Recursion Pharmaceuticals Inc

Recursion Pharmaceuticals, Inc. (NASDAQ: RXRX) is a clinical-stage TechBio biotechnology company. It is focused on utilizing advanced technologies in biology, chemistry, automation, and computer science to discover and design therapeutics. The Company’s platform, Recursion Operating System (OS), is built with diverse technologies and enables the Company to map and navigate trillions of biological and chemical relationships within the Recursion Data Universe.

Key Financial and Business Updates:

Business Highlights Summary:

• Pipeline:
  • Cerebral Cavernous Malformation (CCM) (REC-994): RXRX’s Phase 2 SYCAMORE clinical trial is progressing as a double-blind, placebo-controlled study focused on safety, tolerability, and exploratory efficacy for participants with CCM. Enrollment was completed by June 2023, with 62 participants. Those who have completed their first year of treatment are now participating in the long-term extension study. Anticipated Phase 2 proof-of-concept data will be shared in H2 2024.
  • Neurofibromatosis Type 2 (NF2) (REC-2282): RXRX’s Phase 2/3 POPLAR clinical trial, examining REC-2282 in individuals with progressive NF2-mutated meningiomas, is ongoing. Part A of the study is underway, assessing two REC-2282 doses in approximately 23 adults and 9 adolescents. Phase 2 safety, tolerability, pharmacokinetics, and preliminary efficacy data are expected in H2 2024.
  • Familial Adenomatous Polyposis (FAP) (REC-4881): Enrollment is ongoing in the TUPELO clinical trial, which evaluates REC-4881 in FAP patients. A data readout is guided, and Phase 2 safety, tolerability, pharmacokinetics, and preliminary efficacy data are anticipated in H1 2025.
  • AXIN1 or APC Mutant Cancers (REC-4881): In Q4 2023, RXRX plans to initiate a Phase 2 biomarker-enriched study evaluating REC-4881 in patients with unresectable, locally advanced, or metastatic cancer with AXIN1 or APC mutations. The FDA accepted the IND for this study.
  • Clostridioides difficile Infection (REC-3964): RXRX’s Phase 1 clinical trial, assessing REC-3964 in healthy volunteers for safety, tolerability, and pharmacokinetics, is progressing. Single and multiple ascending dose studies are complete, and Phase 1 safety and pharmacokinetics data are expected in Q3 2023.
  • RBM39 HR-Proficient Ovarian Cancer: The preclinical program for RBM39, a potential therapy for HR-proficient ovarian cancer, is underway, with IND-enabling studies in progress.

• Partnerships:
  • NVIDIA: In July 2023, RXRX announced a USD 50 million investment and collaboration with NVIDIA. This partnership involves optimizing the foundation models for biology and chemistry, access to computational resources, and potential hosting of machine learning models on NVIDIA's BioNeMo platform for generative AI in drug discovery.
  • Roche-Genentech and Bayer: Collaborations with Roche-Genentech and Bayer continue to advance in the discovery of potential therapeutics. Option exercises associated with partnership programs and data sharing initiatives are possibilities.

• Platform:
• Digital Chemistry and Generative AI Capabilities: Acquisitions of Cyclica and Valence Discovery in May 2023 enhanced the digital chemistry and generative AI capabilities. RXRX has applied these tools to predict protein-ligand interactions for large chemical libraries, aiding the pipeline and partnerships.
• Accelerating Pipeline and Partnership Value: Digital chemistry tools have been used to deconvolve proteome-wide biological targets, validating novel mechanisms of action. These capabilities enhance the identification of promising chemical series.
• Foundation Model Construction: Proprietary phenomics foundation models are under development using the supercomputer, BioHive-1. These models leverage the multi-omics data to improve predictions. Commercial licensing of models may be explored in collaboration with NVIDIA.
• Large Language Models: Deployment of large language models has streamlined program initiation, facilitating autonomous drug discovery and biological exploration based on scientific literature and proprietary maps.
• Valence Labs - Powered by Recursion: Launched in July 2023, Valence Labs is Recursion's machine learning research center in Montréal, focusing on open-science, academic research, and advancing AI in drug discovery.

• Additional Corporate Updates:
  • Chief Medical Officer: In May 2023, Dr. David Mauro joined as Chief Medical Officer, bringing over 20 years of oncology drug development expertise.
  • Chief Legal Officer: Nathan Hatfield was appointed Chief Legal Officer in July 2023, after serving as SVP and Head of Legal for over 6 years.
  • Toronto Office: In June 2023, RXRX celebrated the opening of its Canadian Headquarters in Toronto.
  • ESG Reporting: Recursion received a favorable ESG Risk Rating from Morningstar Sustainalytics in June 2023, ranking as the top biotechnology company out of around 400 companies and 14th among approximately 900 pharmaceuticals companies.

• Second Quarter 2023 Financial Results:
  • Cash Position: As of June 30, 2023, cash and cash equivalents stood at USD 405.9 million, excluding the recent USD 50 million investment from NVIDIA.
  • Revenue: Total revenue for the second quarter of 2023 was USD 11.0 million, reflecting progress in the Roche-Genentech collaboration, compared to USD 7.7 million in the second quarter of 2022.
  • Research and Development Expenses: Research and development expenses for the second quarter of 2023 were USD 55.1 million, reflecting expansion and upgrades in platform capabilities, compared to USD 38.4 million in the second quarter of 2022.
  • General and Administrative Expenses: General and administrative expenses for the second quarter of 2023 were USD 28.3 million, with increases in salaries, wages, software, and depreciation expenses, compared to USD 21.2 million in the second quarter of 2022.
  • Net Loss: The net loss for the second quarter of 2023 was USD 76.7 million, compared to a net loss of USD 65.6 million in the second quarter of 2022.
    

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at 30.64, closing into oversold zone with expectations of some consolidation or a short-term upward momentum. The current price is currently near an important support zone of USD 6.50-USD 7.00 zone, with expectations of a momentum in the upward directions from the support levels as there has been a correction of around 57.50% since July 19, 2023. Additionally, the stock's current positioning is below both 21-period SMA and 50-period SMA, which may serve as a dynamic short-term resistance levels.   

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to Recursion Pharmaceuticals, Inc. (NASDAQ: RXRX) at its current price of USD 7.13 as of October 03, 2023, 06:45 am PDT. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is October 03, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

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