Artificial intelligence (AI) is getting heaps of attention on Wall Street, but that doesn't mean it's the only innovative investment opportunity right now. Shares of plenty of companies that aren't on the cutting edge of AI have been getting scooped up by the Internet's most famous innovation-focused investor, Cathie Wood.
During the first two weeks of June, the CEO of ARK Invest bet heavily on Intellia Therapeutics (NTLA 2.83%) and UiPath (PATH). Naturally, everyday investors with more modest capital inflows are wondering if they should follow her lead into these growth stocks. Here's what you should know about them before risking any of your hard-earned money.
Image source: Getty Images.
Intellia Therapeutics
Multiple times this month, Wood added thousands of shares of Intellia Therapeutics to Ark Invest's flagship Ark Innovation ETF and the Ark Genomic Revolution ETF. Intellia is a clinical-stage developer of CRISPR-based gene therapies that still has no approved products to sell.
Wood's latest Intellia investment came just days before the company announced positive clinical trial results for one of two experimental treatments the company has in early-stage clinical trials. NTLA-2002 is a once-and-done therapy candidate designed to edit a gene that leads to the production of kallikrein.
Kallikrein is a protein that plays a big role in hereditary angioedema (HAE), and knocking it down should reduce the frequency of painful and debilitating HAE attacks. NTLA-2002 will be closely watched because, unlike other CRISPR-based treatments that are closer to earning regulatory approval, it edits blood cell genes in vivo, without removing those cells from the body first.
Wood was likely encouraged by recently announced trial results that showed after one 25-milligram dose of NTLA-2002, three HAE patients saw the levels of kallikrein in their blood reduced by 67% on average 48 weeks after receiving treatment. Patients who received a 75-milligram dose had achieved a 95% reduction after 32 weeks of observation.
A lack of dose-limiting toxicities and serious adverse events suggests that NTLA-2002 has a pretty good chance of eventually earning approval. Before following Wood's lead into Intellia, though, investors should understand the risks.
A pivotal study designed to support a new drug application for Intellia's lead candidate, NTLA-2001 -- a candidate that aims to treat transthyretin amyloidosis -- isn't slated to begin until near the end of 2023. This means it will be at least a couple of years before the company has any chance to generate product sales.
The company finished March with $1.2 billion in cash, but drug development becomes exponentially more expensive as the candidates approach the finish line. Intellia boasts a $4.1 billion market cap at the moment. This lofty valuation could come crashing down if anything goes wrong in the trials of its lead candidates over the next couple of years.
UiPath
Earlier this month, Wood scooped up more than half a million shares of UiPath (PATH) for the Ark Innovation ETF and two other Ark Invest funds.
UiPath is a leader in the rapidly growing market for robotic process automation (RPA) services. Office workers all over the world use its platform to automate away repetitive processes and free up their time for more meaningful work.
Fears of a looming recession made the first few months of 2023 rough ones for most software-as-a-service vendors. Despite that challenging environment, UiPath reported a dollar-based net retention rate of 122% during its fiscal first quarter, which ended April 30.
UiPath recently unveiled new AI-powered capabilities that will help it stay on top of an RPA market that is already large and expanding at a hair-raising pace. The global RPA market reached $2.3 billion in 2022, and Grand View Research forecasts that it will grow at an annualized rate of 39.3% from 2023 through 2030.
If you want to follow Wood and buy UiPath for your own portfolio, you should know there's a lot of growth already priced into the stock. Its market cap is up around $10.9 billion even though it lost $238 million over the past 12 months.
UiPath's lead position in the fast-growing RPA market justifies the stock's lofty valuation. Before buying this stock, though, investors need to realize that its price could crash if there's any sign of a slowdown in the company's growth over the next few years.
Cory Renauer has positions in UiPath. The Motley Fool has positions in and recommends Intellia Therapeutics and UiPath. The Motley Fool has a disclosure policy.
