Artificial intelligence (AI) could have the potential to revolutionize drug discovery and bring new treatments to market, saving time and billions of dollars in research. This is because, currently, before any new drug gets full approval, it typically takes over a decade and, on average, over $1 billion to get to that point. However, the capabilities of AI in drug discovery have the potential to dramatically reduce this hurdle with the hope of making the process more efficient and effective.
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The companies that have taken the lead in dramatically altering the current structure by adopting AI-based drug discovery could be tomorrow’s overlooked big winners. Below, we’ll explore four leaders in this realm as we look at the specialization of Recursion Pharmaceuticals (NASDAQ:RXRX), AbCellera Biologics (NASDAQ:ABCL), Relay Therapeutics (NASDAQ:RLAY), and Schrodinger (NASDAQ:SDGR). All are being closely watched by analysts, as their clinical data readouts could significantly impact their stock valuations.
Recursion Pharmaceuticals: A Pioneer in AI
Recursion Pharmaceuticals has gained attention for its use of AI in drug discovery, with notable partnerships and investments. Despite endorsements from Nvidia (NASDAQ:NVDA) and Cathie Wood’s ARK Investment Management, Recursion’s stock is down 26% year-to-date. The company plans to share seven clinical readouts over the next 18 months, including four phase 2 datasets. However, skepticism remains, as Leerink Partners analyst Mani Foroohar stated, “We struggle to find meaningful near-term catalysts.”
AbCellera: Leveraging AI
AbCellera leverages a vast database of immune cells and antibodies to identify drug candidates. The company has prioritized collaborative relationships with partners like Prelude Therapeutics (NASDAQ:PRLD), Incyte (NASDAQ:INCY), and Biogen (NASDAQ:BIIB). AbCellera’s internal research is in the early stages, with a program in metabolic and endocrine disease potentially leading to a first-in-class treatment. Piper Sandler (NYSE:PIPR) analyst Allison Bratzel remains optimistic, stating, “We like the long-term setup on this name.”
Relay Therapeutics: Focus on Interactions
Relay Therapeutics focuses on how proteins interact with other compounds, applying this strategy to targeted oncology and genetic diseases. The company claims its Dynamo platform has reduced the time to find drug candidates. Goldman Sachs (NYSE:GS) analyst Salveen Richter commented, “I almost would argue Relay has shown us proof of concept.” Relay’s top drug candidate, RLY-2608, is being closely watched, with an update on a phase 1b trial expected in the fourth quarter.
Schrodinger: Applying Physics to Drug Discovery
Schrodinger uses a physics-focused computational platform to find better drug targets, licensing this software to other biopharma companies while also developing its own pipeline. Collaborations include partnerships with Japan’s Takeda Pharmaceutical (NYSE:TAK). Schrodinger expects to share phase 1 data on SGR-1505, an experimental MALT1 inhibitor for non-Hodgkin’s B-cell lymphoma, by early next year.
Key Takeaway – AI-driven Drug Discovery Looks Promising
AI has the potential to revolutionize the drug discovery process, making it more efficient and effective. Companies like Recursion Pharmaceuticals, AbCellera, Relay Therapeutics, and Schrodinger are at the forefront of this movement. While challenges remain, such as skepticism from analysts and the need for further clinical validation, the future of AI-driven drug discovery looks promising. As these companies continue to progress in their clinical trials and partnerships, investors should closely monitor their developments, as positive results could significantly impact their stock valuations.
