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Please enjoy ARK's weekly newsletter curated by our thematic analysts and designed to keep you engaged with disruptive innovation. Have a wonderful day!
 
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Harley-Davidson Unveils Expensive Electric Motorcycles 

Follow Sam on Twitter @skorusARK

 

Harley-Davidson unveiled two new electric motorcycle prototypes, both with price points that left us with many questions. Its electric Livewire, for example, costs $30,000, more than 85% of the gas-powered motorcycles in its lineup and nearly 30% above the cost of a gas-powered Toyota Camary.  

 

A drivetrain typically makes up 20-30% of the cost of an electric car, but the engine in a gas-powered motorcycle probably accounts for more than 30% of its total cost. Replacing an engine with batteries should lead to significantly lower motorcycle costs.

 

Given the 50+ million motorcycles sold annually around the world, Harley’s announcement this week sparked discussion during our Friday brainstorm. Needless to say, we will continue to research the space and share our findings with you.

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The Unrealized Value of Unicorns Surpassed $1 Trillion Globally in 2018  

Follow ARK on Twitter @ARKInvest

 

Continuing our deep dive into the pre-IPO space, we have learned that in 2018 the unrealized value of unicorns globally surpassed the $1 trillion mark for the first time. As shown in the chart below, the valuation of private firms valued at over $1 billion each totaled $1.15 trillion, up more than $300 billion during the year ended 2018. Coincidentally, the unrealized value matches the $1.1 trillion in dry powder that private equity firms have to deploy.

 

The number of unicorns has been growing steadily since 2010 and is now at 327, 68 of which were added in 2018, as shown below. Notably, the number of unicorns exiting the private world is lagging the number going public or being acquired: in 2018, only 27 went public and 9 went through the mergers and acquisitions (M&A) process.

 

The valuations depicted above probably are overstated. As discussed in last week’s newsletter, some researchers argue that the majority of unicorns are overvalued when adjusting share prices for special consent and other rights.

 

Uncertainties about fair value add to the challenges that unicorn investors face. Sooner or later, the companies will have to be sold or go public to deliver the returns their investors expect. Combined with a valuation of more than $1 trillion, low exit rates will challenge investors’ return expectations.

 

 

Ethereum Classic Prices Held Up Even After a 51% Attack

Follow Yassine on Twitter @yassineARK

 

This week, Ethereum Classic (ETC) experienced the cryptocurrency world’s largest double-spend or 51% attack to date, including 15 reorganizations, 12 of which were double-spends totaling $1 million. A cogent explanation of 51% attacks can be found here. The double-spend was newsworthy enough, but its aftermath raised important questions about the impact of double-spends on proof of work (PoW) chains. 

 

After news broke of the double spend attack, ETC's price dropped only 7% and then recovered. Was the muted response because investors don’t understand the threat of such attacks to the security of the underlying chain? This explanation is plausible because in the past 51% attacks have had little impact on cryptocurrency prices.

 

Perhaps a better explanation is that the only parties impacted by a double-spend are exchanges. A realistic and damaging 51% attack would take place as follows: deposit cryptocurrency on exchange -> withdraw to another chain or convert to fiat -> ‘publish’ the longer chain, invalidating original cryptocurrency deposited. Because the average holder would not be affected by such an attack, the impact on pricing is de minimis. 

 

That said, PoW chains seem to be secure only for cryptocurrencies with high hash rates that are traded actively on exchanges. First highlighted by Nic Carter, if 51% attacks aren't going to kill chains, exchanges delisting them after 51% attacks may be the antidote.

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Liquid Biopsies Could Become Companion Diagnostics for Solid Tumor Indications

Follow Simon on Twitter @sbarnettARK

 

At this year’s JPMorgan Healthcare Conference, the clinical adoption of liquid biopsies was a hot topic. Next-generation sequencing (“NGS”) approaches increasingly are used to gain molecular clarity around various cancer indications, though many samples still are tissue-derived. Tissue biopsies can be challenging for solid tumors like non-small cell lung cancer (“NSCLC”) which account for roughly 80—85% of lung cancer diagnoses. They are invasive, don’t gather enough DNA in many cases for an NGS assay, and are more labor- and time- intensive than liquid biopsies that require nothing more than a blood sample.

 

A recent study in the Journal of the American Medical Association (“JAMA”) contrasted the clinical benefits of tissue and liquid biopsies for a cohort of patients with NSCLC. Researchers analyzed the blood serum from each liquid biopsy for circulating tumor DNA (“ctDNA”). While rapidly metabolized within the circulatory system, ctDNA can help researchers analyze the molecular profile of a tumor if amplified and sequenced properly. In the JAMA study, the tissue- and blood-based test results agreed 81.3% of the time, but the tissue biopsy identified many unique therapeutic targets that the liquid biopsy did not, suggesting that tissue biopsies will continue to play an important role in clinical practice.

 

As a result, NGS-based liquid biopsies such as those commercialized by Guardant Health (GH) should scale along with NGS-based tissue biopsies. Recently, GH announced the Lunar Assay, a liquid biopsy for the early detection of various solid tumors that reduces biological noise with an in-house machine learning algorithm based on clinical data from 80,000 patients. Although currently available only to the research community, Guardant should commercialize the Lunar Assay during the second half of this year.


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.


 

 

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