At $306 Million, Recursion Pharmaceuticals’ IPO will be Bigger than Expected

IPO

Recursion Pharmaceuticals is going bigger than expected in its initial public offering. After initially indicating it intended to raise $100 million in its Nasdaq debut, the Salt Lake City-based company will now look at bringing in approximately $306 million.

The company, which will trade under the ticker symbol “RXRX,” will sell 18 million shares of its common stock at a price range of $16 to $18. The IPO could go higher than the $306 million if the high-end target is hit. According to Renaissance Capital, Baillie Gifford and Mubadala Investment plan to purchase up to $125 million worth of shares in the IPO. If the stock sells at the midpoint range of $17, Renaissance Capital pegs the company’s valuation at $3 billion.

The Recursion Operating System combines an advanced infrastructure layer to generate what the company says is one of the world’s largest and fastest-growing proprietary biological and chemical datasets. Also key for the company is its Recursion Map, a suite of custom software, algorithms, and machine learning tools the company uses to “explore foundational biology unconstrained by human bias and navigate to new biological insights,” which may accelerate Recursion’s programs.

The Phase II-ready, machine learning-focused Recursion will be well-financed following the IPO. In September, the company raised $239 million in a Series D financing round, which was led by Leaps by Bayer. At the same time, the company secured Series D financing. It also entered into a collaboration with Bayer to harness Recursion’s artificial intelligence-guided drug discovery platform to bolster Bayer’s small molecule compound library in an effort to discover and develop new treatments for fibrotic diseases of the lungs, kidneys, heart, and other parts of the body. 

Fibrotic diseases are a leading cause of death across the globe. Despite the prevalence of these types of diseases, they are often challenging to treat due to the underlying complex biology and the associated difficulty in discovering relevant drug targets. The partnership between the companies will harness AI to boost phenotypic screening of small molecules to discover and develop new medicines for these diseases. 

Months before the partnership with Bayer, Recursion also struck a licensing agreement with Takeda Pharmaceutical for rights to TAK-733, a clinical-stage MEK inhibitor, for the treatment of a hereditary cancer syndrome and other related areas of oncology. After using its AI platform, the company licensed the asset to discover targeted areas of oncology where TAK-733 could be effective.

Recursion then cross-referenced TAK-733 against hundreds of disease models it had already developed and was planning to develop. Through that cross-referencing, TAK-733 was identified as a potential treatment for a hereditary tumor syndrome using Recursion’s approach to creating cellular models of diseases where genes are inactive, the company said at the time. 

Outside of its partnerships, Recursion currently has four programs set to begin Phase II studies. The company runs trials in familial adenomatous polyposis, GM2 gangliosidosis, neurofibromatosis type 2, and cerebral cavernous malformation. Recursion also has multiple programs in the preclinical phase, including neuroinflammation, Batten disease and C. diff.

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