2. Kathy Wood is betting on high-risk, high-reward stocks in 2023

The tech Nasdaq is a set of riskier stocks than the other major indexes, and this is reflected in lower performance during a bear market and better performance during a bull run.

But the risks associated with the Nasdaq are child’s play compared to sharper funds like Cathy Wood’s Ark Innovation ETF. It did decline during last year’s bear market, but the fund is also up 37% year-to-date, eclipsing the Nasdaq’s 15% gain.

In fact, tarnishing the Nasdaq after January’s best monthly performance, Wood recently claimed that the ARKK ETF is the “new Nasdaq” and offers investors much better access to the breakout stocks she backs.

So, let’s go down that path and dig into the details of a couple of breakout, high-risk, high-paying names that the Ark CEO has been uploading lately. Using the TipRanks database, we can see if Street analysts support Wood’s choice. Here are the details.

Verve Therapeutics, Inc. (VERV)

Kathy Wood’s first choice we’re looking at is Verve Therapeutics, a biotech company with one mission: to offer protection against cardiovascular disease. The company intends to achieve this by developing drugs using cutting-edge technologies — human genetic analysis, gene editing, messenger RNA (mRNA)-based therapies, and lipid nanoparticle (LDL) delivery — to realize its vision and disrupt the current model of cardiovascular disease treatment. being treated.

There are two programs in the Verve portfolio that are still in the early stages of development. Leading the way is VERVE-101, developed as a single course in vivo liver gene editing therapy and originally intended for the treatment of heterozygous familial hypercholesterolemia (HeFH), an autosomal dominant disease defined by markedly elevated plasma levels of low-density lipoprotein (LDL). cholesterol (LDL-C).

However, the program ran into some problems. In November, the Food and Drug Administration (FDA) suspended the company’s clinical review of the company’s Investigational New Drug (IND) application for a candidate, citing the need for additional clinical and preclinical data, as well as modifications to the U.S. study.

However, the Phase 1 VERVE-101 trial, called Heart-1, is currently underway in New Zealand and the UK. Preliminary data on dose increases are expected in the second half of 2023.

Cathy Wood is apparently not overly concerned about clinical delay; she bought 691,589 shares through ARKK in the last two months. The ETF currently owns 1,534,882 VERV shares, which is over $35 million at the current share price.

Reflecting Wood’s confidence and reflecting his high-risk, high-reward status, Stifel analyst Dae Gong Ha calls Verve a “wildcard” but still sees the stock as a “best bet.”

“We believe that VERVE-101 (heterozygous familial hypercholesterolemia [HeFH]) Clinical delay can be resolved (timing to be confirmed) – which could lead to a rise in the stock – but despite this, Ph.1-1 (2H23) heart data is highly likely to generate positive data, which could also lead to a rise in the stock. We think that with the potential support of shares at $19 per 1 ruble in 2023, it is possible to compensate for some of the losses in 2022. We expect investors to continue to deny the commercial viability of VERVE-101, but we do not see this as a major hindrance to valuation growth,” Ha said.

Overall, Ha thinks the stock has room to grow, and in a sense we mean 140% upside potential. This is the return investors are looking for if the stock hits Ha’s target price of $56. No need to add, analyst rating is Buy. (To view Ha’s track record, click here)

Most agree with Ha’s optimistic stance. Based on 6 buys and 1 hold and a sell, VERV has a moderate buy consensus rating. Overall, analysts expect the stock to rise 69%, as evidenced by an average price target of $39.43. (See VERV Reserve Forecast)

Intellia Therapeutics, Inc. (NTLA)

We will stay in the biotech space for the next Wood-backed action. Using CRISPR-based technologies, Intellia Therapeutics aims to develop genome editing techniques for people suffering from serious diseases. In fact, Jennifer Doudna, one of the co-founders of Intellia, was part of the team that invented the CRISPR gene-editing system, a genetic engineering technique in molecular biology that can change the genomes of living organisms, and was awarded the Nobel Prize for Chemistry 2020 for the pioneering work of CRISPER.

Last year, Intellia reported positive interim data from two ongoing clinical trials evaluating in vivo CRISPR/Cas9 gene editing techniques; one of the NTLA-2001 studies for the treatment of patients with ATTR (transthyretin amyloidosis) is a collaboration with Regeneron Pharmaceuticals, and the other is for NTLA-2002 in hereditary angioedema (HAE).

For the former, the company plans to publish more clinical data from the current NTLA-2001 Phase 1 study in 2023 and intends to submit an IND application around the middle of the year to allow US sites to be included in the candidate’s main study. .

For NTLA-2002, the company plans to enter Phase 2 of the ongoing Phase 1/2 study in the first half of the year. The IND to include US sites in the NTLA-2002 Phase 2 study must also be submitted within 1H.

Despite the recent surge, the stock has underperformed over the past year, shedding 54% of its value. Wood apparently thinks now is the time to lash out; over the past two months, it has purchased 181,295 shares through ARKK, bringing the total number of ETF shares to 6,744,252 shares. They are currently worth over $291 million.

Sharing Wood’s enthusiasm, Wells Fargo’s Yanan Zhu likes the way the stock looks right now and assuages ​​investor concerns on specific issues.

“We view NTLA stock as attractive at current price and would like to point out that concerns about US IND registration and approval, and the safety of the company’s in vivo gene editing programs, while understandable, are grossly exaggerated,” the analyst wrote. “In 2023, we see a high likelihood that the FDA will allow INDs for research by NTLA and other in vivo gene editing companies. Our confidence is based on previous FDA approval for zinc finger nuclease (ZFN) gene editing IND. We also note that the accumulation of safety data from in vivo CRISPR gene-editing studies conducted in the US may also facilitate the FDA’s decision.”

Supporting this stance, Zhu rates NTLA stock as “overweight” (i.e. “buy”) to meet its $120 target price. This target increases the upside potential to a whopping 177%. (To see Zhu’s track record, Click here)

Looking at a consensus outlook based on 7 Buy versus 4 Hold ratings, this stock qualifies for a Moderate Buy consensus rating. Analysts expect the stock to return ~98% next year with an average target of $85.80. (See Intellia stock forecast)

For good stock trading ideas at attractive prices, visit TipRanks Best Stocks to Buy, a recently launched tool that aggregates all of TipRanks stock analytics.

Disclaimer: The views expressed in this article are solely those of a selected analyst. The content is for informational purposes only. It is very important to conduct your own analysis before making any investment.

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