•ARK Investment Management LLC

Big Ideas 2021
January 26, 2021 | For Informational Purposes Only
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Anyreferences to particular securities are for illustrative purposes only. There is no assurance that the Adviser will
make any investments with the same or similar characteristics as any investment presented. The reader should notassume that an investment identified was or will be profitable.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE, FUTURE RETURNS ARE NOT GUARANTEED.

www.ark-invest.com

•

Big Ideas 2021

Introduction

ARK’S BIG IDEAS2

ARK aims to identify large-scale investment opportunities byfocusing on who we believe to be the leaders, enablers, andbeneficiaries of disruptive innovation. While we believe
innovation is the key to growth, the opportunities it creates canbe missed or misunderstood by traditional investment
managers who are more focused on sectors, indexes, short-term
earnings, and price movements.
ARK seeks to gain a deeper understanding of the convergence,
market potential, and long-term impact of disruptive innovation
by researching a global universe that spans sectors, industries,
and markets. Today, we are witnessing an acceleration in newtechnological breakthroughs.
To enlighten investors on the impact of these breakthroughs
and the opportunities they should create, we began publishing
Big Ideas in 2017. This annual research report seeks to highlightthe latest developments in innovation and offers some of ourmost provocative research conclusions for the year.

About ARK
Headquartered in New York City, ARK Investment Management LLC
is a federally registered investment adviser and privately held
investment firm. ARK specializes in thematic investing in disruptive
innovation and strives to invest at the pace of innovation.
To learn more visit ark-invest.com

We hope you enjoy our “Big Ideas” for 2021.

3•

Big Ideas 2021

DISCLOSURE

Risks of Investing in Innovation
Please note, companies that ARK believes are capitalizing on disruptive innovation and developing technologies to displaceolder technologies or create new markets may not in fact do so. ARK aims to educate investors and seeks to size the potential
investment opportunity, noting that risks and uncertainties may impact our projections and research models. Investors should
use the content presented for informational purposes only, and be aware of market risk, disruptive innovation risk, regulatory risk,
and risks related to certain innovation areas. Please read risk disclosure carefully.
RISK OF INVESTING IN INNOVATION
Rapid Pace of Change

Exposure Across Sectors and Market Cap

Uncertainty and Unknowns

à Aim for a cross-sector understanding of technology
and combine top-down and bottom-up research.

Source: ARK Investment Management LLC, 2020

Regulatory Hurdles

Disruptive
Innovation

Political or Legal Pressure

Competitive Landscapeà Aim to understand the regulatory, market, sector,
and company risks. (See Risk and Disclosure Page)•

Big Ideas 2021

Big
Ideas
2021
ARK requires a big idea to be investable and long-term. This report
includes research that has been updated or revised over the years aswell as completely new sections marked with ““.

TABLE OF CONTENT

41.

Deep Learning

5

2.

The Re-Invention of the Data Center

133.

Virtual Worlds

21

4.

Digital Wallets

28

5.

Bitcoin’s Fundamentals

37

6.

Bitcoin: Preparing For Institutions

44

7.

Electric Vehicles (EVs)51

8.

Automation

58

9.

Autonomous Ride-Hailing65

10. Delivery Drones

72

11.

78

Orbital Aerospace

12. 3D Printing

85

13. Long Read Sequencing

92

14. Multi-Cancer Screening99

15. Cell and Gene Therapy: Generation 2

106

5

•

Deep Learning

Deep Learning
Deep Learning Could Be The Most Important Software
Breakthrough Of Our Time

01•

Until recently, humans programmed all software. Deep learning, aform of artificial intelligence (AI), uses data to write software. By“automating” the creation of software, deep learning could
turbocharge every industry.

•

According to ARK's research, deep learning will add $30 trillion to
the global equity market capitalization during the next 15-20 years.

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security.

•

Deep Learning

Deep Learning Is Software 2.0
Software 1.0
Code Written by Humans

Software 2.0
Code Written by Data
2015*

Software Capability

6

In the 70s, commercial
software began with thefounding of Microsoft,
Oracle, and SAP.

1970

1980

In the 80s, objectoriented
programming madesoftware reusable andincreased its scaleand capability
dramatically.

1990

In the 2000s,
the Internet
democratizedsoftware, growing
the market frommillions to billions
of people.

2000

In 2012,
deep neuralnetworks won
the ImageNetchallenge, marking
the beginning of the
deep learning or“software 2.0” era.

2010

In 2020, deeplearning powered
almost all largescale internet
services including
search, social
media, and video
recommendations.

2020

During the next decade,we believe the mostimportant software will becreated by deep learning,enabling self driving cars,
accelerated drug
discovery, and more.

2030*In 2015, deep learning started gaining large scale industry adoption. Chart is for illustrative purposes and is not to scale.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Neeraj Agrawal, and Logan Bartlett. “Battery Ventures' Software 2019.” IPOs, M&A, and Forces of Growth — Here’s Software 2019, May 2019,www.battery.com/powered/software-2019/.

•

Deep Learning

Deep Learning Is Creating The Next Generation Of Computing Platforms
Conversational Computers

Self-Driving Cars

Consumer Apps

Powered by AI, smart speakers
answered 100 billion voicecommands in 2020,
75% more than in 2019.

Waymo's autonomous vehicles have collected
more than 20 million real world driving miles
across 25 cities, including San Francisco,
Detroit, and Phoenix.

TikTok, which uses deep learningfor video recommendations, hasoutgrown Snapchat and Pinterest
combined.

600

Daily Active Users (M)

7

40 0

200

0
2014

2016

2018

2020

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020; Based on company derived statistics and data sourced from: Kyle Wiggers, “Waymo’s autonomous cars have driven 20 million miles on public roads”, VentureBeat https://arkinv.st/2N5fC4D.

•

Deep Learning

Deep Learning Requires Boundless Computational Power
While advances in hardware and software have been driving down AI training costs by 37% per year, the size of AI models is
growing much faster, 10x per year. As a result, total AI training costs continue to climb. We believe that state-of-the-art AI
training model costs1 are likely to increase 100-fold, from roughly $1 million today to more than $100 million by 2025.
$10,000,000,000
Cost to Train With 2020 Hardware

8$100,000,000
Meena

AlphaGo Zero

$1,000,000

NMT

AlphaGo

Tesla Autopilot

Neural Arch Search$10,000

Xception
Seq2Seq$100

Dropout$1

GPT-2
TI7 Dota 1v1

AlphaFold 2

BERT

$1B+

DeepSpeech 2

VGG

AlexNetGPT-3

Inception

ResNetVisualize ConvNets
$100M

DQN

$0
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

[1] AI training cost based on AWS A100 and GCP TPU v4 instance list price as of Dec 2020. Actual costs may be up to 10x lower due to software tuning and on-premise hardware. Data series based on work by Hernandez, Danny, and Tom
Brown. “AI and Efficiency.” OpenAI, OpenAI, May 2020, openai.com/blog/ai-and-efficiency/. Note for Chart: The dotted circle shows a range of cost possibilities with the bottom line representing the outcome if progress slows down.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020.

•

Deep Learning

Deep Learning Is Creating A Boom In AI Chips
Total AI Chip Market• As AI training cost grows from $1 to $100
million per project, specialized processors
such as GPUs or TPUs will account for amajority of the incremental growth.
• ARK estimates that data center spending on AI
processors will scale more than four-foldduring the next five years, from $5 billion ayear today to $22 billion in 2025.

$25
$22
$20

Billion, USD

933% CAGR$15$10• The upcoming “deployment phase” for deeplearning will democratize access to AI,
benefitting not only large internet companies
but also every industry in the economy.

$5

50% CAGR1
$5
$1
$0
2016

2017

2018

2019

2020

[1] CAGR: Compound Annual Growth Rate.
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2020 based on data sourced from company derived statistics.

2021

2022

2023

2024

2025

10 •

Deep Learning

AI Is Expanding From Vision To Language2020 was the breakthrough year for conversational AI. For the first time, AI systems could understand and generate languagewith human-like accuracy. Conversational AI requires 10x the computing resources of computer vision and should spur large
investments in the coming years.
Training Time For Different AI Systems
1,000.0
Compute Time(Petaflop-Days*)

~10x
100.0
~10x

10.0
1.0
0.1

Deployment Year:

Industry Penetration:

Pre-AI

Computer Vision

Language Understanding

Reinforcement Learning

Pre 2010

2015

2018 - 2020

2020 +

Most global 2000
companies today

Select technology
companies and startups

AI giants: Google,
Facebook, Amazon, OpenAI

Research
Organizations*A “Petaflop-Day” is performing a quadrillion operations per second for a day.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from Hernandez, Danny, and Tom Brown. “AI and Efficiency.” OpenAI, OpenAI, May 2020, openai.com/blog/ai-and-efficiency/ .

11•

Deep Learning

OpenAI’s GPT-3 Is The First AI That “Understands” Language
GPT-3 translates “legalese” into plain English:“Upon liquidation of
the Company, the Series A
Shareholders will receivein preference to all otherstakeholders an amount inrespect of each Series A Shareequal to one times the OriginalIssue Price (the “Liquidation
Preference”), plus all accrued
but unpaid dividends.
To the extent that the Company
has assets remaining after the
distribution of that amount,
the Series A Shareholders will
participate with the holders of
Ordinary Shares pro rata to thenumber of shares held on as
converted basis.”GPT-3 also can:“If the startup is• Write emails

wound up, the Series A• Design webpages

investors will be paid

• Write code in a dozen
computer languages

back at least what they
invested and they will
also share any leftover
assets with ordinary
shareholders.”

Source: ARK Investment Management LLC, 2020; Tefula, Michael (@michaeltefula). “Just taught GPT-3 how to turn legalese into simple plain English…” 7/21/20 Tweet• Retrieve historical facts• Translate languages• Diagnose diseases• Converse as a therapist• And more…

•

Deep Learning

SIZING THE OPPORTUNITY

Deep Learning Could Create
More Economic Value ThanThe Internet Did.

• Over two decades the Internet added $13 trillion
to equity market capitalizations globally. Deeplearning has created $2 trillion in market
capitalization as of 2020.
• ARK believes that deep learning will add$30 trillion to equity market capitalizations
during the next 15-20 years.

Market Cap Creation: Internet vs. Deep Learning
30.0%

Share of Global Market Cap

12

Information Technology

Internet

Deep Learning$30 Trillion

22.5%$2 Trillion

17%
CAGR

15.0%

~$0
7.5%

$13 Trillion$20 Trillion

2020

2037

0.0%

1997
Internet Wave

Deep Learning Wave

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 based on data sourced from World Federation of Exchanges, "H1 2020 Market Highlights", Aug 2020, https://www.world-exchanges.org/news/articles/h1-2020-market-highlights.

13•

The Re-Invention of the Data Center

The Re-Inventionof the Data Center
Data Centers—The Power Plants Of Computation—
Are Going Through A Revolution

02•

Cheaper, faster, and more power efficient processors are starting todisplace Intel—which traditionally had captured over 90% of allprocessor revenue.

•

For cloud computing, we believe ARM, RISC-V, and graphics
processing units (GPUs) are likely to emerge as the new powerhouseprocessors. Together they could scale at a 45% annual rate to $19
billion in revenue by 2030.

•

In the data center, we believe accelerators, dominated by GPUs, will
become the dominant processors for new workloads, growing 21% at
an annual rate to $41 billion by 2030.

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from IDC "IDC Worldwide Quarterly Server Tracker",Dec 2020, https://www.idc.com/getdoc.jsp?containerId=prUS47123620.

•

The Re-Invention of the Data Center

New Architectures Re-Invent
The Data Center Every Few Decades
The Data Center Architecture• The last great migration of the data center
was from RISC processors in the 90s
to Intel’s low cost, PC derived x86 architecture.
Leveraging the scale of the PC market, Inteldisrupted high end incumbents.
• Today, ARM processors are leveraging the scaleof the mobile ecosystem to disrupt Intel.
Applying open-source principles to hardware,
RISC-V also is emerging as a standard in low-costcomputing.

Legacy (Sparc, Power etc.)
100%

ARM/RISC-V

0%

80%
71%

60%
92%
40%

• We believe that the combination of ARM and
RISC-V will move from 0% market share in 2020
to 71% of the server market by 2030.

0%

x86

23%

Market Share

14

77%

20%

27%

0%
2000
Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from: International Data Corporation (IDC) Worldwide Quarterly Server Tracker 2000–2020.

8%

2%

2020

2030

•

The Re-Invention of the Data Center

Intel Seems Frozen In TimeIntel’s Manufacturing Timeline• Once the world leader of semiconductor
manufacturing, Intel seems to have lost its way.
• Intel delayed its 10nm processor by four years,
allowing its competitors—TSMC and AMD—tolead the market in 2020.
• As of 2020, Intel still has not shipped a 10nm
server chip. A full generation ahead of Intel,
TSMC is mass producing 5nm processors.

