Successfully navigating the stock market requires patience and a long-term perspective. The key is to stick to a consistent plan and make regular contributions to a retirement account, allowing the power of compounding to work its magic over time.
However, there is an undeniable appeal in searching for potential multibagger Stocks. There’s something captivating about companies with revolutionary innovations, whose stocks could be on the cusp of rapid growth and are able to deliver life-changing returns for shareholders.
Oudian Pharmaceuticals (NASDAQ: RXRX) It is a clinical-stage biotechnology that may have this level of potential. The company harnesses artificial intelligence for drug discovery, and promises to revolutionize medicine. Let’s explore whether buying the stock could eventually help you become a millionaire.
Recursion has quickly established itself as a leader in AI-powered biotechnology. The company’s BioHive-2 supercomputer, powered by… Nvidia AI chips are one of the most powerful accelerated computing systems in the world.
Through advanced Machine learning BioHive-2 technology analyzes massive amounts of biological data to identify drug targets, including proteins and genes involved in disease. The Recursion Operating System (OS) evaluates millions of compounds to identify potential drug candidates, while also predicting properties of the drug molecule and optimal patient populations to enhance drug design.
These efforts allow for the acceleration of research on treatments for a wide range of conditions, while reducing costs compared to traditional methods.
Recursion’s major development 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-based 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 shown promising results, with a strong pipeline of drug candidates that now includes Exscientia’s legacy programs.
One of the most promising prospects is REC-994, which could become the first oral therapy to treat cerebral cavernous malformation (CCM), a bleeding condition in the brain that currently lacks any approved treatments.
REC-617 has also shown encouraging results, with a recent interim Phase 1 study showing positive patient responses and good tolerability in the treatment of advanced solid tumors. The company believes this drug has “best-in-class” potential, which is one of the many reasons why Recursion is an interesting opportunity for investors.
Looking ahead to 2025, the market will closely follow clinical readouts and regulatory updates as catalysts for Recursion stock:
It seems likely that at least one of Recursion Pharmaceuticals’ candidates may eventually gain approval as a new treatment, turning the company into a commercially sustainable operation over the next decade.
But making a more optimistic case for the stock, as an investment that can be compounded many times over, would be a significantly more difficult proposition. It will likely take Recursion to develop a successful drug capable of generating billions of dollars in sales over several years.
The truth is that recurrence is still years away from bringing the drug to market. Currently, the company generates only limited revenue through significant partnership payments and research grants, while facing much higher operating expenses. Wall Street analysts expect the financial losses to continue for the foreseeable future, with negative earnings per share (EPS) expected to worsen from an expected loss of $1.54 this year to $1.65 in 2025.
|
metric |
2023 |
2024 (estimated) |
2025 (estimated) |
|
Revenue (in millions) |
$44.6 |
$70.0 |
$76.0 |
|
Revenue Change (YOY) |
12% |
57% |
9% |
|
Earnings per share (EPS) |
($1.58) |
($1.54) |
($1.65) |
|
Change in earnings per share (YOY) |
nothing |
nothing |
nothing |
Data source: Yahoo Finance. YOY = year after year.
While the market could shrug off the lack of profitability based on long-term growth expectations, the dynamism could keep the stock under pressure. Recursion shares are down about 55% from their 52-week high, and any kind of regulatory setback could send the stock down even further.
Another consideration is the highly competitive industry landscape. Major biotechnology and pharmaceutical companies such as Merck, AstraZenecaand PfizerAmong others, they 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 this area.
Although Recursion Pharmaceuticals offers compelling potential, I believe that without better visibility into the product’s approval path, it is too early to buy this stock with conviction. Meanwhile, 2025 will be a crucial year for the company to provide more clarity on its long-term potential. You may want to keep this on your radar.
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And Victor He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck and Pfizer. The Motley Fool recommends AstraZeneca Plc. The Motley Fool has Disclosure policy.
Is Recursion Pharmaceuticals Stock a Millionaire Maker? Originally published by The Motley Fool