate to its development pipeline following the option. Source
Sanofi funds and leads development: Sanofi will fund and lead further development and commercialization to advance the program toward patients. Source

“Together with Sanofi, we tackled a difficult design problem against a dual target product profile with high potential and delivered a molecule that Sanofi has now selected for its development pipeline.”
Najat Khan, Ph.D., President and Chief Executive Officer of Recursion

Guidance

Area	Period	Figure	Against last quarter
Milestone revenue Source	third quarter of 2026	$10 million	New
Milestone payments Source	future payments for this program	more than $300 million
Royalties Source	after commercialization	average of low double-digit royalties on net product sales
Phase 1 trial start Source	2027	2027	New

What changed from last quarter

New: Sanofi optioned the first development candidate from the collaboration, which triggered a $10 million milestone payment. Source
New: Cumulative upfront and milestone payments from Sanofi rose to $144 million, from $134 million in the August release. Source
New: The candidate was added to Sanofi's development pipeline after the option was exercised. Source

Milestone payment and revenue

Sanofi option triggered $10 million: The option on the first development candidate triggered a $10 million milestone payment to Recursion. Source
Revenue to be recognized in Q3: The release contains no quarterly financial statements. The $10 million is to be recognized as revenue in the third quarter of 2026. Source
Operational obligations end for candidate: The milestone ends Recursion's operational requirements for this candidate. Management said all future payments result in profit to Recursion. Source

Future milestones and royalties

More than $300 million still eligible: Recursion remains eligible for more than $300 million of additional milestones for this program, beyond the payments already received. Source
Royalties low double-digit if commercialized: Royalties on net product sales average low double-digit rates, applying if the candidate is successfully commercialized. Source
Cumulative Sanofi payments reach $144 million: Upfront and milestone payments from Sanofi under the collaboration now total $144 million, including the $10 million option payment. Source

“This new development candidate has potential to deliver a differentiated oral medicine with highly selective dual targeting that could be a meaningful advance for people living with inflammatory diseases who still lack adequate treatment options.”
Alyssa Johnsen, Therapeutic Area Head, Development, Immunology & Inflammation, Sanofi

Candidate profile and target

First-in-class oral dual-targeting candidate: The candidate is a potential first-in-class oral small molecule, designed for a differentiated profile against a dual target in inflammatory disease. Source
Target pair required chemistry balancing: Optimizing for the target pair meant managing competing chemistry constraints to reach the intended balance of drug-like properties. Source
Candidate aimed at inflammatory patients: Sanofi's immunology lead described possible value for people with inflammatory diseases who still lack adequate treatment options. Source

Design approach and platform

Recursion and Sanofi capabilities combined: The candidate combined Recursion's integrated AI-enabled drug design platform and small-molecule chemistry with Sanofi's expertise in drug discovery and immunology. Source
Iterative computational design cycles: Multiple computational design approaches were run through repeated cycles of prediction, chemical design, synthesis and experimental validation to explore chemical space. Source
Speed and precision credited to combination: Sanofi's immunology lead credited its clinical and translational knowledge, combined with Recursion's AI-driven platform, for moving with speed and precision. Source

“With additional programs advancing across our collaboration, this milestone is another important demonstration of how our platform can translate computational capabilities into differentiated medicines”
Najat Khan, Ph.D., President and Chief Executive Officer of Recursion

Handover to Sanofi development

Candidate added to Sanofi pipeline: Sanofi has added the candidate to its development pipeline following the option. Source
Phase 1 expected in 2027: Phase 1 clinical trials for the candidate are expected to begin in 2027. Source
Sanofi funds and leads development: Sanofi will fund and lead further development and commercialization to advance the program toward patients. Source

Other programs and collaboration scope

Collaboration targets first and best-in-class: The collaboration aims to find potentially first- and best-in-class small molecules across immunology and oncology, combining both companies' capabilities. Source
Six progress-based milestones reached: With the candidate optioned, the collaboration has reached six progress-based milestones across five programs. Source
More programs may reach milestones: Other programs in the joint portfolio have the potential to reach development candidate and other progress-based milestones within 12 months. Source

