Investors know the biotech industry is a waiting game—smaller companies in this space often work to secure the funding to keep their doors open during a pre-revenue period while they develop drug treatments and other medical products, but the process can be slow and, for those on the outside, opaque. Then, if all goes according to plan, these firms may see success in the form of promising data, successful trial results, or approval from a regulatory agency like the FDA.

In these latter cases, biotech stocks can see incredible rallies outpacing most other spaces in the market. A recent example is Bright Minds Biosciences Inc. (NASDAQ: DRUG), whose shares jumped from about $2.50 each to nearly $39 a piece in the span of two days in October 2024 after releasing data suggesting one of its proprietary compounds demonstrated similar efficacy to morphine in certain pain models.

The two biotech firms below—BriaCell Therapeutics Corp. (NASDAQ: BCTX) and Recursion Pharmaceuticals Inc. (NASDAQ: RXRX)—have not experienced that type of rally in recent months. However, they each provide compelling reasons why investors might continue to play the waiting game as they keep an eye on these stocks.

BriaCell Therapeutics: Promising Results for Bria-OTS

Clinical-stage immuno-oncology firm BriaCell has faced challenges in the last year. The share price declined by a whopping 94% in the year leading to February 7, 2025; the company was forced to complete a 15:1 stock consolidation in January 2025 in order to maintain its listing on the Nasdaq.

Typically, a reverse stock split like this is a common indicator of a company's struggles, but there are some bright spots for BriaCell that may make it a biotech firm to watch. First, the company seems to have a solid cash base—as of its most recent earnings report, BriaCell reported about $5.8 million in cash and equivalents, which should help it to maintain stability in the near-term.

Further, the company's immunotherapy Bria-OTS, currently in Phase 1/2a dose escalation studies, has generated promising results. In February 2025, the company announced that the first patient with metastatic breast cancer treated with Bria-OTS had experienced resolution of lung metastasis, a phenomenon the company noted was "unprecedented." The company's lead candidate is Bria-IMT, currently in Phase 3 trials.

Investors may naturally be cautious about exploring BriaCell, given the company's downward stock trajectory in recent months. However, following the positive results for Bria-OTS, analysts for H.C. Wainwright reiterated their Buy rating for BCTX stock and picked a price target of $32, an incredible 758% above current price levels as of February 7. BriaCell may thus be a high-risk, high-reward prospect for investors with the necessary tolerance.

Recursion Pharmaceuticals: Powerful AI Drug Discovery Potential

Recursion utilizes data science and human cell models to identify potential drug treatments based on biological patterns. Its Recursion OS is a powerful machine-learning platform used to identify novel drug targets and to help move candidates through the clinical trial process. The firm has also seen a slump in shares in the last year, though with a decline of about 26% in the year leading to February 7, RXRX stock has not dropped as far as BriaCell.

Recursion has emerged as a leader in the relatively small AI biotech space. Because of its unique focus, the company partners with other biotech firms to advance its drug development. The firm also achieves a development boost through strategic acquisitions, such as the recent purchase of Exscientia, which immediately yielded dozens of clinical and preclinical, advanced discovery, and partnered programs with some $20 billion in potential milestone payments.

The firm has also recently notched a significant revenue success, as it has moved forward with a neuroscience phenomap as part of its 2021 partnership with Roche and Genentech to provide drug-discovery service through Recursion OS. This latest development sees Genentech pay Recursion $30 million as an acceptance fee. Two analysts rate Recursion a Buy and two others a Hold, though the company's 17% in upside potential suggests analyst optimism overall.

Investors should beware of Recursion's trouble with profit margin—which has been negative in several quarters—and operating losses in some recent periods due to the high cost of drug development.

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