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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 (NASDAQ: RXRX) 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.