Recursion Pharmaceuticals Q3 2026 & Study Update Earnings Call Transcript

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November 3, 2026

Key Takeaways

  • Positive Sentiment: REC-4881 showed encouraging FAP activity: 87% of evaluable patients had reduced total polyp burden after 12 weeks, with reductions across the upper and lower GI tract and activity against larger, high-risk polyps. Most patients remained below baseline burden 12 weeks after stopping treatment, while the safety profile was described as favorable and mostly grade 1 or 2 events.
  • Positive Sentiment: Recursion plans to advance REC-4881 toward a registrational study, subject to FDA alignment, with initiation targeted for the second half of 2027. The company believes the therapy could reduce surveillance, procedures, and major surgeries in post-colectomy FAP patients, although these potential benefits remain unproven in a registrational trial.
  • Positive Sentiment: REC-1245 produced early signs of anti-tumor activity in heavily pretreated solid-tumor patients, including two confirmed partial responses in endometrial cancer and one unconfirmed response in hepatocellular carcinoma. Recursion selected a 45 mg daily dose for expansion, where it reported no dose-limiting toxicities or serious treatment-related adverse events, and expects preliminary expansion data in the second half of 2027.
  • Positive Sentiment: Partnerships continued to generate commercial validation and cash, including Sanofi’s $10 million payment for an optioned potential first-in-class oral immunology candidate, with Phase I expected in 2027. Recursion said total partner cash inflows now exceed $535 million, including more than $100 million from nine milestones over roughly two years.
  • Positive Sentiment: An oversubscribed $200 million financing increased pro forma cash to approximately $749 million as of September 30 and extended the company’s cash runway into 2029. Management also reduced projected cash operating expenses to below $375 million in 2026 and below $360 million in 2027, while emphasizing tighter investment in higher-conviction programs.
AI Generated. May Contain Errors.
Earnings Conference Call
Recursion Pharmaceuticals Q3 2026 & Study Update
00:00 / 00:00

There are 9 speakers on the call.

Operator

Good morning, everyone, and thank you for joining Recursion's third quarter earnings call. We're hosting earnings live from the CGA-IGC Annual Meeting in Denver. Today, we'll share the new FAP data that was presented yesterday at CGA by Dr. Lisa Boardman, along with updates in our oncology program, REC-1245, and progress across our partnerships. Before we get into the data, I want to start with the philosophy behind what we're building. To pioneer a new blueprint for making medicines with AI, we believe you have to tie together three core capabilities in one engine: uncover novel biology, design differentiated molecules against challenging targets, and generate clinical evidence that matters for patients. That is what we're building at Recursion. The higher bar we set for ourselves is repeatability. Not one target, not one molecule, or one clinical result, but the ability to do this across programs again and again.

Operator

Let me show you the progress we're making. Let me start with what we're seeing in patients. We now have positive clinical data from two first-in-class programs. With REC-4881 in FAP, we saw deep reductions in polyp burden that persisted off treatment. Now we're also seeing activity across the GI and reduction of larger high-risk polyps. We'll walk you through some of that data today. With REC-1245, we've seen partial responses in heavily pretreated cancer patients, two confirmed and one unconfirmed PR. In that program, our AI platform guided all three decisions, from biological insight on which target to pursue, how to design the molecule, and which patients to study. If you take a step back to molecule design, Sanofi recently optioned a potential first-in-class oral I&I candidate. The chemistry challenge behind that was to design a single molecule that could inhibit two targets.

Operator

When we talk about novel causal biology, we use the data that we have generated to build proprietary maps of biology and identify targets that may be driving disease. Genentech has now advanced the first neuroscience target from those maps, and we're working together on small molecules against it. That's the repeatability we're starting to see, the same engine uncovering novel targets, producing new molecules, and generating evidence in patients. Behind the progress you just saw is one AI platform that connects biology, chemistry, and the clinic. We draw on more than 50 petabytes of proprietary data to make decisions about which targets to pursue, which molecules to design, and which patients to study. What makes our approach repeatable is how we learn.

Operator

We generate our own proprietary data, which builds our models, which then in turn guide the experiments we run, and what we learn in the lab and in the clinic now then feeds back into those models. So an insight from one program can shape what we test in the next. Let's start by looking a little bit more into the data from REC-4881 and 1245. Here, we're sharing a summary of the early clinical data from these programs. First, with REC-4881 in FAP, remember there's no approved drug treatment. We previously have shown deep, durable reductions in total polyp burden. What's new is first, we have updated this data to expand the adult population to 18 and over, and we continue to see these substantial reductions.

Operator

In addition to that, we're seeing significant reduction throughout the GI tract, including the upper GI, which is a huge area of unmet need. In addition to that, we're also seeing reductions in the number of larger, higher-risk polyps. The safety profile remains favorable, with mostly grade 1 or 2 adverse events and no additional discontinuations in this update. With REC-1245, as I mentioned, we are seeing early single-agent activity in heavily pretreated patients with solid tumors. Vicki will walk you through the partial responses in the exploratory expansion cohort we have opened. Again, to say, look, the biological insight behind each program came from our platform. With REC-1245, you can see how our use of the platform continues to evolve.

Operator

We're not just using it for biological insight on the target, but we're also using it to design the molecule, and now it's helping us decide which patient populations to study. You can see that same evolution in our partners as well. Genentech optioned the first unexplored neuroscience target from our proprietary maps. Sanofi optioned the first development candidate from our collaboration, a potential first-in-class oral small molecule for I&I. Each of these programs have over $300 million in milestones with high single to double-digit royalties. In total, in our partnerships, we have now achieved more than $535 million in cash inflows from our partners. What gives me confidence in the repeatability of this work is that in roughly two years, we have earned more than $100 million across nine milestones tied to the progress in these partnerships.

Operator

I'd love to remind everybody that, look, underpinning all of this progress is how we use our data and the fact that we have one single engine. One of the biggest rate-limiting steps in science is the access to high-quality relevant data, and we have built a scientific data factory designed to generate this at scale. Our AI models draw on more than 50 petabytes of proprietary biological data to identify these novel potential causal targets. We then test those predictions experimentally and feed the results back into the models to guide the next experiment. That closed loop is how proprietary data can become a map. A map can then surface a new target, and that target can ultimately become a new program that either we or our partner chooses to advance. We see also gains in productivity. Let's just take an example in designing molecules.

Operator

In designing first-in-class molecules, we are now synthesizing 80%-90% fewer compounds across our portfolio relative to industry benchmarks. In the clinic, ClinAgent can screen thousands of trial sites in minutes to help us find sites that actually see the patients we're trying to reach. We're seeing enrollment run about 30%-60% faster than industry benchmarks. We are advancing all of this work from a stronger financial position. We just completed our oversubscribed $200 million financing in October, bringing in leading institutional investors, and now expect our cash runway to extend into 2029. At the same time, as previously communicated, we have lowered our 2026 cash operating expense guidance from $390 million to $375 million. Then now looking ahead for 2027, we expect that figure to come down even further to under $360 million.

Operator

Before we go into a deep dive of the clinical programs, let me take you behind the scenes of a couple of our partnership programs and some of the updates to date. Let's start with the Sanofi announcement. We set out to design one oral small molecule that could inhibit two targets involved in inflammatory disease. That's a difficult chemistry problem. Not only is it first in class, but a change that improves activity in one target could come at the expense of the other, and you still have to preserve the properties that actually allow this to be a chronically dosed oral compound. For patients who may need this treatment for years, an oral option could make a meaningful difference in daily life. That's the kind of first-in-class design challenge we want to take on.

Operator

Sanofi brought deep expertise in immunology and drug discovery, and our team used our AI platform to design the molecules, test them in the lab, and use what we learned to refine that next design. Sanofi has now optioned the candidate and will lead and fund its further development, with phase I expected to begin in 2027. This is the first development candidate Sanofi has optioned from our collaboration and our sixth milestone across five programs together. That track record is what gives us confidence in the repeatability of our work. The option triggered a $10 million payment, bringing total upfront and milestone payments from Sanofi to be $144 million. Under the collaboration, each program has up to $343 million in potential milestone payments, plus double-digit royalties on net sales.

