Recursion Pharmaceuticals Inc at Morgan Stanley Global Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : <_ALACRA_META_ABSTRACT>Welcome. So we're doing this for all our companies. We've got, what, three macro questions just to set the tone. But with China's rise in biotech innovation, how are you thinking about Recursion's competitive position here? And will this influence your R&D and business development strategy? Christopher Gibson - Recursion Pharmaceuticals Inc - President, Chief Executive Officer, Director Yeah. So look, we're excited to see new medicines coming from wherever they come from, and China certainly has had a meteoric rise over the last few years. At Recursion, our focus is on going places that are first-in-class or best-in-class in undruggable areas of biology that I think are maybe not the forte of the Chinese biotech market right now. We're really focused on going places we don't think other people can. And so we think as that market continues to rise, it's going to create a differentiated opportunity for us in this kind of going where others can't focus that we have at Recursion.

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : Wonderful. And last question on the macro before we get to Recursion specific. But what has been the most impactful on Recursion from the regulatory side, if anything? Tariffs, MFN, perhaps some way off or FDA regulatory? Najat Khan - Recursion Pharmaceuticals Inc - Director, Chief Research and Development Officer, Chief Commercial Officer Yeah, I'm happy to take that one. I think you're right, MFN so far, a little bit off, ways off, but we are keeping track on that, right? In terms of whenever we are looking at with our automated workflows to actually start a program, you have to think about not just the unmet needs, the chemistry biology, et cetera, but also the potential commercialization pricing impacts and so forth. So we're keeping -- that's more of a long term. We're keeping that -- we're watching that closely. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 08, 2025 / NTS, RXRX.OQ - Recursion Pharmaceuticals Inc at Morgan Stanley Global Healthcare Conference On the regulatory front, I think there are areas that are tailwinds for us. So very recently, some of the announcements made in the guidance shared on reducing the reliance in preclinical work and translational work on animal models to leverage more predictive models. I think that plays into very much the areas where back to what just Chris said, the dry lab, wet lab, not just creating the models, but the moat really comes with the data. How much data on failure or successes. Some successes are available, but failure when it comes to ADMET and other experiments done preclinically exist in the real world today or exist in publication, it's limited. So we need to create that data in order to then build better models that can predict. That's an area of huge focus. We have our automation studio both in, of course, Salt Lake City, but then also in Oxford. The other part, I would also say there's been guidance from the FDA for the last four, five years in terms of these surrogate endpoints, especially in rare diseases, in the use of alternative endpoints, accelerated approval, et cetera. I mean, that's very important with how we focus on clinical development, rapid go, no-go PoC because unlike a one or two asset company, we have the volume given the platform to have more shots on goal. So we prefer to be good stewards of capital and make quick go, no-go decisions, for instance, what we did with the portfolio prioritization a few months ago.

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : Wonderful. Thank you. To get more specific on Recursion, I've got some questions on the platform. And so how was Recursion OS 2.0? How has it evolved since the merger with Exscientia? And what differentiates the platform from other AI-driven drug discovery platforms? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 08, 2025 / NTS, RXRX.OQ - Recursion Pharmaceuticals Inc at Morgan Stanley Global Healthcare Conference

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : Sure. Can you walk us through how Boltz-2 is being integrated into workflows and why you've chosen to open source it? Najat Khan - Recursion Pharmaceuticals Inc - Director, Chief Research and Development Officer, Chief Commercial Officer I mean, Boltz-2 is a really exciting collaboration. It's just a highlight of one of the many models that we built internally. What Boltz-2, for those watching that is allowing us to do is if you think about the top of the funnel in terms of where ideas and hypotheses come for novel biological insights, our funnel is very much, much broader because we are looking at these whole genome, large massive biology and generating hypotheses. Instead of using something like Boltz-2, which helps you do much more accurate SAP-based analysis much later on in the design process. We have integrated in our first module of our workflow, that is when you're figuring out your biology and also getting a triage understanding of are there molecules that combine and what would that look like. The fact that you can move up the triage process so much earlier in discovery means the whole notion of going from a V, which is it takes a long time to really attrit and figure out which molecules would have their largest, highest probability of success, you turn that into a T, which is a much broader start and then you have much higher probability and consistent probability and you do it better, faster. So that's how -- and every single program that we have in our discovery portfolio is leveraging Boltz-2 or both Boltz-2 S iterations of models that we have in our portfolio. The other thing I'll just say there's new models coming up all of the time. It's also an offensive play for us to commoditize, quite frankly, some models that should be when we think about some of our competitors and the models that are used, but also the rapid iteration of how we can integrate open source model that we might be interested, fine-tune, tweak them into our platform. The modularity approach of how the platform has been built. I mean, kudos to the engineering and the tech teams that have done that execution.

