Cathie Wood Keeps Buying Beam Therapeutics on the Dip. Should You Follow Her Lead?

Cathie Wood, the CEO and founder of Ark Investment Management, owns, through her various Ark ETFs, $220.4 million in Beam Therapeutics (NASDAQ: BEAM) shares. It is a healthcare company that focuses on gene editing to develop precision medicines.

She has owned shares in Beam through her various Ark Technology ETFs for more than five years. On Oct. 12 and Oct. 13, she spent an additional $2.8 million on Beam shares for her Ark Genomic Revolution (NYSEMKT: ARKG) fund. .

The company is a long way from profitability, but thanks to its potential, it is a worthwhile biotech stock to buy if you're willing to handle some volatility and risk.

The stock is down more than 14% this year. Here are three reasons to buy the stock whenever it dips.

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Beam has a distinct gene-editing technique

Unlike first-generation CRISPR-Cas9 technologies, which cause double-stranded DNA breaks and carry risk for unintended chromosomal rearrangements, Beam specializes in base editing. This technology allows precise, single-letter chemical edits to the genome without cutting both DNA strands.

The technology precisely changes a specific nucleotide, or letter, in the genetic code. This enables potentially safer, more precise, and highly repeatable therapies, placing Beam at the forefront of the next wave in genomic medicine.

The company recently filed a lawsuit against Serapha Bio and its Chinese partner, YolTech Therapeutics, alleging the companies, with the assistance of a former Beam employee, developed an experimental alpha-1 antitrypsin deficiency (AATD) treatment using stolen trade secrets from Beam.

It has a deep clinical pipeline

Beam's therapies are still in early trials, but it has eight in its pipeline, giving it better odds of developing a blockbuster product. The pipeline focuses on high-value disease areas such as sickle cell disease (SCD), AATD, and other blood disorders.

The company's lead therapy is ristoglogene autogetemcel (risto-cel), which is in early trials. It is an investigational autologous therapy for the treatment of severe SCD. And it's an ex vivo cell therapy using base editing to genetically modify a patient's own hematopoietic stem cells to produce fetal hemoglobin and suppress sickling.

A large cash runway and tier-1 strategic partnerships

Biotech stocks on a pullback often carry solvency risk, but Beam maintains a relatively strong balance sheet. Backed by major pharmaceutical collaborations, including partnerships with Pfizer and Eli Lilly, and a solid cash buffer, Beam has a clear runway to fund its core clinical trials through key milestones without immediate pressure to pursue dilutive emergency capital raises.

As of the second quarter, the company reported having $1.15 billion in cash, enough, it said, to support operations through mid-2029.

Risk, but with ample reward potential

Beam reported only $32.2 million in revenue through its first six months, though that was up 50.5% year over year. It reported a $2.09 loss per share, an improvement from a $2.12 loss in the same period a year ago.

As its programs advance through phase 1/2 clinical trials, the next 12 to 18 months carry dense regulatory and clinical data readouts. If the company can show positive data on the trial readouts, that would likely significantly boost the stock.

James Halley has positions in Pfizer. The Motley Fool has positions in and recommends Beam Therapeutics, Eli Lilly, and Pfizer. The Motley Fool has a disclosure policy.