Recursion Halves $84M AI Data Bill as Cash Burn Falls 34%

Recursion has cut the fees it still owes Tempus AI for the patient data it uses to train its AI models to $42 million, from $84 million, by our arithmetic on the contract terms in the 10-Q it filed on 2 November. In the same filing it disclosed a $12.0 million deal to license one of its own AI models to Tempus.

The AI drug discovery company also used $77.4 million of cash in its operations in the third quarter, against $117.4 million a year earlier, 34% less by our arithmetic. Upfront and milestone payments from Sanofi and from Roche and Genentech now total $360 million, by our arithmetic, the same figure as its ceiling for 2027 cash operating expense.

Business Pill · Free Cash Flow

A short explainer on free cash flow: profit on paper versus cash in the bank. It teaches the general idea only and does not discuss Recursion.

What the 10-Q Says About the Data Deal

Recursion signed a five-year agreement with Tempus AI in November 2023 to buy access to its multimodal oncology patient records. The 10-Q says: “This data is being used to improve the training of Recursion’s artificial intelligence and machine learning models and is expected to accelerate Recursion’s drug discovery process.”

The original contract set annual license fees of $22.0 million on the first anniversary, $32.0 million on the second and $42.0 million on each of the third and fourth. Recursion could terminate for convenience after the first three years.

In September 2026 the two companies amended it. The 10-Q says Recursion agreed to extend the term by a year while eliminating its right to terminate for convenience. The annual fee became $14.0 million on each of the third, fourth and fifth anniversaries, with at least $4.0 million of each payable in cash and the rest in cash or Recursion shares, the filing says. The amendment also reduces the total number of unique de-identified records Recursion may access.

By our arithmetic, the fees left after the second anniversary fall from $84 million (two payments of $42 million) to $42 million (three payments of $14 million).

What Was Posted on X

Wall St Engine posted its third-quarter 2026 earnings highlights card for Recursion at 21:32 UTC on 2 November, listing revenue of $18.6 million against an estimate of $14.8 million, cash of $561.5 million and a cash runway into 2029. The figures in this piece come from Recursion’s own release and 10-Q; the post is cited only for the consensus estimate.

Recursion Licenses Its Own Model to Tempus

Also in September, Recursion granted Tempus a non-exclusive license to its TxFM model, which the 10-Q calls an RNA foundation model, for use in oncology, including diagnostic and clinical applications and Tempus’s internal research. The license runs for two years.

The 10-Q says the license fee is $12.0 million, non-refundable, in two installments of $6.0 million, and that Tempus also gives Recursion access to a number of de-identified pathology records with linked clinical data. The 10-Q says: “No revenues are being recorded related to the license of the TxFM model.”

Recursion’s data records expense was $5.8 million in the quarter, compared with none a year earlier, which the 10-Q attributes to the timing of record purchases under the Tempus agreement.

The Quarter in Numbers

Total revenue was $18.6 million, against $5.2 million in the third quarter of 2025 and the consensus estimate of $14.8 million cited by Wall St Engine. The release says the increase came mainly from the Sanofi collaboration, under which Recursion achieved a $10.0 million milestone in the quarter. That milestone was 54% of the quarter’s revenue, by our arithmetic.

Research and development expenses fell to $99.1 million from $121.1 million; the release says the year-earlier quarter included $22.8 million of in-process R&D costs for the purchase of full rights to REC-102. General and administrative expenses fell to $32.6 million from $41.6 million.

The net loss was $119.0 million, or $0.22 a share, against $162.3 million, or $0.36 a share. The weighted average share count rose to 543.0 million from 447.0 million, about 21% more, by our arithmetic.

The Partner Money

Sanofi has optioned the first development candidate from its collaboration with Recursion, which the release describes as a potential first-in-class oral small molecule in immunology. The option triggered the $10 million payment and brings total upfront and milestone payments from Sanofi to $144 million. The release says Recursion is eligible for more than $300 million in additional milestones on the program, with double-digit royalties on net sales if a product is approved.

Genentech exercised the first Validated Target Option under the neuroscience collaboration in the third quarter. The release says Recursion has achieved $216 million in upfront and milestone payments from Roche and Genentech, a collaboration that includes up to 40 potential small molecule discovery programs.

