Core Insights - Recursion Pharmaceuticals (RXRX) is transforming drug discovery by utilizing artificial intelligence (AI) through its RecursionOS platform, developed with NVIDIA, to simulate compound interactions with human biology, aiming for more efficient and cost-effective drug development [1][8] - The AI platform has significant commercial potential, evidenced by partnerships with major pharmaceutical companies like Bayer and Roche, which provide recurring revenue through technology licensing [2][8] - RXRX faces competitive pressures from companies like Relay Therapeutics (RLAY) and Schrödinger (SDGR), which are also leveraging advanced technologies in drug discovery [3][4][5] Company Performance - Year-to-date, RXRX shares have decreased by 24.1%, underperforming the industry decline of 3.4% and the S&P 500 [6][7] - The company's stock is trading at a price/book value ratio of 2.23, lower than the industry average of 3.05 and significantly below its five-year mean of 3.63 [9] Financial Estimates - Loss estimates for 2025 remain constant at $1.34 per share, while 2026 estimates have improved from $1.20 to $1.08 [13] - Recent trends show a positive revision in estimates, with a 10% increase for 2026 [14]

Company Performance - Recursion Pharmaceuticals (RXRX) closed at $5.03, down 6.85% from the previous trading session, underperforming the S&P 500's daily gain of 0.52% [1] - Over the past month, the stock has appreciated by 21.35%, outperforming the Medical sector's gain of 3.5% and the S&P 500's gain of 5.95% [1] Upcoming Earnings - The company is expected to report an EPS of -$0.34, which is a 15% increase from the prior-year quarter [2] - Quarterly revenue is projected to be $15.58 million, reflecting an 8.02% increase from the year-ago period [2] Full Year Estimates - For the full year, earnings are projected at -$1.34 per share and revenue at $74.95 million, showing increases of 20.71% and 27.38% respectively from the previous year [3] Analyst Forecasts - Recent revisions to analyst forecasts for Recursion Pharmaceuticals are important as they indicate evolving short-term business trends [4] - Positive changes in estimates suggest analyst optimism regarding the company's business and profitability [4] Zacks Rank System - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has a strong track record of outperforming, with 1 rated stocks producing an average annual return of +25% since 1988 [6] - The Zacks Consensus EPS estimate for Recursion Pharmaceuticals has shifted 0.19% upward over the past month, and the company currently holds a Zacks Rank of 3 (Hold) [6] Industry Overview - The Medical - Biomedical and Genetics industry, part of the Medical sector, has a Zacks Industry Rank of 83, placing it in the top 34% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Company Performance - Recursion Pharmaceuticals (RXRX) closed at $5.03, reflecting a -1.57% change from the previous day's closing price, underperforming the S&P 500's daily loss of 0.22% [1] - Over the past month, shares of Recursion Pharmaceuticals have increased by 23.28%, while the Medical sector remained flat with a 0% change and the S&P 500 gained 0.45% [1] Upcoming Financial Results - Analysts anticipate Recursion Pharmaceuticals will report earnings of -$0.34 per share, indicating a year-over-year growth of 15% [2] - The consensus estimate for revenue is projected at $15.58 million, representing an 8.02% increase compared to the same quarter last year [2] Fiscal Year Projections - For the entire fiscal year, earnings are projected at -$1.34 per share and revenue at $74.95 million, reflecting year-over-year changes of +20.71% and +27.38%, respectively [3] Analyst Estimates and Market Sentiment - Recent modifications to analyst estimates for Recursion Pharmaceuticals are crucial as they reflect near-term business trends, with positive revisions indicating optimism about the business outlook [4] - The Zacks Rank system, which evaluates estimate changes, suggests that these alterations are linked to stock price performance in the near future [5] Zacks Rank and Industry Performance - Recursion Pharmaceuticals currently holds a Zacks Rank of 3 (Hold), with the Zacks Consensus EPS estimate having increased by 0.19% over the past month [6] - The Medical - Biomedical and Genetics industry, part of the Medical sector, has a Zacks Industry Rank of 87, placing it in the top 36% of over 250 industries, indicating strong performance potential [7]

That's why some investors like Wood are interested in the stock. The company's upside potential is massive. And it got an even rosier outlook earlier this year when the U.S. Food and Drug Administration announced that it would be slowly phasing out animal testing in pre-clinical trials in favor of other methods, including AI-based models. It might look as though Recursion'a approach is the future. So why isn't the stock soaring, then? Recursion Pharmaceuticals (RXRX -4.84%) is not the most famous artificial ...