Operator

Now, while with Sanofi, the challenge was to design one small molecule across two targets, with Roche, we started with a different problem. We knew what cancer pathway we wanted to reach, but it had been long considered undruggable. Could our maps reveal a way in? Roche highlighted this work at its September investor day this year. Together, we mapped how cells responded when we altered individual genes and then exposed them to compounds. It's this gene-compound relationship that helped our biology engine to identify a new mechanism for acting on this pathway. We then advanced the most promising compounds and confirmed in vivo that they acted on that intended pathway. Much more work to come on here. In the neuroscience space, instead of knowing whether there was an undruggable pathway, the question was slightly different.

Operator

The question was, can our maps of biology find novel causal targets that were previously unknown? This work is a great example of what deep collaboration looks like for us. We generated high-dimensional proprietary maps of biology from human neurons to uncover genes with unexpected links to disease biology. Our teams then worked side by side to prioritize the most compelling targets and then tested them experimentally, building that body of evidence around which ones are worth advancing. Genentech has now optioned the first target from that work, and small molecule discovery is underway that we're working on together. Importantly, the value of the collaboration doesn't stop with a single target. We are continuing to work in advance using the same reusable maps to generate and test additional hypotheses, creating the potential for multiple programs to emerge from that one shared dataset.

Operator

Now, what ties all these examples together is how we're using one platform across different programs and different disease areas. With Roche Genentech, we uncovered new biology that led to a novel target and more coming in neuroscience. With Roche Genentech in oncology, we found a new way to act on a pathway long considered undruggable. With Sanofi, we designed one oral molecule to act on two targets in immunology. In our own pipeline with REC-4881 and REC-1245 in rare disease and in oncology, we're beginning to see those biological insights translate into activity in patients. Now, before I turn to the REC-4881 data, I also want to share an important board update. Today, we announced that our board unanimously appointed Fred Hassan as chair.

Operator

Fred has repeatedly built, scaled, and transformed some of the most important companies in our industry, including as Chairman and CEO of Schering-Plough and Pharmacia. He also brings a wealth of board perspective and experience from companies including Amgen, BridgeBio, and Prometheus. What matters to me is the perspective Fred brings at this stage of Recursion. He understands firsthand what it takes to transform companies, to move companies from clinical proof through approval and launch, while building enduring businesses around them. He also shares our conviction that data and AI are creating a new blueprint from drug discovery and development. Fred will serve as a non-executive chair, and I'm very excited to work with him as we enter the next chapter. I'm also grateful to Rob Hershberg for his commitment to Recursion and for the perspective he has brought on from many years as physician, scientist, and biotech CEO.

Operator

Rob will remain on the board, and we will continue to benefit from his insights. Now, let's turn to REC-4881, our investigational oral MEK1/2 inhibitor for FAP. Yesterday in Denver, Dr. Lisa Boardman presented the updated TUPELO results in the presidential plenary at CGA-IGC. What makes this meeting particularly relevant to FAP is who's in the room. It brings together the genetic counselors who help families understand their risk, the specialized GI physicians and surgeons who take care of them, and the researchers working on new treatments. I'll share the highlights here. This update gives a broader and more complete picture of the program. It includes additional patients, where we have now expanded eligibility to adults age 18 and older. Importantly, we continue to see the depth and durability of response across and throughout the GI tract.

Operator

After 12 weeks of treatment, 87% of evaluable patients had a reduction in total polyp burden. What stands out to me is the depth of the response and how quickly we're seeing these responses. About one in three patients had greater than or equal to 65% total polyp burden reduction in just 12 weeks. When we follow these patients for about 12 weeks after stopping treatment, we actually see about 85% still had a lower polyp burden than when they first started. The next thing that's really important is the activity we saw both upper and lower GI. Remember, I'd mentioned the high unmet need in upper GI polyp burden reduction. We see reduction throughout the entire GI, with median reductions of about 55% and 50% in upper and lower GI respectively. More importantly, that activity extended to larger high-risk polyps.

Operator

Of the eight patients who had polyps larger than 5 millimeters at baseline, six had fewer of those polyps at week 13, and four saw those counts fall by at least 80%. When we look at safety, we see it favorable for chronic dosing, with no new safety signals and no additional discontinuations in this update. Majority of the AEs that we are seeing are grade 1, 2. To put these results in context, consider what it means to live with FAP. We estimate that more than 50,000 patients across the U.S. and EU5 have been diagnosed with this disease. It is a serious, lifelong condition driven by loss of function in APC, a gene that normally helps keep cell growth in check. Patients develop precancerous polyps throughout the GI tract, hundreds to thousands, and there is no approved drug to treat FAP.

Operator

Even after surgery to remove the colon, patients still face a lifetime of surveillance and life-altering surgeries. There is a psychological burden with that too. Every endoscopy brings another period of waiting for patients and their families. What will define this time? Will I need another operation? I want to spend a moment on the upper GI, because this is one of the greatest unmet needs that we have heard post-colectomy from KOLs time and again. Look at the polyp on the left. It sits flat against the wall of the duodenum. That wall is thin, and removing such a broad-based polyp carries a risk of bleeding and perforation. When the disease can no longer be managed endoscopically, patients need surgery. These are life-altering surgeries to remove the duodenum, sometimes along with part of the pancreas. That is a major surgery with high morbidity and long recovery.

Operator

Upper GI cancer remains a serious risk even after the colon has been removed. That is why we paid such close attention to whether REC-4881 could reduce polyp burden in this part of the GI tract. It is that persistent and prolific disease burden that also helps the population we could ultimately serve. Our immediate focus is the estimated 37,000 patients across the U.S. and EU5 who are post-colectomy and require decades of lifelong surveillance and life-altering surgeries. We also have the potential to explore pre-colectomy patients following this immediate focus. Together, these patients and these populations underpin our estimate of a roughly $15 billion total addressable market. Ultimately, the opportunity is defined by what we can change for patients. Could a medicine, an oral medicine, meaningfully reduce this disease burden?

Operator

Could it delay the need for another one of these multiple life-altering interventions or change the overall trajectory of lifelong surveillance? These are the outcomes that we are focusing on. Let us jump directly into the program. How did we get from APC loss to a MEK1/2 inhibitor? That was not an obvious therapeutic connection. It was an underappreciated biology that our platform surfaced. Our platform compared the changes we saw in images of APC-deficient cells with the effects of thousands of compounds to see, could they reverse the disease-associated changes to healthy? While thousands of these compounds were screened, MEK1/2 inhibition stood out as a top in terms of our AI model prediction, and REC-4881 in particular produced one of the strongest reversals of the disease-associated changes we measured.

Operator

That is the unappreciated synthetic rescue we saw, and what led us to license this particular molecule from Takeda to study in FAP. While the platform surfaced this novel insight, the biology also gave us good rationale, which is something that we are learning more about. Loss of APC is known for decades to activate beta-catenin signaling, which helps polyps form. As these polyps evolve, additional mutations can also activate the MAPK pathway. What REC-4881 is doing is interacting with both of those pathways. One, inhibiting the MAPK pathway, which is downstream of the additional mutations that these polyps accumulate. In addition to that, given the crosstalk that is known between MAPK pathway and beta-catenin, MEK1/2 can also dampen some of the growth signals driven by APC loss. It is that platform insight that led us to test a MEK1/2 inhibitor in patients with FAP for the first time.

Operator

What we see when we tested that hypothesis in patients, this TUPELO update includes additional patients, as I mentioned, and we have expanded that study eligibility to patients 18 and over. Each bar that you are seeing here represents one patient, and after 12 weeks of treatment, 13 of 15 evaluable patients, that is about 87%, had a reduction, deep, deep reduction in total polyp burden. Next, what we looked at is, what happens if you follow the patients for 12 weeks on treatment, and then we take the drug off and follow them off treatment? Essentially what you see is the rapid reduction in polyps in the first 12 weeks. What is interesting is, even when they are off drug, you see majority of the patients, about 85% or so, the polyp burden still remains below baseline.

Operator

For patients living with a disease where they may need to manage it for decades, how much time they spend on treatment matters. The possibility of dosing flexibility could therefore be quite meaningful for patients, and the persistence we are seeing off treatment gives us an important signal to explore as we think about long-term management. We also wanted to know what happens to the larger high-risk polyps. Here, we are counting polyps greater than 5 millimeters. As you can see, eight patients had at least one at baseline, and by week 13, six of the eight patients had fewer of these larger polyps, and four, so their counts go down by 80%. The individual counts really puts that into perspective. Two patients each went from more than 90 polyps, and when I say 90 polyps, 90 larger polyps, to just one. Another went from five to none.

