Below is a summary of the principal factors that make an investment in the common stock of Recursion Pharmaceuticals, Inc. (Recursion, the Company, we, us, or our) risky or speculative. This summary does not address all of the risks we face. Additional discussion of the risks summarized below, and other risks that we face, can be found in the section titled “Item 1A. Risk Factors” in this Annual Report on Form 10-K.

This Annual Report on Form 10-K contains “forward-looking statements” about us and our industry within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this report may include without limitation those regarding:

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate, and financial trends that we believe may affect our business, financial condition, results of operations, and prospects. These forward-looking statements are not guarantees of future performance or development. These statements speak only as of the date of this report and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we undertake no obligation to update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report. While we believe such information forms a reasonable basis for such statements, the information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon them.

We leverage our Recursion OS to enable three key value drivers: i) an

Simultaneously, our world is currently transiting its next industrial revolution based on extraordinary progress in scaled computation, machine learning (ML) have transformed complex industries - from media to transportation to e-commerce - through the creation of scalable and continuously improving iterative cycles of digitization, data aggregation and prediction. The biopharma sector, however,artificial intelligence (AI). While progress in this field has been slowersteady for decades, the exponential growth trajectory is becoming more apparent to embrace such innovationsmany members of modern society through accessible applications like ChatGPT. While progress is being made using sophisticated computation in virtually every industry, the complexity of biology and methodsthe highly regulated nature of thinking, exceptthe biopharma industry has resulted in very narrow areas. Wea delay in the fruits of technology in our space. However, this means we are focused on filling this innovation gap by buildingin a new type of drug discovery engine, the Recursion OS, and reengineering the end-to-end processposition to learn from the ground up using multiple technological advanceslessons of the application to technology to many other fields. One of the primary lessons learned across numerous industries is that have become accessible within justcomputational sophistication alone is rarely sufficient to create disruptive change. It is when computational sophistication is paired with the past decade.right data, typically in an iterative process of ongoing learning, prediction and refinement, where outsized change is created.

Recursion was founded in 2013 with a vision to capitalize on the convergence of advancements in computation and machine learning to address the decreasing efficiency of drug discovery and development. We believe that this opportunity represents one of the most positively impactful applications of ML and AI. Our Radical New Approachvision is to Drug Discovery

We believe we have made progress in reshaping the traditional drug discovery funnel in the following ways:

We have leveragedBy leveraging our evolving Recursion OS to explore more than 150170 disease programs, to a depth sufficient to quantifywe have shown quantifiable improvements in the time, cost and anticipated likelihoods of program success by discovery stage when compared to the traditional drug discovery paradigm. These metrics are leading indicators that, using our approach, we may be able to industrialize drug discovery.process. We believe that future iterations of the Recursion OS will enable even greater improvements. Ultimately, we look to minimizeimprovements minimizing the total dollar-weighted failure whileand maximizing the likelihood of success.

Over time, we believe continued successes and improvements in any or all of the dimensions highlighted above will improve overall R&D productivity, allowing us to address targeted patient populations that may otherwise not be commercially viable using traditional drug discovery approaches. Further,Furthermore, we believehave seen our unbiased approach may lead us to novel targets and allowwhich we believe could enable us to outperform others in highly competitive disease areas where multiple parties often simultaneously pursue a limited number of similar target hypotheses. These advantages potentially significantly expand the total addressable market for our technology. However, the process of clinical development is inherently uncertain, and there can be no guarantee that we will achieve shorter development timelines with future product candidates.of success.

We believe that the primary currency of any biotechnology company today is clinical-stage wholly-owned assets. These programs can be concretely valued using a variety of models by key stakeholders in the biopharma ecosystem and most importantly, present the potential to meet critical patient needs. Further, for Recursion, these assets have a variety of additional benefits, including: a)(i) validation of key elements of the Recursion OS; b)OS, (ii) growing our expertise in clinical development;development and c)(iii) building in-house processes to interactfacilitate smooth interaction with regulatory agencies and advance medicines towards the market. This last point is perhaps the most important for Recursion. If the Recursion OS evolves in the manner we havewith which it has been designed, it to,then it will improve with more iterations such that future programs could be more novel and potentially more valuable than today’s programs. In this way, operating as a vertically-integrated biopharma company that leverages technology at every step from target discovery through clinical development (and even marketing and distribution) may be the long-term business model with the most upside for our stakeholders, including both investors and patients. Thus, the importance of our early cycles of learning and iteration in clinical development