Coming up, as management said on 15 October 2026

Phase 1 start expected in 2027: Sanofi expects the candidate to enter phase 1 clinical trials in 2027, with Sanofi funding and leading development. Source
Milestone revenue recognized in Q3: The $10 million milestone is to be recognized as revenue in the third quarter of 2026. Source
Other programs may reach milestones: Management said other programs could reach development candidate and other progress-based milestones within the next 12 months. Source

Figures management reported

Figure	Reported
Progress-based milestones Source	six across five programs
Phase 1 trial start Source	expected 2027

Risks management discussed

Operational: Optimizing the dual target pair required balancing competing chemistry constraints against drug-like properties, which management described as complex. Source
Financial: Further development and funding of the candidate rest with Sanofi, which leads development and commercialization of the program. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

Recursion Announces Sanofi Options Potential First-in-Class Immunology Development Candidate from Their Collaboration

Potential first-in-class dual targeting inhibitor oral small molecule to enter Sanofi’s development pipeline, with phase 1 clinical study currently planned to begin in 2027

Salt Lake City, UT, Oct 15, 2026 (GLOBE NEWSWIRE) -- Recursion (Nasdaq: RXRX), a leading clinical-stage TechBio company decoding biology to radically improve lives, today announced that Sanofi has optioned the first development candidate from the two companies’ multi-program research collaboration.

The option triggered a $10 million milestone payment to Recursion, bringing total upfront and milestone payments received from Sanofi under the collaboration to $144 million; Recursion is eligible for more than $300 million in additional milestones under the program, with double digit royalties on net product sales, if approved.

“The most important test of any technology platform in drug discovery is whether it can translate into differentiated medicines,” said Najat Khan, Ph.D., President and Chief Executive Officer of Recursion. “Together with Sanofi, we tackled a difficult design problem against a dual target product profile with high potential and delivered a molecule that Sanofi has now selected for its development pipeline. With additional programs advancing across our collaboration, this milestone is another important demonstration of how our platform can translate computational capabilities into differentiated medicines - and do so repeatedly.”

The potential first-in-class oral small molecule was designed to achieve a differentiated profile against a challenging dual target implicated in inflammatory disease. Optimizing for this target pair required navigating complex and competing chemistry constraints to achieve the desired balance of drug-like properties. The candidate was delivered by the combination of Recursion’s integrated AI-enabled drug design platform and small-molecule chemistry capabilities with Sanofi’s deep expertise in drug discovery and immunology. Recursion applied multiple computational design approaches across iterative cycles of prediction, chemical design, synthesis, and experimental validation to rapidly explore and optimize a complex chemical space.

“By combining Sanofi's drug discovery and clinical and translational knowledge in Immunology with Recursion's AI-driven platform, we were able to move with speed and precision in a space where that balance is notoriously hard to achieve,” said Alyssa Johnsen, Therapeutic Area Head, Development, Immunology & Inflammation, Sanofi. “This new development candidate has potential to deliver a differentiated oral medicine with highly selective dual targeting that could be a meaningful advance for people living with inflammatory diseases who still lack adequate treatment options.”The candidate has now been added to Sanofi’s development pipeline and is expected to enter phase 1 clinical trials in 2027, with Sanofi funding and leading further development and commercialization to advance the program toward patients.

Building a growing portfolio through the Recursion-Sanofi collaboration

The Recursion-Sanofi collaboration was established to discover and advance a portfolio of potentially first- and best-in-class small molecule medicines across immunology and oncology by combining Sanofi’s deep therapeutic-area and drug-development expertise with Recursion’s integrated capabilities across biology, AI-enabled molecular design and chemistry.

With the first development candidate optioned, the collaboration has now achieved six progress-based milestones across five programs. Sanofi’s selection of the development candidate triggered a $10 million milestone payment to Recursion, bringing total upfront and milestone payments under the collaboration to $144 million to date.

