Cathie Woods, through her various ARK funds, has been scooping up shares of Intellia Therapeutics (NTLA 3.70%), Block (SQ 2.32%), and Ginkgo Bioworks (DNA 10.60%) lately. All three stocks have declined to start the year, but they have attractive business models driven by trends that make them good long-term investments.
None of the companies are profitable, but all three are headed in the right direction. They should also benefit from unique early-mover status in their business platform. Here's why all three are worth a good look from investors now.
Intellia is part of a gene-editing revolution
Intellia's shares are down more than 23% this year, but the biotech company has huge potential and has shown clinical progress for its two leading therapies. Wood's funds began buying the stock in 2016 and now own 9.95 million shares. In the third quarter, Wood's funds increased their stake in Intellia by 4.4%.
Intellia is a clinical-stage biotech that focuses on gene-editing therapies, using the CRISPR/Cas 9 method. To date, it has already has done something no other company has done as its NTLA-2001 is the first investigational in-vivo CRISPR gene-editing therapy to get clearance for late-stage clinical trials.
On Oct. 19, the company announced that the Food and Drug Administration (FDA) gave the go-ahead for NTLA-2001's investigational new drug (IND) application to undergo a phase 3 study to treat transthyretin amyloidosis with cardiomyopathy, a rare genetic disease that can lead to heart failure. Intellia has partnered with Regeneron on the therapy. According to Intellia, there are an estimated 50,000 people worldwide who are born with the disease and another 200,000 to 500,000 worldwide who develop a different form of the disease.
Meanwhile, Intellia's NTLA-2002 is in a phase 1/2 trial to treat adults with hereditary angioedema, a genetic disorder that can result in severe swelling. According to the National Center for Advancing Translational Sciences, fewer than 50,000 people in the U.S. have the disease.
Both of Intellia's lead pipeline candidates have the potential to be blockbuster therapies that could cure progressive diseases. The company had $1.1 billion in cash as of the second quarter, so it has plenty of funds to develop its pipeline.
Block has an early-mover edge in fintech
Block is an enticing stock at its current price, which is not much above its 52-week low and down more than 28% so far this year. The fintech company isn't profitable, but it continues to grow revenue and has been quick to jump on consumer behavior shifts, such as increased use of digital payments, online shopping, and cryptocurrencies.
Wood's funds own 10.9 million shares of Block stock and have been buying its shares since 2016. She bought additional Block shares in each of the past three quarters.
The company has five different core businesses. Square focuses on business solutions, software and banking services; Cash App is a digital-payment platform; Spiral builds projects that advance the use of bitcoin; Tidal is a marketing platform for musicians; and TBD is a platform designed to make it easier to access bitcoin and other blockchain technologies.
In Q2, the company reported revenue of $5.53 billion, up 26% year over year. It had a net loss of $123 million compared to a net loss of $208 million in the same quarter a year ago. The biggest growth came from its Cash App ecosystem, with $1.16 billion in revenue, up 39% year over year, not counting bitcoin revenue. Much of that came from increased peer-to-peer transactions. Cash App's sale of bitcoin to customers brought in $2.39 billion in revenue, up 34% year over year.
The Square ecosystem also saw a strong rise, with $1.93 billion in revenue, up 12% over the same period last year thanks to the company's outreach beyond smaller businesses and growth from the company's banking products.
Ginkgo's cell programming is driving revenue
Ginkgo Bioworks focuses on cell-programming platforms to aid drug-discovery efforts by biotech companies. Its platforms also have applications for agriculture and other businesses, and aid in biosecurity efforts for governments. Its foundry makes and tests organisms on a large-scale basis. The stock is down more than 5% this year despite strong revenue growth.
Wood's ARK funds are relative newcomers to Ginkgo Bioworks, making their first purchase of its stock in 2021. Since then, Wood has regularly added the stock to her portfolio, with buys in each of the first three quarters this year, and now owns 182 million shares.
Ginkgo appears to be getting closer to being profitable. In Q2, the company reported revenue of $81 million, down 44% due to a drop in biosecurity revenue related to COVID-19 testing in schools. However, the company cut its net losses to $184 million compared to $648 million in the same period a year ago. The biggest rise was in the company's Cell Engineering segment, which reported revenue of $44 million, up 72% year over year.
The company continues to add revenue-producing collaborations. On Sept. 27, Ginkgo announced it would work with pharmaceutical giant Pfizer to discover RNA-based drug candidates. Ginkgo will receive an upfront payment from Pfizer and is eligible for research fees and milestone payments up to $331 million, and that doesn't count some future royalties from sales.