1000

180

Production Node (nm)

15

130
90

100

65
45

32
22
14

14

14

Intel’s
Execution
10

10

Moore’s
Law1
1
1999

2001

2003

2005

2007

2010

2012

2014

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
[1] Moore’s Law– named after Gordon Moore for his work in 1965 – focuses on cost as a function of time. Specifically, it states that the number of transistors on a chip would double every two years.
Source: ARK Investment Management LLC, 2020 based on data sourced from: AnandTech.

2016

2018

2020

16

•

The Re-Invention of the Data Center

ARM Could Power The Majority
Of Developer PCs By 2030
• Almost all software developers write code
on Intel’s x86 PCs running Windows, Mac, orLinux operating systems.
• Apple plans to transition Macs, which are usedby one in three developers, from x86 to ARM
based central processing units (CPUs) over the
next two years.
• At the same time, Microsoft is doubling
down on its efforts to support Windows
on ARM processors.
• According to ARK’s research, by 2030 mostdeveloper PCs could be powered by ARM
CPUs, marking the end of the Intel x86 era.

Developer PCs
Share of Central Processing Units
ARM
100%

x86

0.1%

75%

59%
82%

50%

99.9%

25%

41%
18%

0%
2020

2025

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Stackoverflow. “Stack Overflow Developer Survey 2020.” insights.stackoverflow.com/survey/2020.

2030

17

•

The Re-Invention of the Data Center

ARM Could Become The New
Standard In The Cloud
Cost Per Hour

Performance• The public cloud, the default platform for
deploying new applications, generated$140 billion in global revenues in 2020.
• Amazon Web Services (AWS)—the largest
public cloud provider in the world—launched
the Graviton 2 ARM CPU in 2020, reducing its
need to purchase chips from Intel and AMD.
• AWS Graviton 2 is cheaper and faster thanIntel CPUs, offering 48% higher performance
per dollar.
• In the future, AWS is likely to migrate most of
its servers to ARM based processors.

120%

$1.6

119%

150%

Performance/$
per Hour

$1.5

148%

100%

125%
$1.2

100%
80%

$1.2

100%
100%

60%

x

$0.8

=

75%
50%

40%
$0.4

25%

20%
$0.0

0%
AWS M5 AWS M6g(Intel(ARM
Xeon)
Graviton)

0%
AWS M5 AWS M6g(Intel(ARMXeon) Graviton)

AWS M5(IntelXeon)

AWS M6g(ARM
Graviton)

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security. Note for Third Chart:
Time is implied. The math is: (119/1.2)/(100/1.5)-1. Source: ARK Investment Management LLC, 2020 based on data sourced from: “Global Cloud Services Market Q2 2020.” Canalys, www.canalys.com/newsroom/worldwide-cloudinfrastructure-services-Q2-2020, Michael Larabel. “Benchmarking Amazon's Graviton2 Performance With 64 Neoverse N1 Cores Against Intel Xeon, AMD EPYC.” Phoronix, May 2020,
www.phoronix.com/scan.php?page=article&item=amazon-graviton2-benchmarks&num=12, Daly, Donald J., and Donald J. Daly. “Economics 2: EC2.” Amazon, CGA Canada Publications, 1987, aws.amazon.com/ec2/pricing/.

•

The Re-Invention of the Data Center

ARM & RISC-V Could Become The New
Processor Standards By 2030

• ARM server revenue could scale 100-fold,from less than $1 billion in 2020 to $100 billion
in 2030, a level higher than x86 today. RISC-V
could make a meaningful contribution during
the same time.
• Like mainframes, installed x86 compute capacity
could continue to grow but its revenue basecould be cut in half.

Total Server Revenue
x86• We believe that PCs and servers adopting ARM
processors will create the first ecosystem withenough scale, tooling, and vendor support tochallenge Intel’s x86.

ARM/RISC-V

Legacy$160,000

Revenue (Millions, USD)

18$120,000$80,000$40,000$02007 2009

2011

2013

2015

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from: International Data Corporation (IDC) Worldwide Quarterly Server Tracker 2007–2020

2017

2019

2021

2023

2025

2027

2029

•

The Re-Invention of the Data Center

By 2030, The Accelerator Should
Replace The CPU As The Main
Server Compute Engine

Potential Server Spending Over The Next Ten YearsCPU• Accelerators, such as GPUs, Tensor
Processing Units (TPUs), and field
programmable gate arrays (FPGAs), performthe most demanding computing tasks
including artificial intelligence (AI),analytics, drug discovery, and cloud gaming.
• Despite intense competition, ARK believes
that GPUs will continue to dominate theaccelerator market during the next five
years thanks to their unmatched
programmability and software stack.

MemoryStorage

Other

Accelerator$140

Server Bill of Materials (Billions, USD)

19

$41

$112

$84

21%
CAGR
$21

$6
$15

$24
$56

$17
$24

$17
$28
$30

-1%
CAGR

$27

$0
2020
Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020

2030

20 •

The Re-Invention of the Data Center

SIZING THE OPPORTUNITY

ARK Believes That Server
Processors Will Transform
In The Next Decade.

ARM and RISC-V are likely to displace Intel’s
x86 in the cloud. Together they could grow
45% per year to reach $19 billion in CPU
revenue and $100 billion in server revenue
by 2030.

• We believe accelerators, dominated byGPUs, will become the dominant processor
in the data center, growing 21% at an annual
rate to $41 billion.

x86
$30

Revenue (Billions, USD)•

Data Center Accelerator Revenue

Data Center CPU Revenue

CPU

ARM/RISC-V

Accelerators

$70

<$1

$23

$53

$41
$19
$15

$35

$30

$8

$18

$6

$30

$8
$0

$27

$0
2020

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from company quarterly filings by Nvidia, Intel, AMD, and others.

2030

2020

2030

21

•

Virtual Worlds

Virtual Worlds
Virtual Worlds Consist Of Video Games, Augmented
Reality, And Virtual Reality

03•

A virtual world is defined as a computer-simulated environmentthat can be accessed by anyone at any time. Society interacts
daily with virtual worlds which today are in their infancy.

•

According to our research, revenue from virtual worlds will
compound 17% annually from roughly $180 billion today to$390 billion by 2025.

•

Today, virtual worlds are independent from each other, but in the
future they could become interoperable, culminating in what
futurists have deemed 'The Metaverse.’

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security.

22 •Virtual Worlds

Video Game Monetization Models Are Shifting To Virtual Goods
As video games have evolved, so have their business models. According to our research, during the past 10 years in-game
purchases1 as a percent of total gaming revenue increased from 20% to 75%. They could hit 95% by 2025.
Breakdown of Global Gaming Revenue
Percent of Revenue From In-Game Purchases

Percent of Revenue From Premium Games

2015

2010

2020

20%

25%
50%
80%

50%

75%

[1] ARK defines in-game purchases as revenues generated through the sales of in-game items, including expansion or content packs, cosmetics/skins, power-ups, time savers, loot boxes, playable characters, content passes for a one-offfee (battle/season pass), in-game currencies, content passes for a recurring fee, and reward passes. | Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC based on data sourced from “Newzoo Global Mobile Market Report 2020: Free Version.” Newzoo, 30 Sept. 2020, newzoo.com/insights/trend-reports/newzoo-global-mobile-market-report-2020free-version/; “2019 Year In Review.” SuperData, a Nielsen Company, www.superdataresearch.com/2019-year-in-review; Savov, Vlad. “Digital Games Distribution Earned $3.8 Billion in 2010, a Quarter of Entire Video Game Market.”Engadget, 14 Feb. 2020, www.engadget.com/2011-06-09-digital-games-distribution-earned-3-8-billion-in-2010-a-quarte.html.

23 •Virtual Worlds

ARK Believes The Monetization Of Gaming Will Increase
Thanks to the proliferation of in-game purchases, economic power is shifting from developers to gamers. In fact, with lower
barriers to entry, many gamers have become developers. In our view, this shift has increased the monetization rates of video
games. During the next five years, the cost per hour of playing video games is likely to increase by 20% but will remain a bargain
relative to other sources of entertainment and information.
Direct vs. Indirect1 Monetization in the US
DirectIndirect

Cost Per Hour, USD

$2.00
$1.60
$1.20
$0.80

+20%

$0.40
$Newspapers

Cable

Social Media
Platforms

Music

Gaming 2025

Gaming

SVOD

2

AVOD

3

Radio

Podcasts(F)

Forecasts are inherently limited and cannot be relied upon. Chart data is as of 2020. | [1] Direct Monetization is when the consumer pays, an example being a subscription. Indirect Monetization is when a 3rd party funds the product, an
example being advertising. [2] SVOD: Subscription Video On Demand. [3] AVOD: Ad-Based Video On Demand. | Source: ARK Investment Management LLC based on data sourced from: “Xbox Game Pass Subscriptions Hit 10 Million.”
The Guardian, Guardian News and Media, 30 Apr. 2020, www.theguardian.com/games/2020/apr/30/xbox-game-pass-subscriptions-hit-10-million; Warren, Tom. :“Xbox Game Pass Subscribers Jump 50 Percent to 15 Million in Less than Six
Months.” The Verge, The Verge, 21 Sept. 2020, www.theverge.com/2020/9/21/21449219/xbox-game-pass-15-million-subscribers-microsoft-growth; Gough, Christina. “Xbox Live MAU 2020.” Statista, 22 Sept. 2020,www.statista.com/statistics/531063/xbox-live-mau-number/. ;Https://Www.npd.com/Wps/Portal/Npd/Us/News/Press-Releases/2020/More-People-Are-Gaming-in-the-Us/; Pew Research Center, Pew Research Center, 9 Jan. 2020,
www.pewresearch.org/. ; Https://Auditedmedia.com/; Clark, Travis. “Netflix Says Its Subscribers Watch an Average of 2 Hours a Day - Here's How That Compares with TV Viewing.” Business Insider, Business Insider, 13 Mar. 2019,www.businessinsider.com/netflix-viewing-compared-to-average-tv-viewing-nielsen-chart-2019-3; and Quarterly Earnings from: Facebook, Snap, Twitter, Pinterest, Spotify, and Alphabet.

24 •Virtual Worlds

Video Games Are Becoming"Third Places“ Away From
Home And Work

Global Virtual Gaming Revenue (Forecast)
In-Game Revenue (Bull Case)$400• According to our research, the average timespent playing video games will increase from
1.1 hours per person per day to 1.5 hours
during the next five years.

$350

Revenue (Billions, USD)

• If the increasing trend of both monetizationand time spent remains in place, in-game
purchase revenue could compound 21%
annually during the next five years, fromroughly $130 billion in 2020 tonearly $350 billion by 2025.

In-Game Revenue (Base Case)

$300
$250
$200
$150
$100
$50
$2015

2016

2017

2018

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC based on data sourced from: “Newzoo Global Mobile Market Report 2020: Free Version.” Newzoo, 30 Sept. 2020,
newzoo.com/insights/trend-reports/newzoo-global-mobile-market-report-2020-free-version/.

2019

2020

2021

2022

2023

2024

2025

25 •

Virtual Worlds

Augmented Reality (AR)Is Primed To Scale

Augmented Reality Market Opportunity
AR Smartphone• By 2022, consumer-grade AR headsets
should turbocharge this trend.
• ARK forecasts that by 2030 the AR market
could scale from under a $1 billion today
to $130 billion.1

$140
$120

Revenue (Billions, USD)

• Over the past few years, companies such as
Snapchat, Facebook, and Apple haveincreased their investment in augmented
reality, encouraging widespread use of AR
tools on mobile devices.

AR Glassses

$100
$80
$60
$40
$20
$2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

[1] ARK's AR market size estimates consumer-based software revenues and does not include gaming or commercial revenue. AR gaming revenue is captured in our gaming forecast.
Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC based on data sourced from: O'Dea, Published by S., and Aug 20. “Smartphone Users Worldwide 2020.” Statista, 20 Aug. 2020, www.statista.com/statistics/330695/number-of-smartphone-usersworldwide/; Boland., Mike. “AR Advertising: $2.6 Billion by 2022.” AR Insider, 6 Sept. 2018, arinsider.co/2018/09/04/ar-advertising-2-6-billion-by-2022/.

26 •Virtual Worlds"Virtual Reality" Could
Approach Reality By 2030

Unit of Visual Immersion (UVI)
Cost Decline• Based on our proprietary scoring system(UVI1), best in class VR headsets today
achieve only 10% of human visual immersion.

• Based on Wright’s Law,2 complete visual
immersion at a price-point comparable tothat of a PC will require VR headsets tofollow the adoption curve of smart-phones
until 2030.

Projected

1991:
$41 M
2020:
$20,000

USD / UVI

• If consumer VR is limited to the console
gaming market, we believe VR headsets will
not scale to human immersion capabilities
for the mass market.

Historical

SmartphoneLike Adoption
2030:$1,700Gaming ConsoleLike Adoption
2030:$3,4000.00.00.10.1

1.01.0

10.0
10.0

100.0
100

1,0 00.0 10,000
10,000.0 100,000
100,000.0 1,0 00,000.0
10,000,000.0
1,000
1M
10 M 100,000,000.0
100 M 1,0 00,000,000.0
1B

Cumulative UVI Produced[1] Unit of Visual Immersion is calculated by taking the harmonic mean of Resolution, Refresh Rate, and Field of View per device divided by estimated max Resolution, Refresh Rate, and Field of View respectfully, with each factor
weighted differently. [2] Pioneered by Theodore Wright in 1936, Wright’s Law aims to provide a reliable framework for forecasting cost declines as a function of cumulative production. Specifically, it states that for every cumulative
doubling of units produced, costs will fall by a constant percentage.
Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC based on data sourced from: S&P Global Market Intelligence.