Operator

In these three patients, these counts also held at week 25 when they were off treatment for 12 weeks. Moving from the overall polyp burden, we will now break it into upper and lower GI. What we see is reduction in both the upper and lower GI, and in this slide specifically, you are looking at the upper GI polyp burden reduction. Remember, this is one of the greatest areas of unmet need post-colectomy. Just after 13 weeks, we see a 92% of the patients had a reduction in their upper GI polyp burden, or one out of two, so about 65 equal to greater than 65% reduction in their polyp burden, and two patients had near clearance of 98% or greater. Now, let us again look at what happens to these patients when we take them off drug for 12 weeks.

Operator

11 of the 12 evaluable patients, or about 92% or so, still had upper GI polyp burden reduction below baselines. That persistence matters. In the natural history that we've seen before, spontaneous regression was not something that was observed. Polyp burden generally increased over time, and the fact that most of these patients remained below where they started after 3 months off treatment is very encouraging. These images also show what the change looked like in a patient with deep reduction. This patient had about 98% polyp burden reduction. On the left, you can see the polyps in the duodenum before treatment. On the right is the same part of the duodenum at week 13. Across the GI tract, this patient's total polyp burden, measured by adding the polyp diameters, fell from 1,344 millimeters to just 32 millimeters after 12 weeks of treatment. That's a 98% reduction.

Operator

Of the 96 polyps that measured more than 5 millimeter at baseline, only one remained above that threshold. How do clinicians put this in context? One measure they use is the Spigelman stage scoring. This grades the severity of duodenal polyps from stage 0 to stage 4, which is the most advanced. It takes into account the number of size of the polyps, as well as what the pathologist sees under the microscope. Clinicians use that information to determine how often someone needs surveillance and also what type of intervention, including multiple types of surgery. What you see here is at week 13, six of the 12 evaluable patients, about 50%, actually downstage on their Spigelman score. Four went from stage 3 to 2, one went from stage 4 to 2, and another went from stage 2 to stage 0.

Operator

What's even more interesting is, of the six patients, four had reached their week 25 assessment after 12 weeks off treatment, and all four remained at least one Spigelman stage below baseline. The remaining two patients had not yet reached their week 25 assessment at the time of cutoff. Now let's finally also look at the lower GI tract. Again, these are post-colectomy patients, which means it's really focusing on the remaining rectum or the ileal pouch. 12 weeks post-treatment, we see 82% had a reduction in their lower GI polyp burden. Again, you see a few patients that had deep, deep reductions of 88% and 100%. Again, when you look 12 weeks after stopping REC-4881, 7 of the 10 evaluable patients had lower polyp burden in the GI below their baseline. What encourages me across the totality of the data we're seeing is the consistency.

Operator

We saw reductions in both the upper and lower GI tract. We see reductions in the lower polyps that are difficult to manage and are higher risk. We see that even when these patients come back for an endoscopy 3 months after stopping treatment, most still had less polyp burden than they had at the start at baseline. Next, let's look at safety. At 4 milligrams QD, 21 of 26 patients, safety evaluable patients, so that's about 81%, had grade 1 or 2 treatment-related side effects. The most common was an acneiform dermatitis. Four patients had a grade 3 event related to treatment. Two of these are skin reactions, and two had elevations in CPK detected on blood tests. We saw no grade 4 or 5 treatment-related AEs. In terms of discontinuations, we saw four patients stop treatment because of grade 1 or 2 events.

Operator

Two of these cases involved preexisting conditions, while the other two patients had stopped for grade 1 diarrhea and grade 2 rash. Most of the discontinuations occurred early in the study. Three of the four had been reported in our first readout, and there are no additional discontinuations we see in the latest update. As the study progressed, we have refined how we work with sites to recognize and manage side effects early, including the increasing use of measures for rash. We will carry that experience into our next study. Let me bring this back together for what it means to live with FAP. Even after having their colon removed, patients face decades of surveillance and repeated and invasive procedures. Polyps in the upper GI tract can be especially difficult to remove, and patients have no approved drug to treat the disease.

Operator

In TUPELO, we have expanded eligibility to adults 18 and over. After 12 weeks on oral REC-4881, we saw deep, deep reductions of the polyps, which are then sustained when the patients are off drug. We are also seeing fewer of the larger, higher-risk polyps. For patients, the question is whether these reductions can change the course of their care. Could an oral therapy give someone more time between not only these endoscopies, but also surgeries? Over decades of living with FAP, having an oral drug could make a meaningful difference. We are in ongoing discussions with the FDA on the design of the registrational study, and based on regulatory alignment, we are targeting initiation in the second half of 2027. With that, I am going to hand it over to Vicki.

Operator

She will bring in KOL and patient perspectives, which are especially important as we think about these data, what they could mean in the context of lifelong disease management. She will then walk you through the REC-1245 program and the early clinical data that we are seeing there.

Speaker 1

Thank you, Najat, and welcome everyone to our KOL panel. I am pleased to moderate today's discussion to help contextualize the new phase II data for REC-4881 presented at CGA-IGC to explore its relevance to the current unmet medical needs in FAP. Joining us today are two esteemed global FAP specialists. First, we have Dr. Evelien Dekker, head of the Expert Clinic for Familial and Hereditary Polyposis and Colorectal Cancer, and professor of gastrointestinal oncology at the Amsterdam University Medical Center. We are also joined by Dr. Bryson Katona, director of the GI Cancer Genetics Program at the University of Pennsylvania Perelman School of Medicine, and TUPELO study investigator. Dr. Dekker and Dr. Katona, thank you both very much for taking the time to join us. Dr. Dekker, I will start the first question with you.

Speaker 1

For those less familiar with FAP, could you walk us through the natural history of the disease, how patients are managed today, and where the greatest unmet needs are, given that there are no approved therapies?

Speaker 2

Yes. Looking at the FAP patients and their disease course, most of the patients will be diagnosed at a young age because we know family members are having FAP, and they will be genetically tested. We advise around age of 12. That will be at that time, they will come to the pediatrician, and they will be scoped. They will be undergoing a full colonoscopy in our hospital, and we will look at the disease burden, which means we will see how many polyps are already present in the colorectum. From then on, they will be checked upon regularly throughout childhood, usually 2 yearly. Depending on the burden, it might be more frequent.

Speaker 2

What we will, by time, do is resect polyps, mainly from the rectosigmoid, because taking them out from the whole colon will be difficult because it is too many polyps, because they will, by time, develop hundreds to thousands colorectal polyps, which might, if we would not intervene, develop into cancer. To be sure we can prevent colorectal cancer, we will undergo surgery, so that part of the colon will be resected. So at age 18, they are transferred to the adult gastroenterologist, usually in a transitional phase, and we will follow the patients further. Again, if they are not operated yet, which might well be the case, we will check up on the full colon. If not, we will do the end of the colon.

Speaker 2

Approximately from age 25, we will also make sure we evaluate the stomach and the duodenum, because not only in the colorectum, but also in the duodenum, and then later also in the stomach, they might also develop precancerous lesions. So again, polyps. So lifelong checkups, necessary polypectomies or other interventions, maybe even surgery to make sure they have a long life.

Speaker 1

Thank you. You did speak about the early management of the disease in the colon and the need for colectomies, as well as how that shifts to more of an upper GI disease burden, as well as in the retained rectum. Can you also tell us why does upper GI disease become such an important clinical challenge post-colectomy, and why is it more difficult to manage, in some cases, relative to the colonic disease?

Speaker 2

So yes, patients have an increased risk for duodenal cancer and gastric cancer, and that is quite a challenge for us as gastroenterologists to battle that, because pre-neoplastic lesions, so adenomas, develop in the small bowel, but generally they are more difficult to resect endoscopically, and also endoscopic resection comes with more risks for complications. So we try to, however, to do that endoscopically, because otherwise they might need surgery to prevent cancer, and duodenal surgery really is big surgery, with major risks for both morbidity, but also in the end, mortality. The problem also is that after surgery, the risk in the small bowel remains, and it might be also more difficult to inspect the new area at risk properly. So yes, there's definitely a challenge in the duodenum, with specifically with the morbidity of the operation is more difficult.