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : Wonderful. What are some of the key milestones or success criteria for 617 in (inaudible), second-line product? Najat Khan - Recursion Pharmaceuticals Inc - Director, Chief Research and Development Officer, Chief Commercial Officer Yeah. I mean 617, this is the CDK7 program that I was just mentioning. We started the combination. I mean combination is going to be critical for us to see weather response, of course, is one, but also do we keep a cleaner safety profile, which has really plagued this class of medicines for a long time, right? Therapeutic index and being able to optimize that it's not ever going to be an easy endeavor given the importance of CDK7 broadly. So that's the selectivity. And that's where the design element comes in, and how the molecule was designed. And also this is what patient stratification becomes really important. How can you improve or enhance the signal and not the noise. But I'll say that there's also other programs, for instance, our FAP program, which is additional data coming up in the next -- by the end of this year, which is one of our first, I would say, proof of concept of the platform program. So there, FAP, this is a MEK1 -- allosteric MEK1/2 inhibitor that is focused on the disease called FAP, which is driven by a loss of APC mutation. The idea that you could actually use a MEK 1/2 inhibitor in order to actually reverse the disease, actually came from our phenomics platform so that first module. Again, unbiased, we did not know MEK 1/2 would worked. It has never been tested before. But really looking at how do you take disease and reverse to healthy, and we screened thousands of compounds and MEK1 inhibitor was one of the ones that was top of the list. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 08, 2025 / NTS, RXRX.OQ - Recursion Pharmaceuticals Inc at Morgan Stanley Global Healthcare Conference We saw consistent polyp burden reduction in mouse models. And we're also -- we just shared some very, very early cut of the data, and we see a polyp burden reduction from 30% to 80% so far in the patients. Side effects on target, rash, et cetera. So there's a lot more work to do there. We have more data coming up later this year. But I just point to that because that uses multiple components of our platform as well. And again, FAP is a disease where there is no approved drug that's available and the off-label use of celecoxib is about 20%, 30% polyp burden reduction. So we're looking for those trends holding. So much more there, but I just wanted to point out as one of the important programs to our drug for us.

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : Wonderful. Still on the pipeline, what insights from phenomap led to the development of RBM39 degrader REC-1245 as a CDK12 analog with better selectivity? Najat Khan - Recursion Pharmaceuticals Inc - Director, Chief Research and Development Officer, Chief Commercial Officer I love the question. You've now gone through every single program. So RBM39, this is a degrader compound. So just to say from a phenomap perspective, and I wish I can show you, these are incredibly large phenomaps. I mean they are whole-genome CRISPR knockout, trillions of different relationships that come through. However, what we did see is CDK12 -- again, really important for DDR modulation. But it's been hard to drug because of the homology and the similarities with CDK13. So we did see strong gene-gene association from our PMS with RBM39. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 08, 2025 / NTS, RXRX.OQ - Recursion Pharmaceuticals Inc at Morgan Stanley Global Healthcare Conference I want to pause on that for a second because sometimes people think that some of the targets that we are identifying is just from a one interaction. But the beauty of the phenomaps, and I wish we could show it here, is the fact that it turns into a much more systems-level biology. You start to see the connections between different pathways and so forth. And this was an orthogonal way in terms of being able to modulate and have the effect that you'd want to with CDK12, which is important for DDR modulation without the challenges of CDK13. So that's what we saw in our phenomap that it does not interact or inhibit CDK13. The next step was to actually designed the compound. And the compound was designed it's a molecular glue from target ID to IND-enabling studies only 18 months, which in industry is four to five years. So you see the speed of what you can do with the second module, which is a design module. And now it's in monotherapy dose escalation, and we should have some early data on safety, PK, PD first half of next year. I do want to say that once -- before we got into the clinic, we actually went back to those phenomap, expanded the aperture to see what other pathways are actually perturbed in some way. And that's what helps us understand that it's really the high replication stress and DDR defects that are important, and that helps you then stratify the right patients that we go after. So there's a lot of work in terms of once you've created these maps, you can actually go back and query it, just like you'd query like a search tool, and you have all of these relationships. So this is why it's important to create these data sets. And then actually, that is a huge competitive moat for us because you can use that for target ID, for patient selection. And now that you combine that with some of our real-world and Tempus, Helix other data sets, you can do the forward and reverse genetics validation and query that Chris was mentioning earlier.

