DeepMind — a unit of Alphabet (GOOGL) — recently announced the availability of a database of nearly all of the proteins known to science, Jon Markman, growth stock expert and editor of Pivotal Point.
The open-source project eliminates one of the most expensive parts of biotechnology. Investors should consider buying the Ark Genomic Revolution ETF (ARKG).
DeepMind rose to prominence last December when its AlphaFold project solved a 50-year biology problem. The firm used AI algorithms to successfully predict the three-dimensional shapes proteins would take as they folded organically. It was a monumental advance in the field of biotechnology.
The shapes proteins take ultimately determine their function. If biologists knew the shapes/functions in advance, they could custom-design chains of amino acids in the lab, then quickly develop drug treatments for testing.
Before AlphaFold, determining protein structures was experimental. When possible, researchers had to crystalize the protein, then use either electron microscopes or x-ray crystallography machines to make educated guesses. The process was costly and imprecise.
During a podcast in July, Demis Hassabis, chief executive at DeepMind, noted that AlphaFold can process that information in a matter of seconds. Hassabis claims the new database will make finding the structure for 200 million proteins as easy as doing a Google search.
Drug Discovery Trends notes that researchers at the University of Oxford used the results to quickly develop a vaccine for malaria.
While expediting drug discovery is a game changer for biotechnology companies, investors should focus on the way the database will change the narrative about investing in the sector.
In my opinion, the biotechnology sector is moving into a new stage. The next phase, with real products, is beginning now. Investors should get ready. The Ark Genomic Revolution exchange-traded fund holds 60 stocks poised to take advantage of this paradigm shift.
Ark Genomic is managed by Cathie Wood, a polarizing figure in the world of finance. She started Ark Invest in 2014 after her idea to invest in disruptive technology was deemed too risky for AllianceBernstein, her previous employer. By early 2021, she had become an investing star and was named the best stock picker by Bloomberg.
Shares of Ark Genomic zoomed from $35 in early 2020 to a high of $114 a year later. That's when biotechnology shares in general entered the peak of inflated expectations, followed by a trough of disillusionment. Ark Genomic shares traded in June to a low on only $27.
AlphaFold is a substantial innovation. The sector is entering the slope of enlightenment in which first generation products will begin to proliferate. The Oxford University success and others will follow. Buying a basket of companies — as offered by Ark Genomic — is the best way to take advantage of these new products while diversifying risks.
A decade ago, no biologist was close to solving the protein folding problem. A company owned by an internet search engine quietly changed science. It's time for investors to reap the rewards. ARKG could easily fetch $70 during the next 18 months.
