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Why Gene Editing Stocks Might Be the Next Big Thing

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Investor Cathie Wood is the CEO and chief investment officer of some of the most happening ETFs of 2020. They go by the name of ARK. On Dec. 21, Wood declared that gene editing stocks could be the next Tesla.

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After talking up Editas Medicine on Dec. 18, Wood influenced the market enough to cause Editas stock to run up 50 percent in the morning on Dec. 21. This is just one gene editing stock, but it suggests that the biotech sector will be on investors' radar for quite some time.

Gene editing biotech stocks are on a run

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Source: NIH

Editas Medicine stock ("EDIT" on the Nasdaq Exchange) was up 50.85 percent in just three hours. Since the market opened on Dec. 22, the stock has fallen 6.23 percent, but it's still wildly above where it stood last week.  

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Crispr Therapeutics ("CRSP" on the Nasdaq) soared 18.73 percent during the same period. Biogen ("BIIB" on the Nasdaq) hasn't seen the same fate despite its deal with gene editing company Scribe Therapeutics. The company saw a major boost in early November following announcements of executive leaders' Nobel prize.

All of these companies use CRISPR technology, which stands for clustered regularly interspaced short palindromic repeats. The process works by splicing DNA sequences to boost immunity at the genetic level. The gene editing technology can minimize widespread infection and help target issues at the core.

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Wood talked up the biotech sector in a Bloomberg interview on Dec. 18. She even said that she likes CRISPR stocks more than Tesla.

"The biggest upside surprises are going to come from the genomic space," Wood said in the interview. "That's because the convergence of DNA sequencing, artificial intelligence, and gene therapies—importantly CRISPR gene editing—are going to cure disease."

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As an industry, gene editing has proven its potential ever since Emmanuelle Charpentier and Jennifer A. Doudna became the first two women awarded a Nobel Prize together. Charpentier and Doudna are researchers who discovered "genetic scissors." Despite the momentum, Wood has propelled the enthusiasm for gene editing in the public market.

Gene editing stock ETFs from ARK Invest and more

Wood founded ARK Invest in 2014. Currently, ARK has five actively managed innovation ETFs:

  • ARKK: Broad Innovation
  • ARKQ: Autonomous Technology & Robotics
  • ARKW: Next Generation Internet
  • ARKG: Genomic Revolution
  • ARKF: Fintech Innovation
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Crispr Therapeutics AG holds 7.35 percent of the ARKG Genomic Revolution ETF, while Editas holds 2.43 percent. Tesla holds 9.93 percent of the ARKK Innovation ETF. Crispr maintains a 6.16 percent weight, while Editas holds 3.36 percent.

ARK Invest ETFs will likely be the most popular option for investors seeking gene editing stock ETFs, but they aren't alone. 

The Franklin Genomic Advancements ETF (HELX) holds 5.06 percent of Intellia Therapeutics (NTLA), which is another gene editing company using CRISPR technology. The SPDR S&P Biotech ETF (XPI) holds Intellia and Editas.

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