What is the best next use of artificial intelligence (AI)? Many people would say drug development. And arguably they would be right.
However, that’s not something for the future, when AI becomes more refined. Recursion Pharmaceuticals (NASDAQ:RXRX) He’s doing it right now. Its platform called Recursion OS leverages 65 petabytes (65 million gigabytes) of chemical and biological information to virtually test a drug.
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Clinical trials that would normally take years and millions of dollars to complete can now be done with a fraction of both. Although the FDA still requires full clinical trials, these virtual pretests allow drug companies to focus their limited resources on only their most promising prospects.
This is not a mere theory or premise either. Drugs that were previously tested with Recursion OS are now in real-world clinical trials. In total, Recursion’s current development consists of eight drugs, half of which are in trials with real patients.
Although Recursion is working on some of its own drugs, in most cases, pharmaceutical companies compensate Recursion for access to their technology. To this end, analysts expect the company’s top line to improve from a forecast $62 million last year to $83 million this year, on track to $163 million in 2028, as R&D milestone payments from some of its partners begin to flow more freely. Actual pharmaceutical sales revenue is yet to come.
There is still risk here, to be sure. Profitability is even further away than drug sales, for example, and there isn’t necessarily much stopping a larger technology company from crossing the industry’s low barrier to entry to become a direct competitor.
However, in light of Straits Research’s belief that the AI-driven drug development industry will grow at an average annual rate of 30% between now and 2034, perhaps the first name in the business to create a solution of the caliber of Recursion OS is also the name to put at the top of your watch list.
Just keep in mind that this is an all or nothing trade, with a lot of upside potential, but also a lot of downside potential.
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