Genomic Stocks to Buy Ahead of the Medical Revolution
We could be about to enter a revolution in biotech medical advances that could take genomic stocks rocketing higher. To date, just 10 gene therapies have been approved but 712 clinical trials are underway. If even a typical rate of approvals occur, that could mean over 170 gene editing therapies approved over the next few years.
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Genomic Stocks Market are Worth Billions of Dollars
Gene editing, therapies and cancer screening is a $400 billion addressable market with just the oncology segment expected to increase 20-fold to $260 billion.
In fact, one stock I’ll highlight in this video is expected to post sales growth of 35,000% over the next three years. Sales growth that could make it one of the fastest-growing stocks in the market.
That data is from the Ark Invest Big Ideas report, a 112-page research report from Cathie Wood and the team at Ark Funds on the 15 life-changing trends they’re following.
So over the next few months, I’m going to dig deep into these 15 disruptive trends, show you that research, help you analyze it and then reveal the top stocks to buy in each!
I’ll be putting these videos into a special playlist on the channel called Ark Invest Stocks to Buy. Make sure you join the community so you don’t miss any of those videos because these are going to be the stocks you want to be in over the next decade!
Today I want to focus on a segment that is probably one of the more neglected trends among investors just because it’s so complicated. The market potential for gene editing, therapies and multi-cancer screening is immense but if you don’t have a PhD in biochemistry…a lot of the research can sound like a foreign language.
In this video, I’ll break down the most important research into gene editing and the trend to multi-cancer screening. We’ll look at the market potential for biotech advances in the space and how to find stocks to buy. Then I’ll reveal what to watch for in biotech stocks and the five genomic stocks to buy ahead of this medical revolution.
I’ll show you the rest of the research in the ARK Invest report but the biggest factor to remember here is just the speed at which this trend is accelerating. Because of advances in artificial intelligence, we’re sequencing genes at a much faster pace. That’s enabling new gene editing and other genomic therapies and accelerating approval rates. That’s why ARK expects a baseline of 170 new commercialized therapies over the next decade, 17-times the number currently approved in the market.
Strong Trend to genomic Editing and Research
In fact, this trend to genomic editing and research is so strong, ARK gave it three sections in the Big Ideas report studying sequencing, multi-cancer screening and gene therapy.
And obviously, the market for these kinds of advances is immense. Just the shift to allogenic therapies from autologous cells in cancer treatment could unlock a $260 billion market. That’s 20-times the current market size from just $13 billion today.
That increase is from applications that can be applied at earlier stages of cancer, being able to apply them on solid tumors, which account for more than 80% of cancer patients, versus liquid tumors, and from lower costs of testing that opens up a larger market.
Innovation has pushed the cost of multi-cancer screening down 95% from 2015 to just $1,500 today and it’s expected to fall another 80% to just $250 by 2025. That current $1,500 screening cost though, the purple line here, is still only reimbursable for those 60 and older. As the cost lowers though, you get the test down to where people much younger are being reimbursed and they’re willing to pay. At a $1,000 test, we could open multi-screening cancer to those as young as 40 years old.
Being able to test people at a younger age could potentially save more than 60,000 people a year in the U.S. alone and means a massive increase in the market for these screening and therapies biotech stocks.
How to Find Stocks in Genomic Research and Gene Editing
I’m going to show you how to find those stocks in genomic research and gene editing but first, you know I’ve got to send a special shout-out to all you out there in the Bow Tie Nation, thank you for spending a part of your day to be here. If you’re not part of the community yet, just click that little red subscribe button. It’s free and you’ll never miss an episode.
We can start our search into genomic stocks here in stockcard and one of the first places I look is in this Watchlist Ideas section for grouped stocks in a lot of the ARK Invest ideas we’re watching. Here you’ve got lists of stocks in AI, space travel, and virtual reality but I don’t see any for gene editing stocks so we’ll go to our dashboard and do a search.
The search bar is another great function here because I can start typing in a topic and not only will it drop down with stocks but also with stock groups. Here we see groups around gene editing, gene therapy and genomic diagnostics stocks. I can click through and this gives me 76 stocks to research in that gene editing theme.
As a special bonus, I’ve negotiated an exclusive discount for everyone in the community. Use the promo code bowtienation for an exclusive discount beyond the free trial.
Now you’ve got a list of genomic stocks to research but a lot of you are probably asking, why not just invest in the ARK Genomic Revolution ETF, ticker ARKG, instead? The fund targets companies expected to benefit from this trend in gene editing and therapies. It’s produced a 130% return over the last year, so why go through the trouble of picking your own biotech stocks?
The problem is, the fund isn’t really a pure play into that gene editing theme. In fact, the largest holding, TeleDoc Health is a health information tech company. Now I own shares of Teledoc myself but if we’re looking for a pure play in genomic stocks, you’ve got to go with the individual stocks.
Some last factors to remember before we look at those five genomic stocks to watch in this theme. Remember, most of these are biotech names are developmental stage companies. They develop the therapies and drugs but then sell them off to larger medical companies after approval.
That means many of these companies are going to have low or no revenue so they need a strong balance sheet with lots of cash to see them through those clinical trials. Looking through the balance sheet, I want to see a high cash balance and relatively low debt.
You also have to compare the pipelines across these companies. That’s the timeline for different therapies, drugs and when the company expects stages of testing to begin.
