Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | Apr. 30, 2024 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-40323 | |
Entity Registrant Name | RECURSION PHARMACEUTICALS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-4099738 | |
Entity Address, Address Line One | 41 S Rio Grande Street | |
Entity Address, City or Town | Salt Lake City, | |
Entity Address, State or Province | UT | |
Entity Address, Postal Zip Code | 84101 | |
City Area Code | 385 | |
Local Phone Number | 269 - 0203 | |
Title of 12(b) Security | Class A Common Stock, par value $0.00001 | |
Trading Symbol | RXRX | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001601830 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 230,273,797 | |
Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 7,389,871 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets | ||
Cash and cash equivalents | $ 296,326 | $ 391,565 |
Restricted cash | 3,195 | 3,231 |
Other receivables | 2,599 | 3,094 |
Other current assets | 41,495 | 40,247 |
Total current assets | 343,615 | 438,137 |
Restricted cash, non-current | 6,629 | 6,629 |
Property and equipment, net | 86,716 | 86,510 |
Operating lease right-of-use assets | 35,501 | 33,663 |
Intangible assets, net | 33,076 | 36,443 |
Goodwill | 52,056 | 52,056 |
Other assets, non-current | 254 | 261 |
Total assets | 557,847 | 653,699 |
Current liabilities | ||
Accounts payable | 5,115 | 3,953 |
Accrued expenses and other liabilities | 26,070 | 46,635 |
Unearned revenue | 36,618 | 36,426 |
Notes payable | 55 | 41 |
Operating lease liabilities | 6,062 | 6,116 |
Total current liabilities | 73,920 | 93,171 |
Unearned revenue, non-current | 37,391 | 51,238 |
Notes payable, non-current | 1,071 | 1,101 |
Operating lease liabilities, non-current | 43,786 | 43,414 |
Deferred tax liabilities | 528 | 1,339 |
Total liabilities | 156,696 | 190,263 |
Commitments and contingencies (Note 7) | ||
Stockholders’ equity | ||
Common stock, $0.00001 par value; 2,000,000,000 shares (Class A 1,989,032,117 and Class B 10,967,883) authorized as of March 31, 2024 and December 31, 2023; 237,508,682 shares (Class A 230,043,061, Class B 7,464,871 and Exchangeable 750) and 234,270,384 shares (Class A 226,264,764, Class B 7,544,871 and Exchangeable 460,749) issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | 2 | 2 |
Additional paid-in capital | 1,460,144 | 1,431,056 |
Accumulated deficit | (1,058,995) | (967,622) |
Total stockholders’ equity | 401,151 | 463,436 |
Total liabilities and stockholders’ equity | $ 557,847 | $ 653,699 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued (in shares) | 237,508,682 | 234,270,384 |
Common sock, shares outstanding (in shares) | 237,508,682 | 234,270,384 |
Class A | ||
Common stock, shares authorized (in shares) | 1,989,032,117 | 1,989,032,117 |
Common stock, shares issued (in shares) | 230,043,061 | 226,264,764 |
Common sock, shares outstanding (in shares) | 230,043,061 | 226,264,764 |
Class B | ||
Common stock, shares authorized (in shares) | 10,967,883 | 10,967,883 |
Common stock, shares issued (in shares) | 7,464,871 | 7,544,871 |
Common sock, shares outstanding (in shares) | 7,464,871 | 7,544,871 |
Exchangeable Stock | ||
Common stock, shares issued (in shares) | 750 | 460,749 |
Common sock, shares outstanding (in shares) | 750 | 460,749 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenue | ||
Total revenue | $ 13,794 | $ 12,134 |
Operating costs and expenses | ||
Cost of revenue | 11,166 | 12,448 |
Research and development | 67,560 | 46,677 |
General and administrative | 31,408 | 22,874 |
Total operating costs and expenses | 110,134 | 81,999 |
Loss from operations | (96,340) | (69,865) |
Other income, net | 4,188 | 4,538 |
Loss before income tax benefit | (92,152) | (65,327) |
Income tax benefit | 779 | 0 |
Net loss and comprehensive loss | (91,373) | (65,327) |
Net loss and comprehensive loss | $ (91,373) | $ (65,327) |
Per share data | ||
Net loss per share of Class A, B and Exchangeable common stock, basic (in dollars per share) | $ (0.39) | $ (0.34) |
Net loss per share of Class A, B and Exchangeable common stock, diluted (in dollars per share) | $ (0.39) | $ (0.34) |
Weighted-average shares (Class A, B and Exchangeable) outstanding, basic (in shares) | 236,019,349 | 191,618,238 |
Weighted-average shares (Class A, B and Exchangeable) outstanding, diluted (in shares) | 236,019,349 | 191,618,238 |
Operating revenue | ||
Revenue | ||
Total revenue | $ 13,491 | $ 12,134 |
Grant revenue | ||
Revenue | ||
Total revenue | $ 303 | $ 0 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) - USD ($) $ in Thousands | Total | Common Stock (Class A, B and Exchangeable) | Additional Paid-in-Capital | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2022 | 191,022,864 | |||
Beginning balance at Dec. 31, 2022 | $ 485,806 | $ 2 | $ 1,125,360 | $ (639,556) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Comprehensive loss | (65,327) | (65,327) | ||
Stock option exercises and other (in shares) | 1,207,990 | |||
Stock option exercises and other | 882 | 882 | ||
Stock-based compensation | 8,814 | 8,814 | ||
Ending balance (in shares) at Mar. 31, 2023 | 192,230,854 | |||
Ending balance at Mar. 31, 2023 | $ 430,175 | $ 2 | 1,135,056 | (704,883) |
Beginning balance (in shares) at Dec. 31, 2023 | 234,270,384 | 234,270,384 | ||
Beginning balance at Dec. 31, 2023 | $ 463,436 | $ 2 | 1,431,056 | (967,622) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Comprehensive loss | $ (91,373) | (91,373) | ||
Stock option exercises and other (in shares) | 1,303,878 | 2,317,083 | ||
Stock option exercises and other | $ 2,088 | 2,088 | ||
Stock-based compensation | 16,127 | 16,127 | ||
Common stock sales issuances, net of issuance costs (in shares) | 921,215 | |||
Common stock sales issuances, net of issuance costs | $ 10,873 | 10,873 | ||
Ending balance (in shares) at Mar. 31, 2024 | 237,508,682 | 237,508,682 | ||
Ending balance at Mar. 31, 2024 | $ 401,151 | $ 2 | $ 1,460,144 | $ (1,058,995) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities | ||
Net loss | $ (91,373) | $ (65,327) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 7,377 | 3,728 |
Stock-based compensation | 16,127 | 8,814 |
Asset impairment | 108 | 1,169 |
Lease expense | 2,472 | 1,988 |
Other, net | (560) | 716 |
Changes in operating assets and liabilities: | ||
Other receivables and assets | (1,040) | (317) |
Unearned revenue | (13,655) | (12,134) |
Accounts payable | 1,168 | (339) |
Accrued development expense | (273) | 676 |
Accrued expenses and other current liabilities | (18,857) | (9,846) |
Operating lease liabilities | (3,794) | (2,444) |
Net cash used in operating activities | (102,300) | (73,316) |
Cash flows from investing activities | ||
Purchases of property and equipment | (6,653) | (5,175) |
Purchase of an intangible asset | 0 | (165) |
Net cash used in investing activities | (6,653) | (5,340) |
Cash flows from financing activities | ||
Proceeds from issuance of common shares, net of issuance costs | 10,873 | 0 |
Proceeds from equity incentive plans | 3,050 | 1,946 |
Repayment of long-term debt | (26) | (24) |
Net cash provided by financing activities | 13,897 | 1,922 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (219) | (2) |
Net change in cash, cash equivalents and restricted cash | (95,275) | (76,734) |
Cash, cash equivalents and restricted cash, beginning of period | 401,425 | 559,112 |
Cash, cash equivalents and restricted cash, end of period | 306,150 | 482,378 |
Supplemental schedule of non-cash investing and financing activities | ||
Accrued property and equipment | 80 | 244 |
Right-of-use asset additions and modifications | 3,266 | 3,520 |
Financed equipment purchase | 0 | 1,214 |
Supplemental schedule of cash flow information | ||
Cash paid for operating leases | $ 3,955 | $ 2,444 |
Description of the Business
Description of the Business | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business | Description of the Business Recursion Pharmaceuticals, Inc. (Recursion, the Company, we or our) was originally formed as a limited liability company on November 4, 2013 under the name Recursion Pharmaceuticals, LLC. In September 2016, the Company converted to a Delaware corporation and changed its name to Recursion Pharmaceuticals, Inc. Recursion is a clinical stage TechBio company decoding biology to industrialize drug discovery. The Recursion Operating System (OS), a platform built across diverse technologies, enables the Company to map and navigate trillions of biological and chemical relationships within the Recursion Data Universe, one of the world’s largest proprietary biological and chemical datasets. The Company integrates physical and digital components as iterative loops of atoms and bits scaling wet lab biology and chemistry data organized into virtuous cycles with computational tools to rapidly translate in silico hypotheses into validated insights and novel chemistry. As of March 31, 2024, the Company had an accumulated deficit of $1.1 billion. The Company expects to incur substantial operating losses in future periods and will require additional capital to advance its drug candidates. The Company does not expect to generate significant revenue until the Company successfully completes significant drug development milestones with its subsidiaries or in collaboration with third parties, which the Company expects will take a number of years. In order to commercialize its drug candidates, the Company or its partners need to complete clinical development and comply with comprehensive regulatory requirements. The Company is subject to a number of risks and uncertainties similar to those of other companies of the same size within the biotechnology industry, such as the uncertainty of clinical trial outcomes, uncertainty of additional funding and a history of operating losses. The Company has funded its operations to date primarily through the issuance of convertible preferred stock and the issuance of Class A common stock (see Note 8, “Common Stock” for additional details). Additionally, the Company has received payments from its strategic partnerships (see Note 9, “Collaborative Development Contracts” for additional details). Recursion will likely be required to raise additional capital. As of March 31, 2024, the Company did not have any unconditional outstanding commitments for additional funding. If the Company is unable to access additional funds when needed, it may not be able to continue the development of its products or the Company could be required to delay, scale back or abandon some or all of its development programs and other operations. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, could materially harm its business, financial condition and results of operations. Recursion believes that the Company’s existing cash and cash equivalents will be sufficient to fund the Company’s operating expenses and capital expenditures for at least the next 12 months. