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Exact Sciences, BioNTech and Invitae start 2023 strong

Exact Sciences, BioNTech and Invitae have been the top performing stocks within the biotech investment theme in the first weeks of 2023, managing to beat analysts’ expectations. Here’s why:

- Exact Sciences reported a jump in sales of over 40% in Q4, while Invitae reported a 12% year-over-year revenue growth.

- BioNTech announced plans to buy AI provider InstaDeep for £562m and collaborate with the UK government on mRNA cancer vaccine research.

- Cathie Wood’s ARK Innovation ETF acquired more Exact Sciences shares, making it the fund’s top holding.

In a preliminary update on January 8, cancer-testing company Exact Sciences [EXAS] announced an increase in sales during Q4, boosting the firm’s profitability ahead of schedule. Sales of screening products such as the Cologuard stool test for colorectal cancer jumped more than 40%, while overall revenue rose 28% in the final quarter of 2022, reaching over £450m.

Exact Sciences’ share price rallied 27% in two days following the announcement and was up 16% in the past week but down 12% year-over-year.

Exact Sciences reports profits earlier than expected

Analysts believe the American biotech company sped up its path to profitability to ease pressure from increasingly impatient investors, as the firm showed steady growth but not yet returns.

Cologuard was the most significant driver of Exact Sciences’ sales beat, but revenue indicated positive results in its cancer genomics testing.

“Exact Sciences’ fourth quarter results show the strength of our business and the momentum building behind the best brands in cancer diagnostics,” said Chief Executive Kevin Conroy in the press release.

Overall, the company grew its business by 25% in 2022 compared to the previous year, leaving out the unusual revenue from COVID testing in 2021.

BioNTech to use AI in manufacturing

German big pharma BioNTech [BNTX] announced last week its plans to buy UK technology company InstaDeep Ltd in a deal worth £562m to use AI and machine learning in areas including manufacturing.

The company has been using advanced computing to tailor personalised vaccines to patients’ tumours, and with this deal, it’s charting a path forward to scale this integration.

“Our aim is to make BioNTech a technology company where AI is seamlessly integrated into all aspects of our work,”  CEO Ugur Sahin said in a statement.

In addition, the firm agreed to join efforts with the UK government in an ambitious plan to boost research into mRNA cancer vaccines. The partnership aims to make this personalised cancer treatment available to roughly 10,000 patients by 2030.

“The concept here is to use specific molecular features in individual cancers of patients to encode them into the mRNA vaccines and to train the immune system to attack,” BioNTech co-founder Prof Ozlem Tureci told BBC News.

Following the success of the mRNA technology in COVID-19 vaccines, scientists are now looking into applying it to cancer treatments.

Invitae’s Q4 revenue above estimates

Last week, Invitae [NVTA] reported a preliminary Q4 revenue of roughly $122m, above analysts’ estimates of $121.4m. The firm’s overall revenue reached $516m in 2022, a 12% increase from $460m in the previous year.

During the 41st Annual JP Morgan Healthcare Conference on January 11, Invitae’s CEO Ken Knight mentioned that the company’s portfolio will stabilise in 2023, with plans to “double down” on its oncology franchise.

Invitae’s share price was up 29% in the past month but down 77% year-over-year. 

CHART INVITAE

Funds in focus: ARK Innovation ETF [ARKK] &  iShares Biotechnology ETF [IBB]

Cathie Wood’s ARK Innovation ETF [ARKK] and ARK Genomic Revolution ETF [ARKG] are the largest ETF holders of Exact Sciences shares, weighting above 10% in both cases.

Following last week’s preliminary results, Wood bought more Exact Sciences shares, surpassing Zoom [ZM] to make it ARK Innovation ETF’s top holding. According to ARK's research, Exact Sciences could compound at an average annual rate of 25%, reaching $140 per share by 2027.

The ARK Innovation ETF is also the largest ETF holder of Invitiae shares, whereas the largest ETF holder of BioNTech shares is the iShares Biotechnology ETF [IBB].

The former ETF was down 16.65% in the last month and down 66.98% year-over-year, while the latter was down 3.57% in the last month and down 13.59% year-over-year.

 

Disclaimer Past performance is not a reliable indicator of future results.

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