27 •Virtual Worlds

SIZING THE OPPORTUNITY

The Revenue From Virtual
Worlds Could Approach$400 Billion By 2025.

Global Gaming Market Size
Premium Spend

Global AR & VR Market Size1

In-Game SpendVR Opportunity
AR Smartphone
$30

$400

• The AR & VR markets will grow at a 59%
compound annual rate during the next five
years, from $3 billion to $28 billion in 2025.

$25
16% CAGR

Revenue (Billions, USD)

• Based on our research, the global gaming
market will increase at a 16% compound annual
rate during the next five years, from $175 billion
in 2020 to roughly $365 billion by 2025.

Revenue (Billions, USD)

$350
$300

AR Glassses

$250
$200
$150
$100

$20

59% CAGR

$15
$10
$5

$50

$-

$-

2020

2025

2020

[1] ARK's AR & VR market size is an estimate of consumer-based software revenues.
Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC based on data sourced from: ”O'Dea, Published by S., and Aug 20. “Smartphone Users Worldwide 2020.” Statista, 20 Aug. 2020,www.statista.com/statistics/330695/number-of-smartphone-users-worldwide/; Boland., Mike. “AR Advertising: $2.6 Billion by 2022.” AR Insider, 6 Sept. 2018, arinsider.co/2018/09/04/ar-advertising-2-6-billion-by2022/. Platform.marketintelligence.spglobal.com, platform.marketintelligence.spglobal.com/web/client?auth=inherit; “Newzoo Global Mobile Market Report 2020: Free Version.” Newzoo, 30 Sept. 2020,
newzoo.com/insights/trend-reports/newzoo-global-mobile-market-report-2020-free-version/.

2025

28 •

Digital Wallets

Digital Wallets
Digital Wallets Represent A $4.6 Trillion
Opportunity In Your Pocket

04•

We believe Venmo, Cash App, and venture funded startups are likely
to upend traditional banking by activating the mobile phones —the bank branches — in users’ pockets and handbags.

•

Today, digital wallets are beginning to penetrate the full traditional
financial services stack, including brokerage and lending. Digitalwallets could serve as lead generation platforms for commercial
activity beyond financial products.

•

According to ARK’s research, digital wallets are valued between$250 and $1,900 per user today but could scale to $20,000 per
user, representing a $4.6 trillion opportunity in the US by 2025.

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security.

29 •Digital Wallets

Incubated In China, Mobile Payments Are 2.5x Its GDP
The volume of mobile payments in China has exploded more than 15-fold in just five years, from roughly $2 trillion in 2015
to an estimated $36 trillion, nearly three times the size of China’s GDP in 2020.

China Third Party Mobile Payments vs. China GDP
China Third-Party Mobile Payments

China GDP$40
$35

$ (Trillions)

$30
$25
$20
$15
$10
$5
$0
2013

2014

2015

2016

2017

2018

2019

2020

Source: ARK Investment Management LLC, 2020 based on data sourced from: “2020 China Third-Party Payment Industry Report”, iresearch.com.cn, iResearch; “GDP – China”, worldbank.org, World Bank; “Word Economic Outlook,
October 2020: A Long and Difficult Ascent”, imf.org, International Monetary Fund (IMF).

30 •Digital Wallets

Digital Wallets Have Become A Global Phenomenon
Selected Examples of Digital Wallets Globally

EuropeNorth
America

Asia

AfricaSouth
America

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020

Digital Wallets

In The US, Digital Wallet Users
Are Surpassing The Number Of
Deposit Account Holders At The
Largest Financial Institutions

Cash App AAUs

Venmo AAUs

80
70
60
50
40
30
20
10

MergerChemical Bank,
Manufacturers
Hanover

MergerChemicalBank, Chase
Manhattan
Bank

MergerChase
Manhattan
Bank, J.P.
MorganAcquisition
Washington
MutualAcquisition
Bank One

20
20

20
18

20
16

20
14

20
12

20
10

20
08

20
02
20
04
20
06

19
98
20
00

19
96

0

19
90

• At the end of 2020, the number of J.P. Morgan
Chase deposit account holders totaled
approximately 60 million1 while Cash App’s andVenmo’s Annual Active Users (AAUs) scaled to
59 million and 69 million, respectively.

J.P. Morgan Deposit Accounts

1994• Square’s Cash App and PayPal’s Venmo each
amassed roughly 60 million active usersorganically in the last 7 and 10 years, respectively,a milestone that took J.P. Morgan more than 30
years and five acquisitions to reach.

J.P. Morgan Chase Deposit Accounts vs. Cash App and Venmo
Annual Active Users (AAUs)

19
92

•

Deposit Accounts/Annual Active Users (Millions)31

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
[1] Refers to number of J.P. Morgan Chase deposit accounts <$100,000 prior to 2010 and number of deposit accounts <$250,000 after 2010 due to changing reporting regulation. Source: ARK Investment Management LLC, 2020 based ondata sourced from: Federal Deposit Insurance Corporation (FDIC) Statistics on Depository Institutions (SDI) and RIS.

32 •Digital Wallets

Digital Wallets Can Acquire
Customers For A Fraction
Of Banks' Customer
Acquisition Costs

Customer Acquisition Costs (CAC) Across Financial Products$,1500$1,500• A primary driver of the explosive growthin digital wallets is lower customer
acquisition costs.
Range of CAC (USD)• According to ARK’s research, comparedto the roughly $1,000 that a traditional
financial institution might pay to acquire
a new checking account customer, digitalwallets invest only $20 thanks to viralpeer-to-peer payment ecosystems, savvy
marketing strategies, and dramaticallylower cost structures.1$1,000
$770
$750

$480

$400

$350
$250
CreditCards
Credit
Cards$250
Bank Retail
RetailChecking
Checking
Account
Account[1] “Cash App vs. Venmo: Research White Paper by ARK Invest.” ARK Invest, 4 May 2020, ark-invest.com/white-papers/cash-app-vs-venmo/.
Source: ARK Investment Management LLC, 2020

Brokerage
Brokerage
Platforms

Insurance
Insurance
Platforms
Platforms

Consumer
ConsumerLending
Lending$20
DigitalDigital Wallet
Wallet•

Digital Wallets

Bank Branch Costs Are Rising While Their Utility Is Decreasing
As consumers have abandoned bricks & mortar in favor of mobile banking, bank branches have experienced increased occupancy
expenses, which hit a record high of $568,000 in 2019.
Occupancy Expenses per Bank Branch in the US
$600

$500

Thousands, USD

33

$400

$300

2019: $568,000
$200

$100

$0

1935

1941

1947

1953

1959

1965

1971

1977

1983

Source: ARK Investment Management LLC, 2020 based on data sourced from: Federal Deposit Insurance Corporation (FDIC) BankFind Historical Data.

1989

1995

2001

2007

2013

2019

34 •

Digital Wallets

Traditional Banks Are Facing
Potentially Sizeable Risks• Digital wallets are entering the unsecured
lending market, suggesting that traditionalbank lending is unlikely to recover to thepeak hit in 2019.
• According to ARK estimates, bank interest
income on credit cards fell more than 10%,or roughly $16 billion in 2020 and is likely todrop more than 25% further, from $130
billion in 2019 to $95 billion by 2025.
• Digital lenders such as Square, PayPal,
Affirm, Klarna and LendingClub are likely totake share from traditional banks.

Unsecured Consumer Debt (Trillions, USD)

Total Unsecured Consumer Debt in the US
Banks' Balance Sheet

Credit Card Securitization

Unsecured Digital Wallets

Unsecured Personal Loans

Digital Wallets

$1.6
$1.4
$1.2
$1.0
$0.8
$0.6
$0.4
$0.2
$0.0
1995

1998

2001

2004

2007

2010

2013

2016

2019

2022

2025

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from: “US ABS Issuance and Outstanding.” Securities Industry and Financial Markets Association, 6 Nov. 2020, https://www.sifma.org/resources/research/us-absissuance-and-outstanding/; “Board of Governors of the Federal Reserve System.” The Fed - Consumer Credit - G.19, https://www.federalreserve.gov/releases/g19/hist/cc_hist_sa_levels.html; “Consumer Credit Market Withstands
Challenges as Accounts in Financial Hardship Begin to Decrease.” Transunion.Com, 20 Aug. 2020, newsroom.transunion.com/consumer-credit-market-withstands-challenges--as-accounts-in-financial-hardship-begin-to-decrease.

•

Digital Wallets

At Maturity, Each Digital
Wallet User Could Be WorthRoughly $20,000• If digital wallets were to become
consumer financial dashboards, ARK
estimates that the net present value
associated with their financial service
revenues will exceed $10,000 per average
US user.
• Beyond financial services, digital wallets
could become lead generation platforms
for offline and online commerce,
potentially adding another $9,000-$10,000
to the net present value of their revenues.

Potential Value Per Average Digital Wallet Customer AcrossCommercial and Financial Products in the US$25,000$20,000
Value Per Customer (USD)

35$19,900$9,400$15,000$2,700$10,000$2,600$2,500$5,000$1,700$1,000

$0

Total
Total

Offline/Online
Offline/Commerce
OnlineCommerce

Payments
Payments

Insurance
Insurance

Personal
Cred it
Personal

Savingand
SavingandMortgage

AccountandMortgage
CreditSpendingandAccount
Spending

Brokerage
Brokerage

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Offline/Online Commerce assumes digital wallet captures 5% lead generation fee for 100% of offline and online average US consumer retail spend. Insurance
assumes digital wallet captures 10% lead generation fee of average insurance revenue per US consumer. Saving and Spending Account assumes digital wallet captures spread between interest and risk-free rate for average balance of US
transaction accounts as defined by the Federal Reserve. Offline and Online Payments assumes digital wallet captures fee standard exempt debit interchange revenue of 100% of offline and online average US consumer retail spend.
Personal credit assumes 6% revenue yield on average consumer debt of US consumer. Mortgage assumes 10% lead generation fee on average revenue per mortgage per average US consumer. Brokerage assumes digital wallet captures
net interest and fees (excluding commissions) revenue from average US brokerage consumer.

36 •Digital Wallets

SIZING THE OPPORTUNITY

According to ARK’s research, if each of the estimated 230 million US
digital wallet users were valued at $19,900 in 2025, the US digital wallet
opportunity would be worth $4.6 trillion.
x

230 Million Digital Wallet Users by 2025

$19,900 Potential Value per Customer
Current and Potential Valuation per Customer

300

Value per Customer(Thousands, USD)

Digital Wallet Users (Millions)

Digital Wallet Users in the US
250
200
150
100
50
0

$25
$20
$15
$10
$5
$0

2014

2016

2018

2020

2022

2024

2026

2028

2030

$19,900

Today, Venmo and Cash App arevalued at a discount to private
fintech firms on a per user basis.

$250

$700

$1,000$2,000

Venmo

Cash App

Robinhood

Chime

Potential
Digital Wallet

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020. ARK's estimate of PayPal's and Square's market capitalization is attributable to each estimated monthly active Venmo and Cash App user, respectively. ARK's estimate of Robinhood's andChime's most recent post-money valuation is attributable to each estimated monthly active Robinhood and Chime user, respectively. For $19,900 potential digital wallet value per customer, see sourcing on prior slide.

37•

Bitcoin’s Fundamentals

Bitcoin’s Fundamentals
The Price Of Bitcoin Has Hit An All-Time High,Supported By Robust Network Fundamentals

05•

As bitcoin’s price hit an all-time high, ARK’s research indicated thatits network fundamentals remained healthy.

•

Based on search volumes compared to 2017, bitcoin’s price increase
seems to be driven less by hype. With bitcoin appearing to gain
more trust, some companies are considering it as cash on theirbalance sheets.

•

If all S&P 500 companies were to allocate 1% of their cash to
bitcoin, ARK estimates that its price would increase byapproximately $40,000.

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.