We believe that in its current form, our Recursion OS is already capable of delivering many more therapeutic insights than we would be able to responsibly shepherd alone today. As such, we have chosen to partner with experienced, top-tier biopharma companies to explore intractable and resource-intensive areas of biology like fibrosis with Bayer and neuroscience with Roche and Genentech. The key advantages of these partnerships are that: i)(i) we are able to deploy the Recursion OS to turn latent value into tangible value in areas of biology where it would be challenging for us to do so alone; ii)(ii) the clinical development paths for these large therapeutic areas are often resource-intensive and highly complex; and iii)(iii) we are able to learn from our colleagues at these top-tier companies such that it could give us a competitive advantage in the industry over the longer term. This strategy also embeds us in the discovery process of large pharmaceutical companies and gives rise to an alternative long-term business model whereby we become a valued partner of many such companies, focusingcompanies. Here, Recursion would focus on discovery and de-riskingefforts across a broad set of broad and varied programs while relying on ourits partners to develop and market the medicines while we take an increasingly large portion of the upside.medicines. Based on how value is ascribed across our industry today, this model alone is not yet feasible to maximize our business impact. However, we feel that due to shifts inwithin the biopharma industry perception and improving economics associated with each partnership agreement that we sign suggest that there is some potential for this portion of our business model to become the most value-accretiveaccrete notable value over the long-term.

Mapping ToolsThe creation of virtuous cycles of atoms and Infrastructurebits has been a competitive advantage for leaders in many industries outside of biopharma. This virtuous cycle of profiling the real (atoms) to create digital representations (bits) can be paralleled as an approach to mapping and navigating biology and chemistry as well.

In order to create large and Bioanalytical Chemistry.relatable data sets, standardization and scale are two critical requirements that can be best achieved through automation. Standardization means that the experiment is executed consistently every time, day after day, year after year - and that any deviations can be detected, tracked and quantified. It involves meticulous metadata collection, prospective/retrospective experiment execution analysis, standard results storage, quantitative quality control and more. At the same time, massive scale, with millions of experiments executed per week, requires execution of multi-step assays processed rapidly and in a tightly orchestrated manner. This combination of precise repetition, high speed and massive volumes favors relying on robots over highly trained scientists, whose time is better spent on context-specific problems. In addition, automation of high-dimensional experiment readouts at scale enables cost reductions in the large high-dimensional digital data sets that can underpin today’s cutting edge opportunities in machine learning (bits).

We have built a state-of-the-art cell culture facility to consistently produce high-quality, primary mammalian cells, such as vein, kidney, lung, liver, skin and bloodimmune cell subsets, that goas well as stem cell-derived and cancer cell lines. Approximately 50 cell types have been onboarded to our high-throughput discovery systems, spanning primary cells, cell lines and iPSCs. In 2022, we greatly expanded our cell culture facility footprint to perform work using human induced pluripotent stem cell (hiPSC) lines. Specifically, we have developed protocols using CRISPR genome editing technologies to generate knock-out or knock-in lines. We have developed protocols to differentiate hiPSC cells into each experiment run onseveral distinct cell types using 3D and 2D differentiation methods. Furthermore, we have developed internal capabilities to characterize these cells using standardized and partly automated methods to molecularly and functionally characterize the differentiated progeny. Lastly, we have developed a scalable platform to produce 50-100 billion cells of interest per week and cryopreserve cells in assay-ready frozen format. In 2022, our team produced over 500 billion hiPSC-derived cells of interest to support various ongoing projects.

We have on-boarded innovations including large scale, microcarrier-based, suspension culture systems to reduce footprint and increase growth surface for additional scale. Additionally, our cell culture facility is now fully equipped to perform work using human induced pluripotent stem cell (iPSC) lines, including: (i) CRISPR genome editing technologies to generate knock-out or knock-in lines (ii) differentiation of human induced pluripotent stem cells at large scale and (iii) increased cryostorage capacity for pluripotent cell lines and differentiated cell products. We will continue to onboard additional cutting-edge innovations to scale our work further.

