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Hello, everybody, and welcome to Recursion's Third Quarter 2025 (L)earnings Call. My name is Chris Gibson. I'm the Co-Founder and current CEO of Recursion, and I'm so delighted to have you all joining us today. I want to start off by talking about something that I'm really excited about, which is our executive leadership updates. And it's my pleasure to share with all of you that beginning January 1, the amazing Najat Khan is going to take over the role of CEO, President and Director of Recursion. I've been working with Najat for the past 18 months in an incredible partnership to build our platform to deliver on our pipeline and our partnerships. And everything that I have seen has convinced me that she is absolutely the right leader to take Recursion through its next chapter. And I'm so delighted that she has agreed to take on that role. I'm also incredibly excited that I'm going to continue bringing my passionate unapologetic founder energy to Recursion as the Chairman of the Board and as an Executive Adviser. And finally, I want to say a huge thank you to our entire Board and especially to our Chairman, Rob Hershberg. He's been an amazing Chair and an incredible mentor to myself and Najat, and I am delighted that he's going to continue on with us, I hope, for a very long time as our Vice Chairman and Lead Independent Director. These are really exciting changes that I believe are going to position Recursion to affect our mission to lead the Tech-Bio space, and I am so, so thrilled to get to share them with you today. Najat?

Thank you, Chris. It is such an honor to step into the big role to be CEO and President of Recursion. And I want to thank you. I want to thank the Board and just our incredible team for their trust and partnership. And Chris, first for a few minutes, I want to say, look, your vision and the courage with which you have taken this from 0 to what Recursion is today is unparalleled. And you've not just been instrumental in building the company, of course, but also creating a new sector that never existed before, really truly blending the best of technology and science to make medicines and radically improve patient lives. There's so much to do. So I'm really -- I'm deeply grateful, of course, for your leadership, but even more so for your friendship which I'm looking forward to doubling down on as you work together in all of your many roles. When I -- I just want to say a few other words, too. Look, when I joined Recursion 18 months ago, I was drawn to the bold ambition, but an ambition in action. And what an 18 months it's been. Step 1 was the special combination with [ Excientia ] to really truly build that end-to-end tech stack, as we like to call it, engine and also the data generation. We've talked a lot about models, but proprietary high-quality data is critical and a critical moat to what we do. Building out clin tech platform, we're in the clinic. This is going to be a critical part of what we do and also sharpening our portfolio, advancing multiple programs internally with our partners. Chris will share a little bit more of some of the latest updates there from Roche and doing so with a…

Thanks, Najat. And with that out of the way, I think we should get back to work. And one of the things that I'm extremely excited about is that Recursion has a tremendous amount of potential catalysts coming in the next 18 months. From our pipeline to our partnerships to advancements of our platform, we are going to continue to deliver exciting updates, I hope, on a really regular cadence to all of our shareholders, all of our stakeholders and ultimately, advancements and milestones that I think take us on a path towards really affecting patient lives. And we're going to do all of that with a pro forma cash balance of almost $800 million as of a few weeks ago. And what I'm excited about is that gives us runway through the end of 2027 without any additional financing. This means we're in an incredibly robust position from a balance sheet perspective to deliver across all of these catalysts. Now let me talk a little bit about something that was really exciting that we got to share last week, which is how our platform is fueling all of our partners, but in particular, our Roche and Genentech colleagues. We shared last week that we had earned a $30 million milestone payment. This is our second such milestone from Roche and Genentech for the delivery of a whole genome neuro map. And I want to point out that this brings our total cash inflows from partnerships to more than $0.5 billion. And I think that is a milestone that few pre-commercial biotech companies ever achieved and one that I think is a leading indicator of the kind of value that we are going to continue to deliver here at Recursion. So let's talk a little bit about the Roche and…

Thank you, Chris. And just the example that you mentioned in terms of microglia is such a phenomenal example of how our platform and the combination of the wet lab and the depth of the wet lab approaches that we have at Recursion with, of course, our dry lab really creates something of unique value. So if you go to the next slide, we shared this slide before. And I just wanted to spend a little bit of time on it today and double-click on a couple of areas. So first of all, this represents the heart of how Recursion operates. You hear a lot about the Recursion OS. And I love to kind of pull the hood and like really show what are the various components that we're focusing on here. Step one, we're applying AI where it matters, where it can truly change either quality, speed or the impact of our decision-making. There are 3 specific modules here. The first is focused on deep biological understanding that's actually connected to patient outcomes. The second, how do we leverage AI to design better molecules that are more drug-like. And then the third is a ClinTech approach on picking the right patients as well as recruitment -- fast recruitment so we can get through our trials faster. All right. Having said that, I wanted to double-click on a couple of areas that we're really focusing on. Next slide. Scientific agents. So we've heard a lot about agentic agents. One of the most exciting parts of the OS is how we are using scientific agents, AI systems that actively participate in the entirety of the scientific process. And these agents are helping us thinking about the data that Chris just mentioned, genomics, transcriptomics, real-world data with partners like Tempus and others…

