The Biotech Stock That's Too Risky for Most Investors

Core Insights - The artificial intelligence (AI) revolution is expected to significantly enhance productivity in various business operations, particularly in drug development [1] - Recursion Pharmaceuticals aims to leverage AI in drug discovery to become a leading biotech stock, despite the high failure rate of experimental drugs in clinical trials [2] Company Overview - Recursion Pharmaceuticals is currently focused on its most advanced drug candidate, REC-617, which is a novel CDK7 inhibitor in its first clinical trial [6] - The company has advanced REC-617 to the phase 2 portion of its study, with top-line results anticipated in 2028 [6] Analyst Sentiment - Analysts are optimistic about Recursion's potential, with none of the five analysts covering the stock issuing a sell rating, and an average price target suggesting a 53% increase from its recent closing price to $7.25 per share over the next 12 months [4] - The company has a market capitalization of $2.1 billion, indicating strong investor interest despite the uncertainty regarding product sales [5] Industry Context - The majority of cancer drugs that pre-commercial companies advance from phase 1 to phase 2 trials do not receive approval or generate sales, highlighting the inherent risks in biotech investments [7] - Even with AI-powered drug discovery, there remains a significant chance that Recursion's lead candidate may not achieve commercial success [7]