RXRX Q2 Earnings Miss Estimates, Revenues Fall Y/Y, Stock Down

Recursion Pharmaceuticals RXRX reported a loss of 25 cents per share in the second quarter of 2026, wider than the Zacks Consensus Estimate of a loss of 23 cents. The company had incurred a loss of 41 cents per share in the year-ago quarter.

In the absence of an approved product, Recursion primarily recognizes collaboration and grant revenues. Total revenues were $7.67 million, which declined 60% year over year and missed the Zacks Consensus Estimate of $14 million. Lower Roche RHHBY and Genentech, a fully owned subsidiary of RHHBY, collaboration revenues hurt the top line. The reduction followed the successful completion of certain project phases during the prior-year period.

The stock fell 4.2% on Wednesday as investors reacted negatively to the disappointing second-quarter results.

RXRX’s Q2 Results in Detail

Operating revenues totaled $7.3 million in the second quarter, down 62% from $19.1 million in the year-ago quarter. Grant revenues rose significantly to $0.37 million from $0.12 million a year earlier.

Research and development expenses decreased 30% year over year to $89.6 million. The decline primarily reflected lower platform costs due to the timing of Tempus record purchases and improved operating efficiency. The reported quarter included $3.1 million in non-cash expenses related to the use of Tempus’ patient-centric multimodal oncology data compared with $22.7 million a year earlier.

General and administrative expenses declined 11% year over year to $41.5 million, primarily due to lower salary expenses following headcount reductions. Cost of revenues fell 43% to $11.5 million from $20.2 million in the prior-year quarter.

Recursion Pharmaceuticals had cash, cash equivalents and restricted cash of $556.8 million as of June 30, 2026, compared with $665.2 million as of March 31, 2026. Based on its current operating plan and without additional financing, RXRX expects its cash reserves to support operations into early 2028.

RXRX shares have plunged 22.5% year to date against the industry’s 2.5% growth.

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Recursion’s Genentech Collaboration Update

Roche’s Genentech exercised the first Validated Target Option under its neuroscience collaboration with Recursion. The decision advanced a previously unexplored neuroscience target into a joint small-molecule early discovery program.

Recursion and Genentech developed a whole-genome CRISPR knockout map using a subset of more than 1 trillion internally manufactured induced pluripotent stem cell-derived neuronal cells. Predicted targets underwent pathway, functional and disease validation before progressing. The companies will now focus on small-molecule design, hit generation and validation using Recursion’s AI-native chemistry platform.

RXRX has achieved $216 million in upfront and milestone payments from the Roche and Genentech collaboration to date. The agreement covers up to 40 potential small-molecule discovery programs, each carrying more than $300 million in potential development, commercialization and net sales milestones, along with tiered royalties of up to high-single digits.

RXRX’s Key Pipeline Updates

REC-4881 is being evaluated for familial adenomatous polyposis (FAP) in the phase Ib/II TUPELO study. The oral MEK1/2 inhibitor is designed to address the drivers of FAP polyp growth.

The candidate has received Orphan Drug and Fast Track designations from the FDA for the FAP indication. Recursion initiated discussions with the agency in the first half of 2026 and expects to provide an update on the potential registrational path later in the year.

The TUPELO study is now enrolling patients aged 18 and older and includes a cohort evaluating an alternative dosing schedule. Additional phase II safety and efficacy data, contextualized with real-world registry findings, are scheduled for presentation at a medical conference in November 2026.

RXRX Advances REC-7735 Toward the Clinical Phase

The FDA cleared the investigational new drug application for REC-7735, an AI-designed PI3K-alpha H1047R inhibitor. Recursion expects to initiate the phase I/II ZINNIA study in select patients with PIK3CA H1047R-mutant solid tumors in the second half of 2026.

Recursion delivered the development candidate within 10 months after synthesizing 242 compounds. Initial data from the dose-escalation portion of the study are expected in the first half of 2028.

Recursion Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Recursion Pharmaceuticals, Inc. price-consensus-eps-surprise-chart | Recursion Pharmaceuticals, Inc. Quote

RXRX’s Other Clinical Programs Progress

Recursion continues dose escalation in the phase I/II DAHLIA study of REC-1245, an oral RBM39 degrader being developed for solid tumors and lymphoma. Additional phase I dose-escalation data are expected in the second half of 2026.

The company is also advancing REC-617 in advanced solid tumors, REC-3565 in B-cell malignancies and REC-4539 in solid tumors and hematologic cancers. Early phase I safety and pharmacokinetic combination data for REC-617 and monotherapy data for REC-3565 are expected in the first half of 2027.

Early phase I safety and pharmacokinetic monotherapy data for REC-4539 are anticipated in the second half of 2027. Recursion is also progressing REC-102, an oral ENPP1 inhibitor for hypophosphatasia, toward the completion of investigational new drug-enabling studies in the second half of 2026.

RXRX’s Zacks Rank & Stocks to Consider

Recursion currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the biotech sector are Harmony Biosciences HRMY and Repligen RGEN, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, estimates for Harmony Biosciences’ 2026 earnings per share have risen from $3.20 to $3.33, while estimates for 2027 have increased from $3.64 to $3.87 during the same time. HRMY shares have gained 2.2% year to date.

Harmony Biosciences’ earnings missed estimates in three of the trailing four quarters and beat on the remaining occasion, delivering an average negative surprise of 13.97%.

Over the past 60 days, estimates for Repligen’s 2026 earnings per share have risen from $1.99 to $2.06, while estimates for 2027 have increased from $2.57 to $2.62 during the same time. RGEN shares have declined 3.2% year to date.

Repligen’s earnings beat estimates in each of the trailing four quarters, with the average surprise being 16.80%.

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This article originally published on Zacks Investment Research (zacks.com).

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