In recent years, AI has gone from a niche industry housed mostly in research labs, academia, and large companies like Google to dominating the news cycle and driving incredible growth and value. The global artificial intelligence (AI) market was valued at $428 billion in 2022 and is projected to grow from $515.31 billion in 2023 to $2 trillion by 2030, which is a compound annual growth rate (CAGR) of 21.6%.
The fervor surrounding AI companies has driven substantial gains in their stock prices, outpacing much of the broader market. This is evident in the impressive 35% year-to-date surge of the Global X Artificial Intelligence & Technology ETF (AIQ), compared to the S&P 500's 13% gain. The challenge now lies in finding AI-related stocks that haven't already witnessed meteoric rises. An often-overlooked sector with a wealth of AI opportunities is healthcare.
The Growth in Healthcare Due to AI
The healthcare market looks poised for a transformative shift, largely driven by the integration of AI. A growing number of healthcare companies are harnessing AI technology in innovative ways to diagnose and develop treatments for conditions like cancer and other devastating diseases.
The global AI-in-healthcare market is poised to reach $15.1 billion in 2022, with a CAGR of 37% projected through 2030, taking its value to an impressive $188 billion in less than a decade. What’s even more interesting is the fact that the healthcare market is expected to grow 15% more per year than the global AI market, highlighting the massively untapped potential of the healthcare industry.
Healthcare presents an under-the-radar gateway to AI investments, offering a blend of technological innovation and medical advancement. Below are six publicly traded healthcare companies at the forefront of AI-driven transformations.
Recursion Pharmaceuticals
Recursion Pharmaceuticals (RXRX), a company that prides itself on being a “technology-enabled drug discovery company,” uses its unique Recursion Operating System for all its drug discoveries. The company’s primary focus is on diseases with well-defined causes and high unmet needs. These are conditions that either lack approved therapies or have significant shortcomings with existing treatments.
The company’s pipeline includes potential treatments for cerebral cavernous malformation, neurofibromatosis Type 2, and familial adenomatous polyposis. Treatments for all of these are currently in Phase 2 clinical trials. In addition to these, Recursion is also exploring therapies for various types of cancer.
Recursion has over a dozen early discovery and research programs that span multiple fields, such as oncology, neuroscience, inflammation and immunology, and rare diseases. The company utilizes artificial intelligence to identify and design new therapies, which are then offered to other drugmakers.
Recursion’s innovative approach has attracted significant attention, including a $50 million investment from chipmaker NVIDIA. This investment has already borne fruit for shareholders, with Recursion’s market value rising by nearly $1 billion. The company continues to lead the TechBio sector with one of the most advanced technology-enabled drug discovery platforms in the industry.
Relay Therapeutics
Relay Therapeutics (RLAY) is a precision medicine company that leverages the power of both computational and experimental technologies. The company’s mission is to revolutionize drug discovery by using its signature method of developing small-molecule medicines against precision-medicine targets.
The company’s unique approach focuses on understanding the motion of proteins and how it impacts their function. To achieve this, Relay uses its proprietary Dynamo platform, which integrates artificial intelligence and machine learning with physics-based simulations. This platform also incorporates insights from chemical biology and Relay’s deep structural understanding to develop drugs that can effectively target proteins that have been challenging to deal with.
Initially, Relay Therapeutics applied its Dynamo platform to precision oncology. This focus has resulted in the generation of several promising drug candidates. One of these candidates, RLY-4008, is touted as the first cancer treatment of its kind that’s not limited by certain toxicities.
In recent news, Relay Therapeutics announced initial clinical data for RLY-2608, the first known investigational allosteric, pan-mutant, and isoform-selective inhibitor of PI3Kα. Furthermore, It has received a buy rating bolstered by promising clinical results and a revised regulatory strategy.
Exscientia
Exscientia (EXAI) is a pioneer in the field of AI-driven drug discovery, combining artificial intelligence with human creativity to develop safer and more effective drugs. The company has made significant strides in the pharmaceutical industry, being the first to create AI-designed molecules that have entered clinical trials. This innovative approach allows Exscientia to precision-engineer medicines at a pace and efficiency that surpasses traditional drug development processes.
The company’s pipeline is diverse and robust, with candidates targeting a range of conditions including renal cell carcinoma, non-small cell lung cancer (NSCLC), solid tumors, inflammatory and immunologic diseases, and hematology. These candidates are the result of Exscientia’s unique AI-driven platform, which has been designed to rapidly translate scientific concepts and patient-centric data into precision-designed therapeutic candidates.