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Basis of Presentation The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes for the year ended December 31, 2023. It is management’s opinion that these condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial statements. Revenue and net loss for any interim period are not necessarily indicative of future or annual results. Recent Accounting Pronouncements In March 2024, the SEC issued rule 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors . The new rule requires Recursion to provide certain disclosures in the footnotes to the financial statements of climate-related information. These disclosures include the impact of severe weather and other natural conditions on the Company’s consolidated balance sheet and statement of operations, to the extent they are material. Recursion will also need to disclose a rollforward of the beginning and ending balances of its carbon offsets and renewable energy credits or certificates (RECs), if they are a material component of meeting the Company’s climate-related targets and goals. Additionally, the Company will need to disclose whether and, if so, how severe weather events and other natural conditions and disclosed climate-related targets or transition plans materially affected estimates and assumptions in the financial statements. The standard’s effective dates, if adopted, will be phased in depending on the disclosure requirement starting the annual period ending December 31, 2025. In April 2024, the SEC voluntarily stayed implementation of the new climate-related disclosure requirements pending judicial review. The Company is currently evaluating the impact this rule will have on its consolidated financial statements and related disclosures. In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-9, Income Taxes (Topic 740) . The new standard updates disclosure requirements for Accounting Standards Codification (ASC) 740 primarily by requiring additional information in the income tax rate reconciliation and additional disclosures about income taxes paid. This standard will be effective for Recursion starting the annual period ending December 31, 2025. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments can be applied on a prospective or retrospective basis. The adoption of this standard will not impact Recursion’s consolidated balance sheet and statement of operations. In November 2023, the FASB issued ASU No. 2023-7, Segment Reporting (Topic 280) . The standard requires new disclosures related to ASC 280 including: disclosing significant segment expenses by category; requiring all the ASC 280 disclosures for Companies with a single reportable segment and; requiring an increased frequency of the ASC 280 disclosures. Recursion must apply the amendments retrospectively to each prior reporting period presented. This standard will be effective for Recursion starting the annual period ending December 31, 2024. Early adoption is permitted. The adoption of this standard will not impact Recursion’s consolidated balance sheet and statement of operations. |
Supplemental Financial Informat
Supplemental Financial Information | 3 Months Ended |
Mar. 31, 2024 | |
Supplemental Financial Information [Abstract] | |
Supplemental Financial Information | Supplemental Financial Information Tempus agreement In November 2023 , Recursion entered into a five -year agreement with Tempus Labs, Inc. (Tempus) to purchase access to their records of patient-centric multimodal oncology data and use rights for therapeutic development purposes. This data will be used to improve the training of Recursion’s artificial intelligence and machine learning models and is expected to accelerate Recursion’s drug discovery process. Recursion is making annual payments, ranging between $22.0 million and $42.0 million , up to $160.0 million in aggregate, to Tempus in cash or equity at the Company’s option. The equity value is determined by using the seven Recursion is expensing the record purchases as “Research and Development” expenses in the Condensed Consolidated Statements of Operations as the records are purchased. To the extent that the Recursion payments to Tempus are greater than or less than the records purchased amount, Recursion records the applicable amount to “Other Current Assets” or “Accrued Expenses and Other Liabilities” on the Condensed Consolidated Balance Sheet, respectively. As of March 31, 2024, Recursion had recorded $16.0 million within “Other Current Assets” on the Consolidated Balance Sheet related to the Tempus agreement. Property and Equipment March 31, December 31, (in thousands) 2024 2023 Lab equipment $ 61,247 $ 60,096 Leasehold improvements 46,289 45,929 Office equipment 22,356 22,126 Construction in progress 5,677 3,231 Property and equipment, gross 135,569 131,382 Less: Accumulated depreciation (48,853) (44,872) Property and equipment, net $ 86,716 $ 86,510 Depreciation expense on property and equipment was $4.0 million and $3.6 million during the three months ended March 31, 2024 and 2023, respectively . The Company recorded an insignificant impairment and an impairment of $1.2 million during the three months ended March 31, 2024 and 2023, respectively, related to construction projects for leasehold improvements as the Company no longer intended to use them. The impairment was recorded in “General and Administrative” in the Condensed Consolidated Statements of Operations. For the three months ended March 31, 2023, the Company initiated and completed a project to upgrade the BioHive supercomputer for $1.7 million . The supercomputer was classified as office equipment in the above table. Accrued Expenses and Other Liabilities March 31, December 31, (in thousands) 2024 2023 Accrued compensation $ 10,055 $ 22,888 Accrued development expenses 5,804 6,077 Accrued early discovery expenses 2,610 2,570 Accrued construction — 2,439 Materials received not invoiced 1,184 2,432 Accrued other expenses 6,417 10,229 Accrued expense and other liabilities $ 26,070 $ 46,635 Notes Payable In January 2023, the Company entered into a financing agreement for borrowing $1.9 million as part of the supercomputer upgrade project. The debt will be repaid over a three-year period at a 7% interest rate. As of March 31, 2024, the outstanding balance was $616 thousand. In 2018, the Company borrowed $992 thousand, which was available as part of a lease agreement for use on tenant improvements. The note will be repaid over a 10-year period at an 8% interest rate. As of March 31, 2024, the outstanding balance was $510 thousand. Interest Income, net Three months ended (in thousands) 2024 2023 Interest income $ 4,048 $ 4,660 Interest expense (20) (19) Interest income, net $ 4,028 $ 4,641 For the three months ended March 31, 2024 and 2023, interest income primarily related to earnings on cash and cash equivalents in money market funds. Interest income was included in “Other income, net” on the Condensed Consolidated Statements of Operations. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions Valence Discovery Inc. On May 16, 2023, Recursion acquired all of the outstanding equity interests in Valence Discovery Inc. (Valence), a privately-held machine learning (ML) / artificial intelligence (AI) digital chemistry company. The integration of Valence’s AI-based chemistry engine into Recursion’s operating system will allow Recursion to expand its technology-enabled drug discovery process. This will accelerate Recursion’s digital chemistry capabilities and its drug discovery process. The acquisition of Valence was accounted for as a business combination using the acquisition method of accounting. The aggregate upfront consideration for the acquisition of Valence consisted of 2.2 million shares of Recursion Class A common stock, 4.4 million shares of a subsidiary of Recursion, exchangeable for shares of Recursion’s Class A common stock, 792 thousand shares issuable upon exercise of stock options held by Valence equity award holders and deferred liabilities for additional consideration. An insignificant number of the aforementioned shares of consideration had not yet been issued as of March 31, 2024.The final number of shares to be issued has not yet been finalized and so are subject to change. The following table summarizes total consideration: (in thousands) Fair value of Recursion Class A common stock $ 11,096 Fair value of Exchangeable stock 22,473 Fair value of equity awards issued to Valance equity award holders 1,933 Deferred liabilities for additional consideration 396 Total consideration $ 35,898 The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date: (in thousands) Cash $ 4,235 Other receivables 536 Intangible asset - technology 15,000 Accounts payable and accrued liabilities (872) Deferred income taxes (3,265) Total identifiable net assets 15,634 Goodwill 20,264 Total assets acquired and liabilities assumed $ 35,898 The intangible asset related to Valence’s ML and AI digital chemistry platform. The estimated fair value of the intangible asset was determined using a cost approach. This valuation technique provides the fair value of an asset based on estimates of the total costs to develop the technology. Significant inputs used to determine the total cost includes the length of time required and service hours performed by Company employees. The technology intangible asset is being amortized on a straight-line basis over its four-year useful life. Goodwill was calculated as the excess of the consideration transferred over the net assets recognized. The goodwill recognized represents the assembled workforce and expected synergies, including the ability to: (i) leverage Valence’s digital chemistry platform across Recursion’s business; (ii) leverage Valence’s ML and AI capabilities; (iii) integrate Recursion’s data and operating system into Valence’s platform; and (iv) accelerate Recursion’s pipeline. Goodwill was also impacted by the establishment of a deferred tax liability for the acquired identifiable intangible assets which have no tax basis. The goodwill is not deductible for tax purposes. Recursion’s condensed consolidated statement of operations during the three months ended March 31, 2024 included no net revenue and a $2.9 million operating loss associated with Valence’s operations. As the acquisition occurred in May 2023, the Company is still finalizing the allocation of the purchase price to the individual assets acquired and liabilities assumed. The allocation of the purchase price included in the current period balance sheet is based on the best estimate of management and is preliminary and subject to change. The primary area subject to change relates to the valuation of other receivables. To assist management in the allocation, the Company engaged external specialists. The Company will finalize the amounts recognized as the information necessary to complete the analysis is obtained. The Company expects to finalize these amounts as soon as possible but no later than one year from the acquisition date. Cyclica Inc . On May 25, 2023, Recursion acquired all of the outstanding equity interests in Cyclica Inc. (Cyclica), a privately-held Company that has built a digital chemistry software suite which enables mechanism of action deconvolution and generative chemistry suggestions based on desired targets. Cyclica’s platform is expected to enhance the optimization of Recursion’s compounds for efficacy while minimizing liabilities through generative machine learning approaches. The acquisition of Cyclica was accounted for as a business combination using the acquisition method of accounting. The aggregate upfront consideration for the acquisition of Cyclica consisted of 5.8 million shares of Recursion Class A common stock, cash payments, 1.0 million shares issuable upon exercise of stock options held by Cyclica equity award holders and deferred liabilities for additional consideration. Approximately 182 thousand of the aforementioned shares of Class A common stock consideration