Shares of Recursion Pharmaceuticals (RXRX -12.62%) are tumbling on Tuesday. The stock lost 10.3% as of 2:50 p.m. ET and was down by as much as 11.8% earlier in the day. The move comes as the S&P 500 and Nasdaq Composite both slipped by 0.6%.
The data from an April survey revealed Tuesday showed that the biotech industry is fearful that President Donald Trump’s federal research cuts will make raising capital more challenging. This comes just a day after Recursion revealed its disappointing first-quarter earnings and announced it would pare down its development pipeline.
President Trump’s cuts could make it harder for Recursion to stay afloat
The Trump administration has taken aim at the National Institutes of Health (NIH), which provides research dollars for biomedical research, as well as major research universities and other science organizations. A survey released Tuesday revealed that a majority of biotech leaders polled believed these cuts would make raising capital harder.
Recursion is still heavily investing in research and development and operates deep in the red. It will likely need outside funding to continue long-term and reach a point where its investments pay off.
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Recursion has a long way to go
This comes just after Recursion revealed it would end research on a significant portion of its pipeline in order to cut costs. That doesn’t exactly instill confidence in the company’s long-term viability, even if money is saved in the short term. Still, Recursion’s use of AI is promising and could lead to lucrative breakthroughs. This is definitely a stock for aggressive, risk-tolerant investors. If that’s you, Recursion could pay off, but it will take time, and there are no guarantees.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
