Like most other early-stage biotech companies, Recursion is reliant on equity + debt financing to sustain their business--not revenue. As such, it is important to assess their runway and determine whether further dilution will be required before their first treatment goes live.
In 2022, Recursion had approximately $700M in assets and $215M in liabilities. That same year they lost a total of $250M with a historical record of deepening 50-100% year over year. If we ignore this and assume they keep spend relatively the same, they have a little less than 2 years of runway. In reality, we expect them to continue to ramp up spend as their existing pipeline progresses and as they role out new drugs to prove the efficacy of their discovery platform. As such, and given the fact that profitability is nowhere in their near future, we expect Recursion to issue more shares to fund operations within the next 2 years, which could be a significant headwind for their stock price at that later stage.
