AI-based drug developers rise on US FDA's plans to replace animal testing

Shares of AI-based drug developers such as Recursion Pharmaceuticals RXRX.O gain 13.3%, Absci ABSI.O up 14.5%, Schrodinger SDGR.O rise 12.8% and Certara CERT.O advance 18.4% premarket

US FDA said on Thursday it plans to replace animal testing in the development of monoclonal antibody therapies and other drugs with "human-relevant methods", including the use of AI-based models

Brokerage TD Cowen expects the news to drive increased demand among drug developers for alternative (non-animal-based) methods for preclinical testing that aligns with the FDA's new strategic focus

"We view the move as a big win for computational drug development players, including biosimulation software provider Certara and Schrodinger's physics-based computational platform in particular" - TD Cowen

Jefferies sees "RXRX as one of the leaders in the AI space within biotech with a powerful platform that actively leverages AI in all aspects of the drug development process, from molecule discovery to clinical trial design"

Up to last close, RXRX down 33.3%, ABSI down 6.3%, SDGR down 0.4% and CERT down 1.3% YTD