Portfolio and Pipeline - Recursion has a streamlined, integrated portfolio strategy focused on near and long-term impact, leveraging the Recursion OS 2.0 platform to prioritize opportunities and exit underperforming efforts[21] - The company is advancing REC-617 (CDK7 inhibitor) into combination studies in 1H25 and expects additional Phase 1 data from ELUCIDATE in 2H25[33, 144] - REC-7735 (PI3Kα H1047R inhibitor) is expected to have a development candidate nomination in 2H25, with preclinical data showing superior in vivo efficacy compared to Alpelisib and Capivasertib[33, 87, 88, 144] - REV102 (ENPP1 inhibitor) is expected to initiate Phase 1 in 2H26, developed in partnership with Rallybio, with preclinical data showing restored bone density to wildtype levels in treated mice[33, 111, 114, 144] - Three clinical programs (REC-994, REC-2282, REC-3964) and one preclinical program (REC-4209) have been deprioritized as part of strategic portfolio prioritization[22, 27] Partnerships and Financials - Recursion has several partnerships, including an oncology and immunology collaboration with >$5 billion total value and a neuroscience and oncology partnership with up to $300 million per program for 40 programs[23] - As of March 31, 2025, Recursion had $5092 million in cash, with an expected cash runway until mid-2027[147] - The company anticipates ≤$450 million expected cash burn for FY2025, excluding potential partnership and financing inflows, achieved through pipeline prioritization and streamlined operations[150] Technology and Innovation - Recursion OS is central to the company's strategy, driving a data-led portfolio approach and enabling rapid validation of opportunities[9, 21, 31] - The company is focused on developing first-in-class and best-in-class molecules, leveraging its integrated, end-to-end tech stack and multimodal biology, design, and ClinTech capabilities[32] - Recursion's approach aims to reduce the time to candidate ID and cost to IND compared to industry legacy programs[18] REC-4881 (MEK1/2 Inhibitor) for FAP - REC-4881 is being developed as a chemoprevention for Familial Adenomatous Polyposis (FAP), targeting approximately 50000 addressable patients[28, 39] - Preliminary Phase 1b/2 data shows a 43% median reduction in total polyp burden at week 13 in efficacy evaluable patients on the 4 mg dose[68] - The program is currently enrolling, with additional efficacy and safety data expected in 2H25[38, 78]

Core Viewpoint - Recursion Pharmaceuticals is implementing cost-saving measures, including a workforce reduction of approximately 20%, to extend its financial resources and improve investor sentiment, resulting in a stock price increase of 1.6% [1][2][7] Group 1: Cost-Saving Measures - The company announced a workforce reduction of around 20% as part of its strategy to streamline operations [4] - Recursion anticipates incurring approximately $11 million in charges related to severance payments, benefit payouts, and other restructuring costs during the current year [4] Group 2: Financial Projections - The company's cash burn is projected to be less than $450 million in 2025 and under $390 million in 2026, potentially offset by over $100 million in milestone payments expected by the end of 2026 [5] - Recursion estimates that its cash, cash equivalents, and restricted cash will exceed $500 million by the end of the current second quarter, a slight decrease from $509 million at the end of the first quarter [6] - With the planned measures, the company's cash runway is expected to last into the fourth quarter of 2027 [6]

Core Insights - The article discusses the launch of Boltz-2, an open-source biomolecular foundation model developed by MIT and Recursion, which significantly improves the accuracy and speed of predicting molecular binding affinities and structures [1][2][5]. Company and Industry Overview - Boltz-2 is a pioneering model that combines structure and binding affinity prediction, achieving near-physics-based accuracy while being over 1,000 times faster than traditional methods [5][6]. - The model is designed to enhance drug discovery processes by allowing researchers to select promising molecules more effectively, thereby improving the success rates of R&D programs [3][4]. - The open-source nature of Boltz-2, including its training code, enables scientists to customize the model for specific molecules, facilitating broader applications in both academic and commercial settings [2][4]. - Recursion, the TechBio company behind Boltz-2, utilizes advanced machine learning algorithms and operates one of the world's most powerful supercomputers, BioHive-2, to support its mission of decoding biology for improved healthcare outcomes [7][8]. - The development of Boltz-2 involved collaboration between MIT's academic expertise and Recursion's AI capabilities, highlighting the importance of partnerships in advancing biotechnological innovations [3][5].

Company Overview - Recursion Pharmaceuticals (RXRX) shares have increased by approximately 5.7% over the past month, underperforming the S&P 500 [1] - The most recent earnings report is crucial for understanding the stock's performance and potential catalysts [1] Earnings Estimates - Estimates for Recursion Pharmaceuticals have trended upward in the past month, with a consensus estimate shift of 10.13% [2] VGM Scores - The company has a poor Growth Score of F, a Momentum Score of A, and a Value Score of F, placing it in the bottom 20% for the value investment strategy [3] - The aggregate VGM Score for Recursion Pharmaceuticals is F, indicating a lack of focus on any single investment strategy [3] Outlook - The upward trend in estimates is promising, and Recursion Pharmaceuticals holds a Zacks Rank of 3 (Hold), suggesting an expectation of in-line returns in the coming months [4] Industry Comparison - Recursion Pharmaceuticals is part of the Zacks Medical - Drugs industry, where Ionis Pharmaceuticals (IONS) has gained 9.1% over the past month [5] - Ionis Pharmaceuticals reported revenues of $132 million for the last quarter, reflecting a year-over-year increase of 10.9% [5] - For the current quarter, Ionis Pharmaceuticals is expected to report a loss of $0.14 per share, indicating a 68.9% improvement from the previous year [6]

