Investors looking for stocks that could make dramatic moves in a short, defined time frame will want to turn their attention toward two innovative drugmakers. A couple of stocks in the volatile biopharmaceutical industry are poised to soar by the end of March.
Results from clinical trials that wrap up soon could soon push shares of Recursion Pharmaceuticals (RXRX 3.87%), and Arvinas (ARVN +0.27%) through the roof. Both companies are expected to report their highly anticipated data any day now.
Before you get excited and fill your portfolio with shares of these drugmakers, it's important to realize positive outcomes regarding their upcoming catalysts are a long way from guaranteed. Read on to see why these stocks could be worth further inspection.
1. Recursion Pharmaceuticals
In a nutshell, Recursion Pharmaceuticals is using artificial intelligence (AI) software to speed up the pace of drug development. The stock soared in 2023 when Nvidia disclosed a small equity stake.
NASDAQ: RXRX
Key Data Points
Unfortunately, Recursion stock has fallen around 59% from its previous peak because investors are still waiting for clinical validation of its AI-powered drug discovery platform.
Recursion Pharmaceuticals was founded in 2013 and received its first green light to begin a clinical trial with REC-994, an experimental drug it discovered with help from its AI-driven discovery platform in 2018. Unfortunately, REC-994 for cerebral cavernous malformation failed to improve outcomes for patients with the rare neurovascular condition in a phase 1 study that read out last September.
Recursion disappointed investors further with its second clinical trial flop last December. The Elucidate study enrolled 19 ovarian cancer patients and treated them with REC-617, a CDK7 inhibitor similar to Verzenio from Eli Lilly. One out of 18 evaluable patients responded to the candidate Recursion described as potentially best in class.
Recursion's stock has been justifiably beaten down in response to dismal clinical data so far. Now that its market cap has dwindled down to about $1.9 billion, clinical validation of its platform could send the stock soaring. A phase 2 trial with REC-2282 and neurofibromatosis patients was supposed to read out results in late 2024 and could produce data any day now.
A successful readout for REC-2282 could send Recursion stock soaring. After two consecutive trial failures, though, it isn't worth the risk. It's best to wait until after we see a candidate from its AI-driven platform produce better outcomes for patients.
2. Arvinas
Arvinas is another clinical-stage drug developer with a somewhat unproven drug discovery platform. Instead of AI, it's focused on getting cells to degrade troublemaking proteins once considered unassailable.
NASDAQ: ARVN
Key Data Points
Arvinas' lead candidate, vepdegestrant, is an orally available estrogen receptor degrader that the company is co-developing in partnership with Pfizer. The phase 3 Veritac-2 study finished enrolling second-line breast cancer patients in late 2024, and the study could produce top-line results any day now.
Patients in the Veritac-2 study were randomized to receive a standard estrogen blocker called fulvestrant, or Arvinas' vepdegestrant. If the experimental estrogen degrader delays tumor growth longer than the standard of care, this stock will rocket higher.
In a few years, vepdegestrant sales could soar past $1 billion annually if it outperforms the standard of care in Veritac-2 and subsequent trials. Unlike Recursion, Arvinas already validated its discovery platform with phase 2 results that showed a 38% response rate among second-line breast cancer patients treated with vepdegestrant monotherapy.
Arvinas stock has fallen by more than half from a peak it set last spring. At its beaten-down price, the drugmaker sports an extremely modest $119 million enterprise value.
With Pfizer doing a lot of the heavy lifting, Arvinas burned through just $154 million during the first nine months of 2024. A modest cash burn rate left the company with an extremely healthy $1.1 billion cash position. There are no guarantees that vepdegestrant will outperform the standard of care, but its chances of success appear better than average. Adding some shares of this stock to a diverse portfolio now could be a smart move for investors with a strong risk tolerance.