had not yet been issued as of March 31, 2024. The following table summarizes total consideration: (in thousands) Fair value of Recursion Class A common stock $ 49,915 Cash 6,505 Fair value of equity awards issued to Cyclica equity award holders 3,852 Deferred liabilities for additional consideration 344 Total consideration $ 60,617 The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date: (in thousands) Cash $ 2,429 Restricted cash 1,685 Other receivables 741 Investments 1,000 Other current assets 385 Intangible assets - technology 28,000 Accounts payable and accrued liabilities (579) Unearned revenue (1,754) Deferred income taxes (2,075) Other liabilities, current (66) Other liabilities, non-current (139) Total identifiable net assets 29,627 Goodwill 30,990 Total assets acquired and liabilities assumed $ 60,617 The intangible assets are related to Cyclica’s digital chemistry platforms. The estimated fair value of the intangible assets were determined using a cost approach. This valuation technique provides the fair value of an asset based on estimates of the total costs to develop the technology. Significant inputs used to determine the total cost includes the length of time required and service hours performed by Company employees. The technology intangible assets are being amortized on a straight-line basis over their three-year useful lives. Goodwill was calculated as the excess of the consideration transferred over the net assets recognized. The goodwill recognized represents the assembled workforce and expected synergies, including the ability to: (i) leverage Cyclica’s digital chemistry platform across Recursion’s business; (ii) leverage Cyclica’s ML and AI capabilities; (iii) integrate Recursion’s data and operating system into Cyclica’s platform; and (iv) accelerate Recursion’s pipeline. Goodwill was also impacted by the establishment of a deferred tax liability for the acquired identifiable intangible assets. The goodwill is not deductible for tax purposes. Recursion’s condensed consolidated statement of operations during the three months ended March 31, 2024 included immaterial net revenue and a $3.8 million operating loss associated with Cyclica’s operations. As the acquisition occurred in May 2023, the Company is still finalizing the allocation of the purchase price to the individual assets acquired and liabilities assumed. The allocation of the purchase price included in the current period balance sheet is based on the best estimate of management and is preliminary and subject to change. The primary area subject to change relates to the valuation of the other receivables. To assist management in the allocation, the Company engaged external specialists. The Company will finalize the amounts recognized as the information necessary to complete the analysis is obtained. The Company expects to finalize these amounts as soon as possible but no later than one year from the acquisition date. Pro forma financial information The following table presents the unaudited pro forma combined results of operations of Recursion, Valence and Cyclica as if the acquisitions had occurred on January 1, 2022: (in thousands) Three months ended March 31, 2023 Net revenue $ 12,155 Net loss (73,514) The unaudited pro forma financial information was prepared using the acquisition method of accounting and was based on the historical financial information of Recursion, Valence and Cyclica. In order to reflect the occurrence of the acquisitions on January 1, 2022 as required, the unaudited pro forma financial information includes adjustments to reflect the incremental amortization expense to be incurred based on the fair values of the identifiable intangible assets acquired and the additional stock compensation expense associated with the issuance of equity compensation related to the acquisitions. The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been had the acquisitions been completed on January 1, 2022. In addition, the unaudited pro forma financial information is not a projection of the future results of operations of the combined company nor does it reflect the expected realization of any cost savings or synergies associated with the acquisitions. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Leases | Leases The Company has entered into various long-term real estate leases primarily related to office, research and development and operating activities. The Company’s leases have remaining terms from under 1 to 9 years and some of those leases include options that provide Recursion with the ability to extend the lease term for five years. The options are included in the lease term when it is reasonably certain that the option will be exercised. For the three months ended March 31, 2024 and 2023 , Recursion entered into lease modifications resulting in a decrease to the right-of-use asset and lease liability of $3.1 million and an increase to the right-of-use asset and lease liability $3.5 million , respectively . The modifications had no impact to the Condensed Consolidated Statements of Operations. In January 2024 , the Company entered into a lease agreement for office space in London, England with approximately 6,792 square feet (the “London Lease”). The right of use began January 2024 when the control of the asset was obtained. The London Lease term is 5 years with a five-year renewal option. The London Lease includes provisions for escalating rent payments. Total fixed payments are expected to be approximately $7.9 million, additionally there will be variable expenses including building service charges related to the lease. In February 2024 , the Company entered into a lease agreement for the supercomputer for the exclusive use of physical space in a data center of approximately 1,851 square feet ( the “Data Center Lease”). The right of use is expected to begin in the second quarter of 2024 and the Data Center Lease term is 5 years with a five-year renewal option. The lease includes provisions for escalating rent payments. Total fixed lease payments are expected to be approximately $13.0 million with additional variable expenses, including utilities and tax expenses. The Company did not control the space or any of the assets being constructed as of March 31, 2024 and therefore no right of use asset or lease liability was recorded on the Condensed Consolidated Balance Sheet as of March 31, 2024. The components of the lease cost were: Three months ended (in thousands) 2024 2023 Operating lease cost $ 2,472 $ 1,998 Variable lease cost 538 657 Short-term lease cost 40 — Lease cost $ 3,050 $ 2,655 The remaining lease term and discount rate were: (in thousands) March 31, 2024 Operating leases Weighted-average remaining lease term (years) 6.4 Weighted-average discount rate 7.7 % Maturities of operating lease liabilities as of March 31, 2024 were: (in thousands) Operating leases Remainder of 2024 $ 7,300 2025 10,748 2026 10,882 2027 11,281 2028 8,850 Thereafter 16,948 Total lease payments 66,009 Less: imputed interest (16,161) Present value of lease liabilities $ 49,848 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill There were no changes to the carrying amount of goodwill during the three months ended March 31, 2024 and 2023. No goodwill impairment was recorded during the three months ended March 31, 2024 and 2023. Intangible Assets, Net The following table summarizes intangible assets: March 31, 2024 December 31, 2023 (in thousands) Gross carrying amount Accumulated Amortization Net carrying amount Gross carrying amount Accumulated Amortization Net carrying amount Definite-lived intangible assets $ 44,426 $ (12,336) $ 32,090 $ 44,426 $ (8,969) $ 35,457 Indefinite-lived intangible assets 986 — 986 986 — 986 Intangible assets, net $ 45,412 $ (12,336) $ 33,076 $ 45,412 $ (8,969) $ 36,443 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contract Obligations In the normal course of business, the Company enters into contracts with clinical research organizations, drug manufacturers and other vendors for preclinical and clinical research studies, research and development supplies and other services and products for operating purposes. These contracts generally provide for termination on notice and are cancellable contracts. Indemnification The Company has agreed to indemnify its officers and directors for certain events or occurrences, while the officer or director is or was serving at the Company’s request in such capacity. The Company purchases directors and officers liability insurance coverage that provides for reimbursement to the Company for covered obligations and this is intended to limit the Company’s exposure and enable it to recover a portion of any amounts it pays under its indemnification obligations. The Company had no liabilities recorded for these agreements as of March 31, 2024 and December 31, 2023, as no amounts were probable. Employee Agreements The Company has signed employment agreements with certain key employees pursuant to which, if their employment is terminated following a change of control of the Company, the employees are entitled to receive certain benefits, including accelerated vesting of equity incentives. Legal Matters The Company may, from time to time, be involved in various legal proceedings arising in the normal course of business. An unfavorable resolution of any such matter could materially affect the Company’s future financial position, results of operations or cash flows. In February 2021, the Company entered into a lease agreement for laboratory and office space (the Industry Lease) with Industry Office SLC, LLC (the landlord). In March 2023, the Company sent a letter to the landlord detailing numerous construction delays and irregularities, deficiencies and deviations from applicable structural drawings and/or non-conforming conditions with applicable building codes. On June 23, 2023, the landlord filed a lawsuit against the Company ( Industry Office SLC, LLC v. Recursion Pharmaceuticals, Inc. , Case No. 230904627) in the Third District Court for Salt Lake County, State of Utah (the Court), alleging anticipatory repudiation and breach of contract. The Plaintiff seeks monetary damages and attorney’s fees. In July 2023, the Company filed a motion to dismiss. In September 2023, Recursion was granted its motion to dismiss, and the Court provided the landlord until October 23, 2023, to amend and re-file the dismissed complaint. On October 23, 2023, the landlord filed an amended complaint again alleging anticipatory repudiation, breach of contract and breach of the implied covenant of good faith and fair dealing (the Amended Complaint) and seeks monetary damages and attorney’s fees. In November 2023, the Company filed a motion to dismiss the Amended Complaint. The Court set a hearing on the Company’s motion to dismiss in May 2024. As of March 31, 2024, the Company had no liability recorded for these events as an unfavorable outcome was not probable. In connection with the Industry Lease, in September 2023, the Company filed claims in the Court against the landlord alleging, among other things, breach of contract and fraudulent misrepresentation (the Counterclaims). In October 2023, the landlord filed an answer and denied the Company’s allegations asserted in the Counterclaims. The Company and the landlord are currently engaged in discovery. On October 27, 2023, the Company filed a motion for partial judgment on the pleadings, seeking judgment on one of its four counterclaims. The Court set a hearing on the Company’s motion for partial judgment on the pleadings in May 2024. The Company is unable to estimate the possible amount or range of amounts associated with the Counterclaims. |
