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An Introduction

The AI-powered drug discovery process is expected to grow by a compound annual growth rate of 30% between now and 2030 according to research from Grand View Research. This should result in approximately 50 novel therapies being brought to market over that 10 year period according to Morgan Stanley and generate annual sales in excess of $50 billion by then.

The munKNEE AI-focused Drug Discovery Stocks Portfolio

There are 6 AI-focused clinical-stage drug discovery currently trading on North American stock exchanges and they are tracked in the munKNEE AI-focused Drug Discovery Stocks Portfolio. Their stock performances MTD (as of the close of business on August 13th) are highlighted below, in descending order and in the month of July, along with a description of their areas of focus, their market capitalizations, their product pipeline and the latest news, analyses and commentary on each, where pertinent:

1. Exscientia (EXAI): DOWN 5.5% MTD; UP 3.7% in July
   • Area of Focus: designs and develops differentiated medicines for diseases with high unmet patient needs (see details here)
   • Market Capitalization: $646M
   • Pipeline: (see here)
   • Latest News, Analyses and Commentary:
     • Exscientia and Recursion merge to form drug discovery company
2. Schrödinger (SDGR): DOWN 10.6% MTD; UP 15.2% in July
   • 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: $1,450M
   • Pipeline: (see here)
   • Latest News, Analyses and Commentary:
     • Schrödinger Second Quarter 2024 Earnings
3. Absci Corporation (ABSI): DOWN 11.8% MTD; UP 42.9% in July
   • Area of Focus: analyzes drug characteristics that may provide therapeutic benefit. (see details here)
   • Market Capitalization: $439M
   • Pipeline: (see here)
   • Latest News, Analyses and Commentary:
     • Absci Collaborates with Global Cancer Center to Discover Novel Therapeutics Using Generative AI
4. AbCellera Biologics (ABCL): DOWN 18.1% MTD; UP 10.1% in July
   • Area of Focus: searches for antibodies from natural immune responses which are then outsourced to their partners. (see details here)
   • Market Capitalization: $787M
   • Pipeline: (see here)
   • Latest News, Analyses and Commentary:
     • AbCellera Biologics Just Reported And Analysts Are Trimming Their Forecasts
5. Recursion Pharmaceuticals (RXRX): DOWN 20.2% MTD; UP 9.3% in July
   • Area of Focus: decodes biology by integrating technological innovations to industrialize drug discovery (see details here)
   • Market Capitalization: $1,840M
   • Pipeline: (see here)
   • Latest News, Analyses and Commentary:
     • Recursion to absorb Exscientia in ‘techbio’ deal
6. Relay Therapeutics (RLAY): DOWN 20.2% MTD; UP 26.1% in July
   • Area of Focus: uses its platform to enhance small molecule therapeutic discovery in targeted oncology and genetic disease indications (see details here)
   • Market Capitalization: $878M
   • Pipeline: (see here)
   • Latest News, Analyses and Commentary:
     • Relay Therapeutics Reports Second Quarter 2024 Financial Results

Summary

On average, the 6 constituents in our AI-focused Drug Discovery Stocks Portfolio (averaging $1,007M in market capitalization) are DOWN 13.7% MTD vs. going UP 16.1% in July.

How To Analyze A Biotech Company’s Financial Health

Bill McNarland expands on the above information expressing the need (see here) to analyze cash flow, burn rate, liquidity, working capital, debt levels, and revenue growth, all of which are crucial for sustaining lengthy development processes. He also points out the need for potential investors to assess the total addressable market, competition, and uniqueness of treatments before making any investment decisions.

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