Two of the company’s promising candidates, EXS21546 and GTAEXS617, are currently in Phase 1/2 clinical trials, demonstrating the potential of AI in revolutionizing healthcare. EXS21546, a product of the collaboration between Exscientia and Evotec, is being tested for the treatment of renal cell carcinoma and NSCLC. What sets this candidate apart is Exscientia’s unique precision medicine platform. This platform leverages AI to analyze patient tumor microenvironments ex vivo. By doing so, it provides insights into immune function which could help identify the right patients for this drug.
On the other hand, GTAEXS617 is a result of a partnership between Exscientia and GT Apeiron. This candidate is a CDK7 inhibitor currently being tested for solid tumors. The ELUCIDATE trial evaluating GTAEXS617 is an example of how AI can enhance clinical trials. The trial aims to assess the safety, efficacy, and pharmacokinetics of this drug across multiple ascending doses in patients with advanced solid tumors.
Renovaro BioSciences
Renovaro BioSciences (RENB), a biotechnology firm with promising results in pancreatic cancer, has recently announced it signed a definitive agreement to enter into a business combination with GEDi Cube. The business combination is a strategic move that combines the strengths of both companies. Renovaro’s focus on gene-modified cell therapies for cancer and infectious diseases, specifically HIV and HBV, is complemented by GEDi Cube’s AI technology that has been validated for early diagnosis of lung cancer.
GEDi Cube’s AI technology uses a multi-omics approach to search for individual biomarkers present even in asymptomatic patients. The Company has recently announced a partnership with Nvidia’s Inception program to add imagery and advance to a multi-modal approach. GEDI Cube is developing liquid biopsy-based tests to diagnose cancer, detect recurrence and predict response to therapy targeting 2024 for its first commercial products.
Renovaro’s clinical trial data could enhance GEDi Cube’s AI capacity. The company is expected to begin human studies for several challenging solid tumors by the second half of 2024. This data could provide valuable insights for GEDi Cube’s AI panels, further enhancing their diagnostic capabilities.
This business combination represents a significant step forward in the fight against cancer. By combining Renovaro’s biotechnology expertise with GEDi Cube’s AI capabilities, the companies aim to accelerate diagnosis, enhance treatment effectiveness, and discover new therapies. This collaboration could lead to breakthroughs in the treatment of various types of cancer and infectious diseases.
BioXcel Therapeutics (BTAI)
BioXcel Therapeutics (BTAI), a clinical-stage biopharmaceutical company, is at the forefront of using artificial intelligence to revolutionize drug discovery. The company’s focus is on neuroscience and immune-oncology, and it employs its proprietary AI platform to identify potential therapies that can be repurposed for new indications or delivery methods.
One of the company’s significant achievements is the development and market launch of Igalmi, a treatment for acute agitation in patients with schizophrenia or bipolar. This approval marked a significant milestone in BioXcel’s journey, demonstrating the potential of AI in accelerating drug development.
Currently, BioXcel is conducting Phase 3 clinical trials for BXCL501, another promising candidate. This drug is being evaluated for the at-home treatment of agitation in patients with schizophrenia, bipolar, or Alzheimer’s. The positive results from the Phase 1b/2 TRANQUILITY clinical trial have paved the way for these advanced studies.
In recent news, BioXcel announced positive topline results from the TRANQUILITY II Phase 3 Trial of BXCL501 for acute treatment of Alzheimer’s Disease-related agitation. The trial met its primary efficacy endpoint with the 60 mcg dose. This progress underscores BioXcel’s commitment to harnessing AI to develop transformative medicines in neuroscience and immuno-oncology.
AI in Healthcare
AI is revolutionizing healthcare by improving diagnosis and accelerating drug discovery. The integration of AI and machine learning in healthcare is not a fleeting trend; it's a fundamental transformation that is reshaping the industry.
AI's ability to analyze vast datasets, identify patterns, and provide real-time insights is being applied to various aspects of healthcare, from diagnostics and drug discovery to personalized medicine and patient care. This ongoing evolution is expected to yield numerous benefits, including more accurate diagnoses, faster treatment development, and improved patient outcomes, all of which will ultimately contribute to the growth of the industry and the bottom lines of all these companies.
Ari Zoldan is CEO of Quantum Media Group, LLC. Renovaro BioSciences is a client of Quantum Media Group.
