Genomics has long been one of the more tech-centric corners of the healthcare space, and that remains the case today.
That’s a strong indication that disruptive technologies often intersect with and depend on one another. Among the related exchange traded funds, the ARK Genomic Revolution Multi-Sector Fund (ARKG ) nimbly taps into that trend.
Research confirms that technological evolution can have material benefits in the genomics space, including lower costs and, potentially, superior patient outcomes.
“According to our research, innovative neural-network-based algorithms can predict protein structures accurately in lab experiments and could turbocharge human therapies and agricultural breakthroughs,” says ARK Investment Management analyst Alexandra Urman.
As an actively managed fund, ARKG can be more responsive to equity-level technological advances in genomics. That’s meaningful on a number of fronts, including the potential to reduce costly pre- and early trial experimentation.
“Our research suggests that neural-network-based algorithms could reduce R&D costs, increase the value of clinical trial assets, and increase the probability of clinical trial phase transition. For example, enabling technologies could shorten the average time spent in pre-clinical experimentation,” adds Urman.
Obviously, the COVID-19 vaccines are exceptions, but the traditional pre-trial time for drugs and therapies can last up to several years. That’s a long time, and it takes capital for companies to stay afloat during that period. Said another way, if technology can effectively help biotech and genomics companies reduce pre-trial experimentation without adversely impacting patient outcomes, investors stand to benefit.
“Based on our model assumptions, that number drops to three years and, with neural-network-based algorithms, two years, as shown below. For the entire pipeline—from discovery to the registration of a therapeutic drug—technology could improve efficiency, reduce costs, and eliminate 3.5 years of research and development time,” notes Urman.
Interestingly, technological improvements as they pertain to the genomics industry may not broadly reduce research and development expenditures. However, tech advances could serve to boost the number of drugs entering trial pipelines. Over time, that could be advantageous in terms of addressing various unmet needs in the healthcare arena.
The $3.9 billion ARKG, which debuted in October 2014, holds 49 stocks. The fund is higher by 7.52% over the past month.
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