Though I have historically resisted the temptation to have more than 21 recommendations in the newsletter at any given time, I am breaking that “rule” to satisfy the requests that many of you have been making for me to recommend something new in the areas of biotech and/or “AI.” Introducing Recursion Pharmaceuticals (RXRX), writes Nate Pile, editor of Nate’s Notes.
Recursion is harnessing the power of AI and machine learning to accelerate the drug discovery process. It uses what it calls its integrated Recursion Operating System, a closed-loop system that essentially can perform “mini-experiments” at an astounding rate (“millions per week”) in an automated environment, analyze the data obtained from said experiments, and then further refine those experiments based on the information that was gathered in an effort to discover previously unknown relationships between genes, drugs, and biologic function in cells.
The company already has partnerships in place with Roche and Genentech in the neuroscience and oncology arenas, as well as with Bayer in the area of fibrosis. Along with providing validation of the technology by partnering with Recursion, these large companies are contributing a great deal of data that they have already collected over the years (decades, in fact) to further enhance the already massive pool of data (roughly 23 petabytes and counting so far) that Recursion has gathered since it was founded in 2013.
Thanks to the above relationships, Recursion currently has five candidates that have reached the Phase 2 or Phase 2/3 stage of the drug development process. While there are no guarantees that any of the molecules will pass their next round of clinical trials, the potential is certainly there for additional validation of the technology to come to light as the study results trickle in over the next 12-18 months. And, of course, it is positive clinical trial results that help lead to higher stock valuations as companies grow and mature in the biotech space.
Along with the above relationships, it was also announced recently that NVIDIA (NVDA) has made a $50 million investment in the company. It will further be providing its two chips and expertise in the areas of AI and machine learning to help Recursion refine and advance its platform.
Terms of the deal were not disclosed. But I have learned over the years that it is often worth following the smart money when it comes to finding new ideas for the newsletter. The past 21 years of owning NVIDIA have shown us that Jensen Huang (NVIDIA's CEO) represents some of the smartest money out there.
Recommended Action: Buy RXRX.