Speaker 1

Thank you. Dr. Katona, turning to the REC-4881 TUPELO data, we saw reductions in upper GI polyp burden in 92% of evaluable patients, and about half of those patients had deep reductions of about 65% or more, and rapid reduction within that 12-week treatment window. From a clinician's perspective, how meaningful is the magnitude of polyp burden reduction like this, and how might that affect decisions about patient care?

Speaker 3

Thanks, Vicki, for the great question and for the opportunity to discuss this data. When we think about reduction in polyp burden and what that means clinically, I think oftentimes what it means clinically is a little bit different from what people want to see from a regulatory standpoint, and unfortunately, that polyp burden is not a regulatory endpoint that's typically used. But from the clinician's standpoint, it's incredibly meaningful. Most of the decisions that we make for patients with FAP are related to the polyp burden, and so like when we're determining when someone will go for surgery, how soon they have to come back for another upper endoscopy or colonoscopy is typically dependent on what type of polyp burden we're seeing on the exam. So, clinically, I think the polyp burden and seeing reductions in the polyp burden can have a major impact for patients.

Speaker 3

So just to give you an example, say somebody who is getting upper endoscopies because of duodenal polyposis, if the number of polyps that you are seeing in the duodenum starts to reduce, they are starting to get smaller, I think a lot of clinicians may feel comfortable potentially extending out the interval at which an individual would undergo an upper endoscopy. So, I think from the clinical side, the polyp burden and reductions in polyp burden, especially large reductions in polyp burden, do lead to meaningful clinical changes for our FAP patients.

Speaker 1

Great. Thank you for that. One particularly interesting finding was that 92% of evaluable patients with upper GI polyp burden reductions remained below baseline after 12 weeks off treatment. How do you interpret that durability or sustained effect of the drug, and how does durability affect how you might approach management of this lifelong disease with patients?

Speaker 3

It is a great question, and I think that the durability of a reduction in polyp burden is an important metric to understand for any type of chemopreventive agent in FAP. From my perspective, clinically, seeing a durable response is always very encouraging. I think the dream chemopreventive agent for FAP is one that somebody doesn't have to take lifelong, and potentially could be taken for a shorter amount of time or maybe potentially with intermittent dosing patterns, so that individuals could see a response, have durability of that response. But I think it is a very encouraging first sign for this drug.

Speaker 1

Thanks, Dr. Katona. I would like to move on to the safety data, Dr. Katona. The safety data showed that most patients, about 80%, had treatment-related AEs of only grade 1 or 2, and those included adverse events such as rash, including acneiform dermatitis, diarrhea, and left ventricular ejection fraction changes. Four patients had grade 3 events, and there were no events above grade 3 that were treatment-related. Given your experience managing patients with FAP, how do you think about the benefit-risk profile for REC-4881 in this setting?

Speaker 3

Yeah, it's a great question and an important question to think about the risk-benefit profile and how any side effects would be tolerated by patients. I think a patient's willingness to tolerate side effects is a very personalized decision based on the patient, but then also based on how advanced or at what stage their FAP is at. Just to give you an example scenario, if you have a patient who maybe has a very attenuated FAP phenotype, they're having a couple polyps that form in their colon every year, and they're getting their colonoscopy with complete polyp clearance, that individual may have a low threshold to tolerate any side effects from a medication since their polyps are being completely managed by colonoscopy.

Speaker 3

But if you go to the other side, if you go to somebody who has very severe FAP with advanced-stage duodenal polyposis, say, for example, Spigelman stage 4 duodenal polyposis, and they're getting upper endoscopies every 3 to 6 months, and they're right on the cusp of potentially needing a, as Dr. Evelien Dekker mentioned earlier, a major duodenal surgery for resection, I think that individual is going to have a much higher tolerance for side effects, one, to potentially avoid a potentially morbid and life-altering large surgery, but then also potentially to have to cut down on such a high burden of endoscopic monitoring. One other important point to think about side effects and patient tolerance is, are we developing strategies where patients can essentially manage these side effects or take proactive steps to prevent them?

Speaker 3

I think that's the other important thing to think about for side effects, especially when you know what the side effects are, and especially if it's kind of a narrow window of side effects where you potentially could either prevent or kind of aggressively treat them to reduce their impact.

Speaker 1

Thank you for that. I think it's a really important point and speaks to the need for educating both the patients themselves as well as the physicians who are treating them as you bring new therapies into the market. My next question is for both of you. I'll start with you, Dr. Katona, and then you, Dr. Dekker. As people learn about this space, they often ask whether there is a threshold of polyp burden reduction that would be clinically meaningful. For example, if you have a reduction but you still have residual polyps, would that change how you treat the disease? What are your thoughts about that in clinical practice?

Speaker 3

I would say that any reduction in polyps is a good thing in our mind. I think that the fact that polyps don't go away is also okay as well. Those of us that take care of FAP patients, we know they're going to have polyps there, and essentially, we follow them to basically make sure that these polyps don't progress to cancer down the road. I think when you're thinking about reduction in polyp, I don't think you need to think about it as all polyps have to be eliminated. Then also to get to your point about threshold, I don't think that there's a specific threshold that we expect, because again, I think that often is a personalized thing as well.

Speaker 3

If you have, for example, somebody who has two polyps in their rectum and those polyps decrease by 80%, that's great, but I would be more excited if I had somebody with 100 polyps in their rectum that all decreased by 50% in size. I think any polyp reduction is a good thing to see, but I think it's very difficult to put a specific number because I think it's a very personalized scenario based on the patient.

Speaker 1

Great. Thank you for that. Dr. Dekker?

Speaker 2

Yes, I would like to add that I agree about the personalized checkups we do. It's not a one-size-fits-all, we scope everyone one yearly and see what happens. If the polyp burden reduces, usually that means that we can prolong intervals at which we scope. Maybe even, there could be not only a regression of the polyps present, but also less growth of new polyps, because we know during the life of those FAP patients, new polyps keep coming, right? If that would be a combination, reduction of the size of any present polyps and less new polyps, that would translate into, I think, a lot of benefits for the patients.

Speaker 1

Great. Thank you, Dr. Dekker. This question is also for both of you, and this time I'll start with Dr. Dekker. To recap, we talked about the intensity of surveillance to decisions about polyp removal and major surgery, which is driven by the extent and severity of polyp disease. In closing, how significant is the unmet need for medical therapy in FAP for post-colectomy patients, especially patients with upper GI disease?

Speaker 2

Oh, it's absolutely a huge unmet need for these patients, for these FAP patients, to have medication as a potential treatment, because they suffer a lot from the big burden of surveillance as well as the risk for having cancer, both in the retained rectum or maybe in the pouch, as well as upper, because the consequences upper might be even larger if we get to the stage where preventive polypectomies are not possible anymore and they need surgery, and again, more checkups after. It never stops during their life.

Speaker 1

Thank you very much. Dr. Katona?

Speaker 3

I can't agree more. I think Evelien's use of "it's a huge need" is spot on. People have been doing research in the chemoprevention space in FAP for decades, and we still don't, at least in the U.S., we still don't have an agent that is FDA approved. We're FAP patients, we're diagnosing them, our numbers of FAP patients are increasing. We're still having to send these patients for major surgeries. We're doing a ton of scopes on these patients. The need is very large, and it's only going to increase over time as numbers of FAP patients continue to increase.

Speaker 1

Thank you. I'll close this out by asking if there's anything else that either of you wanted to mention that we haven't yet covered.

Speaker 3

I'll just add on that I think this preliminary or early data is very exciting and promising, and I'm definitely very intrigued to see how the rest of the results from this study turn out. I know the FAP community has their fingers crossed and are very interested and hopeful as well.

