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An Introduction

The use of AI in drug discovery is expected to significantly shorten (currently 13.5 years, on average) and cheapen (currently about $900M, on average) the process of developing new drugs the conventional way. According to research from Grand View Research, the AI-powered drug discovery process is expected to grow by a compound annual growth rate of 30% between now and 2030 which should result in approximately 50 novel therapies being brought to market over that 10 year period and, according to Morgan Stanley, 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.

Below are their stock performances last week, in descending order, and MTD and YTD, 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. Absci Corporation (ABSI): UP 12.8% last week; UP 45.5% MTD; UP 6.7% YTD
   • Area of Focus: utilizes a platform to improve upon traditional biologic drug discovery by using AI to simultaneously optimize multiple drug characteristics that may be important to development and therapeutic benefit. (see details here)
   • Market Capitalization: $507M
   • Pipeline: (see here)
   • Latest News, Analyses and Commentary:
     • Absci to Report Business Updates and Second Quarter 2024 Financial and Operating Results on August 14, 2024
2. AbCellera Biologics (ABCL); UP 9.8% last week; UP 10.1% MTD; DOWN 42.9% YTD
   • Area of Focus: discovers antibodies from natural immune responses which are pre-enriched for antibodies and then outsources them to their partners, Eli Lilly and Company, Confo Therapeutics and Biogen Inc. (see details here)
   • Market Capitalization: $959M
   • Pipeline: (see here)
   • Latest News, Analyses and Commentary:
     • Is AbCellera A Smart Buys for Your Portfolio?
3. Recursion Pharmaceuticals (RXRX): UP 9.7% last week; UP 11.3% MTD; DOWN 15.3% YTD
   • Area of Focus: engages in the decoding biology by integrating technological innovations across biology, chemistry, automation, data science, and engineering to industrialize drug discovery (see details here)
   • Market Capitalization: $2,240M
   • Pipeline: (see here)
   • Latest News, Analyses and Commentary:
     • Is Recursion Pharmaceuticals a Buy?
4. Schrödinger (SDGR): UP 5.2% last week; UP 15.9% MTD; DOWN 37.4% YTD
   • Area of Focus: has developed a physics-based computational platform geared toward the discovery of 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: $1,630M
   • Pipeline: (see here)
   • Latest News, Analyses and Commentary:
     • Schrödinger Launches Initiative to Significantly Expand Application of Computational Tools for Predictive Toxicology
5. Exscientia (EXAI):  UP 4.5% last week; UP 5.3% MTD; DOWN 16.2% YTD
   • Area of Focus: engages in the design and development of differentiated medicines for diseases with high unmet patient needs and has collaboration agreements with Merck KGaA, Bristol Myers Squibb, Sanofi, the Bill & Melinda Gates Foundation, Charité – Universitätsmedizin Berlin, Rallybio, and GT Apeiron Therapeutics (see details here)
   • Market Capitalization: $659M
   • Pipeline: (see here)
   • Latest News, Analyses and Commentary:
     • Exscientia acquires oral CDK7 inhibitor for $20m; plans breast cancer trial
6. Relay Therapeutics (RLAY): UP 4.0% last week; UP 37.1% MTD; DOWN 18.8% YTD
   • Area of Focus: specializes in developing an artificial intelligence-driven allosteric drug-discovery platform intended to detect and characterize interactions that occur on a protein of interest and combines computational methods with experimental approaches across the fields of structural biology, biophysics, and chemistry. Its initial focus is on enhancing small molecule therapeutic discovery in targeted oncology and genetic disease indications (see details here)
   • Market Capitalization: $1,190M
   • Pipeline: (see here)
   • Latest News, Analyses and Commentary:
     • Roche walks away from Relay

Summary

On average, the 6 constituents in our AI-focused Drug Discovery Stocks Portfolio (averaging $1,201M in market capitalization) were UP 6.5%, on average, last week, are UP 18.7% MTD but remain DOWN 27.6% YTD.
 

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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