We have assembleda total in-house chemical library of approximately 1.7 million small molecules from a combination of commercial, semi-proprietary and synchronized robotic components,proprietary and partner sources and use this library to identify chemical starting points for discovery campaigns. Over 1 million of these compounds reside within the Recursion’s novel chemical entity library (i.e. these are not compounds belonging to our big-pharma partners), curated by our medicinal chemists and designed for highly druggable chemical properties while avoiding undesirable chemical properties, such as liquid dispensers, plate washerspoor solubility and incubation stations,permeability. While this library has been constructed to maximize chemical diversity, we have ensured that several analogs of many compound cores are included to help identify emergent SAR for early hits and enable us to efficiently execute up to 2.2 million experiments per week with onlyrapid hit expansion into readily available analogs. Additionally, we have curated a small

We ensurebelieve that the scale of our lab generates consistent, accuratetotal in-house chemical library is comparable to the scale of chemical libraries curated by some large pharmaceutical companies. We plan to substantially increase the size and precise datadiversity of our NCE library over the coming years through a combination of partnerships and investments in automated chemical microsynthesis in order to more fully understand novel biological and chemical relationships. Furthermore, we envision that an automated chemical microsynthesis system would integrate with existing sample management, synthesis and purification capabilities. With the usecompletion of multiple systems: facility controlsour recent wet-laboratory expansion, we now have the potential capability to prevent contamination of cells, rigorous assay validation and instrument qualificationstore up to ensure consistency, and routine quality monitoring to capture data automatically and track all critical experiment specifications. Our quality system is designed such that we routinely monitor our performance to identify and implement the appropriate preventive and continuous improvement actions.more than 60 million compounds (in plated formats) onsite.

compounds. This diversity increases the probability that we capture useful biochemical interactions across a sophisticated manufacturing facility than a biology R&D laboratory. Our platform can execute up to 2.2 million experiments each week with high-quality to enable downstream analyses.broad range of biology. Note that red dots indicate known chemical entities.

The Recursion OS is built on top of a core technology stack that is highly scalable and flexible. We have adopted a ‘hybrid-cloud’hybrid-cloud strategy, leveraging the benefits of both public and private cloud infrastructure depending on the context and our needs:

requirements or stall at some point in the process and notify the appropriate Recursionaut, providing them the tooling needed for manual intervention. Elements of our Enabling Software Tool suite include:

To understand, explore and relate new or existing data in the Recursion Data Universe, we must normalize, transform and analyze the data. Our tools in this layer manage the streaming of our data at scale to the appropriate public and private cloud, the transformation of our images into mathematical representations through our in-house proprietary convolutional neural networks and the standard and custom analyses performed on our data as parameterized and requested by users. Anomalies are flagged to the team for fast resolution.

In order to identify novel program starting points, it is criticalimportant that the Recursion OS can accurately predict relationships across diverse domains of biology. To confirm the accuracy of our predictions, we have demonstrated that our approach recapitulates hundreds of well-known biological pathways. In the example below, we illustrate our map basedphenomap predictions for approximately 150 gene knockouts from canonical biological pathways and known agonists or antagonists of these same pathways. By comparing the phenotypes induced by these perturbations to one another using our Recursion OS, we observed that each perturbation creates a unique phenotype and phenotypes form clusters that recapitulate well-understood biological pathways, including genes involved in Bcl-2 signaling, NF-KB signaling, RAS signaling, JAK/STAT signaling and TGFß signaling.

Promising compounds are automatically advanced in our Industrialized Program Generation workflows for further evaluation. First, we then physically screentest candidate compounds in multiple concentrations and replicates using our phenomics assay, including directly in the disease-relevant background, to confirm our predictions. These experiments deemed ‘lightning screens,’ are designed to confirm predicted relationships of interest from our mapphenomaps and can be completed rapidly.

