Is Recursion Pharmaceuticals Stock Attractive?

Recursion Pharmaceuticals (NASDAQ: RXRX) saw its stock jump 11% on Wednesday after JP Morgan upgraded the stock, citing promising potential for its MEK inhibitor program. But here’s the reality check: RXRX is still down 35% year-to-date and trading under $5. So the real question isn’t whether it had a good day—it’s whether this beaten-down biotech represents a compelling buying opportunity right now.

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The Fundamental Bet You’re Making

Let’s be clear about what you’re buying: nothing on the drugs front. At least, nothing you can hold in your hand or see on pharmacy shelves. Recursion has zero commercialized drugs generating revenue. This is a pure-play bet on future potential, which means you’re essentially underwriting the company’s pipeline and its AI-driven drug discovery platform. Is that necessarily bad? No. But you need to understand that’s the game. See, for the nine months ended September 30, 2025, the company’s total operating (collaboration) revenue was approximately $34 million. This stems from research collaborations and technology licensing fees.

What’s Actually In The Pipeline?

The crown jewel right now is REC-4881, a MEK inhibitor that’s generating the kind of data that makes investors—and apparently JP Morgan analysts—sit up and pay attention.

What’s it treating? Familial adenomatous polyposis (FAP) – a genetic condition where patients develop hundreds to thousands of polyps in their colon, essentially guaranteeing colorectal cancer without intervention. It’s also being tested in other APC-mutant solid tumors.

What do the results show? The December 2025 data from the Phase 2 TUPELO trial showed a median 43% reduction in polyp burden for FAP patients. That’s not incremental improvement—that’s clinically meaningful.

Why does this matter financially? If approved, REC-4881 could generate over $1 billion in annual sales. For a company currently valued at $2 billion, a successful drug launch would be transformative.

But wait—isn’t banking on one drug risky? Absolutely. Which brings us to the rest of the pipeline.

Beyond REC-4881: The Supporting Cast

Recursion isn’t a one-trick pony. They’re developing:

• REC-617: Another pipeline asset in development. It’s a CDK7 Inhibitor currently in phase two trials for platinum-resistant ovarian cancer.
• REC-1245: Additional clinical program identified using the Recursion Operating System (OS) platform. It targets a selective degrader of RBM39, a protein that mimics the effects of CDK12 inhibition. The drug is currently in early trials for biomarker-enriched solid tumors and lymphoma.
• REC-7735: Further expanding their therapeutic reach with this development-stage candidate – a precision-designed molecule targeting a specific mutation common in breast cancer.

Do these have billion-dollar potential too? That remains to be seen. But the point is this: the company is building multiple shots on goal, which is exactly what you want in a clinical-stage biotech. One failure doesn’t sink the ship.

The AI Drug Discovery Advantage

Here’s where things get interesting beyond just the pipeline. Recursion isn’t your grandfather’s pharmaceutical company grinding through traditional drug development. They’ve built a platform combining:

• AI and machine learning to analyze massive datasets of cellular images
• High-throughput screening to test compounds at scale
• Partnerships with major players that validate their approach

Why does the platform matter?

Because if it works, Recursion can potentially:

• Discover drugs faster than traditional methods
• Reduce development costs significantly
• Generate multiple pipeline candidates from the same infrastructure
• License the platform technology itself as a revenue stream

Has this been proven yet? Not fully. But they’ve secured partnerships with Roche, Bayer, and others who’ve put real money behind the technology. That’s meaningful validation.

The Partnership Revenue Stream

Speaking of partnerships—this is crucial. While Recursion waits for its own drugs to reach commercialization, partnership deals provide:

• Upfront payments
• Research funding
• Milestone payments as programs advance
• Potential royalties on successful drugs

These partnerships do two things: they keep the lights on during the long development process, and they validate that Big Pharma believes in Recursion’s approach. When Roche writes a check, they’re not doing it out of charity.

What Could Go Wrong?

Let’s not sugarcoat this—plenty could derail the thesis:

• Clinical trial failures: REC-4881 could fail in later-stage trials. That 43% polyp reduction could not translate to meaningful endpoints that regulators care about, or safety issues could emerge.
• Cash burn: Clinical-stage biotechs burn cash. If trials take longer or cost more than expected, dilutive financing becomes necessary. Your ownership percentage shrinks.
• Platform risk: What if the AI-driven approach doesn’t actually accelerate drug discovery as promised? The whole competitive advantage evaporates.
• Competition: Other companies are working on FAP treatments and APC-mutant cancers. Being first matters, but being best matters more.
• Market conditions: Small-cap biotechs get hammered in risk-off environments. Macro headwinds could keep the stock suppressed regardless of clinical progress. For instance, during the 2022 inflation shock, RXRX stock fell 89.0% from a high of $41.33 on 13 July 2021 to $4.56 on 2 May 2023, vs. a peak-to-trough decline of 25.4% for the S&P 500. The stock is yet to recover to its pre-Crisis high. See our dashboard – Is Recursion Pharmaceuticals Stock Built to Withstand More Downside? – for more details.

The Bottom Line: Is RXRX A Buy Under $5?

Here’s why the risk-reward looks attractive right now:
You’re getting a company with a potentially billion-dollar drug candidate showing strong Phase 2 data, a platform that major pharma partners are betting on, and multiple pipeline shots on goal—all for a market cap that prices in significant skepticism.
Analysts have an average price target around $7, implying nearly 50% upside. That’s not a moonshot prediction; it’s a reasonable rerating if REC-4881 continues progressing and the platform proves out.
But—and this is critical—we could be completely wrong. Clinical trials fail. AI platforms underdeliver. Partnerships fizzle. That’s the biotech game.
So should you buy RXRX under $5? If you understand you’re buying a high-risk, high-reward lottery ticket on drug development, and you can stomach volatility and potential loss, then yes—the setup looks compelling. Just make sure it’s money you can afford to lose, because in biotech, “promising” and “profitable” are separated by years of expensive trials and binary outcomes.
Size your position accordingly. Weight the risks heavily. But don’t ignore the potential.

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