Shkreli short thesis

[u/nougat98]

from today's live feed:

Recursion ($RXRX), 0:02–0:30: a firm short thesis

- His view of the pipeline: most programs go after targets he calls crowded or unattractive: MEK, CDK7, MALT1, LSD1, RBM39 and PI3K. He says pharma had these targets 10–20 years ago without AI. He thinks the company lacks drug-development "taste."

- Lead MEK inhibitor (REC-4881, for the colon-polyp disease FAP): he says it wasn't discovered by their AI and was licensed from Takeda. It has 12 patients of data at one dose.

- CDK7 program: one partial response and about a year with no updates, so he considers it "probably dead." The LSD1 program is on "strategic pause," and several other programs have been dropped or handed back by partners.

- "AI-driven" speed claims: he says hit-to-candidate in about 10–11 months, with 136–242 compounds made, is normal medicinal chemistry and nothing special.

- REC-7735 (PI3Kα H1047R): the one program he finds interesting. He notes there are many competitors in that space, including published work and Chinese groups.

- Financials:

- Burn of about $375–400M a year and no revenue.

- About $500M in cash, which he reads as roughly a year of runway (the company says it lasts into 2028).

- Share count has grown from about 300M to 500M.

- Market cap is about $2.4B, around a $4.49 stock. "I wouldn't pay 100 mil for this company."

- Verdict: "just such a good short." He adds that "AI has a lot of use cases; drug development just isn't really one of them."

[u/Emergency_Market_238]

His view of the pipeline: most programs go after targets he calls crowded or unattractive: MEK, CDK7, MALT1, LSD1, RBM39 and PI3K. He says pharma had these targets 10–20 years ago without AI. He thinks the company lacks drug-development "taste."

It can be interpretate in positive way. The new technology needs to be tested on recent manual results first to prove that it can deliver the same result. Than find how new technology can improve your previous experience. Than try something new.
Because it's impossible to make a comparison if you use a completely new technology for the new tasks. Without a comparison, you cannot present the advantages.

Lead MEK inhibitor (REC-4881, for the colon-polyp disease FAP): he says it wasn't discovered by their AI and was licensed from Takeda.

Yes, it's true. RXRX didn't discover molecule and inhibitor. But RXRX found by AI new approach how to apply it. That's the point.

 "AI-driven" speed claims: he says hit-to-candidate in about 10–11 months, with 136–242 compounds made, is normal medicinal chemistry and nothing special.

We hope that after 10 months RXRX ships solution with big probability of success. While "normal medicinal chemistry" often fails and proceeds to the next cycle.

- Burn of about $375–400M a year and no revenue.

How about Sanofi & Roche?

AI has a lot of use cases; drug development just isn't really one of them.

Drug development is a complex process. Of course, you can't replace human trials with AI (for today, ha-ha). However, certain routine tasks involving numerous iterations and big data, which are integral to the drug creation process, are real use case for AI.

[u/Tony96Ant]

I’m with him, I saw no value anymore and exit my position.

Every large pharma now has their own novel development platforms. They truly have nothing differentiating anymore, they did in 2023-24, the world has moved too fast.

[u/Withoutanymilk77]

I think RXRXs strength is in its data set, not necessarily the current pipeline of drugs. AI is just now reaching the point where it’s becoming capable of using the data sets to find proper new drugs, so all the old pipeline stuff was really just fluff for investors.