September 30, 2023

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Computer Will Live On Forever

The ARKG ETF and the Intersection of All Things Tech

2 min read

It’s often said that disruptive technologies frequently intersect with each other. For example, cloud computing and the Internet of Things (IoT) are frequently linked to advancements in cybersecurity.

Likewise, electric vehicle (EV) adoption is in part dependent on improving clean energy and smart grid technology. Yet healthcare and artificial intelligence (AI) may be the most compelling tech intersections in existence today.

On that, the ARK Genomic Revolution Multi-Sector Fund (CBOE: ARKG) is one of the premier exchange traded funds for investors looking to tap into the intersection of new tech and healthcare.

“Emerging technologies like gene editing, gene therapy, artificial intelligence (AI), and next generation sequencing (NGS) should continue to improve clinical trial success rates, increasing the percentage of drug candidates that commercialize successfully,” writes ARK analyst Alexandra Urman. “If so, we believe investors relying upon historical success rates are likely to undervalue biopharmaceutical pipeline assets, particularly those at early stages.”

ARKG 1 Year Performance

Tech x Healthcare

On its own, genomics, is a disruptive concept. Many holdings in the actively managed ARKG are the definition of “cutting edge,” particularly when measured against traditional pharmaceuticals companies.

Companies engaged in fields such as agricultural biology, bioinformatics, CRISPR, and other revolutionary healthcare endeavors are heavily dependent on technology. As technology advances, it’s possible that patient and trial outcomes will follow suit.

“After researching the technology-based improvements likely at each stage of the clinical trial process, ARK has compared the difference in net present values (NPVs) between pipelines based on historical success rates to those on potential success rates,” adds Urman.

The ARK analyst goes on to note that in early stage trials, tech advancements can substantively reduce failure rates while improving a drugs’ and therapeutics’ time-to-market. That’s a win-win for patients and ARKG holdings.

Focusing on NGS – a concept ARKG is arguably more levered to than any other ETF – advancements on this front can present clinicians with data necessary to ascertain how patients will respond to treatments targeting specific, hard-to-treat conditions.

“In phase 3 lung cancer trials, genetic diagnostics could lower therapy failure rates by 45%. In our analysis, ARK has assumed conservatively that the integration of NGS in clinical trials will reduce failure rates at each stage of the clinical development process by 25%,” according to Urman.

For more on disruptive technologies, visit our Disruptive Technology Channel.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.