38 •Bitcoin’s Fundamentals

As Support For Its Network Increased,
Bitcoin’s Price Hit An All-time High In Late 2020
Bitcoin's Price in 2020, USD
Amidst coronavirus fears,
bitcoin suffers its second
largest daily drawdown
in price history$24,000$19,000

Macro investor
Paul Tudor Jones discloses
a 1% allocation into bitcoin

Share of total bitcoin
held in GBTC reaches
record high 1.57%$14,000

Microstrategy
announces $500 million
bitcoin investment

OCC grants federally
chartered banks permission
to custody cryptoassets$4,000Feb

Square announces
1% allocation ofassets into bitcoin

Bitcoin undergoes third
successful ”halving”$9,000Jan

Bitcoin pricereaches alltime high

Mar

Apr

May

Jun

Jul

Aug

Crypto exchange
Kraken receives bankcharter approval
Sep

Oct

PayPal launches
crypto buying andselling services
Nov

Dec

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2020 based on data sourced from: PlusToken, “GBTC Now Holds More than 285,000 Bitcoin, 1.57% of All&nbsp;BTC.” The Block, 10 Feb. 2020, www.theblockcrypto.com/genesis/55363/gbtc-nowholds-more-than-285000-bitcoin-1-57-of-all-btc, Partz, Helen. “It Happened: Bitcoin Just Experienced Third Halving in Its History.” Cointelegraph, Cointelegraph, 11 May 2020, cointelegraph.com/news/it-happened-bitcoin-justexperienced-third-halving-in-its-history; Microstragy Earings Report; Kapilkov, Michael. “Jack Dorsey's Square Adds 4,709 Bitcoin to Its Balance Sheet.” Cointelegraph, 8 Oct. 2020, cointelegraph.com/news/jack-dorsey-s-square-adds-4709-bitcoin-to-its-balance-sheet; “PayPal Launches New Service Enabling Users to Buy, Hold and Sell Cryptocurrency.” PayPal Newsroom, newsroom.paypal-corp.com/2020-10-21-PayPal-Launches-New-Service-Enabling-Users-to-BuyHold-and-Sell-Cryptocurrency.

39 •Bitcoin’s Fundamentals

Bitcoin’s Market Participants Never Have Been More Long-Term Focused
As of November 2020, roughly 60% of bitcoin’s supply had not moved in more than a year, a testament to the market’s
longer-term focus and a holder base with stronger conviction.
Bitcoin “HODL” Waves
1d-3m

Share of BTC Outstanding

100%

3m-6m

6m-12m

1y-2y

2y-3y

3y-5y

> 5 years

80%% of BTC’s Supply
Held For More Than
1 Year60%

40%% of BTC’s Supply
Held For Less Than
1 Year

20%

0%
2010

2011

2012

2013

2014

2015

2016

2017

2018

Note: HODL is slang in the cryptocurrency community for holding the cryptocurrency rather than selling it.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Glasssnode

2019

2020

40 •

Bitcoin’s Fundamentals

Bitcoin’s Market And Investor Set Appear To Be Maturing
Bitcoin’s Realized Capitalization, a measure of a holder’s cost basis, has hit an all-time high.1 A growing cost basis suggests that early
investors are taking profits, while newer investors are establishing positions and creating higher price support levels.
Bitcoin’s Aggregate Cost Basis Hit New Records In 2020
$400
Realized Capitalization (cost basis)$350

Market Capitalization

Billions, USD

$300
$250
$200
$150
$100
$50
$0

2013

2014

2015

2016

2017

2018

As of December 2020.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Coinmetrics

2019

2020

•

Bitcoin’s Fundamentals

Compared To 2017, The Hype Around Bitcoin Appears Contained
Bitcoin’s search interest is low relative to the increase in its price. As its price neared all-time highs, bitcoin’s Google search interest
was at 15% of its all-time high.

Bitcoin Price vs. “bitcoin price” Search Volume"bitcoin price" Search Volume

BTC Price100$25,000

90
80$20,000

70
60$15,000

50
40$10,000

30
20$5,000

10
0

2015

$0

2016

2017

2018

2019

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Google Trends

2020

Bitcoin Price (USD)

Relative Search Volume (%)

41

42 •

Bitcoin’s Fundamentals

Bitcoin’s Increasing Acceptance Has Set The Stage For Ethereum And
A New Wave Of Financial Experimentation
We believe that decentralized finance (“DeFi”) has been a positive catalyst for the increased adoption of Ethereum’s network. Byleveraging ether as “trust-minimized” collateral, market participants can disintermediate traditional financial companies and accessfinancial services like credit & lending, market making, trading, custody, investing, and access to synthetic US dollar exposure.
Financial Experimentation On The Ethereum Network
Stablecoin Market Capitalization on Ethereum

Total Ether Value Locked in "DeFi"

25

Billions, USD

20
15
10
5
0
Dec-17Mar-18Jun-18

Sep-18Dec-18Mar-19Jun-19Sep-19Dec-19For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Coinmetrics

Mar-20Jun-20

Sep-2043 •Bitcoin’s Fundamentals

SIZING THE OPPORTUNITY

Bitcoin Could Play A Pivotal
Role As Corporate Cash.

Hypothetical Price Increase If Bitcoin Were to Replace
Cash on S&P 500 Corporate Balance Sheets• Square and Microstrategy, both with balance sheet
investments in bitcoin, are showing the way for
public companies to deploy bitcoin as a legitimate
alternative to cash.
• According to our research, if all S&P 500 companies
were to allocate 1% of their cash to bitcoin,1 its pricecould increase by approximately $40,000.

Potential Price Increase Per Bitcoin$450,000$400,000$350,000$300,000$250,000$200,000$150,000$100,000$50,000
$0

0.10%

1%

10%

Bitcoin’s Potential Percent of Cash On Corporate Balance Sheets[1] As of December 1, 2020
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2020

44 •Bitcoin: Preparing For Institutions

Bitcoin: Preparing For
Institutions
ARK Believes Bitcoin’s Rapid Growth Has Positioned It
For An Allocation In Investment Portfolios

06•

We believe bitcoin offers one of the most compelling risk-reward
profiles among assets.

•

As our analysis suggests, it could scale from roughly $500 billion1
to $1-5 trillion in network capitalization during the next five toten years.

•

In our view, capital allocators should consider the opportunity
cost of ignoring bitcoin as part of a new asset class.

[1] As of December 31, 2020
Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.

45 •Bitcoin: Preparing For Institutions

Bitcoin Continues To Gain Credibility
EntityRegulators

Market Validation•••

OCC permits federally chartered banks and thrifts to provide custody services for cryptoassets (6/22/2020)
OCC permits national banks and federal savings associations to hold "reserves" on behalf of customers
who issue stablecoins (9/21/2020)
OCC permits banks to run nodes on public blockchain networks to streamline payment functions like processing, validation,and settlement. (1/4/21)

Banks

•
•
•

JP Morgan adds major cryptocurrency exchanges Coinbase and Gemini as banking clients (5/12/2020)
Singapore’s largest bank, DBS, announces plans to launch a cryptocurrency exchange (10/27/2020)
Kraken becomes first cryptocurrency exchange to charter a US bank (9/16/2020)

Institutional
Investors••••

Macro investor Paul Tudor Jones discloses a 1% allocation to bitcoin (5/11/2020)
Billionaire Stanley Druckenmiller places a bet on bitcoin (11/17/2020)
Fidelity Digital to hold bitcoin as collateral for cash loans (12/9/20)
Insurance giant MassMutual invests $100 million into bitcoin (12/10/20)

PublicCompanies•••

MicroStrategy substitutes its $500 million in cash for bitcoin (7/20/2020)
Square invests 1% of its assets in bitcoin (10/8/2020)
PayPal announces cryptocurrency buying and selling services (10/20/2020)

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2020 based on data sourced from: PTJ: https://www.cnbc.com/2020/05/11/paul-tudor-jones-calls-bitcoin-a-great-speculation-says-he-has-almost-2percent-of-his-assets-in-it.html
Druckenmiller: https://www.theblockcrypto.com/linked/84069/stanley-druckenmiller-bitcoin-bet Salinas: https://www.forbes.com/sites/billybambrough/2020/11/20/mexican-billionaire-reveals-government-fears-sparked-bitcoininvestment/?sh=5e7c7ecc258d OCC crypto custody: https://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-98.html OCC stablecoin: https://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-125.html JP
Morgan: https://www.coindesk.com/coinbase-gemini-first-crypto-exchange-customers-jpmorgan-bank-report Singapore DBS: https://www.theblockcrypto.com/post/82411/singapore-biggest-bank-dbs-crypto-exchange Kraken:
https://www.coindesk.com/kraken-crypto-exchange-secures-bank-charter-under-wyoming-law Microstrategy: https://news.bitcoin.com/nasdaq-microstrategy-bitcoin-425-million/ Square: https://www.coindesk.com/square-buys-50min-bitcoin PayPal: https://newsroom.paypal-corp.com/2020-10-21-PayPal-Launches-New-Service-Enabling-Users-to-Buy-Hold-and-Sell-Cryptocurrency

46 •Bitcoin: Preparing For Institutions

ARK Believes Bitcoin Deserves A Strategic Allocation
In Institutional Portfolios
Untethered from traditional rules and regulations and generally uncorrelated to the behavior of other asset classes, bitcoin seems tohave earned a strategic allocation in well-diversified portfolios. During the past decade, bitcoin is the only major asset withconsistently low correlations to traditional asset classes.
Correlation Matrix
High correlation: coefficient value lies between ± 0.50 and ±1
Moderate correlation: coefficient value lies between ± 0.30 and ± 0.49
Low correlation: coefficient value lies below ± .29
Bitcoin
BitcoinS&P 500
Bonds
Gold
Oil
Emerging Market Currencies
Real Estate
TSLA
AAPL
BAC

S&P 500
0.26

0.26
-0.14

Bonds
-0.14
-0.62

-0.62

Gold

Emerging Market
Currencies

Oil

Real Estate

TSLA

AAPL

BAC

0.24
0.37

0.19
0.59

0.13
0.52

0.34
0.89

0.15
0.51

0.17
0.69

0.25
0.89

0.61

-0.44

-0.36

-0.49

-0.30

-0.29

-0.61

0.24

0.37

0.61

0.19

0.59

-0.44

0.43

0.43

0.37

0.26

0.22

-0.22

-0.55

0.53

0.48

0.42

0.37

0.53

0.13

0.52

-0.36

0.37

0.53

0.45

0.29

-0.22

0.42

0.34

0.89

-0.49

0.26

0.48

0.45

0.47

0.57

0.77

0.15
0.17

0.51
0.69

-0.30
-0.29

0.22
-0.22

0.42
0.37

0.29
-0.22

0.47
0.57

0.40

0.42
0.49

0.40

0.25

0.89

-0.61

-0.55

0.53

0.42

0.77

0.42

0.49

Note: TSLA, AAPL, and BAC are included because bitcoin most closely resembles a large cap stock in its volume and liquidity profile but presents a different risk-reward profile. For informational purposes only and should not be
considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency. | Source: ARK Investment Management LLC, 2020 based on data sourced from: Bloomberg. Methodology: We take themaximum - positive or negative - one-year rolling correlation of listed assets since 2011. Our correlation calculation uses a Pearson correlation of logarithmic price returns. To take the correlation, we selected the following commonlyused asset class benchmarks: Real Estate - The Morgan Stanley Capital International (MSCI), US Real Estate Investment Trust Index (RMZ), Commodities - The Crude Oil Futures (CL1 COMB), Currencies - MSCI Global Currency Index, Bonds- Bloomberg Barclays US Aggregate Bond Index, Equities - S&P 500, Gold - GLD.

47 •Bitcoin: Preparing For Institutions

Bitcoin Trading Volume Is Comparable To That Of A Large Cap StockAnd Has Grown At An Exponential Rate
ARK estimates that bitcoin’s daily trading volume could exceed the volume of the US equity market in fewer than four years
and the volume of the global FX spot market in fewer than six years.
Bitcoin Spot Market US Dollar Daily Volume On Major Exchanges$10,000.0000

Global FX Spot Market Volume
Global US Equity Volume$1,000.0000
Daily volume peakedaround $8 billion in late 2017$100.0000

Billions, USD$10.0000

AAPL Average Volume*
SQ Average Volume*$1.0000

Current dailyvolume is around$6 billion$0.1000$0.0100$0.0010$0.0001$0.0000$0.0000$0.0000
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

*Securities referenced are provided as examples of large capitalization stock average volume. The static lines are the average 2020 trading volume of each of those stocks.
Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Coinmetrics

2022

2023

2024

2025

2026

48 •

Bitcoin: Preparing For Institutions

Institutional Investors Can Access Bitcoin In Sophisticated Ways
Bitcoin open interest, or the total outstanding value of futures contracts, hit an all-time high on the Chicago Mercantile Exchange(CME) in October 2020. It increased 10-fold and hit nearly $1 billion in 2020. Integrated into established financial infrastructures, theCME allows investors of all risk appetites to gain exposure.

BTC Futures Open Interest on CME
Open Interest$25,000$800$20,000$700$600$15,000$500$400$10,000$300$200$5,000$100$0Jan-19$0
May-19Sep-19Jan-20May-20For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2020 based on data sourced from: CME

Sep-20BTC Price, USD

BTC Futures Open Interest On CME(Millions, USD)

$900

BTC PriceBitcoin: Preparing For Institutions

We Believe Bitcoin Has Earned
An Allocation In Well-Diversified
Portfolios•

Based on daily returns across asset classes
during the past 10 years, our analysis suggeststhat allocations to bitcoin should range from
2.55% when minimizing volatility to 6.55% whenmaximizing returns.

•

In ARK's analysis, we ran a Monte-Carlosimulation of 1,000,000 portfolios composed ofvarious asset classes, as shown in the chart. The
efficient frontier captures the highest returns
possible for a given level of volatility. The stars
indicate allocations associated with the
maximum Sharpe Ratio and minimum volatility.

