The founder and chief executive officer of ARK Investment Management, Cathie Wood, isn't letting a bear market stop her from loading up on biotech stocks. Recently, she splashed out on a handful of life science businesses, even though some of them have been hit really hard recently.
Should you follow Wood's lead and buy these stocks for your own portfolio? Before blindly following this legendary investor, let's look at why she's confident about the road ahead for these drugmakers.
Image source: Getty Images.
1. Verve Therapeutics
Over the past week, Wood has been accumulating shares of Verve Therapeutics (VERV +0.00%) for her firm's flagship growth stock fund, the ARK Innovation ETF (ARKK +2.61%), and the biotech-focused ARK Genomic Revolution ETF (ARKG +2.45%).
NASDAQ: VERV
Key Data Points
Shares of Verve Therapeutics have been on the move since July, when the company signed a four-year deal with a much larger company, Vertex Pharmaceuticals. Together, the partners intend to discover and develop an in vivo gene editing program for a single undisclosed liver disease.
Under the terms of their collaboration, Verve received $60 million up front. The deal also makes Verve eligible to receive up to $406 million in milestone payments and a tiered royalty percentage of any potential sales.
Verve's lead candidate, VERVE-101, is designed to permanently reduce circulating low-density lipoprotein (LDL) cholesterol by silencing the production of PCSK9, a protein that limits the liver's ability to remove LDL cholesterol. Instead of removing or replacing a section of the PCSK9 gene, Verve's treatment candidate uses a relatively reliable base-editing technique. If this potentially better way to edit genes works as intended, this stock could soar.
2. Intellia Therapeutics
Intellia Therapeutics (NTLA +3.53%) is another company in the gene editing arena that Wood keeps buying with both hands. While Verve's technique is akin to changing one letter of a book with a pencil and an eraser, Intellia employs a CRISPR-based gene editing technique that's more like a pair of scissors and a glue stick.
NASDAQ: NTLA
Key Data Points
Wood is likely encouraged by clinical trial data Intellia and its commercial-stage partner Regeneron posted earlier this month. The partners are developing an experimental therapy for cardiomyopathy caused by transthyretin (TTR) amyloidosis called NTLA-2001. Four weeks after receiving treatment with a single administration of NTLA-2001, circulating TTR levels fell by 90% or better for all 12 patients.
Intellia also announced positive clinical data from NTLA-2002, an unpartnered gene-editing candidate for the treatment of hereditary angioedema (HAE). This drug works by inhibiting the production of a protein called kallikrein. A single 75 mg dose of NTLA-2002 lowered kallikrein by 92% on average and greatly reduced the frequency of painful angioedema attacks reported by patients.
Shares of Intellia have fallen 46% this year. If the company's HAE and TTR amyloidosis candidates continue to impress, though, this stock will bounce back in a big way.
3. Gingko Bioworks
Gingko Bioworks (DNA +1.69%) has fallen around 63% this year, but this hasn't stopped Wood from buying the stock hand over fist. More than once over the past week, Wood added shares of the synthetic biology company to ARK Invest funds.
NYSE: DNA
Key Data Points
Gingko Bioworks owns a horizontal platform for cell programming that allows it to build custom microorganisms for clients that excrete high-value ingredients, including experimental new drugs. For example, this August, the company developed a new drug candidate for gout in partnership with a company called Synlogic.
Instead of simply providing its service for a one-time fee, Gingko Bioworks likes to receive an equity interest in its partners. This means clinical trial success for Synlogic's gout candidate could lead to big gains for Gingko's stock price, too.
Before splashing out on this particular stock, it's important to know that Gingko Bioworks doesn't manage finances nearly as well as it manages custom-built organisms. The company lost a whopping $1.3 billion in the first half of 2022.
With an increasing list of clients and partnered programs, Gingko Bioworks' equity portfolio could be worth billions one day. Until it finds a way to make ends meet, though, it probably isn't worth the risk.
