It's Monday, July 6, 2020. Please enjoy ARK's weekly newsletter curated by our thematic analysts and designed to keep you engaged with disruptive innovation.
Amazon Web Services (AWS) has formed a new division called Aerospace and Satellite Solutions. In 2019 Amazon announced Project Kuiper, a low earth orbit satellite constellation and then, earlier this year, Iridium CloudConnect, a service leveraging off AWS and the Iridium satellite network for internet of things applications, launched.
Led by retired Air Force Major General Clint Crosier who recently helped establish the Space Force for the US military, the AWS Aerospace and Satellite Solutions group will target the public sector. Most interesting in the announcement was a comment from Teresa Carlson, AWS’s VP in charge of public sector business, that the addressable market for global space-related cloud-computing is in the hundreds of billions. Clearly, Amazon has ambitious plans for space!
Autonomous Trucks Continue Move Toward Reality with TuSimple’s Latest Contracts
This week TuSimple, an autonomous trucking startup, partnered with UPS, Xpress Enterprises, Penske, and McLane with plans to expand its service coast to coast in the US during the next four years. Given this expansion, TuSimple hopes to double the 50 human-chaperoned deliveries per week that it makes with 40 Paccar and Navistar trucks and enabling components from Nvidia and Sony.
TuSimple has attracted some impressive customers, but autonomous trucks are not likely to commercialize before autonomous passenger cars for several reasons: autonomous trucks have piloted fewer development miles on public roads to inform their artificial intelligence systems; heavy truck weights add to the risks of autonomous system failures; and the Teamsters Union could delay legislation allowing for more ubiquitous testing.
In addition to its partnership with TuSimple, UPS is working with droneUP, Wingcopter, Matternet, Workhorse, Arrival, and Waymo on drones, electric vehicles, and autonomous technology. Notably absent in recent autonomous delivery announcements has been FedEx, which did not mention the technology on its earnings call this week.
Seattle Genetics’ Data on Cervical Cancer Is Promising, But Don’t Count Iovance Out
Seattle Genetics (SGEN), a targeted cancer therapy company, and Genmab (GMAB), a Danish biotech company, announced data from their tisotumab vedotin (TV) Phase II clinical trial targeting late stage cervical cancer. An intravenous infusion (IV) drug administered every three weeks, TV delivered a 24% response rate with median duration of survival at eight months, better than typical standard of care response rates below 15% with survival ranging from six to nine months. The FDA approved Merck’s Keytruda, the only drug for this patient population today, based on a 14% response rate and overall survival of 11.1 months.
Even though the FDA probably will approve TV as the second treatment for cervical cancer, Iovance (IOVA) could be the sleeper in this race. With a one-time tumor infiltrating lymphocyte (TIL) therapy, Iovance reported a 44% response rate though, at the median follow up of seven months, it had not demonstrated a durable response. Its one-time gene therapy would obviate the need for transfusions every few weeks.
Iovance is a leader in the market for solid tumor cancer therapies, with significant upside potential based on its response rate, improving durability, and one-time dose.
COVID-19 Is Accelerating the Shift Towards Cashless Payments
Consumers were quick to shift their payment habits from cash to cashless during the COVID-19 crisis, according to a recent report by Square. In the seven weeks from March 1 to April 23, the percent of cashless* Square sellers nearly quadrupled from 8% to 31%. One Square merchant who “never [had] heard of the concept” in 2019 now is cashless for 90% of her transactions; 69% of Square merchants think that the COVID-19 crisis will accelerate the adoption of cashless payments in the US; and the number of years they believe it will take the US to turn into a cashless society has shrunk from 19 in the 2019 survey to 13.
Mobile payments offer an even safer alternative to debit and credit cards when they are not contactless. According to researchers from Princeton and other universities, the COVID-19 virus can live on plastic surfaces for 72 hours while, according to a 2019 study, credit cards spread more germs than a New York City subway pole.
*Defined as accepting 95% or more of transactions with credit or debit cards.
Square Has Become Bitcoin’s Unofficial Marketing Department
Square Crypto, an independent corporate entity formed to support the open-source Bitcoin community, announced it is building a decentralized bitcoin design community.
As statedby Square CEO Jack Dorsey in March 2019, Square Crypto is supporting underfunded areas in the Bitcoin ecosystem, including design. According to Jack, “great design will help more people access this technology faster and better.”
Instead of hiring one full-time designer, Square Crypto will be pointing talent toward an open source design community made up of freelance designers interested in Bitcoin but unsure where to focus their time and skills, as well as designers working full-time at Bitcoin companies. Anyone can participate in the community by joining the Bitcoin Design Slack workspace.
Without a dedicated marketing team, Bitcoin has faced somewhat of a “branding” perception problem. In our view, its lack of branding highlights Bitcoin’s open source and decentralized nature. Typically, given enough time and attention, such open source projects attract more centralized organizations to encourage their development.
While few pure play crypto companies have hired full-time open source contributors, we believe Square Crypto’s commitment to a Bitcoin design community highlights Square’s willingness to trade off short term profits for long-term returns.
India Is Banning Chinese Apps, a Sign of the Increased Balkanization of the Internet
The internet—once an unrestricted global platform for information and commerce—is breaking down along geopolitical lines. After border clashes with China that killed 20 of its soldiers, Indiabannedalmost 60 Chinese smartphone apps including TikTok, WeChat, and Weibo. The Indian government explained that these apps were collecting and transmitting user data surreptitiously. With a third of its users in India, TikTok’s parent Bytedance probably will be impacted the most, particularly because it has been planning to IPO.
Censoring content critical of its government, China was the first country to fracture the internet with a great firewall, creating an asymmetry whereby its companies have had access to foreign markets while international companies have been banned from China. Unchallenged for decades, China now is facing US restrictions and bans on companies like ZTE and Huawei based on national security risks.
As global tension increases, techno-nationalism could be the new normal. Purportedly, TikTok tried to subvert a Trump rally recently, even after it had been banned by branches of the US government and military. Chinese apps are likely to face much more scrutiny in the days ahead.
Be kind, stay safe, and we hope you find this information useful.
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.
You received this email because you are subscribed to Research NewslettersfromARK Investment Management LLC. Unsubscribe from ARK emails or choose the types of emails you want to receive. Unsubscribe from all.
This Newsletter is for informational purposes only and does not constitute, either explicitly or implicitly, any provision of services or products by ARK Investment Management LLC (“ARK”). Investors should determine for themselves whether a particular service or product is suitable for their investment needs or should seek such professional advice for their particular situation. All content is original and has been researched and produced by ARK unless otherwise stated therein. No part of the content may be reproduced in any form, or referred to in any other publication, without the express written permission of ARK. All statements made regarding companies, securities or other financial information contained in the content or articles relating to ARK are strictly beliefs and points of view held by ARK and are not endorsements of any company or security or recommendations to buy or sell any security. By visiting and/or otherwise using the ARK website in any way, you indicate that you understand and accept the terms of use as set forth on the website and agree to be bound by them. If you do not agree to the terms of use of the website, please do no access the website or any pages thereof. Any descriptions of, references to, or links to other products, publications or services does not constitute an endorsement, authorization, sponsorship by or affiliation with ARK with respect to any linked site or its sponsor, unless expressly stated by ARK. Any such information, products or sites have not necessarily been reviewed by ARK and are provided or maintained by third parties over whom ARK exercises no control. ARK expressly disclaims any responsibility for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites.
