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ARK Disrupt Issue 102: Autonomous EVs, Bitcoin, AI, Gene Editing, and Israel

Please enjoy ARK Disrupt Issue 102. This blog series is based on ARK Brainstorming, a weekly discussion between our CEO, Director of Research, thematic analysts, ARK’s theme developers, thought leaders, and investors. It is designed to present you with the most recent innovation takeaways and to keep you engaged in an ongoing discussion on investing in disruptive innovation. To read the previous issue, click here.

1. Israel: An Innovation Powerhouse With Exponential Growth Potential

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Israel is a world leader in the development of innovative products and services with companies that are advancing scientific research and enhancing every sector of the global economy. Ranked highly in the world for technological advancements and entrepreneurship, and responsible for many innovations, Israel has earned its status as an innovation powerhouse. Named the 10th most innovative country in the world by the 2017 Bloomberg Innovation Index, and 2nd overall for innovation by the 2017 Global Competitiveness Index, Israel is attracting investor interest.

We invite you to read our latest blog and learn more about the investment opportunity in Israeli innovation!

2. GM Touts Its Autonomous Electric Strategy

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Earlier this week GMGM invited reporters to test Cruise Automation’s autonomous electric cars. While Waymo’s autonomous demo a few weeks ago was on a closed course without safety drivers, Cruise cars were on public roads with safety drivers. Most of the journalists agreed that the Cruise cars managed to get through relatively complex situations, but the rides were halting and slow. Safety drivers had to intervene in a few situations, not to avoid crashes but to maneuver around double-parked cars or trash trucks.

ARK’s take is that the first commercially deployed autonomous taxis will be much cheaper per mile than taxis and ride-sharing services, but that they will take longer to reach destinations. During its investor day last week, GM laid out its autonomous electric strategy (the entire presentation can be viewed here), echoing many of ARK’s research conclusions.  That said, it suggested that its autonomous ridesharing service would debut in 2019 at $1 per mile, well above the $0.35 per mile which ARK believes would be profitable in 2020, and that battery prices would drop from $145/kWh today to $100/kWh.

While seemingly off to a good start in the autonomous electric realm, GM is a traditional auto manufacturer facing two transitions that could threaten its survival: first from its internal combustion engine roots to electric, and second from a low margin hardware assembly to vertically integrated software and services.  While rarely in the history of disruptive innovation has a company been able to change its DNA so radically, GM deserves credit for understanding that the shift to autonomous taxi networks could be the difference between life and death, and for launching its service on the challenging streets of San Francisco.

3. Bitcoin Becomes Wildly Popular In India

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India is one of the countries yet to provide clear rules and regulations for bitcoin and cryptoassets.  While their government has established a task force to help it understand cryptoassets, the Indian people have not been waiting for guidance, especially given the moves toward demonetization and digital payments. Consequently, bitcoin has become not only a store of value but also a means of payment in India.

Thanks to the surge of interest in this space, bitcoin’s price on the Indian exchange has spiked to $13,000, a premium to its price in the rest of the world.  With roughly 95% of India’s crypto exchange volume, Unicoin added ~200,000 users in November alone.

In its early days, bitcoin could transform India’s $70 billion remittance market. Not only could it eliminate middlemen and curb corruption, but it also could compress fees by an order of magnitude.

4. The FDA Approves AliveCor’s KardiaBand

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This week the U.S. Food and Drug Administration (FDA) approved the first medical accessory for the Apple Watch, one that will enable electrocardiograms (ECGs). According to AliveCor, it is the “world’s first cardiac health platform for the Apple Watch that combines an FDA-cleared ECG device and analysis algorithms with state-of-the-art artificial intelligence (AI) models for tracking heart rate and activity data from the Apple Watch.” The FDA-approved algorithms incorporated into the Apple Watch can identify and monitor atrial fibrillation, a serious heart arrhythmia.

AliveCor also announced software – SmartRhythm – based on artificial intelligence that runs on the Apple Watch.  The software is an autoregressive, deep neural network that analyzes the relationship between any activity and the heart rate on Apple Watch’s photoplethysmogram (PPG) sensor. When the heart rate differs from what the neural network predicts based on variables like normal activity patterns and caffeine consumption, it prompts users to take an ECG by touching the band’s sensor. The readings can be sent to a user’s doctor for analysis and integrated with other fitness data in the Apple Health app.

The KardiaBand costs $199, does not require a prescription, and could become a strong driver of Apple Watch sales, particularly because the FDA study and approval was based on the Apple Watch only. According to research, atrial fibrillation raises the risk of death by 40 to 90%, and early detection can be critical to preventing complications like strokes. According to the British NHS, costs associated with atrial fibrillation account for roughly 1% of its total budget.

Finally, this study demonstrates the promise of enhancing medical diagnoses with AI.  Thanks to AppleAAPL, scientists are collecting massive amounts of raw data in a quest to understand the heart, and to improve health care decision-making around the heart.

5. Are Zinc Finger Nucleases (ZFNs) Making A Comeback?

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SangamoSGMO has created a lot of firsts in genome-editing technology: it was the first to edit human cells, the first to edit cells ex vivo, and now it is the first company in the US to have administered gene-edited therapeutics in vivo. In its Phase I/II trials, Sangamo treated a man diagnosed with MPS II, also known as Hunter’s Disease, and if the treatment is successful the patient will forgo costly enzyme replacement therapy, and be cured.

Because Sangamo is the first company to edit cells in vivo, many investors believe that zinc finger nuclease (ZFN) genome-editing will not be displaced by CRISPR’s technology after all.  Based on a comparison of ZFN and CRISPR technologies summarized below, ARK is not so sure.

ARK Disrupt Issue 102

Important to note, ZFN took nearly 20 years of research and development to get from bench to bedside, while CRSPR will take six years. Discovered in 2012, CRISPR will enter clinical trials in 2018. Among the reasons, CRISPR technology is easier, cheaper, and faster, increasing R&D productivity. No wonder CRISPR Therapeutics CRSP is hot on Sangamo’s tail in developing therapeutics for lysosomal storage disorders similar to MPS II.

ARK's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, click here. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. For full disclosures, click here.