By Mariam Sunny
(Reuters) -Recursion Pharmaceuticals said on Tuesday it will lay off around 20% of its workforce and focus on developing drugs for rare diseases and cancers to reduce cash burn during a prolonged biotech industry downturn.
Growing concerns over health policy under President Donald Trump’s administration have exacerbated existing challenges for the biotech industry, which has been struggling with decreased investor funding since the COVID-19 pandemic.
The Salt Lake City, Utah-based biotech 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 and 2026 burn under $390 million, extending its cash runway into the fourth quarter of 2027.
Investors fear that the 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.
The S&P Biotech ETF 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, isn’t as affected as other biotech firms, raising money and securing partnerships remain challenging, Gibson said.
(Reporting by Mariam Sunny in Bengaluru; Editing by Tasim Zahid)
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