Recursion buys Rallybio's 50% ENPP1 venture stake, paying 1,457,952 shares plus cash

Recursion Pharmaceuticals, Inc. (Nasdaq: RXRX) bought Rallybio Corporation's 50% interest in RE Ventures I, LLC, the joint venture behind an ENPP1 inhibitor program, on July 8, 2025. It paid 1,457,952 newly issued Class A shares at closing, plus cash, and agreed to more stock and cash if milestones are met. It disclosed the deal in a Form 8-K filed July 8, 2025.

The share price and the open-ended part

The filing says the initial shares were calculated by dividing $7,500,000 by $5.1442, the volume weighted average price of Recursion's Class A stock over the seven trading days ending July 7, 2025. The contingent shares work the same way: $12,500,000 divided by the average price over the seven days before a milestone is met. The filing does not say what those milestones are, beyond that they concern the compound developed by the venture.

Recursion also agreed to make cash payments tied to the seller's proceeds from selling the shares, and to further milestones. Those amounts are set out in the purchase agreement, which the 8-K does not reproduce.

Dilution is capped. The total shares issuable under the agreement may not exceed 19.9% of the Class A and Class B common stock outstanding on July 7, 2025, or the count on the day before any issuance, whichever is lower. Any equity payment above that limit is paid in cash instead.

Resale of the shares

The shares were sold without registration, in reliance on the Section 4(a)(2) private-offering exemption. Recursion agreed to file a resale registration and keep it effective until the shares can be sold without restriction under Rule 144. The 8-K's Item 8.01 says the company filed a prospectus supplement dated July 8, 2025 under its automatic shelf registration statement, on Form S-3ASR, to register the 1,457,952 initial shares for resale. Wilson Sonsini Goodrich & Rosati, P.C. gave the legal opinion on the shares, filed as Exhibit 5.1.

The 8-K names no underwriter, placement agent or financial adviser for these shares. The only firm it names is the law firm that wrote the opinion. The company's annual report on Form 10-K describes a February 2025 sales agreement with Citigroup Capital Markets Inc. for at-the-market sales of up to $500.0 million of Class A stock. The 8-K does not say whether any of the shares in this deal were sold under that program.

What Recursion bought

The program is REV102, an oral ENPP1 inhibitor for hypophosphatasia, a rare genetic disorder. Rallybio's share of the venture is now owned fully by Recursion, along with a backup molecule. The press release describes REV102 as "a preclinical asset that will require further study," in IND-enabling studies, with Phase 1 trials expected to start in the second half of 2026. Those are the company's expectations, and the release reports no clinical data.

The release also sets out what Rallybio is owed: $7.5 million in upfront equity, a $12.5 million contingent equity payment when additional preclinical studies start, and a $5 million milestone when dosing starts in a Phase 1 study. Rallybio is also eligible for low single-digit royalties on future net sales and possibly payments if Recursion sells the program.

Chief Scientific Officer David Hallett said that "Having full ownership of this important program allows Recursion to accelerate the development of the first potential oral disease-modifying treatment to HPP patients."

The company's finances

The 8-K does not give a cash balance or a net loss for Recursion. The annual report says the company has generated more than $450 million in collaboration payments to date. It also says Roche-Genentech optioned a neuroscience phenomap for $30 million, and that Sanofi paid $15 million in milestones in 2024. Those figures are the company's own description of its partnerships and are not audited results.

Chief Legal Officer Nathan Hatfield signed the 8-K on July 8, 2025.

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