8-K: Recursion Pharma & Tempus AI Forge New Data & AI Deal

Recursion Pharmaceuticals and Tempus AI have amended a master agreement and entered into a new license for Recursion's TxFM Model, impacting data access and license fees.

Summary

• Recursion Pharmaceuticals, Inc. (the Company) and Tempus AI, Inc. (Tempus) have entered into new agreements that modify their existing collaboration.
• An Amendment to the Master Agreement, effective September 15, 2026, extends the collaboration term from five to six years.
• The Company's right to terminate the Master Agreement for convenience has been eliminated.
• Annual License Fees payable by Recursion to Tempus have been revised downwards, with $14,000,000 due on the third, fourth, and fifth anniversaries of the Effective Date, with a minimum of $4,000,000 payable in cash and the remainder in stock, cash, or a combination.
• The aggregate total of unique de-identified data records Recursion can access has also been decreased.
• A new TxFM License Agreement was also executed, granting Tempus a non-exclusive license to Recursion's TxFM Model for use in oncology.
• Tempus will pay Recursion a $12,000,000 non-refundable license fee in two $6,000,000 installments.
• Tempus will also provide Recursion with access to a certain number of de-identified pathology records with linked clinical data.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive development, indicating strategic collaboration and revenue generation, though with revised financial terms.

Positives

• Secured a $12,000,000 non-refundable license fee from Tempus for the TxFM Model.
• Extended the strategic collaboration with Tempus by one year to a total of six years.
• Gained access to de-identified pathology records with linked clinical data from Tempus.
• The revised payment structure for the Master Agreement may offer more flexibility with a cash/stock option for a portion of the fees.
• The TxFM Model license to Tempus in oncology could validate its application in a key therapeutic area.

Negatives

• Eliminated Recursion's right to terminate the Master Agreement for convenience, reducing flexibility.
• Reduced the aggregate total of unique de-identified data records Recursion can access.
• The annual license fees payable by Recursion to Tempus have been revised, with a significant portion still due annually.
• The initial Master Agreement had higher annual license fees ($22M, $32M, $42M, $42M) compared to the revised terms ($14M for three years).

Risks

• The elimination of the termination for convenience clause binds Recursion to the agreement for its full extended term, regardless of strategic shifts.
• Reduced access to Tempus's de-identified data could limit Recursion's research and development capabilities.
• The financial commitment to Tempus, even with revised terms, represents a significant ongoing expense.
• Reliance on Tempus for data access and collaboration introduces counterparty risk.

Future Outlook

The agreements suggest continued collaboration and potential for future revenue generation through licensing of proprietary models and data access.

Industry Context

StockSavvy.ai notes that this development aligns with broader industry trends of pharmaceutical companies leveraging AI and large datasets for drug discovery and development. The collaboration with Tempus, a leader in AI-driven precision medicine, is a strategic move to enhance Recursion's platform capabilities.

Stakeholder Impact

• Shareholders: The revised financial terms and extended collaboration may impact future profitability and cash flow. The licensing of TxFM could be a positive indicator of technology value.
• Employees: Continued collaboration and potential for new data access could support ongoing research and development efforts.
• Creditors: The ongoing financial commitments to Tempus will need to be managed within the company's overall financial obligations.

Next Steps

• Tempus will make the first $6,000,000 payment for the TxFM License Agreement upon execution.
• Recursion will receive the second $6,000,000 payment for the TxFM License Agreement on the first anniversary of its effective date.
• Recursion will pay the revised Annual License Fees to Tempus on the third, fourth, and fifth anniversaries of the Master Agreement's effective date.
• The full text of the Amendment and TxFM License Agreement will be filed as exhibits to the Company's Form 10-Q for the quarter in which they were executed.

Key Dates

Recommendation

The filing details a strategic partnership amendment and a new licensing agreement, which are generally positive. However, the elimination of termination rights and revised financial terms for the Master Agreement introduce some constraints and ongoing financial obligations. The $12M license fee is a positive, but the overall impact on future cash flows and strategic flexibility warrants a 'hold' until further performance is demonstrated.

Keywords

Master Agreement Amendment, TxFM License Agreement, Tempus AI, Recursion Pharmaceuticals, Oncology, Data Access, RNA Sequencing Model, License Fee