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With her ARK Innovation ETF (ARKK: NYSE Arca), Cathie Wood makes large wagers on biotech businesses that lead front-edge scientific and technical innovation. Although these high-potential businesses show great stock volatility, their appeal stems from the possibility of large returns.
Cathie Wood recently purchased two biotech stocks, demonstrating her optimism. Should you buy them as well? Let’s examine if following her lead is a wise decision.
CRISPR Therapeutics
Investors seeking to buy the dip have a strong candidate in CRISPR Therapeutics (NASDAQ:CRSP). This year, shares have declined by 13%. Following her most recent purchase on May 30, Cathie Wood has steadily increased her stake in CRISPR Therapeutics. At 3.6% of the ARK Invest portfolio, the stock ranks tenth among all the associated funds.
This investment aligns with Wood’s strategy, which focuses on companies developing groundbreaking technologies capable of causing significant industry change and remarkable growth. Known for its expertise in gene therapy, CRISPR Therapeutics has solidified its market presence with the recent commercialization of its Casgevy gene therapy product.
Developed by CRISPR Therapeutics, Casgevy aims to functionally cure inherited blood disorders such as sickle cell disease (SCD) and beta-thalassemia.
Although Casgevy has not yet produced revenue, it was recently approved for these indications in late 2023 and early 2024. Vertex Pharmaceuticals is leading the commercialization efforts and is expected to earn significant profits by collaborating with CRISPR.
As sales begin, CRISPR Therapeutics’ stock stands to gain significantly, considering the potential for a substantial earnings increase from a zero baseline.
Most Wall Street analysts believe that profitability gains won’t materialize until at least 2025. This gives investors multiple opportunities to buy the dip and use a dollar-cost averaging (DCA) strategy to build a substantial position ahead of the anticipated rise.
Intellia Therapeutics
Similar to her strategy with CRISPR Therapeutics, Cathie Wood has been purchasing Intellia Therapeutics (NASDAQ:NTLA) shares throughout May, with her most recent purchase on May 30. Intellia now makes up just under 2% of the ARK Invest portfolio, and Wood owns 10.4% of the company’s outstanding shares.
Intellia’s shares have dropped 27% this year compared to the market. As the company is still developing its first drug, an increase in revenue is not expected soon. Intellia is therefore considered a high-risk investment, with significant financial gains unlikely for several years.
Intellia Therapeutics (NTLA) ‘s most advanced project targets a rare genetic disease, focusing on transthyretin (ATTR). Management plans to start a phase 3 clinical trial for this medication by year’s end. If approved, the treatment might provide access to a market that GlobalData forecasts to be worth up to $11 billion by 2029.
Intellia’s timeline to market is significantly longer than CRISPR Therapeutics’; hence, the company might run out of funds before a product is commercialized. With total operating expenses of $142.9 million in the first quarter, Intellia now boasts $553.3 million in cash, equivalents, and short-term investments.
With this expenditure rate, Intellia’s financial runway is slightly over 1.5 years until it becomes necessary to seek further money. With modest capital lease obligations and 0% long-term debt, the company is in a steady state to get more funding if needed.
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This article Cathie Wood Invests In 2 Biotechnology Stocks – Are They Worth Buying? originally appeared on Benzinga.com
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