Many of Wall Street's biggest names are rapidly scooping up stock in some of the most prominent artificial intelligence (AI) companies. Nvidia and alphabet, among other tech giants. Although these market leaders are getting a lot of attention around his AI, there are also smaller players in this space. recursion medicine (NASDAQ: RXRX).
This mid-cap biotech uses AI in innovative ways (more on that below). The product has caught the attention of a prominent player on the street, her CEO of Ark Invest, Cathie Wood. Let's see what's interesting about this stock.
Bet on the genome revolution
Ark Invest explores disruptive technologies that will shape the future. An actively managed exchange-traded fund (ETF) ARK Genome Revolutionis aimed at companies seeking to improve the quality of life through scientific innovation.
Cathie Wood and her team have added Recursion Pharmaceuticals stock to ARK Genomic Revolution several times over the past few months. On April 2nd, the company purchased just over 174,000 shares of the company's stock, the highest number of shares added to ARKG at once this year.
Recurrence currently makes up 5.7% of the ETF, ranking it third in terms of portfolio weight.
How does this small biotech company relate to the themes of AI and the genomic revolution? The company is leveraging AI to speed up the drug discovery process. Pharmaceutical companies have to go through a scary, expensive, long, and dangerous process to launch their medicines. Many companies that participate in clinical trials fail to obtain regulatory approval, and some do not generate sufficient revenue to cover the costs of developing the clinical trial.
Recursion has developed an AI-powered operating system (OS) that tests how different clinical compounds interact with the human body in an automated laboratory. Up to 2.2 million experiments are performed every week. This approach allows Recursion to advance only compounds that appear highly promising into clinical trials, possibly increasing their chances of making it to market.
If the Recursion Pharmaceuticals OS works as intended, the company will not only be able to launch successful drugs faster than its competitors, but also be able to license its OS to other companies. Additionally, Recursion Pharmaceuticals OS has the potential to build network effects. Whether the selected compound is a success or failure after the tests conducted by the OS, the algorithm can now be fine-tuned, potentially resulting in more accurate results over time.
Should investors follow Wood's lead?
Recursion Pharmaceuticals is still a clinical-stage biotechnology. Translation: The company's approach has not yet produced a commercially available treatment. However, it has attracted the attention of some major Swiss-based companies. Roche, plans to collaborate with Recursion to discover anti-cancer drugs. Clearly, this biotech looks promising, but is that enough to buy the stock?
Recursion Pharmaceuticals has yet to achieve tangible results, so the stock should be quite volatile as clinical and regulatory developments progress. At this point, no one knows whether these developments will be positive or negative. The company's stock price could skyrocket or fall off a cliff, making it extremely risky. We should know a little more by the end of the year.
Recursion is expected to have several data readouts, including data from a Phase 2 study of REC-994, a potential treatment for brain cavernous malformations. The biotech company plans to release data by the third quarter of 2024. Recursion is also conducting a Phase 2/3 trial of his REC-2282, an investigational drug for neurofibromatosis type 2 (a genetic disorder that can cause tumors), with some data showing His is expected to be announced by the third quarter of 2024. Fourth quarter.
Even if these have good results, it will be at most two years before they are released. That's why investors need to tread carefully. Recursion Pharmaceuticals represents 1.77% of Ark Invest's total ETF holdings. Even if you're an active investor, biotech won't be a large part of your portfolio.
Should you invest $1,000 in Recursion Pharmaceuticals right now?
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Suzanne Frey, an Alphabet executive, is a member of the Motley Fool's board of directors. Prosper Junior Bakinny has no position in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool recommends Roche Ag. The Motley Fool has a disclosure policy.
Cathie Wood is buying this under-the-radar AI stock The original article was published by The Motley Fool