Common Stock
Common Stock | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Common Stock | Common Stock Each share of Class A common stock entitles the holder to one vote per share and each share of Class B common stock entitles the holder to 10 votes per share on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the Company’s Board of Directors. As of March 31, 2024 and December 31, 2023, no dividends had been declared. At-The-Market Offering In August 2023 , the Company entered into an Open Market Sales Agreement (the “Sales Agreement”) with Jefferies LLC (the “Sales Agent”), to provide for the offering, issuance and sale of up to an aggregate amount of $300.0 million of its Class A common stock from time to time in “at-the-market” (ATM) offerings. As of March 31, 2024, an amount of $208.2 million remained available for future sales under the Sales Agreement. For the three months ended March 31, 2024, the Company has sold 921 thousand shares and received net proceeds of $10.9 million under the agreement. Recursion is not required to sell additional shares under the Sales Agreement. The Company will pay the Sales Agent a commission of up to 3% of the aggregate gross proceeds received from all sales of Class A common stock. The Sales Agreement continues until the earlier of selling all shares available under the Sales Agreement or terminated by written notice from either of the parties. The ATM Offering is being made under a prospectus supplement dated August 8, 2023, and related prospectus filed with the Securities and Exchange Commission pursuant to our automatically effective shelf registration statement on Form S-3ASR (Registration No. 333-264845). NVIDIA Private Placement In July 2023 , Recursion entered into a Stock Purchase Agreement for a private placement with NVIDIA Corporation (2023 Private Placement), pursuant to which the Company sold an aggregate of 7.7 million shares of the Company’s Class A common stock at a price of $6.49 per share for net proceeds of approximately $49.9 million. Valence Acquisition Exchangeable Shares In May 2023 , in connection with the acquisition of Valence, the Company entered into an agreement to issue up to 5.9 million shares of Class A common stock (the “Exchange Shares”), that may be issued upon exchange, retraction or redemption of exchangeable shares of a subsidiary of Recursion. Each exchangeable share of the subsidiary of Recursion entitles the holder to exchange those shares on a one-for-one basis for Recursion’s Class A common stock. The shares are entitled to receive dividends economically equivalent to dividends declared by Recursion, are non-voting and are subject to customary adjustments for stock splits or other reorganizations. In addition, the Company may require all outstanding exchangeable shares to be exchanged into an equal number of Class A common stock upon the occurrence of certain events and at any time following the seventh anniversary of the closing of the Valence acquisition. The exchangeable shares are substantially the economic equivalent of the Class A shares and classified as common stock within the Company’s stockholders’ equity. The Company’s calculation of weighted-average shares outstanding includes the exchangeable shares. As of March 31, 2024, 4.2 million Exchangeable shares have been redeemed for Class A shares. Registration Rights Agreements Tempus agreement In November 2023 , in connection with the Tempus Agreement, the Company agreed to prepare and file a registration statement (or a prospectus supplement to an effective registration statement on Form S-3ASR that will become automatically effective upon filing with the SEC pursuant to Rule 462(e)) with the SEC, for resale of the shares of Class A common stock issued or issuable under the Tempus Agreement. A prospectus supplement to a registration statement (File No. 333-264845) was subsequently filed in December 2023 to register shares issued to Tempus for the initial license fee under the Tempus Agreement for resale. After registration of any shares issued to Tempus under the Tempus Agreement, the Company has agreed to use commercially reasonable efforts to keep such registration statement effective until such date that all shares issued to Tempus covered by such registration statement have been sold or are able to be publicly sold by relying on Rule 144 of the Securities Act without registration. NVIDIA Private Placement In July 2023 , in connection with the 2023 Private Placement with NVIDIA, the Company entered into a Registration Rights Agreement providing for the registration for resale of the shares of Class A common stock issued in such transaction. A prospectus supplement to a registration statement (File No. 333-264845) was subsequently filed in August 2023 to register the resale of the shares of Class A common stock issued to NVIDIA. The Company has agreed to use commercially reasonable efforts to keep the registration statement continuously effective until such date that all registrable securities under the agreement have been sold. In the event the holders cannot sell their shares due to certain circumstances causing the registration statement to be ineffective, the Company must pay each holder of shares outstanding on the date and each month thereafter 1% of the aggregate purchase price with the maximum payable amount of 5% of the aggregate purchase price. As of March 31, 2024, there was no accrued liability related to this agreement, as it was not probable that a payment would be required. Acquisitions In May 2023 , in connection with the acquisition of Valence, the Company entered into a Registration Agreement providing for the registration for resale of the shares of Class A common stock and Exchange Shares issued or issuable in such transaction. A registration statement on Form S-3ASR (File No. 333-272281) was filed to register the shares for resale by the holders. The registration statement must remain effective for a period of not less than three years. In May 2023 , in connection with the acquisition of Cyclica, the Company entered into a Registration Agreement providing for the registration for resale of the shares of Class A common stock issued in such transaction. A prospectus supplement to a registration statement (File No. 333-264845) was subsequently filed in June 2023 to register the shares for resale by the holders. The registration statement must be continuously effective until the earlier of the date that all shares have been sold thereunder or are able to be publicly sold by relying on Rule 144 of the Securities Act without registration. 2022 Private Placement In October 2022, i n connection with the 2022 Private Placement, the Company entered into a Registration Rights Agreement providing for the registration for resale of the shares of Class A common stock issued in such transaction. A prospectus supplement to a registration statement (File No. 333-264845) was subsequently filed in October 2022 to register the resale of the shares of Class A common stock by the Purchasers. The agreement must remain effective until registrable securities covered by the agreement have been publicly sold by the holders or all shares cease to be registrable securities. In the event the holders cannot sell their shares due to certain circumstances causing the agreement to be ineffective, the Company must pay each holder of shares outstanding on the date and each month thereafter 1% of the aggregate purchase price paid by the holder without limit until the agreement is cured. As of March 31, 2024, there was no accrued liability related to this agreement, as it was not probable that a payment would be required. Class A and B Common Shares Authorization In April 2021 , the Company’s Board of Directors authorized two classes of common stock, Class A and Class B. The rights of the holders of Class A and B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to 10 votes per share and is convertible at any time into one share of Class A common stock. All Class B common stock is held by Christopher Gibson, Ph.D., the Company’s Chief Executive Officer (CEO), or his affiliates. As of March 31, 2024, Dr. Gibson and his affiliates held outstanding shares of Class B common stock representing approximately 25% of the voting power of the Company’s outstanding shares. This voting power may increase over time as Dr. Gibson vests in and exercises equity awards outstanding. If all the exchangeable equity awards held by Dr. Gibson had been fully vested, exercised and exchanged for shares of Class B common stock as of March 31, 2024, Dr. Gibson and his affiliates would hold approximately 26% of the voting power of the Company’s outstanding shares. As a result, Dr. Gibson will be able to significantly influence any action requiring the approval of Recursion stockholders, including the election of the Board of Directors; the adoption of amendments to the Company’s certificate of incorporation and bylaws; and the approval of any merger, consolidation, sale of all or substantially all of the Company’s assets, or other major corporate transaction. |
Collaborative Development Contr
Collaborative Development Contracts | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Collaborative Development Contracts | Collaborative Development Contracts Roche and Genentech Description In December 2021, Recursion entered into a collaboration and license agreement with Roche and Genentech (collectively referred to as Roche). Recursion is constructing, using the Company’s imaging technology and proprietary machine-learning algorithms, unique maps of the inferred relationships amongst perturbation phenotypes in a given cellular context with the goal to discover and develop therapeutic small molecule programs in a gastrointestinal cancer indication and in key areas of neuroscience. Roche and Recursion will collaborate to select certain novel inferences with respect to small molecules or targets generated from the Phenomaps for further validation and optimization as collaboration programs. Roche and Recursion may also combine sequencing datasets from Roche with Recursion’s Phenomaps and collaborate to generate new algorithms to produce multi-modal maps from which additional collaboration programs may be initiated. For every collaboration program that successfully identifies potential therapeutic small molecules or validates a target, Roche will have an option to obtain an exclusive license to develop and commercialize such potential therapeutic small molecules or to exploit such target in the applicable exclusive field. Pricing In January 2022, Recursion received a $150.0 million non-refundable upfront payment from the Company’s collaboration with Roche. Recursion is eligible for additional milestone payments based on performance progress of the collaboration. Each of the Phenomaps requested by Roche and created by Recursion may be subject to either an initiation fee, acceptance fee or both. Such fees could exceed $250.0 million for 16 accepted Phenomaps. In addition, for a period of time after Roche’s acceptance of certain Phenomaps, Roche will have the option to obtain, subject to payment of an exercise fee, rights to use outside the collaboration the raw images generated in the course of creating those Phenomaps. If Roche