Simulated Portfolio Optimization Based On Daily Asset Class Returns
Sharp Ratio

49 •For informational purposes only and should not be considered investment advice,or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Coinmetrics.
Sharpe Ratio: The Sharpe ratio measures risk-adjusted returns. It is defined as the difference between an investment’s returns and the risk-free return, divided by the standard deviation of the investment’s returns. Efficient Frontier:
The efficient frontier is the set of optimal investment portfolios that maximizes returns given defined levels of risk. Simulation Methodology: To model the potential bitcoin weights in a portfolio, we use a Monte Carlo simulation
method. The basis of using this method is that the probability of varying outcomes is typically harder to determine given random variable interference. A Monte Carlo simulation mitigates this interference by focusing on repeating
random samples to output a result. While typically more effective than relying on a single variable to forecast or estimate an outcome, our simulation assumes perfectly efficient markets and does not account for factors that are notbuilt into the price movement, including macro trends and market sentiment. As a part of the simulation, we selected the following commonly used asset class benchmarks, analyzing their price behavior since 2011: Real Estate –The Morgan Stanley Capital International (MSCI), US Real Estate Investment Trust Index (RMZ), Commodities - The Crude Oil Futures (CL1 COMB), Currencies - MSCI Global Currency Index, Bonds - Bloomberg Barclays US Aggregate
Bond Index, Equities - S&P 500, Gold - GLD

50 •Bitcoin: Preparing For Institutions

SIZING THE OPPORTUNITY

Institutional Investment
Could Have A Substantial
Impact On Bitcoin’s Price.

Hypothetical Impact of Institutional Investment
On The Price of Bitcoin
HNW1I

Mass Affluent
Pension Funds

Insurance Companies
Sovereign Wealth Funds$600,000• Based on ARK’s simulated portfolio
allocations, institutional allocations
between 2.5% and 6.5% could impact
bitcoin’s price by $200,000 to $500,000.

Price Increase Per Bitcoin$500,000$400,000$300,000$200,000$100,000$-

1% Allocation

2.55% Allocation

6.55% Allocation(Minimum Volatility)(Maximum Sharpe Ratio)

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
[1] HNWI: High Net Worth Individuals. Source: ARK Investment Management LLC, 2020 based on data sourced from: PWC

51•

Electric Vehicles (EVs)Electric Vehicles (EVs)EV Sales Should Accelerate Significantly

07•

Electric vehicles are approaching sticker price parity with gaspowered cars. Leaders in the EV market are developing innovative
battery designs to enable longer range vehicles at lower costs.

•

Based on Wright’s Law, ARK forecasts that EV sales should increase
roughly 20-fold from ~2.2 million in 2020 to 40 million units in 2025.

•

We believe the biggest downside risk to our forecast is whether
traditional automakers can transition successfully to electric andautonomous vehicles.

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security.

52 •Electric Vehicles (EVs)Electric Vehicle Sales Have Taken Share In Good Times And Tough Times
While sales of gas-powered vehicles decreased during the recent COVID-19 pandemic, EV sales continued to increase globally.
Vehicle Sales Growth
Gas-Powered(Year Over Year)

Electric

40%

33%

30%
20%

16%

10%
0%
-10%

-4%
-15%

-20%

2019

2020

Source: ARK Investment Management LLC, 2020, based on data sourced from: “Global Auto Sales Forecasts: Hopes Pinned On China.” Global Auto Sales Forecasts: Hopes Pinned On China, “Global Auto Sales Expected to Gain Momentum
Next Year; 83.4 Million Light Vehicles to Be Sold In 2021, According to IHS Markit.” Business Wire, 17 Dec. 2020, www.businesswire.com/news/home/20201217005798/en/Global-Auto-Sales-Expected-to-Gain-Momentum-Next-Year-83.4Million-Light-Vehicles-to-Be-Sold-In-2021-According-to-IHS-Markit; Bekker, Henk. “2019 (Full Year) International: Worldwide Car Sales.” Car Sales Statistics, 16 Jan. 2020, www.best-selling-cars.com/international/2019-full-yearinternational-worldwide-car-sales/.

53 •Electric Vehicles (EVs)

Wright’s Law Has Modeled The Decline In Battery Costs Successfully
According to Wright’s Law, for every cumulative doubling of units produced, battery cell costs will fall by 28%. The largest cost
component of an EV is its battery so these cost declines are critical to reaching price parity with gas-powered vehicles.

Li-ion Cost Decline Model
Modeled Cost Decline

Forecast Cost Decline

Reported Prices$10,000

USD/kWh$1,000

$100

$10

$1
10

100

1,000

10,000100,000

Cumulative MWh* Produced*A MWh is 1,000 kWh.
Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020, based on data sourced from: Avicenne Energy, International Energy Agency (IEA), and Bloomberg New Energy Finance (BNEF).

1,000,000

10,000,000

54 •Electric Vehicles (EVs)Electric Vehicles Are Approaching Sticker Price Parity
With Gas-Powered Cars
The total cost of ownership for a like-for-like EV dropped below that of a Toyota Camry in 2019.1
Soon, sticker prices likely will do the same.
Vehicle Prices
Toyota Camry

350-Mile Range EV$60,000$50,000

MSRP* (USD)$50,000$39,000$40,000$30,000$24,000$25,000$26,000$26,000$26,000$18,000$20,000$10,000
$-

2019

2021

2023

2025

*MSRP stands for the Manufacturer Suggested Retail Price[1] Total cost of ownership includes savings from gas, maintenance, insurance, and resale value.
Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020

55 •Electric Vehicles (EVs)In Addition To Cost, EVs Are Competing On Range And Performance
The auto market is undergoing a shift to both electric and autonomous. ARK believes that traditional automakers lack the softwareand electrical engineering talent necessary to succeed.
Electric Vehicle Efficiency vs. Performance
5

EPA Range/kWh

Tesla Model 3 LR AWD Today2017 Chevy Bolt

Hyundai Ioniq

4

Nissan Leaf Today

Chevy Bolt Today2018 Tesla Model 3 LR AWD

2015 Nissan Leaf

3

NIO EC6
Audi e-tron

Jaguar I-Pace

2

Mustang Mach-E
Porsche Taycan Turbo S

1
12

10

8

6

4

2

0

0-60mph Acceleration (seconds)
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020, based on data sourced from: Kierstein, Alex. “Polestar 2 Recalled Again, This Time for EV Component Issue.” MotorTrend, MotorTrend, 3 Nov. 2020, www.motortrend.com/news/polestar-2recall-inverter; O'Kane, Sean. “VW's First Mass-Market EV Suffers Delay Thanks to Software Struggles.” The Verge, The Verge, 11 June 2020, www.theverge.com/2020/6/11/21288572/volkswagen-id3-ev-delay-software-vw-herbert-diess;“Hyundai to Expand Kona EV Recall to North America, Europe over Battery Fire Risk - Yonhap.” Reuters, Thomson Reuters, 12 Oct. 2020, www.reuters.com/article/hyundai-motor-ev-battery/hyundai-to-expand-kona-ev-recall-to-northamerica-europe-over-battery-fire-risk-yonhap-idUSKBN26X0GP.

56 •Electric Vehicles (EVs)At Today’s Battery Prices,
Cell-To-Vehicle Technology
Enables Longer Range EVs
At Lower Prices• Cell-to-vehicle designs increase thevolumetric density of batteries by 50%
relative to battery cells integrated intomodules and packs.
• In the mass market segment, cell-tovehicle technology should enable EV
makers to lower energy density and costcells, producing more kilowatt hours toincrease the range of vehicles.
• At a given battery pack size, cell-tovehicle technology should enable longerrange vehicles at lower price points.

How most EVs are manufactured today:

Battery
Cells

Battery Cells
in a Module

Battery Cells in
Modules in a packBattery as Percent ofVolumetric Density

Battery Cells in Modules
in a Pack in the Vehicle

How leaders in the space
are manufacturing EVs:

80%

~60%

60%
40%

~40%

20%
0%
Cell to Module to Pack

Cell to Pack/Vehicle

Cell-to-Battery Pack/Vehicle

Source: ARK Investment Management LLC, 2020, based on data sourced from: Lima, Pedro. “BYD Blade Prismatic Battery Cell Specs and Possibilities (Update).”PushEVs, 13 June 2020, pushevs.com/2020/05/26/byd-blade-prismatic-battery-cell-specs-possibilities/; THRON, tesla-share.thron.com/content/?id=96ea71cf-8fda-4648-a62c-753af436c3b6.

57 •Electric Vehicles (EVs)SIZING THE OPPORTUNITY

Global Electric Vehicle Sales
45
40
35
Units (Millions)

If Traditional Automakers
Overcome Obstacles,
Global EV Sales Could Scale
Roughly 20-Fold From
~2.2 Million In 2020 To
40 Million By 2025.

30
25
20

• ARK expects that sales of smaller, cheaper,“neighborhood electric vehicles” will risedramatically as a share of total EV sales.

82%
CAGR

15
10
5

2013

2014

2015

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from: EV-volumes.com

2016

2017

2018

2019

2020 ... 2025

58 •Automation

Automation
The Robots Are Coming…To Help You And Create Jobs

08•

Fears abound that automation will destroy jobs, but ARK believes
it will empower humans, increasing both productivity and wage
growth.

•Automation has the potential to shift unpaid labor to paid labor.
For example, as food services automate, they will transform foodprep, cleanup, and grocery shopping into market activities including
food delivery.

•

ARK believes automation will add 5%, or $1.2 trillion to US GDP
during the next five years.

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security.

59 •Automation

The US Economy Is At Automation Levels Similar To That Of US
Manufacturing In The Early 1990s
While manufacturing took roughly 25 years to hit its current level of automation, ARK believes that the US economy will automate at a
rate five times faster during the next five years.
US Economy Automation Density

US Manufacturing Robot Density(Density per 10,000 Employees)(Density per 10,000 Employees)

250

250

200

200

150

150

100

100

50

50

0

1985

1990

1995

2000

2005

25 Years

2010

2015

2020

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

5 Years

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Bureau of Labor Statistics (BLS), International Federation of Robotics (IFR), “The Future of Employment: How Susceptible Are Jobs to Computerization?”
Oxford Martin School, https://arkinv.st/2rFJJYW.

60 •Automation

Industrial Robot Demand Seems
To Have Hit An Inflection Point
Industrial Robot Price Elasticity of Demand
1996-2002••

Following the great recession in 2008/2009,
perhaps in response to it, industrial robot
demand hit an inflection point.
Trade tensions between the US and China
may have added to the momentum before
COVID-19 created a headwind in 2020.
According to ARK’s research, short-term
obstacles will not prevent a rebound inindustrial robot sales and could encouragecompanies to automate and cut costs moreaggressively.

2009 and 20192010-20152016-2018

500,000
450,000
Unit Sales of Industrial Robots•

2002-2010

400,000
350,0002019

300,000
250,000
200,000
150,000
100,000
50,000

2009

$120

$100

$80

$60

Unit Price of an Industrial Robot(Thousands)
Source: ARK Investment Management LLC, 2020 based on data sourced from: “World Robotics.” IFR International Federation of Robotics

$40

$20

$0

•

Automation

Increased Automation And Productivity
Can Provide Many Economic Benefits
A drop in labor relative to capital does not suggest
necessarily that wages are falling. Instead, output
can grow faster than wages. Thanks to increased
productivity and automation, ARK expects a
combination of the following four outcomes:• Higher wages: benefiting employees• Lower prices: benefiting consumers• Higher margins: benefiting companies• Higher investments: creating virtuous cycles

US Manufacturing Robot Density vs
US Manufacturing Labor Share(1991-2015)
70%

Labor Share of US Manufacturing

61

60%
50%
40%
30%
20%
10%
0%

0

20

40

60

80

100

120

140

160

US Manufacturing Robot Density per 10,000 Employees
Note: Each purple dot represents a year from 1991 – 2015.
*Labor share is employee wages as a percent of income.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Bureau of Labor Statistics (BLS), EU KLEMS Database September 2017 release, July 2018 revision.

180

200

62 •

Automation

Historically, When Labor Share Has
Declined, Operating Margins
Have Increased

Labor Share: S&P Operating Profit Margins vs.
All Industries Labor Share
Historic Aggregate Data

• If labor share were to fall 15%, in linewith manufacturing, operating margins
could double to more than 20%.

25%

Operating Margin• According to ARK’s research, for every
percentage drop in labor share in theindustrial and agricultural sectors,
operating margins increased 30 basis
points and 280 basis points, respectively.
We would not be surprised to see asimilar relationship in all industries.

Forecast

20%

15%

10%

5%

0%
65%

60%

55%
Labor Share

Note: Chart time period is 1993-2015 the forecast is for 2025.
Labor share is employee wages as a percent of income.
Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 based on data sourced from: EU KLEMS Database September 2017 release, July 2018 revision, Yardeni.

50%

45%

40%

63 •

Automation

Automation Shifts “Unpaid” Labor
Into “Paid” Labor• 82% of the roughly 7 million people who lost jobs
in agriculture between 1950 and 2000 were unpaid
family workers.1• As food services automate, they will continue
to transform food prep, cleanup, and grocery
shopping into market activities including fooddelivery.