Core Insights - Recursion Pharmaceuticals (RXRX) and Schrodinger (SDGR) are leading the integration of artificial intelligence in drug discovery, aiming to transform the biotech sector by improving efficiency and reducing costs [1][2][3] Company Overview Recursion Pharmaceuticals (RXRX) - RXRX utilizes its AI-driven platform, Recursion OS, in collaboration with NVIDIA to enhance drug discovery processes [5] - The company has faced setbacks, including the discontinuation of its lead candidate REC-994 and REC-2282 due to unfavorable efficacy results [6][8] - RXRX is focusing on developing candidates like REC-4881 for familial adenomatous polyposis, which has shown a preliminary median 43% reduction in polyp burden [8] - The company ended Q1 2025 with a cash balance of $509 million, expected to sustain operations into mid-2027 [9] - RXRX has collaboration agreements with major pharmaceutical companies, generating $15 million in collaboration revenues in Q1 2025, a slight increase from the previous year [10] Schrodinger (SDGR) - SDGR employs a physics-based computational platform for drug discovery, with its lead candidate SGR-1505 currently in a phase I study for B-cell malignancies [11][13] - The candidate has received FDA's Orphan Drug designation for mantle cell lymphoma [14] - SDGR's second candidate, SGR-2921, is being evaluated for acute myeloid leukemia, with initial results expected in the second half of 2025 [15] - The company generated $59.6 million in total revenues in Q1 2025, a 63% year-over-year increase [17] Financial Performance - RXRX's stock has declined 39.6% year-to-date, while SDGR's stock has increased by 10.9% [25] - RXRX trades at 1.78 times its book value, significantly lower than SDGR's 4.2 times, making RXRX more attractive from a valuation perspective [26][27] - The Zacks Consensus Estimate for RXRX's 2025 revenues implies a 22% year-over-year improvement, while SDGR's estimate suggests a 21% improvement but a widening loss per share [18][21] Market Position and Competitive Landscape - Both companies face competition from other biotech firms and tech-driven drug discovery companies, which may challenge their market differentiation [31] - Despite the competitive landscape, both RXRX and SDGR have the potential to revolutionize drug discovery by delivering cost-effective therapies [32] - RXRX is viewed as a better investment opportunity due to its innovative pipeline, collaboration agreements, and favorable valuation compared to SDGR [34]

Core Viewpoint - Recursion Pharmaceuticals (RXRX) has experienced a significant stock decline of 21.6% in May due to weaker-than-expected Q1 2025 results and the discontinuation of key drug candidates [1][2][15] Financial Performance - RXRX reported first-quarter 2025 results where both earnings and revenues missed estimates, leading to a year-to-date stock decline of 36.2%, compared to the industry’s 3.8% decline [1][4] - The stock is currently trading below its 50-day and 200-day moving averages, indicating underperformance in the sector and the S&P 500 [4] Pipeline Developments - The company has discontinued the development of its lead candidates, REC-994 and REC-2282, due to unfavorable efficacy results, and also halted the mid-stage study on REC-3964 [2][3][15] - RXRX is focusing on other candidates, such as REC-4881, which has shown a preliminary median 43% reduction in polyp burden in a phase Ib/II study, with additional data expected in H2 2025 [11] - Other candidates in early-stage development include REC-1245 for solid tumors and REC-617 for advanced solid tumors, with cash reserves of $509 million expected to sustain operations into mid-2027 [12] Strategic Collaborations - RXRX has ongoing collaborations with major pharmaceutical companies like Roche, Bayer, and Sanofi, which could enhance its pipeline and revenue potential [13] - The company recently received $7 million in collaboration revenues from Sanofi following a significant discovery milestone [13] Competitive Landscape - RXRX faces intense competition from other biotech firms and tech-driven drug discovery companies, which may challenge its ability to maintain a competitive edge [14] - The company’s investigational candidates are still in early stages, raising concerns about the timeline for commercialization [15] Valuation Metrics - RXRX is trading at a premium price/book value ratio of 1.88 compared to the industry average of 1.20, although it is below its five-year mean of 3.65 [16] - Loss estimates for 2025 remain constant at $1.34 per share, while 2026 estimates have narrowed from $1.20 to $1.17 [19] Future Outlook - The company is positioned as a leader in AI-driven drug discovery, with a strong focus on Precision Oncology and Rare Diseases, which could enhance shareholder value if pipeline candidates are successfully developed [22] - Recent setbacks in the pipeline are viewed as temporary, and the decline in stock price may present an attractive entry point for new investors [23]