exercises its external use option for all 12 eligible Phenomaps, Roche’s associated exercise fee payments to Recursion could exceed $250.0 million. Under the collaboration, Roche may initiate up to 40 programs, each of which, if successfully developed and commercialized, could yield more than $300.0 million in development, commercialization and net revenue milestones for Recursion, as well as tiered royalties on net revenue. Accounting This agreement represents a transaction with a customer and therefore is accounted for in accordance with ASC 606. Recursion has determined that it has three performance obligations, one related to gastrointestinal cancer and two in neuroscience. These performance obligations are for performing research and development services for Roche to identify targets and medicines. The performance obligations also include potential licenses related to the intellectual property. The Company concluded that licenses within the contract are not distinct from the research and development services as they are interrelated due to the fact that the research and development services significantly impact the potential licenses. Any additional services are considered customer options and will be considered as separate contracts for accounting purposes. The Company has determined the transaction price to be $150.0 million, comprised of the upfront payment. Recursion will fully constrain the amounts of variable consideration to be received from potential milestones considering the stage of development and the risks associated with the remaining development required to achieve each milestone. Recursion will re-evaluate the transaction price each reporting period. The transaction price was allocated to the performance obligations based on the estimated relative stand-alone selling price of each performance obligation as determined using an expected cost plus margin approach. The Company recognizes revenue over time based on costs incurred relative to total expected costs to perform the research and development services. Recursion determined that this method provides a faithful depiction of the transfer of control to the customer. This method of recognizing revenue requires the Company to make estimates of total costs to provide the services required under the performance obligations. Significant inputs used to determine the total costs included the length of time required, service hours performed by Company employees and materials costs. A significant change in these estimates could have a material effect on the timing and amount of revenue recognized in future periods. Recursion has estimated the completion of the performance obligations by 2026. Additional Revenue Disclosures Of the revenue recognized during the three months ended March 31, 2024 and 2023, primarily all of it was included in the unearned revenue balance as of December 31, 2023 and 2022, respectively. Revenue recognized was from upfront payments received at the inception of the related contracts, which decreased the initial unearned revenue recognized. As of March 31, 2024, the Company had $6.5 million of costs incurred to fulfill a contract on its Condensed Consolidated Balance Sheet within “Other Current Assets.” |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation In April 2021, the Board of Directors and the stockholders of the Company adopted the 2021 Equity Incentive Plan (the 2021 Plan). The Company may grant stock options, restricted stock units (RSUs), stock appreciation rights, restricted stock awards and other forms of stock-based compensation. As of March 31, 2024, 18.9 million shares of Class A common stock were available for grant. The following table presents the classification of stock-based compensation expense for employees and non-employees within the Condensed Consolidated Statements of Operations: Three months ended (in thousands) 2024 2023 Cost of revenue $ 766 $ 1,011 Research and development 7,666 2,683 General and administrative 7,077 4,578 Total $ 15,509 $ 8,272 Stock Options Stock options are primarily granted to executive leaders at the Company, generally vest over four years and expire no later than 10 years from the date of grant. Stock option activity during the three months ended March 31, 2024 was as follows: (in thousands except share and per share amounts) Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding as of December 31, 2023 14,957,617 $ 6.13 7.0 $ 72,416 Granted 2,558,102 10.09 Cancelled (178,609) 12.70 Exercised (1,303,878) 2.80 11,575 Outstanding as of March 31, 2024 16,033,232 $ 6.99 7.3 $ 64,131 Exercisable as of March 31, 2024 8,909,647 $ 5.49 6.2 $ 51,959 The fair value of options granted to employees is calculated on the grant date using the Black-Scholes option valuation model. The weighted-average grant-date fair values of stock options granted during the three months ended March 31, 2024 and 2023 were $6.41 and $5.32, respectively. The following weighted-average assumptions were used to calculate the grant-date fair value of stock options: Three months ended March 31, 2024 2023 Expected term (in years) 6.3 6.3 Expected volatility 65 % 64 % Expected dividend yield — — Risk-free interest rate 4.2 % 3.5 % As of March 31, 2024, $43.9 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over approximately the next three years. RSUs Equity awards granted to employees primarily consist of RSUs and generally vest over four years. The weighted-average grant-date fair value of RSUs generally is determined based on the number of units granted and the quoted price of Recursion’s common stock on the date of grant. The following table summarizes Recursion’s RSU activity during the three months ended March 31, 2024: Stock units Weighted-average grant date fair value Outstanding as of December 31, 2023 15,223,764 $ 8.39 Granted 1,840,877 10.46 Vested (1,023,464) 8.60 Forfeited (409,634) 7.99 Outstanding as of March 31, 2024 15,631,543 $ 8.63 The fair market value of RSUs vested was $13.0 million during the three months ended March 31, 2024. As of March 31, 2024, $124.8 million of unrecognized compensation cost related to RSUs is expected to be recognized as expense over approximately the next three years. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company did not record any U.S. income tax expense during the three months ended March 31, 2024 and 2023. The Company has historically incurred operating losses and maintains a full valuation allowance against its U.S. net deferred tax assets. Foreign taxes were insignificant during the three months ended March 31, 2024 and 2023. Net operating losses (NOLs) and tax credit carry-forwards are subject to review and possible adjustment by the Internal Revenue Service (“IRS”) and may become subject to annual limitation due to ownership changes that occur under Section 382 of the Internal Revenue Code, as amended and similar state provisions. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50% over a three-year period. As of March 31, 2024, the Company was not limited on its NOLs and tax credit carry-forwards. The Company will continue to monitor future ownership changes for potential Section 382 limitations. |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share For the three months ended March 31, 2024 and 2023, Recursion calculated net loss per share of Class A, Class B and Exchangeable common stock using the two-class method. Basic net loss per share is computed using the weighted-average number of shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares and the effect of potentially dilutive securities outstanding during the period. Potentially dilutive securities consist of stock options and other contingently issuable shares. For periods presented in which the Company reports a net loss, all potentially dilutive shares are anti-dilutive and as such are excluded from the calculation. For the three months ended March 31, 2024 and 2023 , the Company reported a net loss and therefore basic and diluted loss per share were the same. The rights, including the liquidation and dividend rights, of the holders of the Company’s Class A, Class B and the Exchangeable common stock are identical, except with respect to voting. As a result, the undistributed earnings for each period are allocated based on the contractual participation rights of the Class A, Class B and the Exchangeable common stock as if the earnings for the period had been distributed. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis and the resulting amount per share for Class A, Class B and the Exchangeable common stock was the same during the three months ended March 31, 2024 and 2023. The following tables set forth the computation of basic and diluted net loss per share of Class A, Class B and Exchangeable common stock: Three months ended March 31, (in thousands, except share amounts) 2024 2023 Numerator: Net loss $ (91,373) $ (65,327) Denominator: Weighted average common shares outstanding 236,019,349 191,618,238 Net loss per share, basic and diluted $ (0.39) $ (0.34) The Company excluded the following potential common shares from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect: Three months ended March 31, 2024 2023 Stock based compensation 11,159,250 8,534,876 Tempus agreement 5,143,690 — Total 16,302,940 8,534,876 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The fair value hierarchy consists of the following three levels: • Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets that the company has the ability to access; • Level 2 — Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market; and • Level 3 — Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company's management about the assumptions market participants would use in pricing the asset or liability. The Company is required to maintain a cash balance in a collateralized account to secure the Company’s credit cards. Additionally, the Company holds restricted cash related to an outstanding letter of credit issued by J.P. Morgan, which was obtained to secure certain Company obligations relating to tenant improvements. Recursion also holds restricted cash related to a Bill and Melinda Gates Foundation grant. The following tables summarize the Company’s assets and liabilities that are measured at fair value on a recurring basis: Basis of fair value measurement (in thousands) March 31, 2024 Level 1 Level 2 Level 3 Assets Cash equivalents: Money market funds $ 276,697 $ 276,697 $ — $ — Restricted cash 9,824 9,824 — — Total assets $ 286,521 $ 286,521 $ — $ — Basis of fair value measurement (in thousands) December 31, 2023 Level 1 Level 2 Level 3 Assets Cash equivalents: Money market funds $ 322,653 $ 322,653 $ — $ — Restricted cash 9,860 9,860 — — Total assets $ 332,513 $ 332,513 $ — $ — In addition to the financial instruments that are recognized at fair value on the Condensed Consolidated Balance Sheet, the Company has certain financial instruments that are recognized at amortized cost or some basis other than fair value. The carrying amount of these instruments are considered to be representative of their approximate fair values. The following tables summarize the Company’s financial instruments that are not measured at fair value: Book values Fair values (in thousands) March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023 Liabilities Current portion of notes payable $ 55 $ 41 $ 55 $ 41 Notes payable, net of current portion 1,071 1,101 1,071 1,101 Total liabilities $ 1,126 $ 1,142 $ 1,126 $ 1,142 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (91,373) | $ (65,327) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 shares | |
