Nvidia-backed Recursion hurts AI biotechs on mixed data for lead drug

Recursion Pharmaceuticals (NASDAQ:RXRX) led a selloff among AI-driven biotechs on Tuesday after the company, backed by chipmaker Nvidia (NASDAQ:NVDA), announced initial results from a Phase 2 trial for its lead asset REC-994.

The trial targeting a neurocondition called cerebral cavernous malformation (CCM) met the primary endpoint of safety and tolerability after 12 months of therapy, Recursion (RXRX) said.

However, the company added that while data for MRI-based secondary efficacy endpoints were promising, it has yet to see improvements in either patient—or physician-reported outcomes at that time point.

In July 2023, Recursion (RXRX) sparked a rally in AI-driven biopharma stocks after winning a $50M investment from Nvidia (NVDA).

However, in the wake of the readout, Recursion (RXRX) shares plunged ~11%, marking its biggest intraday loss in over two months, albeit on below-average volumes, while Nvidia (NVDA) fell ~8%.

Exscientia (EXAI), another AI-based biotech that Recursion (RXRX) agreed to acquire last month, lost ~9%.

Other AI-based drug developers, Absci (ABSI), AbCellera Biologics (ABCL), and Tempus AI (TEM), were also in the red, while Schrödinger (SDGR) and BioSig Technologies (OTCQB:BSGM) were trading flat.