Recursion remains eligible for more than $300 million in additional milestones for this program, with an average of low double-digit royalties on net product sales if successfully commercialized. The $10 million milestone payment will be recognized as revenue in the third quarter of 2026, and ends Recursion’s operational requirements related to this candidate, with all future payments resulting in profit to Recursion.

Additional programs across the collaboration continue to advance. Over the next 12 months, other programs in the joint portfolio have the potential to reach development candidate and other progress-based milestones.

About Recursion

Recursion (NASDAQ: RXRX) a leading clinical-stage company pioneering AI-enabled drug discovery and development decoding biology to radically improve lives. Recursion is advancing a portfolio of differentiated investigational medicines across its wholly owned and partnered pipeline in oncology, rare disease, neuroscience, immunology, and other therapeutic areas with significant unmet need. Enabling its mission is the Recursion OS, an AI-native, end-to-end drug discovery and development platform integrating biology, chemistry, and clinical development into a unified intelligence system. Powered by proprietary multimodal data, purpose-built AI models, and bilingual teams fluent in both science and AI, the Recursion OS is designed to translate complex science into medicines that matter - faster, better, and at scale - for patients who are waiting.

Recursion's platform infrastructure is anchored in Salt Lake City, Utah and Milton Park, Oxfordshire, where its automated biology and chemistry laboratories generate proprietary data at industrial scale. Recursion also maintains offices in New York, Montréal, and London, three global hubs for talent and leadership at the intersection of AI and scientific innovation.

Forward-Looking Statements

Forward-looking statements notice

This document contains information that includes or is based upon "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, those regarding the expected timing of the initiation of phase 1 clinical trials for the development candidate optioned by Sanofi; the potential of such development candidate, including its potential to be a first-in-class, differentiated oral medicine for inflammatory diseases; Sanofi’s funding and leadership of further development and commercialization of such development candidate; Recursion’s eligibility to receive future milestone payments and royalties under its collaboration with Sanofi, and the expected timing of revenue recognition for the $10 million milestone payment; the potential for additional programs in the collaboration to reach development candidate and other progress-based milestones over the next 12 months; the ability of Recursion’s platform to repeatedly translate computational capabilities into differentiated medicines; and all other statements that are not historical facts. Forward-looking statements may or may not include identifying words such as "plan," "will," "may," "could," "should," "expect," "anticipate," "intend," "believe," "estimate," "project," "designed to," "potential," "continue," and similar terms. These statements are subject to known or unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements, including but not limited to: challenges inherent in pharmaceutical research and development, including the timing and results of preclinical and clinical programs, where the risk of failure is high and failure can occur at any stage prior to or after regulatory approval due to lack of sufficient efficacy, safety considerations, or other factors; our ability to leverage and enhance our drug discovery platform; the performance and limitations of our artificial intelligence and machine learning models and the data on which they are trained; our reliance on third parties, including collaborators, contract research organizations, and manufacturers; our ability to initiate clinical trials and enroll patients on expected timelines; competition from other therapies and platforms; our ability to obtain financing for development activities and other corporate purposes; the success of our collaboration activities and our collaborators' discretion over option exercises, program advancement, and funding, including the risk that Sanofi may delay, deprioritize, or discontinue development of the optioned development candidate; our ability to obtain regulatory approval of, and ultimately commercialize, drug candidates; our ability to obtain, maintain, and enforce intellectual property protections; cyberattacks or other disruptions to our technology systems; our ability to attract, motivate, and retain key employees and manage our growth; inflation and other macroeconomic issues; and other risks and uncertainties such as those described under the heading "Risk Factors" in our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K and our subsequent Quarterly Reports on Form 10-Q. All forward-looking statements speak only as of the date of this document and are based on management's current estimates, projections, and assumptions, and Recursion undertakes no obligation to correct or update any such statements, whether as a result of new information, future developments, or otherwise, except to the extent required by applicable law.

Contacts
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investor@recursion.com