Trading Arrangements, by Individual | |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Terry-Ann Burrell [Member] | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | On March 1, 2024, Terry-Ann Burrell, a member of our Board of Directors, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 211,290 shares of the Company’s Class A common stock until May 30, 2025. |
Name | Terry-Ann Burrell |
Title | member of our Board of Directors |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | March 1, 2024 |
Arrangement Duration | 455 days |
Aggregate Available | 211,290 |
Tina Marriott [Member] | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | On March 1, 2024, Tina Marriott, President and Chief Operating Officer, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 672,000 shares of the Company’s Class A common stock until June 27, 2025. |
Name | Tina Marriott |
Title | President and Chief Operating Officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | March 1, 2024 |
Arrangement Duration | 483 days |
Aggregate Available | 672,000 |
Michael Secora [Member] | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | On March 1, 2024, Michael Secora, Chief Financial Officer, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 1,259,955 shares of the Company’s Class A common stock until June 10, 2025. |
Name | Michael Secora |
Title | Chief Financial Officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | March 1, 2024 |
Arrangement Duration | 466 days |
Aggregate Available | 1,259,955 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes for the year ended December 31, 2023. It is management’s opinion that these condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial statements. Revenue and net loss for any interim period are not necessarily indicative of future or annual results. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2024, the SEC issued rule 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors . The new rule requires Recursion to provide certain disclosures in the footnotes to the financial statements of climate-related information. These disclosures include the impact of severe weather and other natural conditions on the Company’s consolidated balance sheet and statement of operations, to the extent they are material. Recursion will also need to disclose a rollforward of the beginning and ending balances of its carbon offsets and renewable energy credits or certificates (RECs), if they are a material component of meeting the Company’s climate-related targets and goals. Additionally, the Company will need to disclose whether and, if so, how severe weather events and other natural conditions and disclosed climate-related targets or transition plans materially affected estimates and assumptions in the financial statements. The standard’s effective dates, if adopted, will be phased in depending on the disclosure requirement starting the annual period ending December 31, 2025. In April 2024, the SEC voluntarily stayed implementation of the new climate-related disclosure requirements pending judicial review. The Company is currently evaluating the impact this rule will have on its consolidated financial statements and related disclosures. In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-9, Income Taxes (Topic 740) . The new standard updates disclosure requirements for Accounting Standards Codification (ASC) 740 primarily by requiring additional information in the income tax rate reconciliation and additional disclosures about income taxes paid. This standard will be effective for Recursion starting the annual period ending December 31, 2025. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments can be applied on a prospective or retrospective basis. The adoption of this standard will not impact Recursion’s consolidated balance sheet and statement of operations. In November 2023, the FASB issued ASU No. 2023-7, Segment Reporting (Topic 280) . The standard requires new disclosures related to ASC 280 including: disclosing significant segment expenses by category; requiring all the ASC 280 disclosures for Companies with a single reportable segment and; requiring an increased frequency of the ASC 280 disclosures. Recursion must apply the amendments retrospectively to each prior reporting period presented. This standard will be effective for Recursion starting the annual period ending December 31, 2024. Early adoption is permitted. The adoption of this standard will not impact Recursion’s consolidated balance sheet and statement of operations. |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Supplemental Financial Information [Abstract] | |
Schedule of Property and Equipment | Property and Equipment March 31, December 31, (in thousands) 2024 2023 Lab equipment $ 61,247 $ 60,096 Leasehold improvements 46,289 45,929 Office equipment 22,356 22,126 Construction in progress 5,677 3,231 Property and equipment, gross 135,569 131,382 Less: Accumulated depreciation (48,853) (44,872) Property and equipment, net $ 86,716 $ 86,510 |
Schedule of Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities March 31, December 31, (in thousands) 2024 2023 Accrued compensation $ 10,055 $ 22,888 Accrued development expenses 5,804 6,077 Accrued early discovery expenses 2,610 2,570 Accrued construction — 2,439 Materials received not invoiced 1,184 2,432 Accrued other expenses 6,417 10,229 Accrued expense and other liabilities $ 26,070 $ 46,635 |
Schedule of Interest Income and Expense Disclosure | Interest Income, net Three months ended (in thousands) 2024 2023 Interest income $ 4,048 $ 4,660 Interest expense (20) (19) Interest income, net $ 4,028 $ 4,641 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The following table summarizes total consideration: (in thousands) Fair value of Recursion Class A common stock $ 11,096 Fair value of Exchangeable stock 22,473 Fair value of equity awards issued to Valance equity award holders 1,933 Deferred liabilities for additional consideration 396 Total consideration $ 35,898 The following table summarizes total consideration: (in thousands) Fair value of Recursion Class A common stock $ 49,915 Cash 6,505 Fair value of equity awards issued to Cyclica equity award holders 3,852 Deferred liabilities for additional consideration 344 Total consideration $ 60,617 |
Schedule of Fair Value of Assets Acquired and Liabilities Assumed | The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date: (in thousands) Cash $ 4,235 Other receivables 536 Intangible asset - technology 15,000 Accounts payable and accrued liabilities (872) Deferred income taxes (3,265) Total identifiable net assets 15,634 Goodwill 20,264 Total assets acquired and liabilities assumed $ 35,898 The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date: (in thousands) Cash $ 2,429 Restricted cash 1,685 Other receivables 741 Investments 1,000 Other current assets 385 Intangible assets - technology 28,000 Accounts payable and accrued liabilities (579) Unearned revenue (1,754) Deferred income taxes (2,075) Other liabilities, current (66) Other liabilities, non-current (139) Total identifiable net assets 29,627 Goodwill 30,990 Total assets acquired and liabilities assumed $ 60,617 |
Schedule of Business Acquisitions, Pro Forma Information | The following table presents the unaudited pro forma combined results of operations of Recursion, Valence and Cyclica as if the acquisitions had occurred on January 1, 2022: (in thousands) Three months ended March 31, 2023 Net revenue $ 12,155 Net loss (73,514) |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Schedule of Components of Lease Cost, Supplemental Cash Flow Information Related to Leases, Lease Term and Discount Rates | The components of the lease cost were: Three months ended (in thousands) 2024 2023 Operating lease cost $ 2,472 $ 1,998 Variable lease cost 538 657 Short-term lease cost 40 — Lease cost $ 3,050 $ 2,655 The remaining lease term and discount rate were: (in thousands) March 31, 2024 Operating leases Weighted-average remaining lease term (years) 6.4 Weighted-average discount rate 7.7 % |
Schedule of Maturities of Operating Lease Liabilities | Maturities of operating lease liabilities as of March 31, 2024 were: (in thousands) Operating leases Remainder of 2024 $ 7,300 2025 10,748 2026 10,882 2027 11,281 2028 8,850 Thereafter 16,948 Total lease payments 66,009 Less: imputed interest (16,161) Present value of lease liabilities $ 49,848 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The following table summarizes intangible assets: March 31, 2024 December 31, 2023 (in thousands) Gross carrying amount Accumulated Amortization Net carrying amount Gross carrying amount Accumulated Amortization Net carrying amount Definite-lived intangible assets $ 44,426 $ (12,336) $ 32,090 $ 44,426 $ (8,969) $ 35,457 Indefinite-lived intangible assets 986 — 986 986 — 986 Intangible assets, net $ 45,412 $ (12,336) $ 33,076 $ 45,412 $ (8,969) $ 36,443 |
Schedule of Indefinite-Lived Intangible Assets | The following table summarizes intangible assets: March 31, 2024 December 31, 2023 (in thousands) Gross carrying amount Accumulated Amortization Net carrying amount Gross carrying amount Accumulated Amortization Net carrying amount Definite-lived intangible assets $ 44,426 $ (12,336) $ 32,090 $ 44,426 $ (8,969) $ 35,457 Indefinite-lived intangible assets 986 — 986 986 — 986 Intangible assets, net $ 45,412 $ (12,336) $ 33,076 $ 45,412 $ (8,969) $ 36,443 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-based Compensation Expenses | The following table presents the classification of stock-based compensation expense for employees and non-employees within the Condensed Consolidated Statements of Operations: Three months ended (in thousands) 2024 2023 Cost of revenue $ 766 $ 1,011 Research and development 7,666 2,683 General and administrative 7,077 4,578 Total $ 15,509 $ 8,272 |
Schedule of Share-based Payment Arrangement, Option, Activity | Stock option activity during the three months ended March 31, 2024 was as follows: (in thousands except share and per share amounts) Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding as of December 31, 2023 14,957,617 $ 6.13 7.0 $ 72,416 Granted 2,558,102 10.09 Cancelled (178,609) 12.70 Exercised (1,303,878) 2.80 11,575 Outstanding as of March 31, 2024 16,033,232 $ 6.99 7.3 $ 64,131 Exercisable as of March 31, 2024 8,909,647 $ 5.49 6.2 $ 51,959 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following weighted-average assumptions were used to calculate the grant-date fair value of stock options: Three months ended March 31, 2024 2023 Expected term (in years) 6.3 6.3 Expected volatility 65 % 64 % Expected dividend yield — — Risk-free interest rate 4.2 % 3.5 % |
Schedule of Nonvested RSU Activity | The following table summarizes Recursion’s RSU activity during the three months ended March 31, 2024: Stock units Weighted-average grant date fair value Outstanding as of December 31, 2023 15,223,764 $ 8.39 Granted 1,840,877 10.46 Vested (1,023,464) 8.60 Forfeited (409,634) 7.99 Outstanding as of March 31, 2024 15,631,543 $ 8.63 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Loss per Share | The following tables set forth the computation of basic and diluted net loss per share of Class A, Class B and Exchangeable common stock: Three months ended March 31, (in thousands, except share amounts) 2024 2023 Numerator: Net loss $ (91,373) $ (65,327) Denominator: Weighted average common shares outstanding 236,019,349 191,618,238 Net loss per share, basic and diluted $ (0.39) $ (0.34) |
