Cathie Wood and Brett Winton of Ark Invest are sounding the alarm on a profound shift happening in healthcare. The convergence of technologies like AI, gene sequencing, and gene editing is ushering in a new era of curative therapies that could dramatically transform the pharmaceutical industry and healthcare landscape.
The key insight is that cures, not just treatments, are becoming viable. Historically, the pharmaceutical business model has been built around chronic treatments that patients must take indefinitely. But now, gene therapies and other curative approaches offer the potential to completely eliminate certain diseases with a single dose.
This shift in the revenue profile of drugs is not yet understood by Wall Street. Cures are actually more valuable than long-term treatments, as they avoid a lifetime of healthcare costs and deliver better patient outcomes. Yet the market is still valuing curative therapies as if they are just incremental improvements over existing treatments.
The Revenue Potential of Cures
To illustrate the value of cures, Winton walks through the example of hereditary angioedema (HAE), a rare disease. The current standard of care for HAE involves monthly injections costing $500,000 per year over a patient's lifetime. In contrast, a one-time curative therapy could be priced at $3 million, yet still represent a massive cost savings for the healthcare system.
Extrapolating this to the broader rare disease market, Winton estimates the revenue potential of cures to be around $2 billion per therapy - over 20 times more valuable than a traditional treatment. This is because cures not only eliminate the need for ongoing care, but also pull all of that future revenue forward into the present.
The Underappreciated Potential of Cures
Despite this massive value proposition, the market is currently underpricing and underappreciating the potential of curative therapies. Companies like Intellia Therapeutics, which is developing a cure for HAE, are trading at a fraction of what their asset could be worth if priced appropriately.
Winton believes this disconnect is due to a lack of familiarity. Wall Street has not yet seen the tangible evidence of how the revenue curve for cures differs from traditional treatments. As more cures come to market in the next 5 years, he expects a shift in how these assets are modeled and valued.
A New Golden Age of Healthcare Innovation
Wood and Winton see this convergence of technologies as ushering in a new golden age of healthcare innovation. Just as the biotech boom of the 1980s-1990s delivered massive returns, they believe the current wave of curative therapies could drive even greater returns to R&D.
Importantly, this isn't just good business - it's also transformative for humanity. The ability to cure devastating diseases, rather than just manage symptoms, has profound implications for patient outcomes and the overall healthcare system. The sooner the capital markets recognize this value, the faster these cures can be developed and deployed.
As Winton concludes, "the sooner kind of Wall Street or the capital markets realize how valuable these things could be, the more quickly we'll be able to develop cures for these diseases which can be yes great businesses but also great for Humanity."
Part 1/5:
The Transformative Power of Healthcare Innovation
Cures, Not Just Treatments
Cathie Wood and Brett Winton of Ark Invest are sounding the alarm on a profound shift happening in healthcare. The convergence of technologies like AI, gene sequencing, and gene editing is ushering in a new era of curative therapies that could dramatically transform the pharmaceutical industry and healthcare landscape.
The key insight is that cures, not just treatments, are becoming viable. Historically, the pharmaceutical business model has been built around chronic treatments that patients must take indefinitely. But now, gene therapies and other curative approaches offer the potential to completely eliminate certain diseases with a single dose.
Part 2/5:
This shift in the revenue profile of drugs is not yet understood by Wall Street. Cures are actually more valuable than long-term treatments, as they avoid a lifetime of healthcare costs and deliver better patient outcomes. Yet the market is still valuing curative therapies as if they are just incremental improvements over existing treatments.
The Revenue Potential of Cures
To illustrate the value of cures, Winton walks through the example of hereditary angioedema (HAE), a rare disease. The current standard of care for HAE involves monthly injections costing $500,000 per year over a patient's lifetime. In contrast, a one-time curative therapy could be priced at $3 million, yet still represent a massive cost savings for the healthcare system.
Part 3/5:
Extrapolating this to the broader rare disease market, Winton estimates the revenue potential of cures to be around $2 billion per therapy - over 20 times more valuable than a traditional treatment. This is because cures not only eliminate the need for ongoing care, but also pull all of that future revenue forward into the present.
The Underappreciated Potential of Cures
Despite this massive value proposition, the market is currently underpricing and underappreciating the potential of curative therapies. Companies like Intellia Therapeutics, which is developing a cure for HAE, are trading at a fraction of what their asset could be worth if priced appropriately.
Part 4/5:
Winton believes this disconnect is due to a lack of familiarity. Wall Street has not yet seen the tangible evidence of how the revenue curve for cures differs from traditional treatments. As more cures come to market in the next 5 years, he expects a shift in how these assets are modeled and valued.
A New Golden Age of Healthcare Innovation
Wood and Winton see this convergence of technologies as ushering in a new golden age of healthcare innovation. Just as the biotech boom of the 1980s-1990s delivered massive returns, they believe the current wave of curative therapies could drive even greater returns to R&D.
Part 5/5:
Importantly, this isn't just good business - it's also transformative for humanity. The ability to cure devastating diseases, rather than just manage symptoms, has profound implications for patient outcomes and the overall healthcare system. The sooner the capital markets recognize this value, the faster these cures can be developed and deployed.
As Winton concludes, "the sooner kind of Wall Street or the capital markets realize how valuable these things could be, the more quickly we'll be able to develop cures for these diseases which can be yes great businesses but also great for Humanity."