Will RXRX's Shift in Pipeline Focus Help Restore Investor Faith?

Recursion Pharmaceuticals RXRX faced a massive setback in May 2025 after announcing the discontinuation of three key drug candidates — REC-994, REC-2282 and REC-3964 — due to disappointing results from mid-stage studies. REC-994 and REC-2282 were being developed for cerebral cavernous malformation and neurofibromatosis type II, respectively, but showed insufficient efficacy to justify further investment. Similarly, REC-3964, for Clostridioides difficile infection, was also shelved as the company opted to focus on areas with greater unmet needs. The move was part of a broader strategic pipeline reprioritization, but it shook investor confidence and led to a stock price decline.

In the wake of these terminations, Recursion Pharmaceuticals turned its attention to more promising candidates, including REC-4881, which is being evaluated for familial adenomatous polyposis in the phase Ib/II TUPELO study. Early data from the phase II portion showed a preliminary median 43% reduction in polyp burden by week 13. Additionally, half of the patients demonstrated a reduction in upper gastrointestinal disease severity. More comprehensive data from this study are expected in the second half of 2025.

Beyond REC-4881, Recursion Pharmaceuticalsis advancing other candidates to diversify and strengthen its pipeline. These include REC-1245, currently in a phase I/II DAHLIA study for biomarker-enriched solid tumors and lymphoma, with initial results anticipated in the first half of 2026. The company is also exploring REC-617 for advanced solid tumors and REC-3565 for B-cell malignancies in separate early-stage studies. While recent setbacks have dealt a blow to its near-term prospects, RXRX remains committed to leveraging its AI-driven platform to develop novel therapies, aiming to rebuild momentum through a refocused and streamlined clinical portfolio.

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 use AI-driven platforms to develop novel therapies. 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’sStock Price, Valuation & Estimate Movements

Year to date, RXRX shares have plunged 22% compared with the industry’s 1.1% decline. 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 2.29, which is less than 3.13 for the industry. The stock is trading significantly below its five-year mean of 3.57.

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 $1.21 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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