Schedule of Antidilutive Securities Excluded from Computation of Net Loss per Share | The Company excluded the following potential common shares from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect: Three months ended March 31, 2024 2023 Stock based compensation 11,159,250 8,534,876 Tempus agreement 5,143,690 — Total 16,302,940 8,534,876 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following tables summarize the Company’s assets and liabilities that are measured at fair value on a recurring basis: Basis of fair value measurement (in thousands) March 31, 2024 Level 1 Level 2 Level 3 Assets Cash equivalents: Money market funds $ 276,697 $ 276,697 $ — $ — Restricted cash 9,824 9,824 — — Total assets $ 286,521 $ 286,521 $ — $ — Basis of fair value measurement (in thousands) December 31, 2023 Level 1 Level 2 Level 3 Assets Cash equivalents: Money market funds $ 322,653 $ 322,653 $ — $ — Restricted cash 9,860 9,860 — — Total assets $ 332,513 $ 332,513 $ — $ — |
Schedule of Fair Value Disclosure of Asset and Liability Not Measured at Fair Value | The following tables summarize the Company’s financial instruments that are not measured at fair value: Book values Fair values (in thousands) March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023 Liabilities Current portion of notes payable $ 55 $ 41 $ 55 $ 41 Notes payable, net of current portion 1,071 1,101 1,071 1,101 Total liabilities $ 1,126 $ 1,142 $ 1,126 $ 1,142 |
Description of the Business (De
Description of the Business (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ 1,058,995 | $ 967,622 |
Supplemental Financial Inform_3
Supplemental Financial Information - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2023 | Jan. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||||
Depreciation | $ 4,000,000 | $ 3,600,000 | |||
Impairment of leasehold improvements | 0 | 1,200,000 | |||
Purchases of property and equipment | 6,653,000 | 5,175,000 | |||
Notes payable | |||||
Property, Plant and Equipment [Line Items] | |||||
Proceeds from issuance of long-term debt | $ 1,900,000 | ||||
Debt instrument, term | 3 years | ||||
Debt instrument, interest rate (as percent) | 7% | ||||
Notes payable | 616,000 | ||||
Notes payable | Station 41 lease | |||||
Property, Plant and Equipment [Line Items] | |||||
Proceeds from issuance of long-term debt | $ 992,000 | ||||
Debt instrument, term | 10 years | ||||
Debt instrument, interest rate (as percent) | 8% | ||||
Notes payable | 510,000 | ||||
BioHive Supercomputer | |||||
Property, Plant and Equipment [Line Items] | |||||
Purchases of property and equipment | $ 1,700,000 | ||||
Other Current Assets | |||||
Property, Plant and Equipment [Line Items] | |||||
License agreement, prepaid expenses | $ 16,000,000 | ||||
Tempus Labs, Inc | |||||
Property, Plant and Equipment [Line Items] | |||||
License agreement, term | 5 years | ||||
License agreement, trading period | 7 days | ||||
Tempus Labs, Inc | Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Annual payments | $ 22,000,000 | ||||
Tempus Labs, Inc | Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Annual payments | 42,000,000 | ||||
Aggregate amount payable in cash or equity | $ 160,000,000 |
Supplemental Financial Inform_4
Supplemental Financial Information - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 135,569 | $ 131,382 |
Less: Accumulated depreciation | (48,853) | (44,872) |
Property and equipment, net | 86,716 | 86,510 |
Lab equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 61,247 | 60,096 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 46,289 | 45,929 |
Office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 22,356 | 22,126 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 5,677 | $ 3,231 |
Supplemental Financial Inform_5
Supplemental Financial Information - Schedule of Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Supplemental Financial Information [Abstract] | ||
Accrued compensation | $ 10,055 | $ 22,888 |
Accrued development expenses | 5,804 | 6,077 |
Accrued early discovery expenses | 2,610 | 2,570 |
Accrued construction | 0 | 2,439 |
Materials received not invoiced | 1,184 | 2,432 |
Accrued other expenses | 6,417 | 10,229 |
Accrued expense and other liabilities | $ 26,070 | $ 46,635 |
Supplemental Financial Inform_6
Supplemental Financial Information - Schedule of Interest Income and Expense Disclosure (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Supplemental Financial Information [Abstract] | ||
Interest income | $ 4,048 | $ 4,660 |
Interest expense | (20) | (19) |
Interest income, net | $ 4,028 | $ 4,641 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) shares in Thousands | 3 Months Ended | |||
Mar. 31, 2024 | May 25, 2023 | May 16, 2023 | Mar. 31, 2024 | |
Valence Discovery Inc | ||||
Business Acquisition [Line Items] | ||||
Net revenues | $ 0 | |||
Operating loss | 2,900,000 | |||
Valence Discovery Inc | Technology Intangible Assets | ||||
Business Acquisition [Line Items] | ||||
Useful life | 4 years | |||
Valence Discovery Inc | Stock based compensation | ||||
Business Acquisition [Line Items] | ||||
Equity interest issued or issuable (in shares) | 792 | |||
Valence Discovery Inc | Class A | ||||
Business Acquisition [Line Items] | ||||
Equity interest issued or issuable (in shares) | 2,200 | |||
Valence Discovery Inc | Exchangeable Stock | ||||
Business Acquisition [Line Items] | ||||
Equity interest issued or issuable (in shares) | 4,400 | |||
Cyclica Inc | ||||
Business Acquisition [Line Items] | ||||
Operating loss | $ 3,800,000 | |||
Cyclica Inc | Technology Intangible Assets | ||||
Business Acquisition [Line Items] | ||||
Useful life | 3 years | |||
Cyclica Inc | Stock based compensation | ||||
Business Acquisition [Line Items] | ||||
Equity interest issued or issuable (in shares) | 1,000 | |||
Cyclica Inc | Class A | ||||
Business Acquisition [Line Items] | ||||
Equity interest issued or issuable (in shares) | 182 | 5,800 |
Acquisitions - Schedule of Busi
Acquisitions - Schedule of Business Acquisitions, by Acquisition (Details) - USD ($) $ in Thousands | May 25, 2023 | May 16, 2023 |
Valence Discovery Inc | ||
Business Acquisition [Line Items] | ||
Deferred liabilities for additional consideration | $ 396 | |
Total consideration | 35,898 | |
Valence Discovery Inc | Employee stock | ||
Business Acquisition [Line Items] | ||
Fair value of equity interests issued, value | 1,933 | |
Valence Discovery Inc | Class A | ||
Business Acquisition [Line Items] | ||
Fair value of equity interests issued, value | 11,096 | |
Valence Discovery Inc | Exchangeable Stock | ||
Business Acquisition [Line Items] | ||
Fair value of equity interests issued, value | $ 22,473 | |
Cyclica Inc | ||
Business Acquisition [Line Items] | ||
Cash | $ 6,505 | |
Deferred liabilities for additional consideration | 344 | |
Total consideration | 60,617 | |
Cyclica Inc | Employee stock | ||
Business Acquisition [Line Items] | ||
Fair value of equity interests issued, value | 3,852 | |
Cyclica Inc | Class A | ||
Business Acquisition [Line Items] | ||
Fair value of equity interests issued, value | $ 49,915 |
Acquisitions - Schedule of Fair
Acquisitions - Schedule of Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | May 25, 2023 | May 16, 2023 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 52,056 | $ 52,056 | ||
Valence Discovery Inc | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 4,235 | |||
Other receivables | 536 | |||
Intangible assets - technology | 15,000 | |||
Accounts payable and accrued liabilities | (872) | |||
Deferred income taxes | (3,265) | |||
Total identifiable net assets | 15,634 | |||
Goodwill | 20,264 | |||
Total assets acquired and liabilities assumed | $ 35,898 | |||
Cyclica Inc | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 2,429 | |||
Restricted cash | 1,685 | |||
Other receivables | 741 | |||
Investments | 1,000 | |||
Other current assets | 385 | |||
Intangible assets - technology | 28,000 | |||
Accounts payable and accrued liabilities | (579) | |||
Unearned revenue | (1,754) | |||
Deferred income taxes | (2,075) | |||
Other liabilities, current | (66) | |||
Other liabilities, non-current | (139) | |||
Total identifiable net assets | 29,627 | |||
Goodwill | 30,990 | |||
Total assets acquired and liabilities assumed | $ 60,617 |
Acquisitions - Schedule of Bu_2
Acquisitions - Schedule of Business Acquisitions, Pro Forma Information (Details) - Recursion, Valence and Cyclica $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Business Acquisition [Line Items] | |
Net revenue | $ 12,155 |
Net loss | $ (73,514) |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Feb. 29, 2024 USD ($) ft² | Jan. 31, 2024 USD ($) ft² | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | |
Lessee, Lease, Description [Line Items] | ||||
Operating lease, renewal term | 5 years | |||
Increase (decrease) in operating lease right-of-use assets | $ (3,100) | $ 3,500 | ||
Increase (decrease) in lease liability | (3,100) | $ 3,500 | ||
Lessee, operating lease, liability, to be paid | $ 66,009 | |||
London Lease | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease, renewal term | 5 years | |||
Square footage of leased space (in square feet) | ft² | 6,792 | |||
Lease term | 5 years | |||
Lessee, operating lease, liability, to be paid | $ 7,900 | |||
Data Center Lease | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease, renewal term | 5 years | |||
Square footage of leased space (in square feet) | ft² | 1,851 | |||
Lease term | 5 years | |||
Lessee, operating lease, liability, to be paid | $ 13,000 | |||
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Remaining operating lease term | 1 year | |||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Remaining operating lease term | 9 years |
Leases - Components of Lease Co
Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Leases [Abstract] | ||
Operating lease cost | $ 2,472 | $ 1,998 |
Variable lease cost | 538 | 657 |
Short-term lease cost | 40 | 0 |
Lease cost | $ 3,050 | $ 2,655 |
Leases - Lease Term and Discoun
Leases - Lease Term and Discount Rates (Details) | Mar. 31, 2024 |
Leases [Abstract] | |
Weighted-average remaining lease term (years) | 6 years 4 months 24 days |
Weighted-average discount rate | 7.70% |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Leases [Abstract] | |
Remainder of 2024 | $ 7,300 |
2025 | 10,748 |
2026 | 10,882 |
2027 | 11,281 |
2028 | 8,850 |
Thereafter | 16,948 |
Total lease payments | 66,009 |
Less: imputed interest | (16,161) |
Present value of lease liabilities | $ 49,848 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Change in carrying amount of goodwill | $ 0 | $ 0 | |
Goodwill impairment | 0 | 0 | |
Intangible Assets, Net | |||
Gross carrying amount | 44,426,000 | $ 44,426,000 | |
Accumulated Amortization | (12,336,000) | (8,969,000) | |
Net carrying amount | 32,090,000 | 35,457,000 | |
Indefinite-lived intangible assets | 986,000 | 986,000 | |
Intangible assets, gross | 45,412,000 | 45,412,000 | |
Intangible assets, net | 33,076,000 | $ 36,443,000 | |
Amortization expense | 3,400,000 | 152,000 | |
Impairment of indefinite-lived intangible assets | $ 0 | $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Mar. 31, 2024 USD ($) | Dec. 31, 2023 USD ($) | Oct. 27, 2023 claim |
