3 Cathie Wood Investments That Could Deliver Superior Returns

Cathie Wood, the CEO of Ark Investment, has made a name for herself by betting on cutting-edge technology with financial technology stocks, or fintechs, and biotechnology growth stocks making up a significant part of her exchange-traded funds (ETFs). While many growth stocks fell out of favor the past two years, her flagship ARK Innovation ETF (ARKK 1.05%) is up more than 44% so far this year.

Two of the Wood investments that I believe will deliver long-term superior returns are gene-editing biotechs, Intellia Therapeutics (NTLA 3.70%) and CRISPR Therapeutics (CRSP 0.34%), while another is the fintech Block (SQ 2.32%). All three companies are well off their 52-week highs, but have seen their shares rise so far this year.

Here's why each of these stocks could deliver elite returns.

Intellia: A big pipeline and strong trial results

Intellia Therapeutics is up more than 28% so far this year. Various Ark ETFs own a total of 8.7 million shares, or roughly 10% of the outstanding shares of the company. On Sunday, the company announced promising data from its phase 1 study of NTLA-2002 to treat hereditary angioedema (HAE), a genetic disease that leads to chronic swelling.

NTLA-2002 is an in-vivo gene-editing treatment wherein the genetically engineered cells are infused into the body, and designed to reach the liver, as a functional cure for HAE. In the trial, one dose of NTLA-2002 led to a 95% mean reduction in monthly HAE attacks. The gene therapy inactivates the KLKB1 gene in the liver to inhibit the production of the plasma kallikrein protein (also in the liver), a primary mediator of HAE.

HAE is a rare disease, affecting as few as 1 in 50,000 people, according to the U.S. Hereditary Angioedema Association. Most HAE patients have a deficiency in the plasma protein called C1 esterase inhibitor. The potential of NTLA-2002 is that with one dose, it would end the need for lifelong IV or subcutaneous therapies to limit HAE attacks. The therapy is expected to complete enrollment of a phase 2 study in the second half of this year.

The company's lead therapy is NTLA-2001, which is in early trials to treat the genetic disorder transthyretin amyloidosis, in which clumps of irregular proteins called fibrils build up in the heart, kidneys, eyes, and nerves. It affects 50,000 people worldwide. NTLA-2001 is the first CRISPR therapy to be administered intravenously to edit a gene.

Intellia isn't profitable yet, but it has a growing pipeline with more than eight therapy candidates, including collaborations with Regeneron and Novartis, as well as with private companies. Intellia has a strong cash position, with $1.2 billion as of the end of the first quarter.

CRISPR Therapeutics is closer to paying off

For a long time, CRISPR stock was a draw because of its potential. By this time next year, that potential should start paying off.

The company's lead therapy, exa-cel, which it developed with Vertex Pharmaceuticals (NASDAQ: VRTX), is drawing closer to the finish line. Last week, the Food and Drug Administration (FDA) accepted the companies' Biologics License Application (BLA) for exa-cel, setting two Prescription Drug User Fee Act (PDUFA) dates, by which the FDA must respond to CRISPR's submitted applications, respectively.

The first application is under priority review to treat sickle cell disease (SCD), with a PDUFA date of Dec. 8. The FDA also said it would do a standard review for exa-cel as a transfusion-dependent β-thalassemia (TDT) therapy, which has a PDUFA date set for March 30, 2024.

Wood has been a fan of CRISPR for a while and owns 6.6 million shares of the company's stock. 

CRISPR's willingness to partner with other collaborators such as Vertex, Bayer, and ViaCyte has paid off, allowing the company to advance its pipeline while building up a stockpile of cash. As of the first quarter, it had nearly $1.9 billion in cash, enough to help the company develop a broad pipeline that includes 20 cell-engineering therapies across immuno-oncology, regenerative medicine (such as edited stem cells to treat or cure diabetes), in-vivo therapies, and genetic blood diseases. 

Still the big kid on the fintech block

Block's shares are up slightly so far this year. The company reported a $575 million loss last year, the first year the company lost money since 2018.

The fintech has been hurt by its connection to cryptocurrencies, both through its investments and through crypto's connection to Block's Cash App ecosystem. The crypto industry took a hit this week after the Securities and Exchange Commission (SEC) charged Coinbase (NASDAQ: COIN) and Binance with breaking securities laws.

Block's financial growth appears to be back on track, however. In the first quarter, the company reported revenue of $4.99 billion, up 26% year over year and 7% sequentially. It also said it had a gross profit of $1.71 billion, up 32% year over year, and Cash App led the way, with $931 million in gross profit, up 49% over the same quarter next year. 

While the fintech's Cash App ecosystem is its fastest growing, its Square ecosystem for merchants has developed steadily as well. In the quarter, the Square ecosystem reported $1.67 billion of revenue and $770 million of gross profit, up 15% and 16%, respectively. The company is focusing more on international business and adding over 100 new products, features, and partnerships directed toward merchants. 

Block also appears to be closer to turning a profit. It said it had a loss per share of $0.03 in the quarter, compared to losses of $0.19 in the prior quarter and $0.38 in the same period last year.

Wood, undaunted by the company's crypto concerns, bought 227,365 shares of Block, worth $15 million, just last week through the Ark Innovation ETF, the Ark Next Generation ETF, and Ark Fintech Innovation ETF. The various Ark ETFs own slightly over 7.3 million Block shares.

I like Block because it is consistently ahead of the curve. While artificial intelligence is the hot topic this year, Block has been involved in it for years. It jumped into crypto with two feet, and although that industry has struggled, those bullish about cryptcurrencies think it has good long-term possibilities.