Cathie Wood is a big believer in the genomics revolution. Thanks to the advent of next-generation sequencing, researchers now have access to not only entire genomes in a cost and time-effective manner, but they also have the option of exploring how the expression of those genes influences biological functions. This revolutionary step has kickstarted a research bonanza into the dynamic intra- and intercellular environments that govern disease progression and therapeutic options.
Wood, a seasoned biotech investor, has gotten in front of this emerging trend by buying shares in several leading genomics companies. Among her various holdings in this high-growth area, Prime Medicine (PRME 2.91%) and Ginkgo Bioworks Holdings (DNA 10.60%) stand out as two of the most promising companies within her portfolios. Read on to find out more about these cutting-edge biotech companies.
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Prime Medicine: A leader in gene editing
Prime Medicine is a biotechnology company developing a novel platform for gene editing, called prime editing. Prime editing is touted as a more precise and versatile method of gene editing than the popular CRISPR-Cas9 system, as it can make targeted insertions, deletions, and replacements of DNA without cutting the DNA strands.
Prime editing has many potential applications in treating genetic diseases, such as sickle cell anemia, cystic fibrosis, and muscular dystrophy. It could also be used to create novel traits in plants and animals, such as drought resistance or disease resistance. Prime's brain trust also hopes to eventually broaden the applicability of its platform to include one-time functional cures for scores of chronic human diseases.
What's the investing thesis? Prime Medicine is gearing up to request human trial clearance from the Food and Drug Administration (FDA) for its lead candidate indicated for chronic granulomatous disease, a rare immune disorder.
The biotech's stated goal is to have a formal request to begin human studies in front of the FDA by 2024. Additional trials for other rare inherited conditions are on tap for 2025, according to the company. As things stand now, however, Prime Medicine is in the proof-of-concept stage of its life cycle; so this is a "ground floor" type of opportunity for investors.
The bottom line is that Prime Medicine's shares could be a wealth escalator if its gene editing platform turns out to be a best-in-class approach. Several other gene editing companies are angling to prove Prime Medicine wrong, so there is a risk that this approach won't be the gold standard.
But it is intriguing enough to compel leading fund managements like Wood to buy into its value proposition before it's even been validated in human studies. As such, aggressive investors may want to do a deeper dive into this innovative gene editor before it formally joins the complicated and unpredictable world of clinical-stage biotechs.
Ginkgo Bioworks Holdings: A pioneer in synthetic biology
Ginkgo Bioworks Holdings is a biotechnology company at the forefront of synthetic biology, or the engineering of living organisms. Ginkgo uses advanced software, automation, and artificial intelligence to design, build, and test custom microbes for various applications across multiple industries.
The company reports revenue through two operating segments: biosecurity and foundry. Its value proposition centers on its ability to sway large companies working with biomaterials to use its in-house manufacturing and engineering services. To date, this unique business strategy appears to be paying dividends.
Although the synthetic biology specialist is cash flow-negative at the moment, Ginkgo has been steadily gaining new customers and adding important new capabilities to its platform. Last year, for instance, the biotech booked 59 new customers, representing a 90% growth rate over the prior year. And in the most recent quarter, Ginkgo unboxed four new end-to-end service offerings: microbe services, cell therapy services, AAV services, and RNA Therapeutics services.
The synthetic-biology pioneer went public in September 2021. Since its public debut, Ginkgo's shares have lost 77% of their value because of unfavorable market conditions in 2022, rising interest rates, and skepticism among investors toward unprofitable companies. Thus, this beaten-down biotech stock could represent an attractive opportunity for long-term investors who are willing to wait while the emerging field of synthetic biology matures and demand for Ginkgo's unique services blossoms.
