Cathie Wood Bets Big: Are CRISPR and Intellia Therapeutics Worth the Risk for Your Portfolio?

Renowned for her bold investment choices, Cathie Wood and her ARK Innovation ETF (NYSEMKT: ARKK) frequently delve into the biotech sector, zeroing in on companies at the forefront of scientific and technological innovation. These enterprises, albeit volatile, tantalize investors with the potential for astronomical returns in exchange for considerable risk. When such stocks are under market pressure, does it make sense to follow in her footsteps and buy the dip? Wood seems to think so, especially with her recent bets on two particular biotech firms. Let's dissect whether these moves might also align with your investment strategy.

CRISPR Therapeutics

Down 13% this year, CRISPR Therapeutics (NASDAQ: CRSP) emerges as a compelling dip-buying opportunity. Wood's ardent interest in the company, evidenced by her multiple purchases throughout the month, is noteworthy. As of May 30, this stock represents 3.6% of the ARK Invest portfolio, making it the eighth-largest holding.

CRISPR Therapeutics aligns flawlessly with Wood's investment philosophy, which champions entities capable of industry disruption and significant growth. The company's flagship gene-therapy product, Casgevy, has recently gained approval for treating sickle cell disease (SCD) and beta thalassemia, although it's yet to generate revenue.

While Vertex Pharmaceuticals leads the commercialization efforts and will reap the larger profit share, CRISPR Therapeutics could see a notable stock surge as initial sales figures trickle in. However, Wall Street analysts predict any real earnings growth won't manifest until at least after 2025. This suggests that there's a window to incrementally build a position by dollar-cost averaging, albeit acknowledging potential volatility stemming from the company's ongoing clinical-stage endeavors.

Intellia Therapeutics

Likewise, Wood has been steadily accumulating shares of Intellia Therapeutics (NASDAQ: NTLA), a company whose stock has plummeted 27% this year. Intellia now constitutes nearly 2% of the ARK Invest portfolio, with Wood holding a significant 10.4% of its outstanding shares.

Intellia Therapeutics is focused on developing its first medicine, targeting transthyretin (ATTR) amyloidosis, a rare genetic disorder. The company anticipates launching a phase 3 clinical trial for this therapy by year-end, aiming to tap into an $11 billion market by 2029, according to GlobalData.

However, Intellia's longer road to commercialization could spell financial straits before it turns profitable. With $953.3 million in cash and equivalents and quarterly expenses of $142.9 million, the company has a runway of just over 1.5 years before needing additional capital. Fortunately, its clean balance sheet, devoid of long-term debt, provides a bit of cushion.

Should you mirror Cathie Wood's strategy and invest in Intellia Therapeutics? For most traders, the high risk inherent in early-stage biotechs makes this a less appealing choice. The potential rewards are distant and uncertain, and such stocks can be precarious. However, for those with a high risk appetite and a well-diversified portfolio, a modest position in Intellia could be justifiable.

In essence, both CRISPR Therapeutics and Intellia Therapeutics offer intriguing opportunities—but not without significant risk. Evaluate your risk tolerance and investment horizon carefully before deciding to follow Cathie Wood's lead in these biotech ventures.