RXRX Soars 17.85% on JPMorgan Upgrade and Promising Trial Data – What’s Next for Biotech’s AI-Driven Contender?

Summary
• Recursion Pharmaceuticals (RXRX) surges 17.85% intraday to $4.95, defying a down healthcare sector
• JPMorgan upgrades RXRX to Overweight with $11 price target, citing blockbuster potential for REC-4881
• Phase 1b/2 trial shows 43% median polyp reduction in FAP patients, with durable effects post-treatment
• Options frenzy: 2025-12-26 $5 call options see 500% price surge, while 2026-01-02 $5 calls trade at 300% gains
Recursion Pharmaceuticals (RXRX) is experiencing a seismic shift in investor sentiment, driven by JPMorgan’s strategic upgrade and groundbreaking clinical data for its FAP drug candidate. The stock’s 17.85% intraday surge to $4.95—despite a broader healthcare sector slump—highlights the market’s renewed optimism in AI-driven drug discovery. With options volatility spiking and institutional buying evident, the question now is whether this momentum can sustain or if it’s a short-term catalyst play.

JPMorgan’s Overweight Upgrade and Durable Trial Results Ignite Biotech Rally
RXRX’s 17.85% surge is directly tied to JPMorgan’s upgrade to Overweight and a raised $11 price target, reflecting confidence in the company’s AI-powered drug pipeline. The firm highlighted REC-4881’s Phase 1b/2 TUPELO trial results, which demonstrated a 43% median reduction in polyp burden for FAP patients after 12 weeks of treatment, with 82% maintaining reductions post-treatment. These durable effects, coupled with a broader patient population estimate, validate Recursion’s AI-driven approach and pharmaceutical partnerships. Additionally, JPMorgan noted peak U.S. sales potential exceeding $1B for REC-4881, with 60% probability of success. The stock’s outperformance against a down healthcare sector (XBI -0.11%) underscores the market’s focus on clinical milestones over macroeconomic concerns.

RXRX Volatility and ETF Correlation: Navigating the Biotech Breakout with Leverage
• Bold ETFs: ARKG (29.691, +0.375%) and XBI (121.872, -0.113%) show divergent momentum
• 200-day MA: 5.2028 (above current price), RSI: 45.97 (oversold), MACD: -0.1206 (bearish), Bollinger Bands: $3.85–$5.01 (wide range)
• Key support/resistance: 30D $4.31–$4.33, 200D $4.81–$4.87
• Short-term bullish setup: Break above $5.01 triggers 52W high retest at $12.36, while 200D MA resistance at $5.20 could cap near-term gains. ARKG’s 0.375% rise suggests AI/biotech synergy, but XBI’s -0.113% drag highlights sector divergence. Aggressive traders may consider RXRX20251226C5 and RXRX20260102C5 for leveraged exposure.
• RXRX20251226C5 (Call, $5 strike, 2025-12-26):
- IV: 100.41% (high volatility)
- Leverage: 16.45% (high)
- Delta: 0.504 (moderate sensitivity)
- Theta: -0.0254 (rapid time decay)
- Gamma: 0.486 (high sensitivity to price swings)
- Turnover: 53,242 (liquid)
- Payoff at 5% upside ($5.19): $0.19/share
- Rationale: High IV and gamma make this ideal for short-term bets on a $5.01 breakout, though theta decay requires swift execution.
• RXRX20260102C5 (Call, $5 strike, 2026-01-02):
- IV: 100.16% (high volatility)
- Leverage: 12.34% (moderate)
- Delta: 0.522 (moderate sensitivity)
- Theta: -0.0178 (moderate decay)
- Gamma: 0.373 (moderate sensitivity)
- Turnover: 20,828 (liquid)
- Payoff at 5% upside ($5.19): $0.19/share
- Rationale: Slightly lower theta decay and higher liquidity make this a safer play for a 1-week hold, capitalizing on JPMorgan’s upgrade and trial optimism.
Aggressive bulls should target RXRX20251226C5 if $5.01 breaks within 48 hours; conservative traders may prefer RXRX20260102C5 for a 1-week hold.

Backtest Recursion Stock Performance
The backtest of RXRX's performance after an 18% intraday surge from 2022 to the present reveals favorable short-to-medium-term gains, with win rates and returns increasing across various time frames. However, the overall maximum return during the backtest period was only 6.33%, indicating limited long-term gains despite positive short-term performance.

RXRX’s AI-Driven Biotech Breakout: Ride the Wave or Watch the Volatility Fade?
RXRX’s 17.85% surge is a testament to the power of clinical milestones and institutional upgrades, but sustainability hinges on maintaining momentum above $5.01 and $5.20 (200D MA). JPMorgan’s $11 target implies 123% upside, but near-term focus should be on the $5.01–$5.20 range. Sector leader AMGN (-0.228%) underperforms, highlighting RXRX’s divergence from traditional biotech. Investors should monitor the RXRX20251226C5 call for a 48-hour breakout play and RXRX20260102C5 for a 1-week hold. Watch for $5.01 retest and 200D MA break above $5.20—failure to hold these levels could trigger a pullback to $4.31 support.