Recursion Pharmaceuticals Inc. (NASDAQ:RXRX) snapped a three-day winning streak on Thursday, surging as much as 17.9 percent intraday, after Sanofi finally pulled the trigger on the development of drug molecules that would help bolster its milestone revenues to over $400 million.
In an updated report on the same day, Recursion said that it received another $10 million in milestone payments from Sanofi, bringing total upfront and milestone payments received from the latter to $144 million.
Recursion is eligible to receive more than $300 million in additional milestones, with double-digit royalties on net product sales if the drug molecules secure regulatory approvals.
Meanwhile, the amount recently received will reflect on its third-quarter earnings performance and mark the end of operational requirements related to the development. Future payments from Sanofi will begin to be recognized as future profits.
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4 Years in the Making
The potential first-in-class oral small molecule was designed to achieve a differentiated profile against a challenging dual target implicated in inflammatory disease, supported by Recursion’s multiple computational design approaches across iterative cycles of prediction, chemical design, synthesis, and experimental validation, combined with Sanofi’s expertise in drug discovery and immunology.
The program forms part of an original partnership clinched in 2022, under which Recursion Pharmaceuticals Inc. and Sanofi will join forces to discover and develop AI-enabled small molecule therapies across immunology and oncology.
“The most important test of any technology platform in drug discovery is whether it can translate into differentiated medicines,” Recursion President and CEO Najat Khan said.
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“Together with Sanofi, we tackled a difficult design problem against a dual target product profile with high potential and delivered a molecule that Sanofi has now selected for its development pipeline. With additional programs advancing across our collaboration, this milestone is another important demonstration of how our platform can translate computational capabilities into differentiated medicines — and do so repeatedly,” she added.
Additional programs across the collaboration continue to advance, Recursion said. Other programs in the joint portfolio have the potential to reach development candidate and other progress-based milestones over the next 12 months.
Strong Q2 Hedge Fund Conviction
Fourth quarter filings could provide a clearer picture of whether the official drug development would spark further buying in Recursion Pharmaceuticals Inc. by the end of the year.
In the second quarter alone, 30 hedge funds held positions in its stock, a modest decline from 33 in the first quarter of the year.
However, conviction strengthened, with combined holdings surging by 16 percent to $287.9 million from $247.66 million quarter-on-quarter, signaling that existing investors have placed more confidence in its long-term growth trajectory.
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