Speaker 1

Well, Dr. Dekker, Dr. Katona, thank you both for sharing your invaluable clinical perspectives on the management of FAP and helping us to contextualize the TUPELO data for REC-4881. We truly appreciate your time and expertise today. Having heard the clinical and scientific perspective, it is now important to hear directly from individuals navigating the daily realities of FAP. We will now move on to our patient panel. I am looking forward to guiding today's conversation. This panel offers a special opportunity to step back from clinical data and hear directly from individuals living with FAP, allowing us to listen, learn, and better understand their daily experiences. Joining us today are Laura and Jesse Laster, who navigate FAP as a family. Jesse was diagnosed as a teenager and underwent a colectomy shortly afterward. To manage his ongoing cancer risk, he later required a complex Whipple procedure.

Speaker 1

Today, Laura and Jesse are raising two children who also inherited the condition, and they are here to emphasize the need for continuous lifelong care. We are also joined by Lindsey Huff. Lindsey grew up knowing FAP would shape her life, as she and her sister inherited the condition from their father. After undergoing a colectomy in her teens, Lindsey faced significant surgical complications, as did her sister, who now requires a Whipple procedure. Lindsey is here to share her journey and show younger individuals that FAP does not have to hold them back. Thank all of you for being here today. The first question is for all of you, but Jesse, let's start with you. FAP has been part of each of your lives and families for a long time. Can you walk us through your experience from when FAP first entered your life through your colectomy?

Speaker 4

Well, my journey with FAP started around the time I was eight years old. I wasn't diagnosed at that time, but that's when I started really seeing my sister go through her journey, or through her surgeries related to FAP. It was mainly thinking about or thinking to the future when I would have to kind of go through similar situations. As you mentioned before, I was diagnosed at 15. I had my own colectomy and J-pouch at 16 years old, and that's really kind of the first part of my journey with FAP.

Speaker 1

Thank you. Lindsey, maybe we'll move to you, and then Laura, I'll circle back to you.

Speaker 5

Sure. My experience with FAP has been lifelong. It started when I was born. My parents knew that it was likely that I would have FAP, but I know, I believe it was either before or shortly after birth, I was genetically tested and found out I had the gene mutation for FAP. My journey started around age 10 with getting my first colonoscopy and finding out that my polyp burden was significant enough that I would ultimately need my colectomy at age 10.

Speaker 1

Wow. Thank you. Thank you, Lindsey. Laura, as a family member who's had to navigate this, can you tell us what that experience has looked like for you?

Speaker 6

Yeah. So, what the experience with FAP has looked like for me has really started when Jesse and I met in college, and he explained that he had this condition and a little bit about it, but it seemed like, "I had this done, and then we were good. Now I am healthy." But actually, very quickly after we met, within a few months actually, he had a bowel obstruction, and I do not know, maybe that was my first clue that maybe the whole life with FAP is not just one-and-done thing after somebody has the colectomy procedure.

Speaker 1

Thank you. Maybe we will talk a little bit more about that now and life after colectomy. Jesse, I will start with you again, and then Lindsey. Many people assume that once someone has a colectomy, FAP is largely taken care of. I think, Laura, as you were just saying. What has been your experience, Jesse, in the years since colectomy, and how has your disease been managed over the years?

Speaker 4

Well, I would like to start to kind of back up to before the colectomy. When I found out that I had FAP, it was very much the thought was that you get diagnosed with FAP, you have a colectomy, and then that takes care of everything. I remember maybe in the following years after my colectomy, bowel obstructions became an issue due to scar tissue from the surgery. But even beyond that, I had such a high polyp burden in my stomach that doctors started getting concerned with that, and then some of the polyps in my small intestine, and especially the duodenum, that became more of an issue. As mentioned before, I have had a Whipple procedure because I had one polyp in particular that had what they call high-grade dysplasia, or cancer in situ, they call it, so just cancer located onto that one polyp.

Speaker 4

I have since learned it is an ongoing maintenance for FAP.

Speaker 1

Ongoing management throughout your life. Thanks, Jesse. And Lindsey?

Speaker 5

My experience after my colectomy at age 10, our doctor had told us that every case of FAP is a little different, that sometimes FAP just sticks to the colon, and sometimes other families have had concerns with it going to the upper GI. Our management was doing upper and lower endoscopies every year. After my colectomy, ultimately had another surgery at age 14 to have a J-pouch placed, and then ultimately had some complications from those surgeries that resulted in a small bowel obstruction.

Speaker 1

Thanks, Lindsey. I'll start this next question with you. How has monitoring or treatment of the upper GI tract factored into your experience with FAP, and how has that shaped the way that you think about your long-term health?

Speaker 5

Sure. For me, I would say monitoring has been fairly stable with my upper GI. I do have a significant amount of polyps, but they're not staging anywhere super significant where there's concern at this time for any further surgical management. My sister has had a pretty significant upper GI burden. She's had multiple duodenum polyps, and at our last scope that we had in August of this year, they found 5 large duodenal polyps that they staged at stage 4. Ultimately, she's getting a duodenectomy, which has been described to us as a pancreas-sparing Whipple procedure, and she'll be having that within the next week.

Speaker 1

You've mentioned that your sister has an upcoming Whipple procedure, and over time, as she's been scoped, as the upper GI has been scoped, did you or she see this coming? I'm wondering, did she have time to sort of mentally prepare herself, or was it kind of a more sudden?

Speaker 5

I guess I'll start with she didn't really have a lot of time to prepare for this being a possibility. Last year, she had an upper endoscopy done, and it was found that she had a pretty large duodenal polyp. They didn't say whether it would come back or not, but they ended up doing a procedure to remove that polyp and placed a stent. Fast-forward to this year, she's got five polyps that are long and kind of branchy, and there's risk of obstruction. They ended up staging them, and they were looking like stage 4 polyps, which is about the worst you can get before they're officially cancerous. Basically, the only thing presented to her was this procedure.

Speaker 1

Thank you. Jesse, perhaps answering the same question, how has the experience of having FAP and the upper GI disease as well, how has that shaped how you think about your health over the long term?

Speaker 4

I guess the way that I see managing my health with FAP has changed over the years, like I mentioned before, from going from it's taken care of and don't need to worry so much about it. Having scopes every few years was kind of thought to be the way to manage it. It went to having scopes every six months, so it got a lot more complicated. Certainly having the Whipple procedure and having the cancer diagnosis definitely changed the way I see that. I talked to my doctor about what are the next options if I get cancer again, and I was curious about can the Whipple be done a second time? He said no. So, there's a lot of concerns with ongoing management.

Speaker 1

Thanks, Jesse. For this next question, Jesse, I will start with you again, then Lindsey, and then back to you, Laura, as well. Jesse, when high-grade dysplasia was found and a Whipple procedure was suggested, what were your considerations in terms of making the decision to move forward?

Speaker 4

I think specifically for the Whipple procedure decision, there did not appear to be much of a decision. The polyp that was found was high-grade dysplasia. It was presented to me as the only way to take it out was to take out the duodenum, and the Whipple procedure was the procedure to do for that. There were other decisions that I had to make in my journey. I have had doctors tell me that I needed to have a permanent ileostomy or even revisit my J-pouch. Even more recently, I had a doctor suggest that I may have to have my stomach removed. There has been a lot of decisions to make in my journey, and it has been a struggle, I guess, to manage quality of life and what is the best choice to make to manage my FAP.

Speaker 1

Lindsey, you have had some significant complications from some of your surgical procedures. Are you able to share some of those experiences? How does that influence how you think about any additional procedures when they are recommended?

Speaker 5

Some of the serious complications, the major one that I have had is from my colectomy and my surgery to get a J-pouch. I had that temporary ileostomy and had it reversed. In 2016, I was a freshman in college, and I had adhesions from those previous surgeries. I was in my dorm room shower, and I bent over to grab soap, and my bowel flipped. That caused a small bowel obstruction. I was emergently ambulanced to a local hospital. We did not know whether they would know anything about FAP or anything going on with my health, and ultimately had 70 centimeters of my small bowel removed. Had another temporary ileostomy placed from October of 2016 to May of 2017, when I finished my freshman year, and ultimately had that reversed again.

Speaker 5

Ongoing complications, I do not really have much bowel left at all, so there is a lot of issues with malnutrition, absorbing nutrients from the food that I am eating, and continued concerns for adhesions and potentially looking to avoid another bowel obstruction that could happen. Ultimately, there is not enough bowel to reverse that in the future, and I would have a permanent ileostomy for the rest of my life. Thinking about knowing that complications are a possibility because they have already happened, if there was another procedure recommended, I believe it would be an emergent procedure, and there really would not be much decision. It would just be basically life-sparing for me.

