An Introduction
The pharmaceutical industry is embracing AI to streamline drug discovery and development because creating a new drug using AI can help a company, in some cases, develop a new drug in a matter of days instead of the years it might take using the traditional clinical trial approach.
- According to Grand View Research the global “AI in drug discovery” market was worth about $1.1 billion last year but should grow at a 30% clip from 2023 to 2030;
- Deep Pharma Intelligence estimates that investments in the field of AI-powered drug discovery have tripled over the past four years to nearly $25 billion;
- Janssen Research & Development (JNJ arm) concludes the AI method to be up to 250 times more efficient than the traditional method of drug discovery holding the potential to reduce timelines for drug discovery, to increase accuracy of predictions on efficacy and safety as well as to create better, and more, opportunities to diversify drug pipelines; and
- Morgan Stanley believes that AI-powered drug discovery will lead to an additional 50 novel therapies being brought to market over the next decade, with annual sales in excess of $50 billion! In other words, a $50 billion AI drug discovery revolution is underway.
Source: Deep Pharma Intelligence
The Clinical Trial Process
New drugs are currently approved through human clinical trials: rigorous, year-long procedures starting in animal trials and gradually moving to patients in trials who are exposed to side effects that cannot be predicted or expected. The process typically cost billions of dollars and take many years to complete, sometimes more than a decade, and, even if their trials are successful, they still have to receive approval of a country’s respective regulatory agency. Source
Source: Biosourcing
Why Use AI Technology In Drug Development?
AI technology, however, helps companies aggregate and synthesize a lot of information that’s needed for clinical trials, thus shortening the drug development process. It can also help understand the mechanisms of the disease, establish biomarkers, generate data, models, or novel drug candidates, design or redesign drugs, run preclinical experiments, design and run clinical trials, and even analyze the real-world experience. Source
The MunAiMarkets AI-focused Drug Discovery Stocks Portfolio
The following 5 clinical-stage companies are using AI to facilitate their discovery and development of new drugs and trade on various Canadian and American stock exchanges. They are listed below in descending order of their stock performances in November along with their along with a description of their areas of focus, their market capitalizations, their product pipeline, and reasons for their price changes.
- Schrödinger (SDGR): UP 28.2% in November
- Area of Focus: uses its platform to discover novel molecules which it leverages to build a pipeline of its own clinical programs in addition to selling access to its platform to other pharmaceutical firms (see details here)
- Market Capitalization: $1,640M
- Pipeline: (see here)
- Specific Reasons Behind Price Change:
- Positive Analyst Ratings: Several brokerages raised their price targets for SDGR, with the consensus target price45.8% above its closing November price indicating strong confidence in the company’s future performance.
- Strong Earnings Report: Schrödinger reported earnings that exceeded expectations, which boosted investor confidence.
- Recursion Pharmaceuticals (RXRX): UP 12.2% in November:
- Area of Focus: decodes biology by integrating technological innovations to industrialize drug discovery (see details here)
- Market Capitalization: $2,170M
- Pipeline: (see here)
- Specific Reasons Behind Price Change:
- Acquisition of Exscientia: was seen as a strategic move to strengthen its position in the AI-driven drug discovery space.
- Positive Earnings Report: reported earnings that exceeded analyst expectations, which boosted investor confidence.
- FDA Clearance: obtained FDA clearance of an Investigational New Drug Application for REC-1245, a potential first-in-class treatment.
- Analyst Upgrades: Several analysts upgraded their ratings and price targets for RXRX, citing the company’s strong growth prospects and upcoming catalysts
- AbCellera Biologics (ABCL); UP 9.2% in November:
- along with a description of their areas of focus, their market capitalizations, their product pipeline,
- Area of Focus: searches for antibodies from natural immune responses which are then outsourced to their partners. (see details here)
- Market Capitalization: $875M
- Pipeline: (see here)
- Specific Reasons Behind price Change:
- Positive Earnings Report: reported better-than-expected earnings for Q3 2024, which boosted investor confidence.
- Pipeline Advancements: made progress with its pipeline, particularly with its lead asset ABCL575, which is being developed for atopic dermatitis.
- Analyst Upgrades: Several analysts upgraded their ratings and price targets for ABCL, citing the company’s strong growth prospects and upcoming catalysts
- Relay Therapeutics (RLAY): DOWN 13.8% in November
- Area of Focus: uses its platform to enhance small molecule therapeutic discovery in targeted oncology and genetic disease indications (see details here)
- Market Capitalization: $782M
- Pipeline: (see here)
- Specific Reasons Behind Price Change:
- Disappointing Earnings Report: reported a quarterly loss that was worse than expected, which disappointed investors.
- Pipeline Setbacks: The company faced delays in its clinical trials, particularly with its lead product candidates, which raised concerns about future revenue streams.
- Analyst Downgrades: Several analysts downgraded their ratings and price targets for RLAY, citing the company’s financial performance and pipeline challenges.
- Absci Corporation (ABSI): DOWN 21.6% in November
- Area of Focus: analyzes drug characteristics that may provide therapeutic benefit. (see details here)
- Market Capitalization: $362M
- Pipeline: (see here)
- Specific Reasons Behind Price Change:
- Disappointing Earnings Report: reported earnings that fell short of analyst expectations, which disappointed investors.
- Pipeline Setbacks: The company faced delays in its clinical trials, raising concerns about future revenue streams.
- Analyst Downgrades: Several analysts downgraded their ratings and price targets for ABSI, citing the company’s financial performance and pipeline challenges.
Summary
The MunAiMarkets Ai-focused micro/small-cap clinical-stage drug discovery stocks portfolio went UP 12.1% in November but remains DOWN 39.2% YTD.
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