By Mariam Sunny

June 10 (Reuters) - Recursion Pharmaceuticals ( RXRX ) 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.