After compounds have been empirically confirmed our predictions empirically, for NCE programs,in multiple orthogonal assays, our medicinal chemists work to optimize early chemical starting points into drug-like molecules using our Industrialized Hit-to-Lead (iH2L) workflows. One critical step in this process is to further understand the mechanism by which compounds are operatingdemonstrating a therapeutic effect. One way in which our chemists can begin this process, is by using our maps, often in parallel with our orthogonal validation work in step 3 above. Our compound library contains approximately six thousand compounds with well-annotated mechanismsmapping

and navigating software tools andto compare the phenotypes from these compounds, as well as from thousandsphenotype of genes that we have knocked out using our CRISPR-gene editing tools, our chemists can comparea candidate molecule to the phenotypes of (i) approximately 9,000 well-characterized clinical-stage and preclinical compounds in our validatedlibrary or (ii) tens of thousands of CRISPR-engineered genetic knockouts in our phenomaps. Novel chemical entities that cluster with annotated compounds and genetic landmarks may share similar mechanistic functions. The below data demonstrates the power of our embeddings to these high-dimensional landmarks and assess their degree of similarity to identify potentialaccurately cluster diverse compounds with similar mechanisms of action.

After optimizing therapeutic drug candidates, we select those compounds that have the best chemical properties to advance through development and ultimately clinical trials. We have built the internal capabilities to drive clinical candidates through IND-enabling studies, regulatory approval processes and human clinical studies. Collectively, members of our team have been involved in over 700hundreds of clinical programs, including recently completing our first SAD and MAD studies in 2019 and 2020, respectively.trials. Additionally, we work closely with a team of external consultants across regulatory, CMC and clinical operationsdevelopment to ensure execution success. In the future, we envision that we will evolve the Recursion OS to incorporate data and techniques that improve our ability to execute clinical programs at scale, including population-scale genomics data, industrialized biomarker development and precision medicine tools in order to identify patients for which a potential therapeutic would be beneficial.

We have leveraged our Recursion OS to explore more than 170 disease programs to a depth sufficient to quantify improvements in the time, cost and anticipated likelihoods of program atsuccess by stage compared to the traditional drug discovery paradigm. We believe that future iterations of the Recursion is a productOS will enable greater improvements. Ultimately, we look to minimize the total dollar-weighted failure while maximizing the likelihood of success.

There are three key factors that differentiate Recursion from the vast majority of other TechBio companies. First, Recursion integrates both wet-lab and dry-lab capabilities in-house in order to create virtuous cycles of learning and iteration. Second, Recursion already functions at significant scale (e.g., five clinical-stage programs, an exciting preclinical pipeline, and two of the largest discovery partnerships in the industry with Roche/Genentech and Bayer, one of the largest biological and chemical datasets in the world, etc.). Third, although Recursion has built significant chemistry capabilities, Recursion was founded as a biology-first company in order to mitigate one of the fundamental causes of failure in drug discovery, choosing the wrong target associated with a disease. While emerging competitors and large, well-resourced incumbents may pursue a similarly differentiated strategy to ours, we have two advantages as a first mover: (i) no amount of resources can compress the time it takes to observe naturally occurring biological processes and (ii) the growing Recursion Data Universe creates compounding network effects that may make it difficult for others to close the competitive gap. In the future, we envision building the following technologies into the Recursion OS.

All of the programs in our internal pipeline are built on unique biological insights surfaced through the Recursion OS and target diseases where: i)(i) the disease-biologydisease-causing biology is well defined but the downstream effects of the disease-cause are typically poorly understood, the primary targets are typically considered undruggable, or the primary targets are not well known in the context of a disease and ii)(ii) there is a high unmet medical need, there are no approved therapies, or there are significant limitations to existing treatments. Several of our internal pipeline programs target indications withcould have potential market opportunities expected to be near to or in excess of $1.0 billion in annual salessales. We currently have four programs in active clinical studies and we are preparing four programs to enter Phase 2 or Phase 2/3 clinical trials within the first three quarters of 2022 andfor a fourthfifth program to enter a Phase 11b/2 clinical trial within the second halfstudy in early 2024. In addition to our clinical stage programs, we are actively developing dozens of 2022.preclinical and discovery programs.

REC-994 is an orally bioavailable, superoxide scavenger small molecule being developed for the treatment of symptomatic CCM. In Phase 1 SAD and MAD trials in healthy volunteers directed and executed by us, REC-994 demonstrated excellent tolerability and suitability for chronic dosing. CCM is among the largest rare disease opportunities and has no approved therapies. We recently enrolled the first patient in atherapies to date. A Phase 2 double-blind, placebo-controlled, safety, tolerability and exploratory efficacy study.study is underway. Orphan Drug Designation has been granted in the US and EU. We expect to share top-line data in 2H 2024.

hemorrhagic stroke. Current non-pharmacologic treatments include microsurgical resection and stereotactic radiosurgery. Given the invasive and risky nature of these interventions, these options are reserved for a subset of patients with significant symptomatology and/or easily accessible lesions. Rebleeds and other negative sequelae of treatment further limit the effectiveness of these interventions. There is no approved pharmacological treatment that affects the rate of growth of CCM lesions or their propensity to bleed or otherwise induce symptoms. CCM can be a severe disease resulting in progressive neurologic impairment and a high risk of death due to hemorrhagic stroke.

