Recursion Pharmaceuticals: AI-Driven Biotech Poised for Potential Breakthrough in 2025

1 Artificial Intelligence (AI) Stock That Could Soar in 2025

The artificial intelligence (AI) field has been grabbing many headlines on Wall Street in the past two years. Will this trend continue in 2025? It's hard to say, but whether or not it does, specific AI-focused companies could make significant progress and see their shares soar as a result. Recursion Pharmaceuticals (RXRX -0.98%) could be one of them. The AI-focused biotech has several potential catalysts next year. Let's figure out whether investing in Recursion Pharmaceuticals ahead of 2025 is worth it. Some background on Recursion Pharmaceuticals Recursion Pharmaceuticals uses AI to speed up the drug discovery and development process. The company's virtual lab runs experiments to identify promising clinical compounds to send to human clinical trials. For a typical drugmaker, most brand-new compounds will never enter the clinic to be tested on humans. Most of those that do will never go on to earn approval. If Recursion's approach can help increase the odds on both fronts, the company could launch medicines much faster than its competitors and at much lower costs. It's not hard to see the potential. Further, Recursion Pharmaceuticals has gotten a major vote of confidence from the hottest AI company on Wall Street: Nvidia. The two collaborated to build the most powerful AI supercomputer in the pharmaceutical industry, which means more computing power, a larger data set, and more virtual experiments for Recursion Pharmaceuticals. Nvidia also made an equity investment in the drugmaker. Recursion Pharmaceuticals is onto something, but the company still has no drug on the market. It could get a bit closer to that goal next year. Multiple potential catalysts on the way Recursion recently shared encouraging results from two clinical trials. In September, the company announced that REC-994 met its primary endpoint of safety and tolerability in patients with symptomatic cerebral cavernous malformation (CCM), a rare condition characterized by the formation of enlarged blood vessels in the brain. In some cases, CCM can lead to life-threatening issues. More recently (earlier this month), Recursion released interim data from a phase 1/2 study for REC-617 in advanced solid tumors. Besides encouraging safety data, the biotech noted that patients seem to be responding to the treatment, with one experiencing a durable (more than six months) partial response to the therapy. This patient suffers from ovarian cancer and, despite previously undergoing four lines of therapy, had continued to progress. Four other patients saw some improvements, too, according to Recursion. It's far too early to celebrate these results, but they are encouraging. Next year, Recursion will release more data from ongoing clinical trials. It is testing REC-4881 in familial adenomatous polyposis (a rare condition that leads to colorectal cancer) and advanced cancers with AXIN1 or APC protein mutations. The biotech expects to post data for both trials sometime next year. Recursion Pharmaceuticals should have at least two more data readouts, one for REC-3964 as a potential treatment for a bacterial infection and REC-1245, another potential cancer treatment. Positive results in just one of those clinical trials might not be that big a deal. However, if the company can consistently post encouraging results across the range of its pipeline, investors might take notice and bid up the stock price. The long-term view There is nothing like clinical or regulatory wins to jolt a biotech's stock. However, even if Recursion Pharmaceuticals performs well next year, will that make it worth investing in? The company has yet to start a phase 3 study, although it should do so relatively soon. It will be a while before it can launch a drug on the market. The good news is that it won't have to worry about funding, at least for a while. Recursion Pharmaceuticals has entered collaboration agreements with such pharmaceutical giants as Bristol Myers Squibb and Roche. It ended the third quarter with $427.6 million in cash and equivalents, which isn't bad for a biotech worth $2.77 billion. That said, even if Recursion Pharmaceuticals' shares perform well in 2025, the stock will remain somewhat risky, although it will be less so as it moves its programs to late-stage studies. Its platform has yet to yield a single commercial victory, and though Recursion claims its AI approach can cut the time and costs associated with the process of developing drugs, it won't prove that claim next year. Recursion Pharmaceuticals' approach looks promising. If its master plan comes to fruition, the stock has massive upside potential. That said, there is also plenty of risk involved, more than risk-off investors will want to deal with. Those comfortable with heightened volatility may consider initiating a small position.