Commitments and Contingencies Disclosure [Abstract] | |||
Loss contingency accrual | $ | $ 0 | $ 0 | |
Number of pending claims | claim | 4 |
Common Stock (Details)
Common Stock (Details) $ / shares in Units, shares in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
May 16, 2023 shares | Aug. 31, 2023 USD ($) | Jul. 31, 2023 USD ($) $ / shares shares | May 31, 2023 | Mar. 31, 2024 USD ($) vote shares | Dec. 31, 2023 USD ($) | Oct. 31, 2022 | Apr. 30, 2021 class | |
Class of Stock [Line Items] | ||||||||
Dividends, stock | $ 0 | $ 0 | ||||||
Percent of aggregate purchase price paid by the holder due if agreement is broken | 1% | |||||||
Registration rights agreement, accrued liability | $ 0 | |||||||
Number of classes of common stock authorized | class | 2 | |||||||
Christopher Gibson and Affiliates | ||||||||
Class of Stock [Line Items] | ||||||||
Affiliated holders, ownership percentage | 0.25 | |||||||
Affiliated holders, potential ownership percentage when outstanding equity awards vest | 0.26 | |||||||
Valence Discovery Inc | ||||||||
Class of Stock [Line Items] | ||||||||
Registration rights agreement, term | 3 years | |||||||
NVDIA Private Placement | ||||||||
Class of Stock [Line Items] | ||||||||
Percent of aggregate purchase price paid by the holder due if agreement is broken | 1% | |||||||
Registration rights agreement, accrued liability | $ 0 | |||||||
NVDIA Private Placement | Maximum | ||||||||
Class of Stock [Line Items] | ||||||||
Percent of aggregate purchase price paid by the holder due if agreement is broken | 5% | |||||||
Class A | ||||||||
Class of Stock [Line Items] | ||||||||
Vote per share of common stock (in votes) | vote | 1 | |||||||
Shares issued, price per share (in dollars per share) | $ / shares | $ 6.49 | |||||||
Proceeds from issuance of common shares, net of issuance costs | $ 49,900,000 | |||||||
Common stock, conversion ratio | 1 | 1 | ||||||
Class A | At-the-Market offering program | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock, value authorized | $ 300,000,000 | |||||||
Sale of stock value remaining authorized | $ 208,200,000 | |||||||
IPO, number of shares issued (in shares) | shares | 921 | |||||||
IPO, net proceeds received | $ 10,900,000 | |||||||
Sale of Stock, percentage of commission | 3% | |||||||
Class A | NVDIA Private Placement | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock sales issuances, net of issuance costs (in shares) | shares | 7,700 | |||||||
Class B | ||||||||
Class of Stock [Line Items] | ||||||||
Vote per share of common stock (in votes) | vote | 10 | |||||||
Exchangeable Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued in the period, upon conversion (in shares) | shares | 4,200 | |||||||
Exchangeable Stock | Valence Discovery Inc | ||||||||
Class of Stock [Line Items] | ||||||||
Contingent consideration, equity interests issuable (in shares) | shares | 5,900 |
Collaborative Development Con_2
Collaborative Development Contracts (Details) $ in Thousands | 1 Months Ended | ||
Jan. 31, 2022 USD ($) program performance_obligation phenomap | Mar. 31, 2024 USD ($) | Dec. 31, 2023 USD ($) | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Unearned revenue | $ 36,618 | $ 36,426 | |
Collaborative arrangement | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Unearned revenue | $ 6,500 | ||
Roche and Genentech | Collaborative arrangement | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Remaining unearned revenue | $ 150,000 | ||
Number of performance obligations under the agreement (in performance obligations) | performance_obligation | 3 | ||
Remaining performance obligation revenue | $ 150,000 | ||
Roche and Genentech | Collaborative arrangement | Phenomaps creation | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Research project, fees and milestones payments receivable for an option on a lead series | $ 250,000 | ||
Number of eligible phenomaps (in phenomaps) | phenomap | 16 | ||
Roche and Genentech | Collaborative arrangement | Phenomaps raw images | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Research project, fees and milestones payments receivable for an option on a lead series | $ 250,000 | ||
Number of eligible phenomaps (in phenomaps) | phenomap | 12 | ||
Roche and Genentech | Collaborative arrangement | Developed and commercialized programs | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Research project, fees and milestones payments receivable for an option on a lead series | $ 300,000 | ||
Number of projects that may be initiated (in projects) | program | 40 | ||
Roche and Genentech | Collaborative arrangement | Gastrointestinal cancer | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Number of performance obligations under the agreement (in performance obligations) | performance_obligation | 1 | ||
Roche and Genentech | Collaborative arrangement | Neuroscience | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Number of performance obligations under the agreement (in performance obligations) | performance_obligation | 2 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted in period, weighted average grant date fair value (in dollars per share) | $ 6.41 | $ 5.32 |
Unvested stock options, unamortized stock-based compensation cost | $ 43.9 | |
Unvested stock options, unamortized stock-based compensation cost, weighted average period recognition | 3 years | |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock options, vesting period | 4 years | |
Stock options, expiration period | 10 years | |
RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock options, vesting period | 4 years | |
Restricted stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unvested stock options, unamortized stock-based compensation cost, weighted average period recognition | 3 years | |
Fair market value of vested shares | $ 13 | |
Unrecognized compensation cost | $ 124.8 | |
2021 Equity Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares available for grant (in shares) | 18,900,000 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock-based Compensation Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based payment arrangement, expense | $ 15,509 | $ 8,272 |
Cost of revenue | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based payment arrangement, expense | 766 | 1,011 |
Research and development | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based payment arrangement, expense | 7,666 | 2,683 |
General and administrative | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based payment arrangement, expense | $ 7,077 | $ 4,578 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Share-based Payment Arrangement, Option, Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Shares | ||
Options, outstanding, number at beginning of period (in shares) | 14,957,617 | |
Granted (in shares) | 2,558,102 | |
Cancelled (in shares) | (178,609) | |
Exercised (in shares) | (1,303,878) | |
Options, outstanding, number at end of period (in shares) | 16,033,232 | 14,957,617 |
Exercisable, (in shares) | 8,909,647 | |
Weighted-Average Exercise Price | ||
Options, outstanding, at beginning of period (in dollars per share) | $ 6.13 | |
Granted (in dollars per share) | 10.09 | |
Cancelled (in dollars per share) | 12.70 | |
Exercised (in dollars per share) | 2.80 | |
Options, outstanding, at end of period (in dollars per share) | 6.99 | $ 6.13 |
Exercisable (in dollars per share) | $ 5.49 | |
Options, outstanding, weighted average remaining contractual life | 7 years 3 months 18 days | 7 years |
Options, exercisable, weighted average remaining contractual life | 6 years 2 months 12 days | |
Options, outstanding, intrinsic value | $ 64,131 | $ 72,416 |
Exercise, intrinsic value | 11,575 | |
Exercisable, intrinsic value | $ 51,959 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Share-based Payment Award, Stock Options, Valuation Assumption (Details) - Stock based compensation | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (in years) | 6 years 3 months 18 days | 6 years 3 months 18 days |
Expected volatility | 65% | 64% |
Expected dividend yield | 0% | 0% |
Risk-free interest rate | 4.20% | 3.50% |
Stock-Based Compensation - Sc_3
Stock-Based Compensation - Schedule of RSU Activity (Details) - Restricted stock | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Stock units | |
Beginning balance, outstanding (in shares) | shares | 15,223,764 |
Granted (in shares) | shares | 1,840,877 |
Vested (in shares) | shares | (1,023,464) |
Forfeited (in shares) | shares | (409,634) |
Ending balance, outstanding (in shares) | shares | 15,631,543 |
Weighted-average grant date fair value | |
Beginning balance, outstanding (in dollars per share) | $ / shares | $ 8.39 |
Granted (in dollars per share) | $ / shares | 10.46 |
Vested (in dollars per share) | $ / shares | 8.60 |
Forfeited (in dollars per share) | $ / shares | 7.99 |
Ending balance, outstanding (in dollars per share) | $ / shares | $ 8.63 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) | $ (779,000) | $ 0 |
Federal Income Tax Expense (Benefit), Continuing Operations | $ 0 | $ 0 |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Basic and Diluted Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (91,373) | $ (65,327) |
Weighted average common shares outstanding, basic (in shares) | 236,019,349 | 191,618,238 |
Weighted average common shares outstanding, diluted (in shares) | 236,019,349 | 191,618,238 |
Net loss per share, basic (in dollars per shares) | $ (0.39) | $ (0.34) |
Net loss per share, diluted (in dollars per shares) | $ (0.39) | $ (0.34) |
Net Loss Per Share - Schedule_2
Net Loss Per Share - Schedule of Antidilutive Securities Excluded from Computation of Net Loss Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of loss per share, amount (in shares) | 16,302,940 | 8,534,876 |
Stock based compensation | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of loss per share, amount (in shares) | 11,159,250 | 8,534,876 |
Tempus agreement | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of loss per share, amount (in shares) | 5,143,690 | 0 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Restricted cash | $ 9,824 | $ 9,860 |
Total assets | 286,521 | 332,513 |
Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 276,697 | 322,653 |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Restricted cash | 9,824 | 9,860 |
Total assets | 286,521 | 332,513 |
Level 1 | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 276,697 | 322,653 |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Restricted cash | 0 | 0 |
Total assets | 0 | 0 |
Level 2 | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Restricted cash | 0 | 0 |
Total assets | 0 | 0 |
Level 3 | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | $ 0 | $ 0 |
Fair Value Measurements - Ass_2
Fair Value Measurements - Asset and Liability Not Measured at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Book values | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total liabilities | $ 1,126 | $ 1,142 |
Book values | Notes payable | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Current portion of notes payable | 55 | 41 |
Notes payable, net of current portion | 1,071 | 1,101 |
Fair values | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total liabilities | 1,126 | 1,142 |
Fair values | Notes payable | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Current portion of notes payable | 55 | 41 |
Notes payable, net of current portion | $ 1,071 | $ 1,101 |