REC-994 is a small molecule therapeutic designed to alleviate neurological symptoms associated with CCM and potentially reduce the accumulation of new lesions. REC-994 is an orally bioavailable small molecule superoxide scavenger with pharmacokinetics supporting once-daily dosing in humans. Mechanistically, theThe putative mechanism of action of REC-994 is through reduction of reactive oxygen species and decreased oxidative stress that leads to stabilization of endothelial superoxide species has been shown to reverse the cellular pathogenesis of the disease.barrier function. In addition, REC-994 exhibits anti-inflammatory properties which could be beneficial in reducing disease-associated pathology.

The MADA subsequent Phase 1 Multiple Ascending Dose (MAD) study was conducted in 52 healthy human volunteers and was designed to investigate the safety, tolerability and PK of multiple oral doses of REC-994, to bridge from the Powder-in-Bottle PIB

dosage form to a tablet dosage form, as well as to assess the effect of food on PK following a single oral dose. Overall, multiple oral doses of REC-994 were well tolerated in healthy male and female subjects at each dose level administered in this study. There appeared to be no dose-related trends in TEAEs, vital signs, ECGs, pulse oximetry, physical examination findings, or neurological examination findings. Pharmacokinetic results support once-daily oral dosing with the tablet formulation.

We recently enrolled the first patient in an exploratoryA two-part Phase 2 study is underway. Part 1 is a randomized, double-blind, placebo-controlled trial to investigate the safety, efficacy and pharmacokinetics studyPK of daily doses of REC-994 in the treatment of symptomatic CCM. The study is enrolling patients with symptomatic CCM at least 18 years of age with anatomic CCM lesions demonstrated by MRI. The primary objective of the Phase 2 study will be to assess the safety(200 mg and tolerability of daily dosing of a low and high dose group of REC-994 over 12 months,400 mg) compared to placebo in patientsparticipants with symptomatic CCM. Exploratory secondary endpoints will include assessmentCCM over a treatment period of patient reported outcomes, imaging assessments, as well as established composite scales12 months. Part 2 is an optional, double-blind, long-term extension (LTE) study of daily doses of REC-994 (200 mg and 400 mg) for neurological signs and symptoms.

To our knowledge, the REC-994 program is the only industry-sponsored therapeutic program in clinical trials for CCM. If approved, REC-994 would be the first pharmacologic disease-modifying treatment for CCM, one of the largest areas of unmet need in the rare disease space. Other ongoing research includes an investigator-initiated study of a marketed therapeutic and a preclinical industry-sponsored program.

Although the coursemost meningiomas are benign their location often makes complete resection untenable, and subsequently patients with NF2 experience loss of disease progression is highly variable, most patients are rendered deaf,hearing, facial paralysis, poor balance and many will eventually need wheelchair assistance due to progressive neurological decline. The standard of care is surgery or radiosurgery and patients may require multiple operative procedures during their lifetime. Although surgery or radiation can be effective in controlling tumor growth, most surgical procedures result in morbidity related to neurological deficits based on the location of the tumor. Hearing loss, facial nerve palsy, and moderate facial nerve dysfunction are also common surgical outcomes. Radiation can induce malignant transformation which in turn makes surgery more complex. In addition, tumors may recur post-surgical resection along with the growth of new tumors. NF2-associated tumors and treatment related morbidity can lead to earlier than expected mortality. If left untreated, NF2-drivenvisual difficulty. Spinal tumors can result in death resulting from rising intracranial pressure.weakness and disability and some patients become wheelchair bound. Many patients with multi-tumor disease die in early adulthood. Due to the catastrophic nature of the disease and lack of non-surgical options for management, new approaches to treatment are needed, particularly those directed toward shrinking tumor burden.