Ark Invest CEO Cathie Wood shot to fame when all the exchange-traded funds (ETFs) managed by her investment management firm jumped by over 100% each in 2020 compared to the S&P 500's mere 16% returns.
Wood is known for her singular investing approach and bets on disruptive, high-growth firms, including generative AI, genome development, autonomous robotics, space exploration, cryptocurrency, and 3D printing. With the philosophy that today's disruptive innovation will shape tomorrow's future and is the shortest path to growth, Wood often takes bold calls and treads investing paths Wall Street majors usually avoid.
In 2024, she had been hunting for disruptors in the healthcare space. Since last quarter, Wood ramped up her Ark Genomic Revolution (ARKG) ETF to $1.34 billion with the addition of biotech and biopharma stocks leveraging the hottest trends to attain breakthrough results in genomic evolution and drug development.
Wood purchased 2.85 million shares of Prime Medicine (Nasdaq: PRME) to take total holdings at 5.99 million shares in Q1, worth above $45 million. The pick aligns with her laser focus on innovation stocks, and this time, she may have chosen Prime Medicine since the gene-editing company received FDA approval in April for its IND (investigational new drug) application for PM359 targeted at chronic granulomatous disease.
The biotech firm's genome innovation revolves around its Prime Editing platform and technology that enables precise human genome editing. The IND approval for chronic diseases marks the first Prime Editor product candidate to attain such progress. Prime will begin trials with preliminary data readout from the research expected next year.
The proprietary Prime Editing platform can use the "search-and-replace" method to make precise gene alterations, minimizing the chances of unintentional mutations. The CRISPR techniques generally create double-strand breaks in DNA. Prime's ground-breaking progress is a step forward in treating genetic disorders as it spearheads R&D efforts in areas related to haematology, immunology, neuromuscular, and the liver.
The company also bolstered its leadership by appointing Dr Tony Coles, MD, as its senior advisor in March. In Q1, Prime Medicine posted a rise in R&D expenses year-over-year (YoY) to $37.8 million from $30.9 million on the back of a strong product pipeline. While the company posted an increase in YoY quarterly loss, it posted a rise in Q1 cash position to $224.2 million from $135.2 million.
Brokerages, including JPMorgan Securities, Morgan Stanley, and Goldman Sachs, retain a "strong buy" rating on the stock with an average 12-month target price of $15.33. The stock closed at $7.45 on May 22.
Wood's next choice was AbSci (Nasdaq: ABSI), bridging the gap between drug discovery and creation using generative AI. This new stock purchase of 3.28 million company shares in Q1 was worth an estimated $14.87 million.
The company's zero-shot approach combines AI with synthetic biology on its Integrated Drug Creation platform, enabling the designing and validation of millions of high-affinity antibodies every week without prior learning on the target. They claim this approach allows them to go from AI-designed antibodies to validated, unique candidates in six weeks, drastically speeding up the time to clinic.
AbSci went public in March via an $86.4 million oversubscribed IPO and started IND-enabling studies for the ABS-101 drug candidate designed for inflammatory bowel disease. They expect to release results in the coming months. The firm plans Phase I clinical trials next year.
Other drugs in the pipeline, like the ABS-201 antibody for a dermatology target and the ABS-301 for an immuno-oncology target, are expected to progress in their respective design and validation stages later this year.
AbSci's promise in biologics drug discovery, which has a failure rate above 90%, is further complemented by its innovative and scalable wet platforms, improved operational efficiencies, and strong partnerships with leaders like Merck, AstraZeneca, and Alpha Cancer.
While its R&D expenses in Q1 remained flat YoY, the company reduced its administrative costs and net loss figures. AbSci's cash, equivalents, and short-term investments in the quarter jumped YoY to $161.5 million from $97.7 million, which they say is enough to fund operations into H1 2027.
HC Wainwright & Co recently initiated coverage of AbSci with a "Buy" rating. The average 12-month target price forecast from analysts as of May 23 is $8.77, a 90.28% potential upside from its current trading price of $4.61. They also anticipate strong revenue growth next year.
Cathie Wood's latest trade was buying 11,360 shares of drug maker Amgen (Nasdaq: AMGN) for an estimated $3.54 million to take total shareholding to 51,712 shares, or 1.06% of the ARKG ETF.
The move came when Amgen announced that its MariTide oral obesity drug demonstrated fast, substantial, and sustained weight loss through monthly administration. The drug is in Phase 2 clinical trials, and the announcement drove the stock 12% higher earlier this month. It is currently trading at $311.27 as of writing this article.
As a leader in biotechnology, Amgen is driving R&D of innovative medicine to treat cancer, heart disease, and inflammatory and rare diseases. In 2023, Amgen's oncology sales stood at $9.2 billion, and the FDA granted it three Breakthrough Therapy Designations while it continued to study the drug bemarituzumab for gastric cancer. It also expects to release the first of eight Phase 3 trials researching rocatinlimab for atopic dermatitis later this year.
Amgen's full-year 2023 revenue increased 7% YoY to $28.2 billion due to solid demand for medicines, especially from the Asia-Pacific region. It declared a dividend of $2.25 per share on December 12, 2023. In Q1 2024, Amgen's revenues jumped 22% YoY to $7.4 billion due to a stellar 25% volume growth.
Brokerage William Blair upgraded Amgen's rating to "Outperform" from "Market Perform" after the impressive quarterly results in May.
The brokerage said in a research note while earnings came in a "little light" due to expected seasonality, the print was "significantly overshadowed" by management's announcements of an interim analysis of the Phase II trial with MariTide for obesity and diabetes.
A total of 24 analysts, including JPMorgan Securities, Deutsche Bank, Barclays Capital, and Wells Fargo, retain a "Buy" rating on the stock with an average 12-month target price of $320.8 per share.
As evident, Wood's stock picks in the biotech space this year might have been backed by clinical progress, AI adoption, sales growth, rising market presence, and steady product pipelines.
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