An innovative ETF opportunity that taps into our best understanding of the human genome
With an exchange-traded fund strategy focused on targeted disruptive innovation in biotechnology, investors can focus on companies driving change in targeted therapies, bioinformatics, CRISPR technology, and more. .
During the recent webcast, Change the DNA of your portfolio: growth opportunities through genomics, Nicholas Grous, Associate Portfolio Manager at ARK Invest, highlighted five innovation platforms that will see long-term growth, including artificial intelligence, energy storage, robotics, DNA sequencing and blockchain technology. These five sub-categories are expected to see long-term growth. For example, gene sequencing is expected to grow from $125 billion in 2020 to $3.6 trillion in 2030. Overall, ARK Invest predicts disruptive innovation technologies could reach $210 trillion by 2030, compared to 14 trillion dollars in 2020.
The increased adoption of disruptive innovation technologies will not just be a one-time event, as these innovative ideas will span a wide range of industries and touch on many facets of the global economy. For example, Grous believed that the convergence of next-generation DNA sequencing, artificial intelligence, and gene therapies would dramatically increase returns on investment, potentially creating a golden age of healthcare that could rival that of the 1980s and 1990s.
Simon Barnett, research analyst at ARK Invest, explained that researchers have always had to choose between precision with short-read sequencing or completeness with long-range sequencing to divide the genome into smaller segments for analysis. with high-resolution optics, which is then reassembled with computer algorithms. According to Wright’s law, for each cumulative doubling of data produced on its relocated base, the cost of synthesis-based LRS has decreased and will continue to decrease by 28%. Looking ahead, ARK predicts that the cost of sequencing a whole human genome with long-read technology will drop to $100-$200 and its accuracy will exceed SRS for all variant types by the end. of 2025.
“According to our research, breakthroughs in gene editing are creating more effective therapies at a faster rate than before,” Barnett said.
For example, compared to zinc finger nucleases (ZFNs), which went from discovery to the first human dose in about eight years, the relatively new CRISPR technology took less than half the time, three years, and can treat 48% of known illnesses, nearly double the 28% of ZFNs. Primary and base edition CRISPR derivatives treat even more diseases, 79% and 59%, respectively. Therefore, Barnett argued that CRISPR can be considered a superior gene editing method in the future, and this already shows that CRISPR has dominated recent academic research and clinical trials.
Looking ahead, ARK expects gene editing and gene therapy companies to reach $1.1 trillion in market capitalization by 2026. Considering potential cures for diseases, the share of the Research and development funding for gene therapy innovations is expected to continue to increase. By 2026, the share of total R&D spending devoted to gene publishing and gene therapy companies could increase from 3% to 17%.
Additionally, Barnett noted that routine blood screening for multiple cancers, combined with improvements in single cancer screening, could prevent 40% of metastatic diagnoses and increase loco-regional diagnoses by 10%. Even without improvements in cancer therapy, ARK estimates that early intervention could prevent 66,000 cancer deaths per year in the United States alone.
The central dogma could help describe how biotechnology progresses. The central dogma states that DNA (the genome) is transcribed into RNA (the transcriptome), which is ultimately translated into protein (the proteome). Proteins perform virtually all of the essential functions of life, but when altered they can cause disease.
“By understanding the interactions between and among the pillars of central dogma, we will improve our ability to make predictions, diagnoses, and leapfrog fundamental biological insights,” Barnett said.
“We believe that the future of molecular biology lies in multi-omics techniques that incorporate the pillars of central dogma. Based on our research, multi-omics – including life science tools, basic and translational research, population health efforts, and molecular diagnostics – could impact oncology, organ health and population health, growing from $110 billion to approximately $300 billion over the next five years. years,” he added.
In order to seize this opportunity for potential growth, investors can turn to ARK Genomic Revolution Multi-Sector Fund (NYSEArca: ARKG)an actively managed strategy that seeks long-term capital growth by investing in domestic and foreign equity securities of companies across multiple industries, including healthcare, information technology, materials, energy and consumer discretionary, which are relevant to the genomic revolution fund’s investment theme.
ARKG aims for multi-cap thematic exposure to innovative elements including gene therapy bioinformatics, bio-inspired informatics, molecular medicine and pharmaceutical innovations. The ETF aims to capture long-term growth with a low correlation of returns relative to traditional growth strategies and a negative correlation to value strategies. In addition, the fund offers a diversification tool due to the low overlap with traditional indices. It can complement traditional value/growth strategies.
Financial advisors interested in learning more about growth opportunities in the biotech segment can watch the webcast here on demand