Recursion Pharmaceuticals (RXRX.O) said on Tuesday it would lay off about 20% of its workforce as the biotech company tries to cope with an industry-wide funding crunch and the current policy uncertainty.
The biotech firm had about 800 employees as of December 31, 2024, a regulatory filing showed.
Investors fear that a major overhaul of health agencies under Health Secretary Robert F. Kennedy Jr., a longtime vaccine skeptic, along with cuts to federal research grants and other policy changes, could delay drug approvals and trigger a substantial biotech selloff.
Shares of the Salt Lake City, Utah-based biotech rose more than 1% to $5.43 in premarket trading.
Recursion is trying to "reduce the complexity, especially in the context of a challenging and frictional capital markets environment, so that every dollar drives real return on investment (ROI) for our investors and for patients," CEO Christopher Gibson told Reuters.
Recursion's restructuring plan is expected to keep its 2025 cash burn below $450 million, excluding partnership payments and one-time severance costs, and 2026 burn under $390 million, extending its cash runway into the fourth quarter of 2027. It had previously projected the cash runway into mid-2027.
The S&P Biotech ETF (XBI.P) is down about 6.4% this year and is trading at less than half its 2021 peak. Shares of Recursion have fallen 21% so far this year.
While Recursion, which uses artificial intelligence to discover new drug candidates, is not as affected as other biotech firms, raising money and securing partnerships remain challenging in the sector, Gibson said.