Speaker 1

Thank you for sharing that. This one is for all of you again. Thinking about your own experience and your family's future, what would a medicine for FAP need to do to make a meaningful difference in your life? When you think about the future of FAP care, what would meaningfully change your daily life?

Speaker 4

I think as far as my medical care goes, I would see a medication that reduced the amount of procedure that I had to do would definitely help with my care. Reducing polyp burden, and especially the polyps that are concerning to my care team, that would be a great advantage, I think, to my medical care. An extension of that would be for my own 2 children. They are still early on in their journey. They have not had to have any surgeries yet. I would see a great benefit to their medical care, even to be able to reduce polyp burden and/or eliminate polyp burden potentially for them, and then reduce or eliminate the need for surgery for them. Kind of an echo of my care needs would be on them too.

Speaker 1

Thank you. Laura, anything you would want to add to that?

Speaker 6

Yeah, just in looking at a medicine that could contribute to less polyp burden, as Jesse said, less procedures having to happen. Where we live, we're driving four hours one way to do this. It's expensive hospital that we go to. It doesn't accept all insurances. There has been just life considerations and having to do less ongoing procedure maintenance, besides, of course, I want you around long time. Also just like an expense issue too. It's something we need to do, but it's just something we have to plan for as a family. So, if there were less requirement of monitoring and avoiding so many procedures, all of which come with risks, that would be fantastic.

Speaker 1

Thanks, Laura. Lindsey?

Speaker 5

I have to echo a lot of what Jesse and Laura said. I think a medication that could reduce polyp burden or potentially eliminate polyp burden would be beneficial to prevent any future complications for myself or my family. Thinking to the future, my wife and I have started thinking about starting a family, and what does that look like? I would love for my children to not have to go through the same experiences that I've had to go through. Echoing again what Jesse and Laura talked about with the financial burden that comes with that. My family flies across the country to go and receive specialized care. There's a significant amount, not only for travel expenses, but the procedures that we're having to have done.

Speaker 5

I think that would lift a lot of the financial burden that we have to think about when we're having medical care done as well. I think a medication that could potentially lessen the amount of monitoring that we have to have could really help with that as well. Along with the issues with insurance, we've talked about facilities take a lot of different insurances, but they don't always take all insurance. This year specifically, I am in South Dakota, and I have my healthcare company's insurance plan. Even though my insurance was going to be accepted as in-network, because they didn't accept my insurance, normally they take 50% of what you're going to ultimately owe to the medical facility upfront, which for me, the total that they were estimating was around $15,000.

Speaker 5

As a 28-year-old, I don't have $15,000, let alone much more under that available to give upfront. There's a lot of financial hoops that you have to navigate and jump through and advocate for yourself for, especially when you need that specialized care.

Speaker 1

Lindsey, Laura, and Jesse, thank you so much for sharing your stories and giving us a window into the daily realities of living with FAP. Hearing your experiences firsthand brings such important perspective to our discussions and reminds us exactly why this work matters so much. We truly appreciate your time today. I will now move on to talking about our REC-1245 program in solid tumors. REC-1245 is an investigational, orally administered, and potentially first-in-class molecular glue degrader of RBM39, a master splicing regulator. Degradation of RBM39 disrupts the splicing of stress response and DNA repair genes that cancer cells depend on for growth. The molecule and the initial insight came from our engine. Our phenomics found that RBM39 degradation phenocopies CDK12 loss while sparing the CDK13-associated liabilities that have made that biology so difficult to drug.

Speaker 1

We screened 204 compounds to achieve a development candidate in 18 months, compared to an industry benchmark for small molecules of roughly 2,500 compounds over four years. In dose escalation, we are seeing evidence of clinical activity. Three partial responses, two confirmed responses in endometrial cancer, and one unconfirmed PR in hepatocellular carcinoma. Disease control rate at eight weeks was 91.7%, 11 of 12 patients, at doses of 45 milligrams and above. We've now selected 45 milligrams once daily for expansion, a dose with no serious treatment-related adverse events and no dose reductions reported. Let's look at how Recursion's engine got us here. The heat map on the left is an actual platform output. RBM39 clusters phenotypically with CDK12 and not with CDK13. That's the insight.

Speaker 1

CDK12 loss has been understood as a vulnerability in genomically unstable cancers for a long time, but CDK12 inhibitors have struggled because they hit CDK13 too. In the middle, RBM39 ensures proper splicing of critical stress response and DNA repair genes. In non-clinical models, RBM39 degradation leads to disrupted mRNA splicing and impaired DNA damage repair and cancer cell death. REC-1245 is highly selective and orally bioavailable and drives rapid RBM39 degradation in human PBMCs within 24 hours, with significant tumor regression seen across multiple xenograft models driven by replication stress. The potential opportunity is broad, with more than 100,000 addressable patients a year across the U.S. and EU5, spanning hard-to-treat tumors like endometrial, HCC, and ovarian, and transcriptionally driven cancers, including pediatric tumors like Ewing sarcoma and neuroblastoma.

Speaker 1

We see two complementary development strategies: monotherapy in tumors that are intrinsically primed and vulnerable, which is where we are today in dose escalation and now expansion, and combination, where REC-1245 could create vulnerabilities alongside standard of care and potentially move into earlier lines of treatment. Our phase I dose escalation enrolled patients with unresectable or metastatic solid tumors or relapsed refractory lymphoma who've progressed on available therapies. Six cohorts were enrolled on continuous daily dosing. The primary objectives are PK and safety. Anti-tumor activity is a secondary objective. Based on the results of the dose escalation, we have selected 45 milligrams daily for our expansion cohorts and are currently enrolling these, including one in endometrial cancer. I'll walk through safety data and evidence of anti-tumor activity on subsequent slides. In terms of safety, REC-1245 was well tolerated at doses up to 45 milligrams daily.

Speaker 1

The 65 milligram daily dose exceeded the maximum tolerated dose, with 3 of 4 patients enrolled on that cohort experiencing dose-limiting toxicities, including stomatitis, neutropenia, febrile neutropenia, and anemia. The most frequently reported treatment-related adverse events across all doses were fatigue and anemia at 30% each, followed by nausea, thrombocytopenia, and stomatitis. About 27% had a grade 3 or higher treatment-related event, with the most frequent being anemia. At the 45 milligram dose, which was selected for expansion cohorts, the most common treatment-related adverse events were grade 1 and 2 fatigue, anemia, and nausea. We saw no dose-limiting toxicities and no serious treatment-related adverse events. The two grade 3 events at that dose were elevated creatinine and hypokalemia. Turning to activity. This is a heavily pre-treated patient population, with patients having received between 2 and 8 prior lines of treatment.

Speaker 1

There was no evidence of anti-tumor activity at doses below 45 milligrams. Across the 12 response-evaluable patients who started at 45 or 65 milligrams, 11 of 12 had evidence of disease control, defined as an initial response of SD or better at 8 weeks. 4 of the 12 remain on treatment. Among these 12 patients, there were 3 partial responses, seen here on the right. Two confirmed responses in endometrial cancer at 38.2% and 48.9% reduction, and one unconfirmed response in hepatocellular carcinoma at 55.9% reduction. The two patients with endometrial cancer who have responses continue on treatment, while the HCC patient has discontinued. I'll now walk through case studies of the two confirmed responses. First, a 70-year-old woman with recurrent, progressive stage 4 high-grade serous carcinoma of the endometrium, which is p53 mutant, HER2 non-amplified, and microsatellite stable.

Speaker 1

She's had 4 prior lines of therapy, including platinum chemotherapy, a TKI, immunotherapy, and an antibody-drug conjugate. She started at 65 milligrams, interrupted for grade 2 oral and abdominal pain, and restarted at 45 milligrams. She has tolerated the 45 milligram dose well, and abdominal pain resolved. At the week 9 CT scan shown on the right, we saw a partial response with 32% reduction in target lesions in the lung, liver, and pelvis. The response was confirmed at week 17 with a 49% reduction in target lesions. She's currently asymptomatic from her disease and remains on therapy. Next is a 54-year-old woman with recurrent, progressive stage 4 endometrioid carcinoma, which is p53 mutant, HER2 amplified, ER positive, and MMR proficient.

