RXRX Stock Heads For Its Best Day In Over A Year – What’s Driving The Rally Today?

• Recursion could receive over $300 million in additional milestone payments from the program.
• Sanofi will fund the development of the drug, with Phase 1 clinical trials expected to begin in 2027.
• Recursion priced a $200 million underwritten offering at $3.25 per share.

Shares of Recursion Pharmaceuticals (RXRX) surged more than 16% on Thursday after French drugmaker Sanofi (SNY) selected an experimental treatment for inflammatory diseases developed through their multi-program research collaboration.

The update comes alongside a $200 million stock offering that Recursion expects will fund operations into 2029.

If the current levels hold, RXRX stock would record its biggest single-day gains in almost a year. 

Sanofi Picks First Drug Candidate Under Partnership

Sanofi’s selection triggered a $10 million milestone payment for Recursion. The experimental oral drug targets two biological mechanisms involved in inflammatory diseases. It is designed to target two biological factors involved in inflammatory diseases.

Recursion used its AI-enabled drug design platform and small-molecule chemistry capabilities along with Sanofi’s expertise in drug discovery and immunology to develop the drug.

Sanofi will fund the development of the drug, with Phase 1 clinical trials expected to begin in 2027.

Recursion has now received $144 million in upfront and milestone payments under the partnership. It could earn more than $300 million in additional payments from this program, alongside royalties if the drug is commercially approved.

Sanofi and Exscientia signed a drug development partnership in January 2022. Exscientia was subsequently merged with Recursion two years later.

The agreement covers up to 15 potential therapies targeting cancer and immune-related diseases, with Recursion eligible for about $5.2 billion in milestone payments if all programs meet their targets.

Recursion’s $200M Fundraising

Recursion also priced a public offering of 61.5 million shares at $3.25 each, aiming to raise about $200 million before expenses. This was a 13% discount to the stock’s closing price on Wednesday.

Investors participating in the offering include ARK Invest, Janus Henderson Investors, Invus and Driehaus Capital Management.

Recursion had around $561 million in preliminary cash, cash equivalents and restricted cash at the end of September. September-end. Its new equity offering is expected to extend its projected cash runway into 2029.

Retail’s Take On RXRX

Retail sentiment on Stocktwits surrounding RXRX remained ‘bearish’ over the past 24 hours despite the rally.

The stock is up about 2% so far this year.

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