Can Recursion Pharmaceuticals' Strategic Deals Fuel Long-Term Growth?

Recursion Pharmaceuticals RXRX is strategically leveraging its AI-powered drug discovery platform through multiple high-value collaborations, positioning itself for long-term growth and sustainability. By partnering with major pharmaceutical companies, Recursion Pharmaceuticals not only expands its pipeline but also secures substantial non-dilutive funding to support its R&D activities.

Through its collaboration with Bayer, Recursion Pharmaceuticals is advancing treatments for fibrosis, with potential milestone payments totaling up to $1.5 billion and tiered royalties, reinforcing its revenue potential. Its agreement with Roche focuses on neuroscience and oncology, giving Roche the option to launch up to 40 programs, each of which could yield more than $300 million in milestones for RXRX, along with royalties. Partnerships with Sanofi and Merck further diversify Recursion Pharmaceuticals’ pipeline across oncology, immunology, and neuroinflammation, together offering billions in milestone opportunities and consistent royalty streams.

In addition to these pharma collaborations, Recursion Pharmaceuticals is investing heavily in AI infrastructure. Its alliance with NVIDIA led to the 2024 upgrade of its supercomputer to BioHive-2. The acquisition of Exscientia in late 2024 added over 20 programs to Recursion Pharmaceuticals’ portfolio and increased its milestone opportunity to more than $20 billion, strengthening its financial foundation.

Further collaborations with technology leaders like Google Cloud, Helix, and Faro Health enhance RXRX’s AI capabilities, accelerating drug discovery and development. These strategic partnerships not only provide immediate financial support but also amplify Recursion Pharmaceuticals’ ability to scale its platform, pursue innovative therapies, and forge new alliances, positioning the company for sustained, long-term success in the evolving biotech landscape.

RXRX Faces Competitive Pressure in the TechBio Industry

In the TechBio space, Relay Therapeutics RLAY and Schrödinger SDGR are emerging as strong competitors to Recursion Pharmaceuticals, who also leverage AI-driven platforms to enter into strategic collaboration agreements and develop novel therapies. RLAY 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’s lead asset SGR-1505 is currently being evaluated 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’sStock Price, Valuation & Estimate Movements

Year to date, RXRX shares have plunged 22.8% against the industry’s 0.1% growth. Recursion Pharmaceuticals 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

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 2.27, which is less than 3.14 for the industry. The stock is trading significantly below its five-year mean of 3.56.

RXRX Stock Valuation

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 $1.17 to $1.08.

RXRX Estimate Movement

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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