Virus Detection Is Just One Catalyst for This Hot Genomics ETF

The coronavirus pandemic is stirring renewed interest in healthcare investments, including ETFs. While the sector – the second-largest in the S&P 500 – is expansive, not all of its ETFs offer COVID-19 leverage. The ARK Genomic Revolution Multi-Sector Fund (CBOE: ARKG) does.

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.

Importantly, the fund is relevant at a time when virus detection and testing capabilities are vital.

“As government officials re-open the US, testing for the COVID-19 virus will be a critical step. A new CRISPR-based test called DNA Endonuclease-Targeted CRISPR Trans Reporter (DETECTR) could help speed the process along,” said ARK analyst Ali Aurman in a recent note.

CRISPR could enable cheap and rapid “write” capabilities to correct genetic defects.

Looking ahead, CRISPR-based innovations to accelerate given the technology’s ease of use, cost-efficacy, growing body of research surrounding its safety, and AI-powered CRISPR nuclease selection tools. CRISPR could also be utilized to address some of the most prominent healthcare problems, which opens up a significant investment opportunity in monogenic diseases.

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“Typically, the Food and Drug Administration (FDA) takes years to review tests but, thanks to the Emergency Use Authorizations for COVID-19, DETECTR could be on track for accelerated approval. It went from hypothesis to development in just three weeks,” notes Aurman. “Perhaps as important, with portable, rapid, and inexpensive testing, DECTECTR could have profound implications for the developing world.”

In addition to its CRISPR and coronavirus leverage, ARKG features significant exposure to the thriving DNA sequencing theme.

“Oncologists routinely use next-generation DNA sequencing (NGS) to examine mutations deeply embedded in patient tumors and match patients to targeted therapies,” said ARK analyst Simon Barnett. “The FDA recently approved alpelisib, for example, to treat breast cancer patients whose tumors harbor a mutation in PIK3CA—a commonly mutated gene. Recently, and as expected, Memorial Sloan Kettering (MSK) researchers discovered that patients with multiple mutations in the PIK3CA gene had a deeper and longer response to alpelisib than those with only one PIK3CA mutation. Patients with a higher tumor mutational burden (TMB) generally respond better to checkpoint inhibitors.”

Plus, CRISPR and DNA sequencing intersect, a theme ARKG captures.

CRISPR can cut DNA/RNA at a single point or in stretches; insert DNA/RNA and create novel gene sequences; activate and silence genes without making permanent changes; regulate protein expression levels epigenetically; record and timestamp biological events; track the movement of specific biological molecules; identify the presence of specific cancer mutations and bacteria; locate molecules without making changes; target and destroy specific viral and bacterial DNA and RNA; interrogate gene function multiplexed, and activate drug release at a specified trigger.

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.