RXRX · Recursion Pharmaceuticals
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $4.35
Note written ·
Price against the kill line
26.8% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $4.35, on record since 11 November 2026. The shares are up 2.4% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $4.35, which is above the 50-day average of $3.79 and would show the shares leading the S&P 500. An announced FDA agreement on the REC-4881 registrational trial design would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Health Care
Quarter to 30 September 2026, filed 2 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 18.6
- Revenue, change on a year (%)
- +258.5
- Gross margin (%)
- 45.9
- Operating margin (%)
- −663.9
- Free cash flow, four quarters ($M)
- −313
- Net cash, cash less debt ($M)
- 538
- Enterprise value to sales (×)
- 21.2
- Free-cash-flow yield (%)
- −15.8
All filed numbers
What Recursion Pharmaceuticals reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 18.6 | +258.5 | 45.9 | −663.9 |
| first filed | 7.7 | −60.1 | −49.8 | −1759.7 |
| first filed | 6.5 | −56.1 | −93.0 | −1985.6 |
| first filed | 35.5 | +681.7 | 59.8 | −304.8 |
| first filed | 5.2 | −80.2 | −183.8 | −3327.6 |
| first filed | 19.2 | +33.3 | −4.9 | −916.8 |
| Pre-tax income ($M) | −119 |
| Net income ($M) four quarters: −476 | −119 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +21.5 |
| Operating cash flow ($M) | −311 |
| Capital spending ($M) | 2.0 |
| Free cash flow ($M) | −313 |
| Cash and short-term investments ($M) | 550 |
| Debt ($M) non-current long-term debt and finance leases plus current maturities | 11.9 |
| Net cash, cash less debt ($M) | 538 |
| Deferred revenue ($M) −14.3% on a year | 136 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | Not reported |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 906 |
| Market value ($M) | 1,984 |
| Enterprise value, market value plus net debt ($M) | 1,446 |
| Enterprise value to sales (×) | 21.2 |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 2.2 |
| Free-cash-flow yield (%) | −15.8 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 26.0% of shares outstanding sold short, 4.4 days of average trading to cover, +2.5% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $701K |
| 12 monthsfrom | $0 | $7.6M |
The thesis
Recursion Pharmaceuticals' shares look more likely to lag the S&P 500 than to lead it over the next three months. The company is funded into 2029 and its REC-4881 polyposis data held up at the 3 November 2026 earnings call, but management's dated next steps all fall in the second half of 2027. An FDA agreement on the registrational trial design is what settles the case.
Third-quarter results were reported on 2 November 2026. Revenue was $18.6 million against $5.2 million a year earlier, the net loss narrowed to $119 million from $162.3 million, and 2026 cash operating expense guidance fell to under $375 million from $390 million, per the 3 November 2026 earnings call.
The market has already paid for the data: the shares closed at $3.59 on 11 November 2026, above the $3.25 price of the 15 October 2026 stock offering and 31.5% below the 52-week intraday high of $5.24 set on 22 January 2026.
Bullish and bearish views on Recursion Pharmaceuticals, Inc.
The bull case on Recursion Pharmaceuticals, Inc. (RXRX), in brief: REC-4881 responses lasted off treatment. The bear case: no dated readout before 2027.
Bull case
- REC-4881 responses lasted off treatment. About 12 weeks after treatment ended, 11 of 13 patients (85%) stayed below baseline polyp burden, per the 3 November 2026 call. At week 12 on treatment, 13 of 15 patients (87%) had reductions, with a median of 47%.
- Safety update added no discontinuations. Among 26 safety-evaluable patients at 4 mg once daily, none had a grade 4 or 5 treatment-related event, per the 3 November 2026 call. Discontinuations stayed at four.
- Funding and costs both improved. Pro forma cash, equivalents and restricted cash were about $748.7 million at 30 September 2026, including $187.2 million of net offering proceeds, with runway guided into 2029. Management guided 2027 cash operating expense to under $360 million, per the 3 November 2026 call.
- Revenue grew from a small base. Third-quarter revenue of $18.6 million compared with $5.2 million a year earlier. Benzinga reported 2 November 2026 earnings per share of $(0.22), in line with estimates.
- New chair has large-company pharmaceutical experience. Fred Hassan, former chairman and chief executive of Schering-Plough and Pharmacia, became non-executive chair effective 31 October 2026, per the company's 2 November 2026 announcement.
Bear case
- No dated readout before 2027. On the 3 November 2026 call, management targeted the REC-4881 registrational start for the second half of 2027, pending regulatory alignment. Preliminary REC-1245 endometrial results are also timed for the second half of 2027. Sanofi's newly optioned immunology candidate could enter Phase 1 trials in 2027, per the company's 15 October 2026 announcement.
- The REC-4881 trial is small. Benzinga described TUPELO on 2 November 2026 as a 15-patient, single-arm Phase 2 trial. The sample is too small to settle the drug's effect, and the registrational design remains under FDA discussion.