Terrific. Thank you, Najat. Another thing that we are very excited about is going into that FAP data as well as the milestones in 2026 in a really strong financial position. So over the course of the year, you've seen us do a number of things. In May, we laid out a strategic plan that allowed us not only to hit on multiple high-value milestones, but also reduce our expense base by 35% from 2024. This was a really important step in us trying to put that discipline in place that Najat was talking about earlier. And then you started to see us hit those milestones. We've brought in almost $40 million from our partnership inflows over the course of this year so far, and we expect more of that to come in the future. So with today, our announcement of having $785 million of cash in the bank as of October 9 is a really strong step in creating that foundation so we can look forward into the future milestones and say, we don't have that financing need to be able to achieve our near-term milestones and really deliver a lot of value to shareholders. And so when we look forward we've looked at how we can bring that financing together in a way that was going to minimize our dilution to all of the shareholders as well as really continue to allow us to focus on the business and move it forward. We are also reaffirming our guidance for 2025 on an expense base of less than $450 million. That's excluding all of the partnership inflows. In 2026, we're also reaffirming less than $390 million over that time period. One note on that 35% expense reduction, that actually equates to over $200 million in expenses coming off of…

Great. Thank you so much, Ben. And we wanted to just capture both looking at this year as well as what's coming up next year. For this year, one big thing that as I look at the slide, which is missing is really the successful integration of the 2 companies coming together. It's been an incredible amount of work. And also the financial discipline that we've gone through internally to really extend our runway so that we can see through a lot of these catalysts. So look, on the internal pipeline highlights, CDK7, I just mentioned the monotherapy update and the combo that's initiated. REC-4881, the Phase 2 initial update, potential first POC for our platform, [ MALS-1 ] monotherapy initiation and the PI3KDC nomination. I will also talk a little bit about our platform and then go to our partnership. On the platform front, a ton of work, like 3 words on a slide, integrated design platform, but actually, I should say integrated our end-to-end platform, the amount of migration work, I have seen this across other companies before with the speed with which that was done and the utility, the fact that we had no slowdown in our productivity of our platform speaks to our fantastic engineering data science teams that exist. And then also the work with MIT and NVIDIA on both 2, but much more that's going on in-house, which I would be a pleasure to share next time, especially with our Frontier team, which is our 0 to 1 cutting-edge AI team, really, really proud of the work that they're doing, Valence and Inception Labs. And then ClinTech, this has been a core focus for us in the last several months to really build out the tech stack end-to-end also into clinical development, crucial pillar…

Thanks, Najat. All right. Let's go. We've got Sean from Morgan Stanley. Ben, this one goes to you. Can you review expectations for cash burn through 2026 and how this works with runway expectations through '27 without additional financing? I know you just hit that, but maybe break it down for everybody. And then also, do you plan to use any additional ATM financing?

Yes, of course. So I think there's a couple of things that we looked at over the course of the quarter. So one, the most important thing for a growth company is delivering on high-value milestones. And so our role as a management team is to make sure that we have the resources to be able to hit those milestones. So we looked at all of the things that we've talked about before. So how do we do the right expense control, how do we prioritize the right programs? And then how do we make sure that we've got the right cash balance in place to be able to reach those milestones and really focus on them. So what we decided to do was fully utilize the ATM over the course of the quarter, the remaining balance on the ATM. So that is now closed. We have not opened up a new ATM. And what that allows us to do is really go in and put in a cash balance that without any additional financing allows us to get to the year-end 2027 and achieve those milestones that Najat was just talking about as well as many others. Just because I know the financing has been a critical question for a lot of shareholders. We really looked at 2 different aspects for that ATM utilization. One was if we look at the biotech financing market, there's a couple of things that we saw very clearly. One, there is increasing volatility. There are fewer open windows. There's a much shorter period of hold that we've seen from a lot of the investor base. And also the discounts have been increasing as well. And so we looked at the ATM as a very attractive cost of capital that would put us in a position to be able to execute on the plan going forward. The other part was just there was so much focus that was becoming a part of the financing and the cash balance. It was actually starting to overshadow some aspects of the story. And so with such important data like FAP and some of the other milestones that are upcoming, we wanted people to really be able to focus in on the fundamentals of those events rather than needing to worry about are those events just going to lead to another financing or other aspects like that. And so we hope that this allows investors to focus. It also gives us a lot of ability to really focus on delivering those milestones over the coming months.