Unpaid Family Workers
10

8

120

7
6

137

140

9

7.6

5
4

100
80
60

3

2.1

2
1

• Automated products and services are lessexpensive than their alternatives.

160(Millions)• The washing machine monetized unpaid timespent cleaning clothes as washing machine
manufacturers and laundromats took hold.

Paid Workers

Number of Workers (Millions)• The loss of jobs in one industry, even a majorindustry, does not suggest that total employment
will decline.

Employed Persons in the US

Paid vs Unpaid Farm Workers

2.3

0
1950

59

40
20

1.1
2000

-0
1950

[1] Unpaid family workers include unpaid family members and self-employed famers.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Economic Research Service United States Department of Agriculture https://www.ers.usda.gov/topics/farm-economy/farm-labor/#size.

2000

64 •

Automation

SIZING THE OPPORTUNITY

Automation could add 5%, or $1.2 trillion, to US GDP during the next five
years. ARK believes automation will boost US real GDP growth by 100
basis points on average per year to 3.4%.
Real US GDP Growth (2020-2025)
Compound Annual Growth Rate

3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%

GDP Growth Without Automation

GDP Growth With Automation

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 based on data sourced from: “The Future of Employment: How Susceptible Are Jobs to Computerization?” Oxford Martin School, https://arkinv.st/2rFJJYW,
Bureau of Labor Statistics (BLS), International Monetary Fund (IMF) World Economic Outlook.

65 •Autonomous Ride-Hailing

Autonomous Ride-Hailing
Autonomous Ride-Hailing Is Likely To Dominate
Urban Transport

09•

We believe autonomous ride-hailing will reduce the cost of mobility
to one tenth the average cost of a taxi today, spurring widespread
adoption.

•

ARK’s research suggests that autonomous ride-hailing platforms
will generate more than $1 trillion in profits per year by 2030. In
addition, automakers and fleet owners could enjoy profits of $250
billion and $70 billion, respectively.

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security.

66 •Autonomous Ride-Hailing

Autonomous Ride-Hailing Is Likely To Be Affordable
Adjusted for inflation, the cost to own and operate a personal car has not changed since the Model T rolled off the first assembly
line. ARK estimates that, at scale, autonomous taxis will cost consumers $0.25 per mile, spurring widespread adoption.

Cost Per Mile of a Personally Owned Vehicle(2020, USD)

$1.70

$0.70

$0.70

$0.70
$0.25

1871

1934

1950

2016

2021
2025

Forecasts are inherently limited and cannot be relied upon.
Note: ARK had estimated previously that an autonomous taxi could price at $0.35 per mile. We have refined our estimates and believe that autonomous taxis could be even cheaper, at only $0.25 per mile.
Source: ARK Investment Management LLC, 2020; Morton Salt Company Records, American Automobile Association (AAA).

67 •Autonomous Ride-Hailing

Robotaxis Should Expand The
Ride-Hailing Market
Economics of
Ride-Hailing vs. Autonomous Ride-Hailing
Assuming 3 Million Vehicles on Network• According to ARK’s research, the ridehailing market today generates roughly $150
billion in revenues globally with take ratesof 10-30% and profit margins as high as 50%
in high performing cities.
• Likewise, autonomous ride-hailing could
generate 50% margins, but its lower pricepoint should expand the total market from$150 billion in revenues with take rates up
to 60%, to $6-7 trillion by 2030.

Price Per Mile forConsumer: $1.85

Platform Costs

Profit $0.28

Ride-Hailing
2020
Note: Price for autonomous ride-hailing shown above would be in the early years ofcommercialization. ARK expects prices to drop as low as $0.25 per mile as the market scales.
Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on ARK estimates and available financials for Uber, Lyft, and Didi.

Price Per Mile forConsumer: $1.00
Platform
Net Revenue:$0.56

Platform Costs

Profit $0.25

Platform
Net Revenue:$0.50

Autonomous Ride-Hailing

68 •Autonomous Ride-HailingThree Autonomous
Strategies Are Evolving• Tesla’s approach is camera-based. With lessaccurate sensors than LiDAR, making the pathto full autonomy a more difficult problem tosolve, cameras do not rely on HD maps andshould enable a much more scalable
service. Tesla's could be the first autonomous
taxi network to scale nationally.
• Alphabet's Waymo is using LiDAR and HD
mapping. Waymo launched its autonomous
network in Arizona but probably will need timeand significant resources to scale nationally.
• Many Chinese players, including Baidu’s Apollo,
are building out infrastructure sensors to help
vehicles identify road signs and traffic. Requiring
large infrastructure investments, this approach
to autonomous ride-hailing seems to be themost rigid and least scalable of the three.

Solution Speed:
FastMediumSlow
Flexible,
Scalable

Camera Based

LiDAR & HD Maps

Rigid,
LimitedScalability

V2X

Perceiving/
Localizing

Predicting

Driving

Steps To Solving For Full Autonomy

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Tesla, Alphabet, and Baidu

Deciding

69 •Autonomous Ride-Hailing

Scalability Will Determine The PaceOf Autonomous Ride-Hailing Adoption
If Tesla launches its autonomous ride-hailing service successfully in 2022, ARK estimates adoption could approach 20% by 2025.
If Waymo or GM is successful, adoption probably will be limited to 1% during the next five years.
North America Autonomous Vehicle Adoption
As a Percent of Urban Miles Traveled
20%
18%

Tesla Adoption(Projected)

16%
14%
12%
10%

ARK Forecast

8%
6%
4%

Waymo Adoption(Projected)

2%
0%
2020

2021

2022

2023

2024

Note: ARK assigns a 30% probability that Tesla will launch autonomous ride-hailing successfully

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020

2025

70 •

Autonomous Ride-Hailing

Demand Response Could Be Higher In
Developed vs. Developing Countries• We believe autonomous ride-hailing will undercut
the cost of human-driven ride-hailing by roughly
90% in the US and 50% in China.

Human Ride-Hailing vs. Autonomous Ride-Hailing
Average Price Per-Mile in China vs. The US
Human Ride-hail• As a result, the demand response to inexpensive
autonomous travel could be higher in developed
countries than in developing countries.

Autonomous Ride-hail$2.00• Platform providers, or companies that own theautonomous technology stack, should garner the
lion's share of autonomous ride-hailing profits.
-88%
$0.50

-50%
$0.25
Didi

$0.25
Uber

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from: “Didi Chuxing Still a Ride-Hailing Giant despite 2018 Safety Setbacks.” South China Morning Post, 22 Jan. 2019, www.scmp.com/tech/startups/article/2181542/didi-numbers-ride-hailing-firm-covered-more-miles-2018-5-earth, Feng, Linyan. “Beyond DiDi's Safety Report: DiDi Posts 21 Million Rides Per Day in Q1.” EqualOcean, EqualOcean, 2 July 2019,equalocean.com/auto/20190703-didi-posts-21-million-rides-per-day-in-q1, Helling, Brett, et al. “How Much Does Uber Cost? – A Comprehensive Guide.” Ridester.com, 14 Aug. 2020, www.ridester.com/uber-rates-cost/.

71•

Autonomous Ride-Hailing

SIZING THE OPPORTUNITY

ARK Believes That Autonomous
Ride-Hailing Platforms Could
Generate More Than $1 Trillion In
Operating Earnings Annually by 2030.

Estimated Operating Earnings Across The
Autonomous Value Chain(Billions, USD)

Platform Provider

Auto Manufacturer

Fleet Owner$1,200• Auto manufacturers with successful electric vehicle
platforms, partnered with autonomous technology
providers, could generate roughly $250 billion inearnings annually by 2030.
• Fleet owners that own, house, and maintain autonomous
ride-hailing vehicles could generate roughly $70 billion
in earnings annually by 2030.
• Enterprise value for autonomous platform operators
could scale to 3.8T by 2025.

$250

$190
$40

2025

$70

$5

2030
Note: Values are rounded.

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020

72 •Drone Delivery

Drone Delivery
Drones Should Reduce The Cost To Transport Goods
And People Dramatically

10•

Lower battery costs and autonomous technology should
power aerial drones.

•

ARK believes that in the not-too-distant future drones will deliver
our packages, food, and even people quicker and moreconveniently than ever before. Drones are likely to transform
shopping behavior, reduce travel time, and save lives.

•

ARK believes that drone delivery platforms will generate roughly$275 billion in delivery revenues, $50 billion in hardware sales,
and $12 billion in mapping revenue by 2030.

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

•

Drone Delivery

Autonomous Air Travel Has Become Possible And Affordable
Battery technology is improving, enough so that flight energy reserves can meet regulations, enabling air taxis and air ambulances
to take to the skies safely. In addition, machine learning improvements have enabled autonomous flight, reducing costs dramatically.

Cost of a 10-Mile Drone Delivery**

Safe Passenger Drone Range$10.00(Inclusive of Flight Reserve For Safety)
25
Safe Flight Range (Miles)

73

$8.00
20

As of 2020, batteries accommodated
12-mile flights + necessary reserves

$6.00

15
10

$7.80

$4.00

Distance from Manhattan to JFK*

$2.00

5

$0.25

0
2000

$2005

2010

2015

2020

Remotely Piloted

Autonomous*JFK – John F. Kennedy International Airport. **Note: Prices shown for drone technology are in the future when each technology reaches scale. While ARK estimates drone delivery services will commercialize in the next 5-10 years, exact
dates will be dependent on regulatory approval. Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2020 based on data sourced from “Menu.” FAR/AIM: PART 91-GENERAL OPERATING
AND FLIGHT RULES, www.gleim.com/aviation/faraim/index.php?fullTextNum=91&amp;terms%5B%5D=SFAR.

Drone Delivery

Drones Enable Cost Savings
And Convenience• Florida is building the first US
passenger drone vertiport,1 withplans to operate in 2025.

Orlando To Tampa
OrlandoTo Tampa:
Cost
vs. TimeCost vs. Time

$4

Cost (USD)

Cost (USD)

Pharmaceutical Delivery/Pickup: Cost vs. Time
Personal Car
to Pharmacy

$3
$2

Mail
Order

Drone
Delivery

$1
1

10

$150
TheoreticaleVTOL2

$100
$50

100

1000

0

10000

Bridge Inspection: Cost vs. Time

PilotedDrones5Time (Hours)

100

150

Parcel Delivery: 5 lbs. 10 Miles: Cost vs. Time

Humans050Time (Minutes)

Time (Minutes, Log Scale)

5
4
3
2
1
0

Personal Car$-$-

Cost (Thousands, USD)

• In the past two years, the Federal
Aviation Authority (FAA) has
kickstarted the commercial drone
industry by allowing companies tooperate drones beyond line ofsight and, in some cases, tooperate drone airlines.

Drone Delivery Costs At Scale Relative to Competitor Costs Today

Cost (USD)

74 •

10

Bike
Courier

$125
$100
$75
$50
$25
$0

AmazonPrime Air
Drone
1

FedEx
Ground100

10000

Minutes (Log Scale)[1] Vertiport is an airport for aircrafts which take off and land vertically. [2] eVTOL: electric vertical takeoff and landing. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be
considered investment advice, or a recommendation to buy, sell or hold any particular security. Source: ARK Investment Management LLC, 2020 based on data sourced from Are you Ready for Take Off? - Presentation by Remo Gerber,
CCO of Lilium at the NOAH Conference London 2017, Old Billingsgate on the 3rd of November 2017, Kelling SE. Exploring Accessibility of Community Pharmacy Services. Inov Pharm. 2015;6(3):Article 201.
http://pubs.lib.umn.edu/innovations/vol6/iss3/6, Carey, Liz. “North Carolina DOT Approved to Inspect Bridges with Drones.” Transportation Today, 6 Oct. 2020, transportationtodaynews.com/featured/19901-north-carolina-dot-approvedto-inspect-bridges-with-drones/. “FedEx Ground® Shipping.” FedEx, www.fedex.com/en-us/shipping/ground.html. “Mail & Shipping Services.” USPS, www.usps.com/ship/mail-shipping-services.htm. Report • By Elise Gould • February 20.
“State of Working America Wages 2019: A Story of Slow, Uneven, and Unequal Wage Growth over the Last 40 Years.” Economic Policy Institute, www.epi.org/publication/swa-wages-2019/.

75 •Drone Delivery

Drones Could Deliver A Substantial
Share Of E-Commerce Shipments
By 2030

Global E-Commerce Share of RetailWith Drones• COVID-19 accelerated e-commerce
experimentation and adoption withcontactless drone deliveries.

Global Parcel Drone
Delivery Revenue(Billions, USD)

Rest of Retail
Ecommerce (Drone Delivered)
Ecommerce (Non-Drone)• ARK estimates that at some point during
the next five years, drones will deliver
more than 20% of parcel shipments.