Is Recursion Pharmaceuticals Stock a Millionaire Maker? | The Motley Fool

Successfully navigating the stock market requires patience and a long-term perspective. The key is sticking to a consistent plan and making regular contributions to a retirement account, allowing the power of compounding to work its magic over time. Nevertheless, there's an undeniable allure in searching for potential multibagger stocks. Something is captivating about companies with disruptive innovations, whose stocks could be on the cusp of rapid growth and capable of delivering life-changing returns to shareholders. Recursion Pharmaceuticals (RXRX -0.98%) is a clinical-stage biotech that may have that level of potential. The company harnesses artificial intelligence (AI) for drug discovery, promising to revolutionize medicine. Let's explore whether buying the stock could eventually help you become a millionaire. Recursion has rapidly established itself as a leader in the field of AI-enabled biotechnology. The company's BioHive-2 supercomputer, powered by Nvidia AI chips, is one of the world's most powerful accelerated computing systems. Through advanced machine learning techniques, BioHive-2 analyzes vast amounts of biological data to identify drug targets, including proteins and genes involved in disease. Recursion's operating system (OS) evaluates millions of compounds to identify potential drug candidates, while also predicting drug molecule properties and optimal patient populations to enhance drug design. These efforts allow accelerated research on treatments across a wide range of conditions, while reducing costs compared to traditional methods. A major development for Recursion this year was its merger with Exscientia, another biotech company focused on AI-based drug discovery. Exscientia's expertise in advanced methods of chemical design complements Recursion's biology-driven approach. This combination has created a vertically integrated platform, resulting in a fundamentally stronger company. The good news is that Recursion's technology has already yielded promising results, with a robust pipeline of drug candidates that now incorporates Exscientia's legacy programs. One of the most promising prospects is REC-994, which could become the first oral therapy for treating symptomatic cerebral cavernous malformation (CCM), a brain hemorrhaging condition that currently lacks any approved treatments. REC-617 has also shown encouraging results, with a recent phase 1 interim study demonstrating positive patient responses and good tolerability in treating advanced solid tumors. The company believes this drug has "best in class" potential, one of several reasons that make Recursion an intriguing opportunity for investors. Looking ahead to 2025, the market will be closely following clinical readouts and regulatory updates as catalysts for Recursion stock: It seems likely that at least one of Recursion Pharmaceuticals' candidates could eventually gain approval as a novel therapy, transforming the company into a commercially sustainable operation over the next decade. But making a much more bullish case for the stock, as an investment to multiply many times over, would be a significantly more challenging proposition. It would likely require Recursion to develop a blockbuster drug capable of generating billions of dollars in sales across multiple years. The reality is that Recursion remains years away from bringing a drug to market. Currently, the company generates only limited revenue through partnership milestone payments and research grants, while facing substantially higher operating expenses. Wall Street analysts project continued financial losses for the foreseeable future, with negative earnings per share (EPS) expected to worsen from a projected loss of $1.54 this year to $1.65 in 2025. Data source: Yahoo Finance. YOY = year over year. While the market can overlook a lack of profitability based on longer-term growth prospects, the dynamic may keep the stock under pressure. Shares of Recursion are down approximately 55% from their 52-week high, and any sort of regulatory setback could send the stock even lower. Another consideration is the highly competitive industry landscape. Major biotech and pharmaceutical companies like Merck, AstraZeneca, and Pfizer, among others, are increasingly using artificial intelligence in their research and development processes. This widespread adoption raises questions about whether Recursion can maintain a technological advantage in the field. Although Recursion Pharmaceuticals offers compelling possibilities, I believe that without better visibility into its product approval pathway, it's just too early to buy this stock with conviction. In the meantime, 2025 will be a crucial year for the company to offer more clarity on its long-term potential. You may want to keep this one on your radar.