- Side effects remain open. Of 26 safety-evaluable patients, 21 had grade 1 or 2 treatment-related events and four had grade 3 events, per the 3 November 2026 call. Four patients discontinued treatment.
- Revenue depends on partner milestones. The company announced a $10 million Sanofi milestone on 15 October 2026, within the quarter that produced the revenue gain. Second-quarter revenue was $7.7 million, per the 5 August 2026 release, so quarterly revenue can swing sharply.
- REC-1245 has a narrow dose range. Three of four patients at 65 mg had dose-limiting toxicities, and 45 mg once daily was chosen for expansion, per the 3 November 2026 call.
- Dilution and insider sales. The company sold 61,540,000 Class A shares at $3.25 on 15 October 2026 for about $200 million gross, per the 424B5 prospectus supplement. Director Blake Borgeson sold 40,000 shares at $3.88 on 3 November 2026 under a Rule 10b5-1 plan, per a Form 4 filed 4 November 2026.
Price setup
The shares closed at $3.59 on 11 November 2026. That is below the 50-day average of $3.79 and above the 200-day average of $3.49, and up 8.5% over three months from the $3.31 close of 13 August 2026. The 52-week closing low is $2.84 on 30 March 2026.
Daily closes since the report have been uneven: $3.88 on 4 November 2026, $3.50 on 5 November 2026, $3.52 on 6 November 2026, $3.81 on 9 November 2026, $3.55 on 10 November 2026. The shares have moved in a band between roughly $3.50 and $3.90 for the week, with the 200-day average and the $3.25 offering price below and the 50-day average above.
Company news in that period was limited. A Salt Lake City life-sciences hub item named Recursion as a participant on 5 November 2026, and the company announced its participation in upcoming investor conferences on 11 November 2026.
Catalysts ahead
- ~31 December 2026 (est.): Update on FDA discussions about the REC-4881 registrational trial design. It shows how long and costly registration would be and whether the second-half 2027 start target holds. The 3 November 2026 call gave no date.
- ~31 December 2027 (est.): REC-4881 registrational start and preliminary REC-1245 endometrial results, both targeted for the second half of 2027. These are the next clinical steps management has timed, and they show whether the early results carry into larger groups of patients.
What would change the view
A daily close above $4.35, which is above the 50-day average of $3.79 and would show the shares leading the S&P 500. An announced FDA agreement on the REC-4881 registrational trial design would also show the shares leading.
What it trades with
The recent swings have been company-specific. The drop from a $3.88 close on 4 November 2026 to $3.50 on 5 November 2026 and the rebound to $3.81 on 9 November 2026 came without clinical or financial news from Recursion. With no catalyst dated before 2027, the shares have little company-specific event risk to trade on and have tracked sentiment around the 15 October 2026 offering price and the 50-day average.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was $18.6 million, up from $5.2 million a year earlier; net loss was $119 million versus $162.3 million. Recursion Q3 2026 earnings call transcript, The Motley Fool · as of
- Pro forma cash, cash equivalents and restricted cash were about $748.7 million at 30 September 2026, including $187.2 million of net offering proceeds; runway guided into 2029. Recursion Q3 2026 earnings call; Zacks call summary via TradingView · as of
- Cash operating expense guidance is under $375 million for 2026, down from $390 million, and under $360 million for 2027. Recursion Q3 2026 earnings call transcript, The Motley Fool · as of
- REC-4881 TUPELO: 13 of 15 patients (87%) reduced total polyp burden at week 12, median 47%; 11 of 13 (85%) stayed below baseline about 12 weeks off treatment. Recursion Q3 2026 earnings call transcript, The Motley Fool · as of
- REC-4881 safety at 4 mg once daily: 21 of 26 patients had grade 1 or 2 treatment-related events, four had grade 3, none had grade 4 or 5; four discontinued. Recursion Q3 2026 earnings call transcript, The Motley Fool · as of
- REC-1245: disease control of 91.7% (11 of 12) at 45 mg or higher; 45 mg once daily selected for expansion, preliminary endometrial results expected in the second half of 2027. Recursion Q3 2026 earnings call transcript, The Motley Fool · as of
- Recursion offered 61,540,000 Class A shares at $3.25 per share for about $200 million in gross proceeds. Recursion 424B5 final prospectus supplement; Benzinga · as of
- Director Blake Borgeson sold 40,000 shares at $3.88 on 3 November 2026 under a Rule 10b5-1 plan. SEC Form 4 filed 4 November 2026 · as of
Sources
- Recursion (RXRX) Q3 2026 Earnings Call Transcript · fool.com ·
- RXRX Q3 Earnings Call Highlights Clinical Progress and Cash Runway · tradingview.com
- RECURSION PHARMACEUTICALS, INC. - Form 424B5 - FY2026 · sec.gov
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