AI specialist Recursion trims pipeline in latest shakeup
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AI drug discovery specialist Recursion Pharmaceuticals is shelving three of its most advanced drug prospects in an effort to cut costs following a merger last year.
Alongside its latest quarterly earnings report, the company revealed plans to halt development of drugs for cerebral cavernous malformation and neurofibromatosis type II that were in mid-stage testing. Recursion will also pause testing and attempt to license out a therapy it's been advancing for C. difficile infections.
The decisions reflect Recursion's plan to focus on 'areas of high unmet need where we believe we can have the greatest impact,' said Najat Khan, the company's chief R&D officer and chief commercial officer, in a statement.
Following a merger with fellow AI biotech Exscientia last year, the company has been 'proactively streamlining' its operations and 'making deliberate tradeoffs' to focus resources on its most impactful programs, Khan added.
Four years ago, Recursion raised $436 million in one of the biotech sector's most lucrative initial public offerings. The company secured those funds on the promise of AI, which is seen by proponents as a way to speed up drug discovery and increase its odds of success. And in combining with Exscientia in 2024, Recursion touted a sprawling pipeline that would produce 10 near-term clinical readouts and had the potential to deliver multiple blockbusters.
The company hasn't yet fulfilled its promise, though. Early clinical data for its treatment for cerebral cavernous malformation disappointed investors and, according to the company's statement Monday, the 'totality' of the results accrued since then led it to stop testing. The neurofibromatosis type II therapy is being scrapped for similar reasons, while a changing treatment landscape has reduced the need for the C. difficile drug it's been developing.
To Mani Foroohar, an analyst with Leerink Partners, the pipeline cuts were 'inevitable' given the company's 'unsustainable cash burn.' The company booked a roughly $464 million net loss in 2024, following a $328 million net loss the year prior. It had $509 million in cash as of the end of March.
Foroohar added in a research note Monday that Phase 2 data the company released Sunday in a condition that causes the growth of potentially dangerous polyps were 'hard to interpret.' The findings do 'little to improve confidence in clinical execution, as cash burn and dilution risk are top of mind,' he wrote.
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