Can RXRX's AI-Based Approach Revolutionize the Drug Discovery Process?

Recursion Pharmaceuticals RXRX is redefining the traditional model of drug discovery by harnessing the power of artificial intelligence (AI) through its proprietary RecursionOS platform, developed in collaboration with NVIDIA Corporation. Instead of relying on time-consuming and costly research and development, RXRX uses AI to simulate how compounds interact with a virtual map of human biology, aiming to identify drug candidates with higher chances of clinical success. This method reduces costs, increases efficiency, and may enable faster, more affordable development of breakthrough therapies.

Beyond its pipeline, Recursion Pharmaceuticals’ AI platform has broad commercial potential. Partnerships with pharma giants like Bayer and Roche highlight industry validation and offer recurring revenue through technology licensing. Even when drug candidates fail in studies, the data collected feeds back into the AI system, making future predictions more accurate. This self-learning feature could significantly refine and enhance its AI models, improving accuracy and long-term outcomes.

RXRX Faces Competitive Pressure in the TechBio Industry

Recursion Pharmaceuticals operates in a competitive landscape, where it faces challenges from a range of companies across the pharmaceutical, biotechnology and technology sectors. As a hybrid company, it competes on multiple fronts, integrating advanced technologies into drug discovery and development while building a scalable scientific platform.

In the TechBio space, Relay Therapeutics RLAY and Schrödinger SDGR are emerging as strong competitors to Recursion Pharmaceuticals. RLAY uses its Dynamo platform to target challenging protein structures and is on track to advance its lead investigational candidate, RLY-2608, into a phase III study for metastatic breast cancer. An early-stage study evaluating the candidate for a second indication, vascular malformations, is also currently underway.

Meanwhile, SDGR relies on a unique physics-based computational platform to design novel molecules, with its lead asset SGR-1505 in an early-stage study for B-cell malignancies. Schrödinger is also evaluating two other candidates, SGR-2921 and SGR-3515, in separate phase I studies for leukemia and solid tumors. Both Relay Therapeutics and Schrödinger are steadily building robust pipelines through cutting-edge approaches.

RXRX’s Stock Price, Valuation & Estimate Movements

Year to date, RXRX shares have plunged 24.1% compared with the industry’s 3.4% decline. The company has also underperformed the sector and the S&P 500 during the same time frame, as seen in the chart below.

RXRX Stock Underperforms the Industry, Sector & the S&P 500

Image Source: Zacks Investment Research

Recursion Pharmaceuticals is trading at a discount to the industry, as seen in the chart below. Going by the price/book value ratio, the company’s shares currently trade at 2.23, which is less than 3.05 for the industry. The stock is trading significantly below its five-year mean of 3.63.

Image Source: Zacks Investment Research

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Loss estimates for 2025 have remained constant at $1.34 per share over the past 60 days. During the same time frame, RXRX’s 2026 loss per share estimates have narrowed from $1.20 to $1.08.

RXRX Estimate Movement

Image Source: Zacks Investment Research

Recursion Pharmaceuticals currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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