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : Got you. Fantastic. And when you do have partnered programs and you are generating data for a third party, who owns the data?

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : Great. Thank you. And I guess more specifically on partnerships, but thank for that. You've noted that you expect 100 million partnerships by year-end '26. What assumptions underlie your guidance for 100 million milestone inflows by '26? And how that probability been weighted?

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : Great. Thank you. And I guess, your partnerships with Roche, Bayer, Merck KGaA, I guess, we don't know a lot of detail around that. But how could you think about -- or how could investors think about whether or not they complement your proprietary program where we -- proprietary programs, we do know a bit. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 08, 2025 / NTS, RXRX.OQ - Recursion Pharmaceuticals Inc at Morgan Stanley Global Healthcare Conference Najat Khan - Recursion Pharmaceuticals Inc - Director, Chief Research and Development Officer, Chief Commercial Officer Yeah. I mean, I think, I'll just start with the Roche one. I mean, Chris mentioned it's focused in the neuroscience space as well as GI oncology. So again, in that we have created around five maps already, five of these phenomap. One of them that we've talked about publicly, and we just received a large milestone for this Fall used -- we have to develop, I think it was 1 trillion iPSC-derived neural cells. This is incredibly hard. So many different relationships and now the team is focused on really prioritizing the programs that come from these maps. These are in the neuroscience space, we don't have internal programs in the neuroscience space, so there's no overlap. We also have another program that's already optioned in GI onc, and we're also developing maps there. When you think about Sanofi that's focused in the I&I and Oncology space, again, we ensure that there is no overlap in terms of the targets and so forth that we're partnering on there. Great momentum. Four milestones in 18 months. These are very challenging targets, and this is where our design platform really becomes critical in terms of the lead series development candidate and so forth milestones that are coming up. The last thing I'll also say, I mean, Chris mentioned this, we learn a lot in terms of various disease areas. But then it also expands our aperture. We're in oncology across -- when I think about portfolio, I think, internal partners, oncology, rare diseases, neuroscience and I&I. And there's also additional maps that we have built that are not in that space, in some of the other chronic disease areas as well. And so I think that plethora of understanding, the breadth and depth in biology, is incredibly important for us for our internal portfolio, but also potential new partnerships that we have. But we are, from a legal perspective, from a BD perspective, very clear on the areas that we work on the guardrails and so forth.

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : Thank you. Next, I have a couple of financial questions. If you could talk about your current cash runway, the assumptions behind it, and how are you managing burn rate?

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : Yeah. Wonderful. That's clear. Thank you, Chris. A few minutes left. I've got a few strategic vision questions. And what does the concept of a virtual cell mean for Recursion? And how close are you to deploying it in production?

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : Sure. Great answer. Than you. We started publishing last week what will be a periodical called Looking to My Mom, but maximally optimized molecule. So essentially, if you look at how drug discovery has evolve from the multiyear discovery of Taxol to something that's really truncated. Essentially you get to a point where you can't iterate anymore, it might not be the best clinical outcome, but it's the best clinical outcome that we can design as humans. So kind of in that context over the long term, you reach the best molecule that you can possibly get and iteration is futile. So you will end up winner takes all. And then at some point, everything goes generic.

Question: Sean Laaman - Morgan Stanley & Co Ltd - Analyst : Awesome. Well, we're just out of time. That would be a perfect place to stop proceedings. But thank you both for your time today, and thanks for coming to our conference. We greatly appreciate it.