Speaker 1

She had received 7 prior lines of therapy, including platinum and taxane chemotherapy, a VEGF inhibitor, HER2 targeted therapy, immune checkpoint inhibitor, a tyrosine kinase inhibitor, an antibody-drug conjugate, and investigational CAR T therapy. She started REC-1245 at 45 milligrams. At her week 9 radiographic assessment shown on the right, she had a partial response with a 33.9% overall decrease in target lesions, including periportal and mediastinal lymph nodes. At week 13, that response was confirmed with a 38.2% reduction in target lesions. She has tolerated the drug well, with predominantly grade 1 and 2 GI adverse events and laboratory abnormalities, and she remains on treatment. As I mentioned earlier, we are currently enrolling an expansion cohort of patients with endometrial cancer who have disease progression following available therapies.

Speaker 1

Endometrial cancer is the fourth most common cancer in women in the U.S., with roughly 68,000 new cases expected this year, and treatment options are limited in the metastatic setting after first-line therapy, especially for the roughly three-quarters of patients who do not have HER2 amplifications and are therefore ineligible for a HER2-targeted ADC. 5-year relative survival with distant stage disease is around 20%. Based on the mechanism of action and the activity seen to date with REC-1245, we see opportunities for 1245 as a monotherapy, including potentially in the post-ADC setting and potentially in combination with existing treatments for endometrial cancer, including immunotherapies. These are hypotheses to be tested, and REC-1245 is investigational. We expect preliminary data from this cohort in the second half of 2027, and we are also exploring additional tumor types in dose expansion. I will now pass it to Ben Taylor for further business updates.

Speaker 7

Thank you. Earlier this month, we completed an oversubscribed follow-on offering with $200 million in gross proceeds. Over 90% of the financing came from healthcare-dedicated specialists and mutual funds that did not own Recursion prior to the financing. We were able to access this new pool of knowledgeable, long-term-focused investors based on the strength of our pipeline data, demonstrated repeatability of the AI engine, and continued operational discipline. Including the net proceeds from the offering, we had $749 million in pro forma cash and equivalents as of September 30th, which does not include the recent $10 million milestone from Sanofi. We have extended our runway into 2029 through not only financing, but also continuing to concentrate capital on the highest value operations. As I have said in the past, we want to continuously increase the impact of every dollar we spend.

Speaker 7

In this quarter, we are in a stronger position to do that than ever before. Our 2026 full-year cash operating expense guidance of less than $375 million, excluding partnership inflows and one-time expenses, represents a nearly 40% reduction from comparable 2024 pro forma expenses. We are going to continue our year-over-year efficiency gains. In 2027, we expect cash operating expenses to be less than $360 million. We fundamentally believe that a dollar invested next year should achieve more than a dollar today. Through adoption of technology and disciplined data-driven management, we expect to keep lowering OPEX while aggressively investing in the best of our pipeline, partnerships, and AI engine. We are concentrating our investment where we see the clearest path to value. In our pipeline, that means prioritizing highly differentiated wholly owned programs, and also knowing that we shouldn't try and do everything ourselves.

Speaker 7

Since 2024, our partnerships with Roche and Sanofi have produced more than $100 million from nine progress-based milestones, bringing the total proceeds from partners to over $535 million. Internally, we build and test our AI models on real pipeline programs so that we can efficiently identify which technology investments are likely to have real-world impact. Our in-house supercomputer allows us to move quickly while still controlling compute expense. Finally, our investment over the last decade to create more than 50 petabytes of multimodal proprietary data gives us a large and reusable asset that creates unique insights beyond what is publicly available. With a stronger balance sheet and lower cost base, we believe we have the time and resources to deliver multiple important milestones across our pipeline and partnerships. With that, I'll turn it back over to Najat.

Operator

Thanks, Ben. Now let me bring it all together. The financial strength you just heard about from Ben gives us the ability to keep investing behind programs and capabilities where the evidence is the strongest. This slide shows just what that means across the engine that we talked about at the beginning of the call, discover, design, and deliver. We now have delivered tangible proofs across all three. In discovery, Roche Genentech advanced the first unexplored target in neuroscience from our maps. In design, Sanofi optioned our first-in-class development candidate, which is an oral molecule in I&I. In the clinic, REC-4881 and REC-1245 are generating encouraging evidence in patients. Now, the focus is to do it again. In discovery, we're working towards additional targets with our partners and expanding our proprietary maps of biology across additional disease areas.

Operator

In design, the candidate that Sanofi just optioned is expected to enter phase I in 2027, with potential for additional partner milestones in 2027. In the clinic, we expect to update our FDA conversations for REC-4881, generate additional phase II data, and, of course, depending on regulatory alignment, initiate a registrational study in the second half of 2027. We also expect preliminary REC-1245 expansion data and additional clinical readouts from the rest of our portfolio. This is the bar that we've set for Recursion. Again, as I mentioned before, not one target, not one molecule, or not one clinical result, but the ability to move repeatedly from novel biology to differentiated molecules to evidence in patients, all from one connected AI-native engine. We have the capital to execute. We have concentrated in our focused set of priorities and a series of meaningful catalysts ahead.

Operator

We're excited about what's to come next. With that, we will now move on to Q&A.

Speaker 8

Najat, you're live.

Operator

All right. Thank you, everyone. With that, now let's go to some questions. We have quite a few questions for REC-4881, so I'll start with a question from Alec from Bank of America. On REC-4881, what does the activity in larger high-risk polyps tell us about the drug's ability to change standard of care? Vicki, I'll have you take that question first.

Speaker 1

Thanks, Najat. Patients with FAP, as we've spoken about and as you've just heard, face a lifetime of surveillance and procedures, interventions such as surgeries and excisions. The standard of care currently, there are no approved drugs in FAP that can alter the disease progression, right? So over time, polyps continue to grow, both in the lower as well as the upper GI tract. Patients have routine surveillance. The surveillance frequency is somewhat determined by the extent of polyposis, including the size of the polyps. There's nothing out there that can approve, that can alter the course of the disease and modify the need for these procedures.

Speaker 1

In terms of what we're seeing with the TUPELO data, we've seen substantial reductions in polyp burden overall, as well as in both the upper and lower GI tracts, and we've seen an effect on larger polyps of 5 millimeters or greater. As the polyps get larger, this drives the need for increased surveillance frequency. It drives the need for additional procedures, including excisions, as well as potentially additional major surgeries down the line. What we've heard is that KOLs are really impressed with the data. We're here in Denver right now at the CGA-IGC Conference. We've been meeting over the last 24 hours or so with many of these KOLs, and they're really impressed both by the extent of polyp burden reduction as well as the durability of that reduction.

Speaker 1

How we're thinking about this is REC-4881 could potentially be an adjunct to routine surveillance. The phase III will determine whether that reduction, that impressive polyp burden reduction that we're seeing, can actually translate into benefit that's meaningful for patients in terms of reduction in the outcomes that are important, such as cancer development, high-grade dysplasia, and also need for these surgical procedures.

Operator

Thank you, Vicki. I'll just take the next question. This is from Steve from KeyBanc. "If this drug reaches commercialization, what percentage of the addressable patient population do you think will continue to go the surgery route?" I would say, Steve, similar to and building on what Vicki mentioned, these patients go through a series of interventions, and a lot of them is driven by polyp burden, but definitely the size of the polyp, as well as also dysplasia and other factors. We do think the fact that we are seeing a reduction in the larger polyps, reduction in the polyp burden overall, and the addressable population is pretty large, right? About 37,000 patients that are post-colectomy. We do think that there's potential for pretty significant impact in terms of either avoiding or delaying these kind of life-altering interventions that are done.

Operator

You heard on the patient panel, duodenectomy, where you're either sparing the pancreas or even removing the pancreas, Whipple procedures, but also just ampullectomy, proctectomy. There's so many procedures that these patients go through. We're excited, and we'll see more, we'll learn more in the coming months. Next question. "How are you thinking about chronic dosing for REC-4881?

