Although fraught with risk, these biotech exposures bring enormous upside potential.
If there is any sector that could benefit from machine learning, it’s the biotechnology sector. Life sciences are inherently multidisciplinary, generating vast amounts of complex data. AI tools can hone in on emergent patterns in that data, filtering it for insights that open avenues for new advances.
This could range from sequencing genomes to identify mutations to processing the entirety of a patient’s clinical data to paint a clearer picture. Breaking down this data, too, reveals new patterns in the aggregate of thousands of patients.
Ultimately, the breakdown of such large biochemical datasets could lead to both disease predictions and new drug discoveries. Moreover, such AI tools don’t have to carry the imposed burden of “AI safety” due to particular ideological constraints as demonstrated during Google’s Gemini launch debacle.
But which AI-powered biotech firms have shown the most progress in leveraging AI?
1. Skye Bioscience
When pushing the medical envelope, this Californian biotech firm picked the unexplored endocannabinoid system (ECS) field. Naturally produced by the body, endocannabinoids act as neurotransmitters, relaying regulating signals across the body’s cells.
Skye Bioscience (NASDAQ:SKYE) uses CB1-targeting molecules to modulate ECS to improve health. So far, the company has focused on the CB1 inhibitor nimacimab to treat obesity, fibrotic liver, pulmonary, and kidney disease, to name a few.
Just for obesity alone, the addressable market is huge, up to $100 billion by 2030, as forecasted by Goldman Sachs (NYSE:GS). Moreover, there are indications that CB1 inhibition approach is of lower-risk profile than with current GLP-1 drugs like Ozempic or Trulicity. Based on this promise, Skye Bioscience is pushing nimacimab into Phase 2 trials by mid-summer 2024.
Accordingly, SKYE stock has skyrocketed by 202% year-to-date. At the present price of $8, SKYE shares are nearly half their 52-week high of $15.60 while near the 52-week bottom of $7 per share, suggesting a favorable entry point. Nasdaq’s forecasting places the average SKYE price target at $21 per share.
2. AbCellera Biologics
Canadian Abcellera Biologics (NASDAQ:ABCL) developed a unique platform that combines big data automation to filter development candidates for investigational new drugs (INDs). Specifically, it aims to identify new antibodies via its proprietary monoclonal antibody (mAb) screening platform powered by machine vision and sequencing.
However, the company is yet to establish clinical manufacturing capability, set for 2025. In other words, AbCellera is a pre-early-clinical stage company riding on speculation. Nonetheless, other biotech firms have shown confidence in AbCellera’s pipeline model, such as Incyte (NASDAQ:INCY), Regeneron Pharmaceuticals (NASDAQ:REGN), Prelude Therapeutics (NASDAQ:PRLD) and Biogen (NASDAQ:BIIB).
In 2017, AbCellera partnered with Pfizer (NYSE:PFE) for a multi-target research collaboration. These show AbCellera as a well-networked biotech company but for long-term investing exposure.
Year-to-date, ABCL stock is down 54%. From the 52-week average price of $4.88, ABCL shares are down to $2.78, significantly under the 52-week high of $8 per share. Yet, Nasdaq’s forecasting data points to an average price target of $12.6, making ABCL stock a potential massive wealth-maker.
3. Janux Therapeutics
Tackling cancer, a manifestation of cell entropy, remains the holy grail of medicine. Janux’s approach departs from the traditionally toxic T-cell engagers (TCEs) and favors the TRACTrs and TRACIrs pipeline.
These proprietary platforms promise increased blood serum stability and targeting accuracy to avoid toxic effects on non-tumor areas. AI can boost the development of bispecific molecules to bind to tumor antigens and T cells.
Janux (NASDAQ:JANX) JANX007 and JANX008 are both in Phase 1 trials, targeting prostate cancer cells and solid tumors, such as non-small cell lung cancer (NSCLC). Of the big pharma players, Janux established cooperation with Merck in 2020, ending March 2024 with a debt-free $652 million pile of cash.
This potent combo of financials and biotech potential propelled JANX stock 264% year-to-date. At $41, JANX stock is still below the 52-week high of $65.60. The latter price level is aligned with Nasdaq’s average JANX price target of $63.33 per share.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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