BREAKING NEWS: Salt Lake City-based Recursion Pharmaceuticals Announces a $200 Million Public Offering

Salt Lake City, Utah-based Recursion Pharmaceuticals (NASDAQ:RXRX) announced last Wednesday, 26 June 2024, that it plans to raise $200 million in a secondary public offering.

According to its news release, Recursion "... intends to offer and sell $200 million of shares of its Class A common stock in an underwritten public offering."

Additionally, the release says that the company further "... intends to grant to the underwriters a 30-day option to purchase up to an additional 15% of the shares of Class A common stock offered."

{NOTE: Those underwriters are Goldman Sachs, J.P. Morgan, and Allen & Company.}

Beyond the news release, Recursion concurrently filed a Prospectus on Form S-3 with the U.S. Securities and Exchange Commission announcing and describing its planned public offering.

In this Prospectus, Recursion explained that it had priced its shares for the offering at $6.50/share of common stock with ~30.7 million shares planned for the secondary offering.

That said, as of "Market Close" last Wednesday (the day the company announced the public offering), Recursion's common shares closed at a per share price of $8.76 per share.

However, by the end of trading on Friday, 28 June 2024, Recursion's share price stood at $7.59/share after dropping to as low as $6.76/share since the public offering was announced.

A Quick Recursion Overview

For those not familiar with Recursion, I feel that this is arguably one of the most intriguing drug discovery and drug development companies on the planet.

From its formation in 2013, the Chris Gibson-led Recursion has been entirely focused on using advancements in compute-power, artificial intelligence, and machine learning to speed-up and enhance the ability to identify and develop new drugs.

Today, Recursion has one of world's most powerful pharmaceuticals-focused supercomputers in the world, in great part because of its partnership with NVIDIA.

Yes, that NVIDIA (NASDAQ:NVDA), the $3 trillion market cap firm seen by many as the firm leading the AI Revolution.

So when the companies announced their partnership nearly one year ago, led by the fact that NVIDIA had invested $50 million in a PIPE investment in Recursion (a Private Investment in Public Equity), NVIDIA was trading at ~$45.50/common share and was valued at near $1 trillion.

Conversely, as of market close this past Friday, 28 June 2024, NVIDIA closed at $123.54/share, giving the firm a market capitalization of over $3 trillion.

Not bad for a run-up in under one year.

That's why I think it's worth noting what Jensen Huang said about Recursion in the partnership announcement release. (Yeah, he's the President, CEO, and founder of NVIDIA.)

Specifically, Huang said,

“We are delighted to collaborate with Recursion’s world-class team, which is doing pioneering work in digital biology and chemistry with NVIDIA DGX and NVIDIA AI software to accelerate the development of the world’s largest biomolecular generative AI models and speed drug discovery for biotech and pharmaceutical companies.”

In this Prospectus, Recursion describes itself as

"... a leading clinical stage TechBio company decoding biology to industrialize drug discovery. Central to our mission is the Recursion Operating System, or OS, a platform built across diverse technologies that enables us to map and navigate trillions of biological, chemical and patient-centric relationships across over 50 petabytes of proprietary data."

{NOTE: That's 50,000,000,000,000,000 bytes of data.}

As I continued reading the Recursion Prospectus, this is what stuck out to me:

Recursion currently has four drug candidates roughly mid-way through Phase II clinical trials:
— Its REC-994 Program, targeting Cerebral Cavernous Malformation;
— Its REC-2282 Program, targeting Neurofibromatosis Type 2;
— Its REC-4881 Program, targeting both

• Familial Adenomatous Polyposis, and
• Advanced AXIN1/APC-mutant Cancers.

Recursion also has three of its own drug candidates in either Phase I or Preclinical development.

Additionally, the Prospectus says that Recursion has "More than a dozen discovery and research programs in oncology or with our partners — (its) first program optioned by Roche-Genetech in GI oncology."

How soon, if ever, Recursion plans to sell these ~30.7 million shares, I do not know.

But when it does, I'll update this report.

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