Operator

Commercially, do you expect patients would require scheduled drug holidays, 13 weeks on, 13 weeks off pattern used in the clinical trial, or regular treatment breaks?" I'm going to hand this over to Vicki, but I will say we're both here in Denver at the CGA Conference, and one thing that we've heard time and time again is that at the end of the day, these patients are so young, they're in their 20s post-colectomy or even younger, that having flexibility in terms of the dosing regimen, and this is a question from Priyanka at JPM, so thank you, Priyanka, is a really, really big need and something that they haven't really had even an optionality before. But Vicki, I'll hand it over to you for more detail.

Speaker 1

Yeah. Thanks, Najat. We are hearing a lot of excitement around the data, a lot of excitement around the durability and that treatment break, and that allows flexibility for patients too in terms of dosing, in terms of life events. Having the flexibility to be able to take a break from treatment is really meaningful for both patients and physicians. I think that durability of effect is really important. Ultimately, how this will play out, I think ultimately will depend on the phase III data in terms of the chronic dosing, but having that opportunity to have a drug that both shows significant polyp burden reduction that may reduce, ultimately be approved in the phase III, may improve these events that are important for patients, and then the flexibility to be able to stop dosing and have an opportunity to take a treatment holiday or a treatment break.

Operator

Thank you so much, Vicki. Okay, now we will move on to the next set of questions. This is from Gil from Needham and also Alec from Bank of America. "Given large AI labs are increasingly leaning into applications in healthcare, how are you positioning Recursion to compete? Does unique data win the day here or maybe something else?" I will take that question. I think it is great to see the interest in terms of the convergence of AI and healthcare, which Recursion really pioneered for many, many years. Here is what I will say. I always say there are three areas of moat for the company. One, yes, the data aspect, the data factory, the 50 petabytes of data, but not just the volume of data, the quality of data to build models and close the loop to find novel targets is critical. We pioneered in that a long time ago.

Operator

We have built on that. Some of the examples with Roche Genentech, Sanofi, et cetera, that you see really build on not just data matters, especially in a space as we have seen with LLMs. A lot of the human history of text and data exists, but you do not have that in science. Being able to create that data and then actually leverage it to find novel targets, design novel molecules, and ultimately show data in the clinic, we think is critical. The next step that is even beyond that is, look, I said that at the beginning of the earnings call today, we firmly believe in order to actually make differentiated medicines with AI, you need to tie together those three capabilities. Novel targets, designing molecules for those novel targets, and then actually showing that evidence in the clinic, which we are starting to do.

Operator

That has taken a lot of time and a lot of learning and reps to build, that connected AI engine end-to-end. It is a huge amount of work where you actually have your datasets, build the models, the models that actually you see the predictions work out in the experiments, and those experiments and that data teaches the models. This sort of recursive learning, that technical aspect of it, and actually having team members that are bilingual that can actually understand both science and AI, that is not an easy thing to build. I think reps, in terms of that closed-loop learning system, is an incredible area of differentiation for us and something we continue to build on every single day. The third is, how does any company compete that has differentiated assets?

Operator

At the end of the day, it's about competing based on really valuable data that's scientifically, medically, and commercially critical to get better medicines for patients, and you see us having that as well. In that diversification and having that end game in mind is very critical. Last thing I'll say, we live in a space where 90% of biology is unknown, 80% of diseases don't really have disease-modifying drugs. There's a huge amount of white space. Looking forward to the entire sector, whether it's the frontier labs, whether it's pharma, whether it's biotech companies, and AI biotech companies like us all make progress here. You've heard about FAP, you've heard about oncology programs for patients that are so late-line treatment on the path to palliative care and trying to get data there and see activity, and have them be asymptomatic from disease.

Operator

There's so much room for us to all play here. We're excited about that. Our position is we want to be known as a company, the real deal in terms of making differentiated medicines using AI. All right, next question. This is a question from Dennis at Jefferies on REC-1245. RBM39 chemotherapy has shown about 17% ORR, 7 months DOR, 3.9-month PFS, 12-month OS, et cetera. With the endometrial expansion cohort starting, what target profile are you expecting? Perhaps can you comment on whether this MOA, if there's a benefit that can be seen by ORR or PFS, OS, et cetera? Lastly, how do you think RBM39 could fit in the late-line endometrial, given Merck's TROP2, ADC data at ESMO, and Gilead's TROP2 as well in upcoming Q4? I'll have Vicki start with that question.

Speaker 1

Thanks, Najat. I mean, first, just to note again, as you've heard in the webinar, RBM39 is novel biology. We're potentially first in class. This is, again, based on Recursion's engine, and we're seeing really promising data coming out of this. Just to contextualize, the data that we shared today is from a dose escalation cohort. These are patients heterogeneous and heavily pre-treated, right? So a very difficult patient population to treat, the early phase I population. In spite of this being a late-line population, we're seeing substantial evidence of activity. So we have 2 confirmed responses in patients with endometrial cancer. That means they had 2 scans, one that showed an initial response based on RECIST, and then a second that showed confirmation of that response, and then one unconfirmed response in hepatocellular carcinoma.

Speaker 1

Again, at a dose where we've been able to select a dose that's tolerable for patients to move forward into expansion cohorts, which we've now initiated recruiting. So those expansion cohorts will give us a better sense of the activity and the safety in well-defined patient populations. We will take those data and compare them both to historical response rates for agents such as chemotherapy in this setting. We will be looking, of course, at response rate and at duration of response, as well as the safety profile to say, where do we go next with this particular drug in these particular tumor types? Of course, we're watching the competitive landscape very carefully, including the TROP2 ADCs.

Speaker 1

I will note that both of the endometrial cancer responders that we had in the dose escalation cohorts had received prior ADCs, including one of them who had received a TROP2 ADC, and we see that activity in patients specifically who have had a prior exposure to ADCs. So we see potential for a monotherapy approach. We see potential for combination approaches, including in patients who have received prior ADCs, I am sorry, including combination with ADCs. These expansion cohorts, we are looking forward to sharing more data that will help guide what those next steps are for the molecule.

Operator

Thank you, Vicki. Yes, I mean, just the other thing to build on that is, in terms of RBM39, the MOA is distinct from ADCs. I think that gives us the potential for synergistic value, and then also the fact that these patients are such late-line patients, as Vicki mentioned, and have actually progressed on these ADCs, and we are still seeing single-agent activity is something that is encouraging for us, but a lot more work to come on the expansion cohorts. All right. The last question we are going to take from Sean from Morgan Stanley. Following the recent financing, you now have runway into 2029 while guiding to lower operating expenses in 2027. How do you balance capital discipline with the opportunity to accelerate higher conviction or high conviction programs, and under what circumstances would you choose to meaningfully increase investment behind REC-4881, REC-1245, or additional platform-generated assets?

Operator

It is a great question. I mean, one of the things, and Ben mentioned this, that is really important for us, I mean, it is not common to be lowering guidance, and we are doing that in a couple of different ways. One is really concentrating capital on areas that we have high conviction, and it is purely data-driven. So we see that with REC-4881, REC-1245, and we are fully funding those programs and accelerating them. Some of the other additional programs in the pipeline, again, as we see data roll out next year, we will do the same. I think the fact that we are incredibly disciplined based on data in our capital allocation has really helped us a lot as we have increased focus, ambition, and discipline. The other thing I will also say in terms of the platform perspective and partnerships, we just crossed $535 million in cash inflows.

Operator

I mean, nine milestones in the last two years, over $100 million in milestones, and I think that repeatability is very encouraging to see with our partners such as Roche Genentech and also Sanofi. That is something we will keep progressing, and we invest really effectively in them. Then the last thing is the AI platform. I mean, part of it is we are seeing productivity in our engine. That is really, really helping us stretch every dollar and be much more productive, whether it is in the design of molecules or even the generation of maps, which we are faster at, more efficient, and more effective. So all in all, it is all about being data-driven, making sure we stretch our every single dollar, making sure we return value, of course, for our patients and our shareholders.

Operator

With that, I just want to say a big thank you to everyone for joining today. This was a combination of both our earnings and also a mini FAP day. A huge thank you to Dr. Dekker, Dr. Katona, and also patients. At the end of the day, this is why we do what we do, like Lindsey and Jesse and Laura that are experiencing FAP and the dramatic and challenging impact of those diseases every single day. We do this for you, so thank you for joining us. Thank you for sharing your stories, and thank you all again, and we will talk very soon.

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