For these companies, it’s all about which can get approved for a blockbuster therapy fastest and collect those milestone payments from drug company partners.
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First up is Beam Therapeutics, ticker BEAM, a $4.2 billion gene editing stock with shares up 325% over the last year.
Beam is using a unique gene editing approach causing a chemical reaction designed to create precise and predictable changes rewriting a single base in the genome either directly changing it, modifying the gene or activating it. And one of the reasons I like Beam here is because they’re experimenting with three delivery methods to see which works best for different organs and which are most effective, really diversifying the research here to find that one blockbuster technique.
The pipeline for its electro-proration modality for sickle cell and leukemia is the closest to clinical trials and carries the most potential revenue growth in the high margin oncology segment.
Sales are expected to jump to $2.2 million this year from just $24,000 last year and to double to $4.3 million next year and double again to $15 million by 2023. So we see here that kind of explosive revenue growth we’re looking for in genomic stocks.
Now that said, the shares are still terrifically expensive, trading at nineteen hundred times on a price-to-sales basis and even if we take that 2023 sales estimate of $15 million…that still puts the shares at 282-times revenue.
Beam has a healthy balance sheet though not quite as healthy as the others we’ll look at, with $300 million in balance sheet cash against just $107 million in debt, it’s got plenty of flexibility to see the research through to commercialization but still shares that are very expensive and already quite a bit of debt.
Next in our list of genomic stocks is Iovance Biotherapeutics, ticker IOVA, a $4.3 billion company focused on cancer treatment.
And Iovance’s strategy here is really interesting, creating t-cell based immunotherapies for patients with solid tumors and blood cancers. What happens, and I’m intimately aware of this because both my mom and step-father died of cancer, but when your body detects multiplying cancer cells, it releases special immune cells to destroy it. Usually that’s enough but because cancerous cells are able to adapt so quickly, sometimes those special cells, the lymphocytes, can’t do the job.
What Iovance is doing is amplifying a patient’s own special immune cells, making them more effective against the cancer, working with your own immune system to beat the cancer.
Oncology is a huge market with 1.8 million new cases and 606,000 cancer deaths annually so this is where you see a lot of these biotechs targeting that massive and monetizable market.
The company has a solid pipeline with two indications for melanoma and cervical cancer already in the pivotal stage of trials, so very near to approval.
Revenue of $3.4 million expected this year is forecast to jump almost 30-fold to $90 million in 2022 which, again just like we saw with Beam, still puts it at 1,270 times on a price-to-sales basis on this year’s sales but actually pretty cheap if it can reach anything close to that $90 million revenue estimate.
The balance sheet here looks even better with $629 million in cash versus just $52 million in debt so no trouble with funding or cash burn here.
Invitae Corporation, ticker NVTA, is larger here at a $7.4 billion mark cap and a 154% return on the shares over the last year.
Invitae is leading in that genetic testing and screening area of the market, focusing initially in the oncology segment but really expanding it throughout genetic information testing to answer questions about health in all age groups from pediatrics to fertility and diagnostics.
The company is estimating a $154 billion market opportunity across four segments and is already one of the most advanced in our genomics stocks for revenue.
Sales were $280 million last year, expected to almost double to $463 million this year and to hit $1.2 billion by 2024. That would also make it one of the least expensive on our list with a price to sales of just 16-times this year’s expected sales.
Now the balance sheet is a little shakier here with just $360 million in cash against $330 million in debt but I still don’t think there’s any financial trouble with funding here. With that kind of sales growth expected, the company will have no problem getting the funding it needs.
Shares of Twist Biosciences, ticker TWST, are up 330% over the last year though it’s 32% off the high reached in January.
Twist has developed a new process to manufacture synthetic DNA by writing it on a silicon chip, a process it says is on a level 10,000-times more scaleable than competitor models. And with this technology is can create synthetic genes, antibody libraries for drug discovery and enable partnerships in biologics.
The company is one of the largest holdings in the ARK Genomics ETF at 4.2% of the fund and $400 million invested in the shares. It’s got a strong partnership-centered model with a stable of testing for different drugs and indications that could really prove the concept over the next few years.
Revenue is expected 30% higher this year to $120 million from $90 million last year and to $166 million in 2022. That means it’s not the most expensive on the list at 52-times on a price-to expected 2021 sales basis but not quite as inexpensive as Invitae either.
The balance sheet is exceptionally strong here with $587 million in cash against just $34 million in debt and the cash burn is slower here because of that partnership-focused development model.
The largest company in our genomics list at $8.6 billion, CRISPR Therapeutics, ticker CRSP, with a 123% return on shares over the last year.
Crispr is a leader in the kind of allogeneic cell therapy that ARK research points out is so much more cost effective and scaleable that it can reach the masses with screening. In fact, it’s also one of ARK’s biggest holdings with $224 million in the ARK Genomics fund and another $609 million invested in the ARK Innovation ETF.
The company is already in clinical studies for five indications and has a strong overall pipeline with partners Vertex and Bayer as well as its wholly-owned studies.
Revenue growth for Crispr is the strongest in the list, expected to surge 13-fold this year to $9.5 million from $719,000 last year and to a forecast of $253 million by 2023. That’s revenue growth of 35,000% over a three year period!
Of course, growth like that don’t come cheap and the shares are trading for a price of 908-times this year’s expected sales though just 34-times if it can meet that 2023 sales forecast.