The ARK Genomic Revolution Multi-Sector Fund (CBOE: ARKG) is one of the best-performing healthcare ETFs of any stripe over the past several years for a simple reason: the ability of the fund’s managers to identify companies that are breaking new ground in the rapidly evolving genomics arena.
That tradition continues today. Consider the case of Pacific Biosciences (NASDAQ: PACB), one of ARKG’s top 10 holdings.
Last week, “Pacific Biosciences of California (PACB) raised nearly $87 million in a secondary equity offering, causing some excitement and an approximate 23% pop in the stock,” writes ARK analyst Simon Barnett in a recent note. “With a strong balance sheet, PacBio should be able to improve its flagship Sequel II platform, enrich its clinical footprint, and expand its value proposition for translational research customers. Once upgraded, we believe Sequel II could be superior to category leader Illumina (ILMN) as measured by cost, accuracy, and features.”
ARKG Outlook Remains Stellar
Disruptive technology is always an interesting play for investors to consider and the genomics market is one to watch closely. According to the “Genomics Market – Growth, Trends, and Forecasts (2020-2025),” exponential growth in the space will occur within the next five years.
Pacific Biosciences could be onto something with its Sequel II platform.
“Unlike short-read sequencers, Sequel II uses high-fidelity (HiFi) long-read chemistry. While less expensive and more efficient, short read systems fail to recognize certain types of mutations, importantly structural variants. They also can be biased by upstream chemistry steps and are unable to detect epigenomic changes like DNA methylation without specialized reagents,” according to Barnett.
ARKG includes companies that merge healthcare with technology and capitalize on the revolution in genomic sequencing. These companies try to better understand how biological information is collected, processed and applied by reducing guesswork and enhancing precision; restructuring health care, agriculture, pharmaceuticals, and enhancing our quality of life.
“According to our analysis, given its track record and access to capital, PacBio could optimize Sequel II to sequence whole human genomes for less than $1,000 within the next 24 months. Sequel II also should be able to generate as much data per day as the NovaSeq, perhaps forcing Illumina to lower reagent prices or integrate super-resolution optics into its high-throughput instruments more rapidly than otherwise might be the case,” notes Barnett.
For more on disruptive technologies, visit our Disruptive Technology Channel.
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.