Cathie Wood, the founder and CEO of ARK Investment Management, is one of the most influential investors in the area of cutting-edge technology. She's known for her bullish bets on disruptive and innovative companies such as Tesla, Roku, and Shopify.
Over the years, Wood has also been an active buyer of smaller innovation-oriented companies like the biotech Repare Therapeutics (RPTX 1.59%). For instance, her ARK Genomic Revolution ETF owned more than 2.68 million shares of the company as of Aug. 17, 2023, making it the sixth-largest institutional shareholder.
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Is this Cathie Wood biotech stock an attractive buy? Let's dig deeper to find out.
A look at Repare's value proposition and risks
Repare Therapeutics is a biotechnology company that focuses on developing precision oncology treatments for various types of cancer. The company's lead product candidate, camonsertib (also known as RP-3500), is a small molecule inhibitor of an important DNA damage response pathway, which is often mutated or dysregulated in cancer cells.
Camonsertib is presently in a basket of phase 1/2 clinical trials for a variety of solid tumors such as lung and ovarian cancer. This work is being conducted via a 2022 collaboration agreement with Swiss drugmaker Roche.
Per the terms of the deal, Repare is eligible for up to $1.172 billion in potential clinical, regulatory, commercial, and sales milestones, along with high-single-digit to high-teen royalties on the drug's net sales (if approved). As a novel anti-cancer therapy targeting patient populations with limited treatment options, camonsertib could become an important new option for patients and prescribers alike.
Repare is also trialing its wholly owned PKMYT1 inhibitor, lunresertib (RP-6306), as both a single agent and in combination therapy settings. Lunresertib is being evaluated in a wide array of solid tumors, including but not limited to breast, endometrial, head and neck, and soft-tissue cancers.
Repare's management team thinks the drug's total addressable market in the U.S. stands at over 65,000 patients annually. If true, lunresertib could be a megablockbuster drug in the making (annual sales exceeding $5 billion). The drug is presently in early-stage testing.
In addition, the company has an ongoing collaboration with Bristol Myers Squibb (aka BMS). The partnership reportedly centers around the discovery of both known and unknown drug targets for various cancers. While this nearly 3-year-old deal has yet to produce a viable clinical candidate, it shows that the heavyweights in pharma are taking Repare's anti-cancer platform seriously.
Lastly, the developmental-stage biotech is in a fairly strong financial position. Repare exited the most recent quarter with cash, cash equivalents, and marketable securities of $280.7 million. Management believes this amount should cover its operating expenses into 2026. Hence, the company shouldn't need to execute a large public offering anytime soon.
Is this Cathie Wood stock a screaming buy?
Wood's confidence in Repare Therapeutics is backed by several Wall Street analysts. At present, the consensus price target on the biotech's shares stands at $27.33, implying a whopping 187% upside potential from its current price of $9.50. What's more, 8 out of 10 analysts covering the stock have given it a buy rating.
Despite this overwhelmingly bullish take by Wood and other analysts, investors would be wise to bear in mind that early-stage cancer drugs fail more often than not in the clinic. Consequently, this small-cap biotech stock is arguably best suited for aggressive investors with an elevated tolerance for risk.
