RXRX Soars 9% on Strategic Shift: Can AI-Driven Biotech Reclaim Its Luster?

Summary
• Recursion Pharmaceuticals (RXRX) surges 8.97% intraday to $6.015, breaking above $6.225 highs
• Acquisition of Rallybio’s HPP joint venture triggers $7.5M upfront equity payment and $12.5M contingent milestone
• Shares underperformed sector by 20.3% YTD despite AI-powered drug discovery pipeline

Recursion Pharmaceuticals (RXRX) is trading at a 9% intraday rally as investors digest its strategic acquisition of Rallybio’s stake in the hypophosphatasia (HPP) joint venture. The stock’s volatile trajectory—from a 52-week low of $3.79 to $6.015—reflects renewed optimism over AI-driven drug development and pipeline reprioritization. With $2.29B market cap and -3.0x P/E, the biotech’s aggressive technical setup and options activity suggest a pivotal juncture.

Strategic Acquisition of Rallybio Stake Ignites Optimism
Recursion’s 8.97% intraday surge stems from its acquisition of Rallybio’s full stake in the HPP joint venture, securing sole ownership of REV102—a promising oral ENPP1 inhibitor. The deal includes $7.5M upfront equity, $12.5M in contingent equity tied to preclinical milestones, and $5M for clinical trial initiation. This move follows a May 2025 pipeline overhaul, where RXRX shelved three key drug candidates (REC-994, REC-2282, REC-3964) due to mid-stage failures. By consolidating the HPP program, Recursion aims to leverage its AI-powered Recursion OS (developed with NVIDIA) to advance the first oral, disease-modifying treatment for HPP, a rare genetic disorder. The transaction also includes low-single-digit royalties for Rallybio, signaling a calculated pivot toward high-impact, AI-optimized targets.

Options Playbook: Leverage Gamma and Theta for Short-Term Volatility
• 200-day average: 6.2486 (above) • RSI: 52.37 (neutral) • MACD: 0.125 (bullish) • Bollinger Bands: 5.675 (upper), 5.237 (middle) • Gamma: 0.5616 (high sensitivity) • Theta: -0.0323 (aggressive time decay)

Recursion’s 9% rally has pushed it above key 200D support at $6.04 and into overbought territory (RSI 52.37). Short-term bulls should watch the $6.225 intraday high as a pivot point; a break above this could trigger a test of the 52W high at $12.36. The most liquid options are RXRX20250725C6 and RXRX20250801C5.5, both offering high gamma and moderate delta for directional bets.

• RXRX20250725C6 (Call, $6 strike, 7/25 expiry):
- IV: 80.96% (elevated volatility)
- Leverage Ratio: 23.69% (moderate)
- Delta: 0.4835 (moderate sensitivity)
- Theta: -0.0323 (aggressive decay)
- Gamma: 0.5616 (high sensitivity)
- Turnover: $61,927 (high liquidity)
- Payoff at 5% upside: $0.48 (max(0, 6.315 - 6))
- Why: High gamma and IV make this ideal for a continuation rally if RXRX holds above $6.225.

• RXRX20250801C5.5 (Call, $5.5 strike, 8/1 expiry):
- IV: 98.07% (extreme volatility)
- Leverage Ratio: 8.46% (low)
- Delta: 0.6845 (high sensitivity)
- Theta: -0.0239 (moderate decay)
- Gamma: 0.3020 (moderate sensitivity)
- Turnover: $13,538 (high liquidity)
- Payoff at 5% upside: $0.815 (max(0, 6.315 - 5.5))
- Why: High delta and IV provide asymmetric upside if RXRX breaks the 52W high, despite lower leverage.

Aggressive bulls may consider RXRX20250725C6 into a break above $6.225.

Backtest Recursion Stock Performance
The backtest of RXRX's performance after an intraday surge of at least 9% shows mixed results. While the 3-day win rate is relatively high at 45.33%, the returns over longer periods such as 10 days and 30 days are negative, with a maximum return of only 0.70% over 30 days. This suggests that while RXRX may experience short-term gains, it is prone to giving them up in the medium to long term.

RXRX at a Pivotal Crossroads: Buy the Dip or Ride the Volatility?
Recursion Pharmaceuticals’ 9% intraday rally reflects a strategic repositioning toward AI-optimized drug candidates like REV102 for HPP. While the stock remains 20.3% below its 52W high, the technical setup—bullish MACD, overbought RSI, and high gamma in options—suggests short-term momentum. Investors should monitor the $6.225 intraday high as a critical resistance; a break above this could trigger a test of $12.36. Meanwhile, the sector leader Illumina (ILMN) is down -0.68% intraday, underscoring biotech sector volatility. For long-term holders, the $5.57 intraday low remains a key support. Short-term traders may capitalize on the RXRX20250725C6 option’s high gamma and IV for a directional play, but caution is warranted given RXRX’s -3.0x P/E and pipeline risks.