Genomics Outlook for Disruption Is Rising | ETF Trends

Biotechnology and genomics equities are showing modest signs of life this year following dismal showings in 2022. The good news for long-term investors is that there could well be much more to come, particularly in the genomics arena.

Resurgent equities in that space could stir renewed interest in exchange traded funds, including the ARK Genomic Revolution ETF (ARKG). For its part, ARKG is higher by 8% — a far better showing than some of its passive rivals and some widely followed biotech indexes.

While ARKG and its peers have plenty of ground to make up after last year’s rough patch, genomics investing has history on its side. For example, genomics indexes have extended track records of topping broader equity and biotech benchmarks.

For investors that rightfully say that past performance is not guaranteed to repeat, the future is potentially bright for ARKG.

“For cancer treatment, living drugs enabled by genetic editing, are forecast to reach a $200B addressable market by 2024,” according to MSCI. “Supported by genomic sequencing, multi-cancer screening through liquid biopsies is projected to grow to a $150B market while preventing 66,000 deaths total annually in the US.”

There are other factors in favor of ARKG for investors that take a long-term view of genomics. That’s probably the right prescription because this can be a volatile corner of the market. First, as genomics continues to evolve rapidly, it will intersect with other disruptive technologies. Second, gene editing is taking off, and as those costs decline, it will be more accessible, potentially facilitating elevated top-line growth.

“By 2025, long-read DNA sequencing is estimated to reach a $5B market, growing at a 82% annual rate,” added MSCI. “Advances in agricultural biology have led to six-fold income increases for farmers.”

Drilling down on other specific areas in which ARKG could excel, cancer therapies stand out as opportunity-rich territory because the immuno-oncology market is massive. In simple terms, immuno-oncology uses a patient’s immune system to combat cancer cells. That requires cutting-edge technology and genomics capabilities — which ARKG puts itself at the forefront of by leveraging active management.

“Despite many recent advances that have revolutionized cancer care for patients, oncology remains one of the areas with the largest unmet need in medicine. The field of immuno-oncology is now consolidating its presence in the frontline of treatments for most major types of cancer. Challenges remain related to treatment complexity and control, cost and patient safety but all of these are seeing rapid progress and high levels of research activity and trials,” concluded MSCI.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.