Thanks, Ben. So financing overhang has been struck. Alec from B of A, one question on platform utilization. It looks like older programs use parts of Recursion's capabilities in their development with Platform 2.0 assets, leveraging the full stack. Najat, this one is coming to you. How do you see this feeding into the quality or uniqueness of the newer assets? And anything to be read into for the current pipeline like 481, where it only benefited from phenomics in the version 0.1 of the platform.

Yes. No, thank you, Alec. And by the way, you were one of the voices that inspired us to create that slide. So thank you for always sharing your feedback. So look, 4881 phenomics, our platform today, even if we're making it multimodal, still leverages genomics a lot, right? And we are very, very excited in terms of some of the data we've seen to date and more to come later this year. But in terms of -- with every crank, like some of the clinical stage programs that we have come from the earlier stages of the platform in discovery, later stages of our platform. I think that's just the true iterative nature of drug discovery and development. And the improvement of our compounds doesn't just stop in discovery. It's also in development. So you see some of the innovative approaches that we're also taking in development for FAP, CDK7, et cetera. So we look at it more holistically. But look, with every crank, the platform gets better, and that's just what it is for us, and we're learning fast, and we want to execute and iterate as quickly as possible to get them into the clinic as well.

Thanks, Najat. I'm going to bring this next one over to you as well. From Gil at Needham, Sean at MS and Manny from Leerink on the partnership side. Is Recursion looking to maintain current biopharma partnerships or expand to new partnerships in the near to midterm? And what are some of the milestones that we should be focused on?

Great question. Our partnerships that we have are deep, highly collaborative and transformational. We are very, very excited about the partnerships that we have. And I mentioned some of the milestones that are critical for us maps to programs, for instance, in our Roche Genentech partnerships. And for Sanofi, we're really making progress on the various programs that we have in immunology and oncology. We are always having discussions in terms of potential new partnerships. We are being incredibly choiceful. So that is an area that we'll always be open to, but areas we can drive incredible value as well as our partner. It has to be a win-win. So the answer is yes, the door is always open, but we also -- we tend to curate a set of partners that we can really show tangible value with.

Thanks, Najat. Next one I'm going to take. This is from Guy and Alec. Would be interested to hear your thoughts on the evolving AI drug development landscape, especially with companies like Lilly throwing their hat in the ring and also partnering with NVIDIA. So look, I think this is extraordinarily exciting. This is a sign that when we said a couple of years ago, we look like what the future of biopharma will look like that we were right. companies are starting to embrace massively scaled compute. They're starting to embrace AI. And so this tech bio sector is really, I think, just a harbinger of what the future of biopharma will become. And so this is super exciting to me. I'm so glad that Lilly is making this visionary investment. I'm so glad to see them partnered with NVIDIA. And I look forward to working alongside many companies in the future that come to the space. We want to move the entire field forward ultimately to bring medicines to patients. So really, really excited by that advance. And then final question, I think, fittingly, over to Najat from Dennis at Jefferies. Congrats on the new role, I mean, effective January 1, we've still got a few weeks. Curious what philosophy you're bringing into the seat as CEO and if there are any near or medium-term priorities that are top of mind.

Thank you, Dennis. Look, my priority is going to be the core priority is going to be how do we translate the data, the compute, our amazing people, our platform, to tangible proof points that matter, whether it's our own pipeline, whether it's with our partners, that is the core element that matters the most. As Chris was saying, look, I've been in big pharma before. Now I'm in tech, bio, biotech, AI inspired, whatever term you want to use. At the end of the day, it's about making differentiated programs and then eventually medicines for patients that matter. That is the core focus for me. It starts with that, it ends with that. We have -- this is a tough journey, 90% failure rate. I am aware, clear eyed of how tough it is across industry. And we're doing something in a way that's never been done before. That's going to be my core focus. The second is going to be really investing where we have a unique ability to win. That's our platform, that's our programs. We're going to make data-driven, and you've seen me do that before, go/no-go decision on our programs. That's why when you say all of the programs we're doing concurrent targeted, efficient approaches so that we can get to a rapid go no-go because unlike a lot of other companies, there are multiple other programs that we're bringing from discovery into the clinic. We need to be choiceful in terms of where we go. And then the third is discipline and execution and good capital stewardship. You heard Ben talk through, we are grateful for the capital that we have. And my intent is to use every single dollar for what will truly create value for our shareholders and our patients. So those are some of my areas of focus. I'm sure I'll think more on it over the holidays. And with Chris' counsel, I am so excited to continue partnering with Chris. It's been such a great journey and so much more to come together.

Thanks, Najat. It's been an amazing first 12 years, and I'm looking forward to the next 12. Thank you, everybody, for joining us. I hope you have a great day.