$115

40%
55%
82%

40%

13%

60%
32%
18%

2020

2025

$15

45%
20%

2030

2025

2030

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 based on data sourced from “Pitney Bowes Parcel Shipping Index Reports Global Parcel Shipping Reaches $279 Billion in Revenue.” Pitney Bowes, 28 Aug. 2018, https://arkinv.st/2QjSeSQ; “D
ata and Research on Digital for Business Professionals.” EMarketer, EMarketer, https://arkinv.st/2trGQeE; Total Retail Sales of Consumer Goods in December 2017, National Bureau of Statistics of China, 25 Jan. 2018, https://arkinv.st/36mBK
z6; “Monthly Sales for Retail and Food Services by Kind of Business: Retail Sales by Kind of Business, Millions of Dollars, Seasonally Adjusted.” FRED, Federal Reserve Bank of St. Louis, https://arkinv.st/2ZJWSN4.

76 •Drone Delivery

Drones Should Accelerate The Shift To Food Delivery
Online food delivery sales grew more than 40% globally in 2020. According to ARK’s research, drone delivery will account fornearly half of the ~40% of food prepared outside of and delivered to the home.

Global Food Delivery as a Share of Food Away From Home

Global Food Delivery Revenue(Billions, USD)

Additional Share Gain With Drones
Food Delivery as a % of Food Away From Home
50%

$116
40%
19%

30%
20%
4%
10%
2%

13%

2020

2025

22%

$18

2030

2025

0%

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 based on data sourced from: https://secondmeasure.com/datapoints/food-delivery-services-grubhub-uber-eats-doordash-postmates/

2030

77

•

Drone Delivery

SIZING THE OPPORTUNITY

While not yet commercialized, ARK estimates that drone delivery
platforms will generate nearly $50 billion in revenues, $14 billion
in hardware sales, and $3 billion in mapping revenues by 2025.
By 2030, drone delivery platforms could scale another four-fold, generating ~$275 billion in revenues, while hardware sales grownearly three-fold to almost $50 billion, and mapping revenues nearly four-fold to $12 billion.
Delivery Revenue

Drone Hardware Sales

Mapping Revenue(Billions, USD)

(Billions, USD)

(Billions, USD)

Parcel Drone

Food Drone

Air Taxi

Parcel Drones

Food Drones

Air Taxis

Parcel Drones

Food Drones

$44
$8
$116
$0.9
$18

$0.2
$114
$9.5

$30

2025

$6

$16

2030

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020

2025

$3.5

$25
$1.5

2030

2025

$0.9

$6

2030

78 •

Orbital Aerospace

Orbital Aerospace
The Space Industry Is Taking Off

11•

Rocket and satellite cost declines are upending what once
seemed a monopolistic and bureaucratic industry.

•Thanks to advancements in deep learning, mobile connectivity,
sensors, 3D printing, and robotics, costs that have been
ballooning for decades are beginning to decline. As a result,the number of satellite launches and rocket landings is
proliferating.

•According to ARK's research, the orbital aerospace opportunity– including satellite connectivity and hypersonic flight – will
exceed $370 billion annually.

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security.

79 •Orbital Aerospace

Orbital Aerospace Is A Big Idea
Global Connectivity

Hypersonic Point-to-Point Travel

Multiplanetary Species

Roughly 50% of the global population lacks
internet connectivity, but with moresatellites, cloud computing will go global.

As long-haul flight times collapse
from 10+ hours to 2-3 hours, the global
economy could transform.

Humans have been living on theInternational Space Station for 20 years.
Within a decade, humans could inhabit themoon and Mars.

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Global connectivity source: https://www.bondcap.com/pdf/Internet_Trends_2019.pdf, ISS source: https://www.nationalgeographic.com/science/2020/10/hum
ans-have-lived-on-international-space-station-20-years-straight/.

80 •Orbital Aerospace

Rocket Reusability Could Lower The Cost Of Launches
By An Order Of Magnitude
Thus far, SpaceX has flown the same Falcon 9 rocket booster eight times successfully.
Rocket Launch Costs
Low Earth Orbit (USD/kg)$16,000$14,000$12,000$10,000$8,000$6,000$4,000$2,000$-2016 Atlas V2014 Arianne 52020 Reusable Falcon 9

Future Reusable Starship

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from: SpaceX, Wayback Machine, web.archive.org/web/20161203124622/, “Discover the Value of Launching on ULA's Atlas V.” RocketBuilder, www.rocketbuilder.com/
start/configure, Peter B. de Selding — March 18, and Peter B. de Selding. “Former Arianespace Chief Says SpaceX Has Advantage on Cost.” SpaceNews, 6 Dec. 2014, spacenews.com/39906former-arianespace-chief-says-spacex-has-advantag
e-on-cost/%C2%A0., https://twitter.com/thesheetztweetz/status/1351880498671472641?s=20.

81•

Orbital Aerospace

Lower Satellite Launch Costs Could Enable Continuous
Global Coverage With Low Latency
While satellites launched into geostationary orbit (GEO) attempted to offer global coverage, latency limited their ability to provide acompelling broadband internet offering. Today, companies are beginning to launch thousands of satellites in low earth orbit (LEO)
and enabling continuous global coverage with low latency.

LEO~300 miles<40 ms latency*

GEO~22,000 miles
700 ms latency**Note: Latency is measured in milliseconds (ms).
Source: ARK Investment Management LLC, 2020 based on data sourced from: “Satellites 101: LEO vs. GEO.” Iridium Satellite Communications, 9 Sept. 2018, www.iridium.com/blog/2018/09/11/satellites-101-leo-vs-geo/, Jon Brodkin
Nov 2, 2020 9:09 pm UTC. “SpaceX Starlink Users Provide First Impressions and Unboxing Pictures.” Ars Technica, 2 Nov. 2020, arstechnica.com/information-technology/2020/11/spacex-starlink-beta-tester-takes-user-terminal-into-forestgets-120mbps/?utm_social-type=owned.

82 •Orbital AerospaceThanks To Lower Launch Costs,
The Number Of Satellites Scheduled For Orbit Has Increased Significantly
Satellites could bolster GDP growth as their networks launch and leverage data for terrestrial businesses.
Number of Active Satellites
30,00025,000 +25,00020,00015,00010,000
5,000
-

2005

2018

2019

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Union of Concerned Scientists Satellite Database.

2020

Planned83 •Orbital Aerospace

SIZING THE OPPORTUNITY

Satellite Broadband Revenues Could Approach $10 Billion Per Year
In The US And $40 Billion Globally During The Next 5-10 Years.

• According to ARK’s research, the $40 billion
opportunity to serve populations without access is afraction of the total addressable market for satellite
broadband.

42 Million

2.6

$50

12

Americanswithout
accessto broadband

People Per
Household

AverageMonthly
Broadband
Bill

MonthsPer Year• Governments globally are likely to add further to thedemand for space services.

3 Billion

5

$5

12

• In total, the satellite connectivity market could
approach $100 billion annually over the medium term.

Peopleglobally
without accessto broadband

People Per
HouseholdMonthly
Broadband
Bill

MonthsPer Year• The market for connected planes, trains, and motor
vehicles is likely to reach $36 billion in 2025.

~$10 Billion

AnnualAddressable
Market~$40 Billion
AnnualAddressable
MarketForecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 based on data sourced from: Dreyfuss, Emily. “Global Internet Access Is Even Worse Than Dire Reports Suggest.” Wired, Conde Nast, www.wired.com/story/global-internet-access-direreports/, “FCC Underestimates Americans Unserved by Broadband Internet by 50%.” BroadbandNow, broadbandnow.com/research/fcc-underestimates-unserved-by-50-percent, “Worldwide Broadband Price Research 2020.” Cable,
www.cable.co.uk/broadband/pricing/worldwide-comparison/, “Global On-Board Connectivity Market Expected to Reach $36,842.3 Million by 2025.” Allied Market Research, www.alliedmarketresearch.com/press-release/on-boardconnectivity-market.html, “Space: Investing in the Final Frontier.” Morgan Stanley, www.morganstanley.com/ideas/investing-in-space.

84 •Orbital Aerospace

SIZING THE OPPORTUNITYARK Expects The Demand For
Hypersonic Flight To Skyrocket.

~4.5 Billion Passengers Flew in 201815%
of flights were > 7 hours• According to our research, passengers on short-haul
flights are willing to pay roughly $15,000 for every twohours saved on private planes.
• Based on the economics of the short-haul flight market,
ARK estimates that passengers and businesses will bewilling to pay $100,000 to save 13 hours on a 2–3 hour
private hypersonic flight from New York City to Japan.
• If 2.7 million passengers were to pay ~$100,000 for longhaul hypersonic flights, the market would scale to $270
billion in revenues annually.

~680 Million Passengers Flew
on Flights Longer Than 7 Hours
0.4%
of passengers flew private~2.7 Million Person Potential AnnualHypersonic Flight Addressable Market$100,000
per hypersonic flight$270 Billion
Annual Revenues

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 based on data sourced from Gollan, Doug. “Why, When And Where The Super Rich Fly Their Private Jets.” Forbes, Forbes Magazine, 10 Oct. 2018, www.forbes.com/sites/
douggollan/2018/10/10/why-when-and-where-the-super-rich-fly-their-private-jets/?sh=215c29c822e1, Charter Market Report 2018, The Federal Aviation Administration, the Bureau of Transportation Statistics, and Flight Aware.

85 •3D Printing

3D Printing
3D Printing Saves Time, Cost, And Waste While
Creating Radically New Part Architectures

12•

3D printing is a form of additive manufacturing that builds
objects layer-by-layer, as opposed to traditional subtractive
manufacturing that removes material from larger blocks.

•

3D printing collapses the time between design and production,
shifts power to designers, and reduces supply chain
complexity, at a fraction of the cost of traditional manufacturing.

•

ARK believes 3D printing will revolutionize manufacturing,growing at an annual rate of roughly 60% from $12 billion lastyear to $120 billion in 2025.

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security.

86 •3D Printing

3D Printing Revenues Declined
In 2020, But New Users Leveraged
The Technology During The Pandemic

3D Printing Sales At Public Companies(Millions, USD)

Applications during the COVID-19 crisis:
Medical Devices• Ventilator Valves• Mask Connectors for CPAP
and BiPAP• Emergency Respiration Device• Non-Invasive PEEP Mask

Personal Protective
Equipment (PPE)• Face Shield• Respirators• Metal Respirator
Filters

Testing Devices• Nasopharyngeal (NP)
Swabs

Personal Accessories• Face Masks• Mask Filters• Mask Adjusters• Door Openers

Training and Visualization Aids
• Medical Manikins• Bio-Models

Emergency Dwellings• Isolation Wards

SSYS

DDD

MTLS

SLGRF

PRLB (3D Printing Sales Only)

EXONE

VJET

SGLB

NNDM

$2,000$1,750$1,500$1,250$1,000
$750
$500
$250
$0

2015

2016

2017

2018

2019

LTM*
(Sept 2020)*LTM: Last Twelve Months
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from: CapitalIQ, Choong, Yu Ying Clarrisa, et al. “The Global Rise of 3D Printing during the COVID-19 Pandemic.” Nature News, Nature Publishing Group, 12 Aug. 2020,www.nature.com/articles/s41578-020-00234-3.

87 •3D Printing

3D Printing Is in Its Infancy

Market Size (Billions USD)

ARK’s research indicates that 3D printing for end-use parts is the next frontier.

PROTOTYPESMOLDS & TOOLSEND-USE PARTS

Market Potential:$12.5 Billion$30 Billion$490 Billion

Current Penetration

40-50%

4%

1%

First Applications

1980’s1990’s

Early 2000’s

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 data sourced from; McKinsey; Stratasys; “3D Printing History.” AV Plastics, 14 June 2018, https://arkinv.st/2TC57H1

88 •3D Printing

3D Printing Applications Vary By
Industry, Volumes, And Complexity
3D Printing Addressable Opportunity
Example applications by category:*$600
Hobbies, Toys and Games•All Industries

Molds & Tools

•
•
•
•
•

Automobiles, Auto Parts, and Equipment
MachineryFoundries and Metal Products
Industrial Manufacturing
Die Sets, Jigs, and Industrial Molds

End Use Parts

•
•
•
•
•

Aerospace
Health Care Equipment and Supplies
Plastic Products
Footwear
Semiconductors and Equipment$500

Semiconductors and Semiconductor Equipment
Die Sets, Jigs and Industrial Molds

Billions, USD

Prototyping

$400

$300

$200

Foundries and Metal Products
Footwear
Plastic Products
Health Care Equipment and Supplies
Machinery$100

Automobiles & Auto Parts and Equipment
Aerospace$0*Note that industries often span multiple categories
Source: ARK Investment Management LLC, 2020 based on data sourced from CapitalIQ.

89 •3D Printing

3D Printing Enables Many Form Factors
Drones Take Many Shapes• Because of autonomous technology andbattery breakthroughs, aircraft volumes anddesigns are proliferating.
• 3D printing is accelerating innovation thanks
to low-costs and rapid prototyping. It lowers
the weight of low volume, highly complex
parts, saving significant costs. The aerospaceindustry should be a prime beneficiary.
• ARK estimates that drone hardware revenues
will total roughly $100 billion by 2025.