Chief executive Najat Khan said in the release: “These are different programs, but they are outputs of the same AI-native engine, providing evidence of repeatability. We will keep concentrating capital where the evidence is strongest and turning innovation into impact for patients who are waiting.”

Cash and Runway

Cash, cash equivalents and restricted cash were $561.5 million at 30 September. Including net proceeds of about $187.2 million from the underwritten offering completed on 16 October, the release puts pro forma cash at about $748.7 million, and says Recursion expects its cash runway to extend into 2029 with no additional financing.

Recursion reiterated its 2026 cash operating expense guidance of less than $375 million and gave 2027 guidance of less than $360 million. Cash operating expense was $271.5 million in the first nine months of 2026. By our arithmetic, that leaves less than $103.5 million for the fourth quarter under the 2026 guidance, and pro forma cash is about 2.1 times the 2027 ceiling.

What Recursion Says Comes Next in the Pipeline

The release says Recursion anticipates starting a registrational trial of REC-4881 in the second half of 2027, pending ongoing discussions with the FDA. For REC-1245 it says preliminary dose expansion data in endometrial cancer are expected in the second half of 2027. Sanofi’s optioned candidate is expected to enter Phase 1 trials in 2027, with Sanofi funding and leading development.

Recursion says it will focus resources on REC-4881, REC-1245, REC-4539, REC-7735 and REC-102, and will seek partners for REC-617 and REC-3565. Fred Hassan, former chairman and chief executive of Schering-Plough and Pharmacia, became chair of the board on 31 October.

What the Risk Factors Say

The 10-Q lists no new risk factors. Its risk factor section refers readers to the risk factors in Recursion’s 2025 annual report.

The Structural Read

As we read the 10-Q, the data relationship with Tempus now runs both ways: Recursion buys oncology records to train its models, and Tempus licenses one of Recursion’s models, with pathology records flowing back to Recursion under that license.

As we read the release, partner cash is the other lever: the Sanofi milestone was 54% of the quarter’s revenue, by our arithmetic, and Khan describes the Sanofi and Genentech programs as outputs of one engine.

Three Implications

FOR THE COST BASE The amended Tempus terms set data fees at $14.0 million a year, against $42.0 million under the original contract for the third and fourth years, per the 10-Q.

FOR REVENUE The 10-Q says the $12.0 million TxFM fee is not recorded as revenue; the release says the quarter’s $18.6 million came mainly from collaboration agreements, led by the $10.0 million Sanofi milestone.

FOR THE RUNWAY Pro forma cash of about $748.7 million is about 2.1 times the 2027 cash operating expense ceiling of less than $360 million, by our arithmetic; Recursion says its runway extends into 2029.

The Business Engineer Lens

This story maps onto the Business Engineer framework The Four Intelligence Moats.

The framework argues: “Each moat is built by a different data pipeline.”

As we read it, Recursion’s filing shows a company paying less for one outside data pipeline, Tempus’s patient records, while licensing one of its own models to the same company. The framework is the owner’s argument and does not discuss Recursion.

What Is Not Established

The 10-Q does not say why the Tempus fees were cut or how many fewer records Recursion will receive, so the value of the data per dollar cannot be compared before and after the amendment. Recursion could have ended the original contract after three years, so the $84 million was not certain to be paid. The $12.0 million TxFM fee is not booked as revenue, and the filing does not say how it is accounted for.

The release also reports clinical trial data for REC-4881 and REC-1245. This piece does not assess those data, and the timelines above are the company’s own expectations. Cash operating expense is a non-GAAP measure that excludes partnership inflows, so it is not the same as cash used in operations. This piece does not draw on the 3 November webinar.

The Bottom Line

Recursion’s third-quarter filing shows its AI data bill to Tempus cut to $42 million from $84 million, a $12.0 million license of its own model going the other way, and quarterly operating cash use down 34% to $77.4 million. Partner payments from Sanofi and from Roche and Genentech total $360 million, by our arithmetic, matching its 2027 cash operating expense ceiling.