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020. Image Sources:TransportUp, https://medium.com/nuro/faces-and-fascia-a-discussion-with-nuros-design-team-b7a2fe2a3a74, https://thespoon.tech/starship-raises-25-million-to-roll-outmore-delivery-robots/, https://www.cnet.com/news/amazons-new-ring-camera-is-actually-a-flying-drone-for-inside-your-home/, https://i.etsystatic.com/16561342/d/il/03d9c2/1413053916/il_340x270.1413053916_msed.jpg?version=0

90 •3D Printing

3D Printing Unlocks The Full Potential
Of Artificial Intelligence In Manufacturing
The convergence of 3D printing and artificial intelligence enables highly
optimized designs not possible in traditional manufacturing.

HEXR

US Air Force Institute of Technology

Cubesat Bus• 125 parts into 1 part
• 50% lighter• 20% stiffer• 6X reduction in failure locations

Custom Helmut Insert• 60% more shock-absorbent• 25% reduction in rotational forces to head
• 45% reduction in rotational velocity to head

Yamaichi Special Steel

Brake Caliper• 40% lighter• Better airflow• Better pressure distribution

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020 based on data sourced from: ntopology. Image Sources: nTopolgy•

3D Printing

SIZING THE OPPORTUNITY

ARK believes that the global 3D printing market will scale at a compound annual rateof 60% during the next five years, from $12 billion to roughly $120 billion by 2025.
Global Estimates for 3D Printing Market 2020 to 2025
By 2025$160$500$140..
.
$120Billons, USD

91$180 – 490

$100
$80
$60
By 2023

$40
$20
$0

By 2024$12

2020
Date of Estimate:

$120

$120

$51

$27

$35

$36

Earnst & Young

3D Hubs

Wohlers

Lux Research

Smartech

BCG

ARK

McKinsey

2019

2019

2019

2017

2017

2020

2020

2013

$20

$33

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security. Source: ARK Investment
Management LLC, 2020 based on data sourced from 3D Printing Trends 2020: Industry Highlights and Market Trends. 3D Hubs Manufacturing LLC, 2020, www.3dhubs.com. “EY's Global 3D Printing Report 2019.” Ey.com/De, Ernst & Young
GmbH, Oct. 2019. McCue, TJ. “Significant 3D Printing Forecast Surges To $35.6 Billion.” Forbes, Forbes Magazine, 3 Apr. 2019, www.forbes.com/sites/tjmccue/2019/03/27/wohlers-report-2019-forecasts-35-6-billion-in-3d-printing-industrygrowth-by-2024/#121d7a9d7d8a, The 3D printing market will quadruple to US$12 billion by 2025. “3D Printing Market to Quadruple to $12 Billion in 2025” [press release], Lux Research, April 29, 2014, http://www.luxresearchinc.com/newsand-events/press-releases/read/3d-printing-market-quadruple-12-billion-2025 “SmarTech Analysis Annual Additive Manufacturing Market Summary Report Says AM Market Grew to Over $10B Worldwide in 2019.” Attachment,www.globenewswire.com/NewsRoom/AttachmentNg/2bfad03b-3edd-4c69-b0a5-e83ca835ea6e/en. Küpper, Daniel, et al. “Get Ready for Industrialized Additive Manufacturing.” BCG Global, BCG Global, 8 Jan. 2021,
www.bcg.com/publications/2017/lean-manufacturing-industry-4.0-get-ready-for-industrialized-additive-manufacturing. Manyika, James, et al. “Disruptive Technologies: Advances That Will Transform Life, Business, and the Global
Economy.” McKinsey & Company, McKinsey & Company, 1 Mar. 2013, www.mckinsey.com/insights/business_technology/disruptive_technologies.

92 •Long-Read Sequencing

Long-Read Sequencing
Long-Read Sequencing Could Provide A MoreComplete Picture Of The Human Genome

13•

Next-generation DNA sequencing (NGS) is the driving force behind
the genomic revolution. Though historically dominated by shortread sequencing, we believe long-read sequencing will gain shareat a rapid rate.

•

ARK believes long-read technology offers superior accuracy, morecomprehensive variant detection, and a richer set of features thanshort-read platforms. By the end of 2025, highly-accurate long andshort-read sequencing should approach cost-parity.

•

We estimate that long-read revenues will grow 82% at an annual
rate, from $250 million in 2020 to roughly $5 billion in 2025.

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

93 •Long-Read Sequencing

The Genomic ‘Toolkit’ Is Expanding To Provide A Fuller, Richer, And
More Accurate View Into Biology

First Generation
Sequencing

Second Generation
Sequencing

Sanger Sequencing

Short-Read Sequencing (SRS)
Illumina (ILMN), BGI Genomics,
Thermo Fisher Scientific (TMO),
GenapSys

Optical Mapping

Bionano Genomics (BNGO), Nabsys

Third Generation
Sequencing

Long-Read Sequencing (LRS)
Synthesis / Fluorescence
Pacific Biosciences (PACB)

Single Cell Biology
Sequencing
10X Genomics (TXG)

Digital Cell Biology
Berkeley Lights (BLI)

Spatial Biology

Spatial Profiling&
In Situ Imaging
10X Genomics (TXG)
NanoString (NSTG)

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020

ElectromechanicalOxford Nanopore ”ONT”

94 •Long-Read Sequencing

Historically, Researchers Had To Choose Between
Accuracy With SRS Or Comprehensiveness With LRSGene (CYP2D6 as an example)• Both LRS and SRS systems (a) break the genome into
smaller fragments, (b) analyze the fragments withhigh-resolution optics,* and (c) reassemble thegenome with efficient computer algorithms.1

LRS

SRS

• SRS blends many small (150-bp) fragments, called
reads, into a consensus sequence. This method
captures small mutations but does not detect larger
reshufflings, called structural variants, or mutations
hidden in repetitive genomic regions (e.g. AAAA).1

Sequence Reads

Consensus• Older LRS systems measured larger (>10,000-bp)
reads and, while less accurate on a per-base level,
provided a more complete picture of the genome.1
Base-Accuracy

CompletenessBase-Accuracy*Applies to Pacific Biosciences of California (PACB) and Bionano Genomics (BNGO). Oxford Nanopore Technologies calls bases using fluctuations in electric voltage/current across a nanopore channel.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020. [1] Pollard, Martin O, et al. “Long Reads: Their Purpose and Place.” Human Molecular Genetics, vol. 27, no. R2, 2018, doi:10.1093/hmg/ddy177.

Completeness95 •Long-Read Sequencing

As Costs For LRS Converge With
SRS, Many Clinical Applications
Could Shift To LRS• Though more expensive, according to results
obtained from the PrecisionFDA Truth Challenge V2,
synthesis-based LRS is 2.5X more accurate than SRS
and 30X more accurate than nanopore-based LRS.3

Short Read (SBS)Long Read (SMRT)

18X$10,000(Log Scale, USD)

• Though less accurate on a per-base level currently,
nanopore-based LRS can generate whole humangenome sequences for ~$500—more cost effectively
than SRS.2$100,000Cost to Sequence a Human Genome*• Catalyzed by deep learning algorithms, such as
Google’s (GOOGL) DeepVariant, both synthesis andnanopore-based LRS methods rapidly could
improve in performance.1

Synthesis-Based LRS and SRS Could Near Cost-Parity by 2025

5X
3.5X

$1,000≈ 1-2X

$100

$10

2010

2015

2020

2025

*Specifically, Pacific Bioscience’s HiFi chemistry, which sits on top of the company’s SMRT (Single Molecule Real Time) platform.
**Assumes equivalent variant calling performance as measured by precision and recall (F1); 30X coverage for Illumina (2010-2025); 30X coverage for PacBio (2010-2015) and 20X coverage for PacBio (2020-2025). For informational
purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security. Source: ARK Investment Management LLC, 2020. [1] Baid, Gunjan, et al. “An Extensive Sequence Datasetof Gold-Standard Samples for Benchmarking and Development.” BioRxiv, Cold Spring Harbor Laboratory, 1 Jan. 2020, www.biorxiv.org/content/10.1101/2020.12.11.422022v1. [2] “Product Comparison.” Oxford Nanopore Technologies,
2 Dec. 2020, nanoporetech.com/products/comparison. [3] “PrecisionFDA Truth Challenge V2: Calling Variants from Short and Long Reads in Difficult-to-Map Regions.” Truth Challenge V2: Calling Variants from Short and Long Reads in
Difficult-to-Map Regions – PrecisionFDA, precision.fda.gov/challenges/10/view/results.

Long-Read Sequencing• Driven primarily by improvements in cost andthroughput, LRS’s unique capabilities should
galvanize broader adoption.1,2,3 LRS (a) does not
require amplification, (b) will detect methylation
natively, and (c) will span full RNA molecules.
• According to ARK’s estimates, the cost to
sequence a whole human genome with long-read
technology will drop to $100-$200, its accuracy
superior to SRS across all variant types by theend of 2025.

The Synthesis-Based LRS Market (SMRT)
Follows Wright’s Law

The Long-Read Sequencing Market (SMRT) Follows Wright’s Law$1,000,000

2010$100,000

Install Base (USD)

According To Wright’s Law, For
Every Cumulative Doubling In
Data Produced On Its Installed
Base, The Cost Of SynthesisBased LRS Has Declined And
Will Continue To Decline By 28%

Realized Cost/Genome Across Synthesis-Based LRS

96 •<$1,000 Estimatedby 2023$10,000

2015
2019$1,000

Released in 2020, the Sequel IIe
enables a ~$3,500 genome—which
we believe is sufficient to drive anadditional 80,000 humangenome equivalentsof demand.

$100

$10
1

10

100

1,000

10,000100,000

1,000,000

Cumulative Human Genome Equivalents Sequenced (90 GB)
Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020. [1] SW. Cho, S. Kim, et al. “Amplification-Free Long-Read Sequencing Reveals Unforeseen CRISPR-Cas9 off-Target Activity.” Genome Biology, BioMed Central, 1 Jan. 1970,
genomebiology.biomedcentral.com/articles/10.1186/s13059-020-02206-w. [2] D. Gordon, J. Huddleston, et al. “Accurate Targeted Long-Read DNA Methylation and Hydroxymethylation Sequencing with TAPS.” Genome Biology, BioMed
Central, 1 Jan. 1970, genomebiology.biomedcentral.com/articles/10.1186/s13059-020-01969-6. [3] Uapinyoying, Prech, et al. “A New Long-Read RNA-Seq Analysis Approach Identifies and Quantifies Novel Transcripts of Very Large Genes.”
BioRxiv, Cold Spring Harbor Laboratory, 1 Jan. 2020, www.biorxiv.org/content/10.1101/2020.01.08.898627v1.full#:~:text=Long%2Dread%20sequencing%20technologies%20such,2017).

97 •Long-Read Sequencing

ARK Believes That LRS
Analytics Are Superior For
Many Sequencing Applications••

Some clinical applications, such as rapid wholegenome sequencing (WGS) within the pediatricintensive care setting, have highreimbursement rates—giving diagnostic
providers more flexibility to switch to LRS.1
Genetic variants of all sizes—from small tolarge—both in easy and hard-to-sequence
genomic regions, can impact a patient’s
phenotype. In ARK’s view, LRS tools provide themost comprehensive variant detection,
regardless of sequence context.2

Pediatric cancers have unique molecular drivers such as
hidden single-nucleotide variants (SNVs), gene fusions,structural variants, and methylation—all more amenable
to LRS and optical mapping instruments.3

Many rare diseases, which affect 350 million people globally,
are genetic in origin. Short-read WGS surfaces <50% of thecauses, forcing many patients into a diagnostic odyssey.4

Common hereditary diseases, especially thoseneurological in origin, have ambiguous clinicalpresentations which LRS can diagnose.5

Studying structural variations in a population andacross diverse groups is vital to increasing theaccuracy of molecular diagnostics.

Source: ARK Investment Management LLC, 2020. [1] Reporter, Staff. “Blue Shield of California to Cover Rady Children's Rapid Whole-Genome Sequencing Test.” GenomeWeb, 9 Mar. 2020, www.genomeweb.com/moleculardiagnostics/blue-shield-california-cover-rady-childrens-rapid-whole-genome-sequencing-test. [2] “Overview of Structural Variation.” National Center for Biotechnology Information, US National Library of Medicine,www.ncbi.nlm.nih.gov/dbvar/content/overview/. [3] Wong, M., Mayoh, C., Lau, L.M.S. et al. Whole genome, transcriptome and methylome profiling enhances actionable target discovery in high-risk pediatric cancer. Nat Med 26, 1742–1753(2020). https://doi.org/10.1038/s41591-020-1072-4.[4] Mitsuhashi, S., Matsumoto, N. Long-read sequencing for rare human genetic diseases. J Hum Genet 65, 11–19 (2020). https://doi.org/10.1038/s10038-019-0671-8 [5] Posey, J.E. Genome
sequencing and implications for rare disorders. Orphanet J Rare Dis 14, 153 (2019). https://doi.org/10.1186/s13023-019-1127-0.

98 •Long-Read Sequencing

SIZING THE OPPORTUNITYARK Expects The LRS Market* To
Grow At An Annual Rate Of 82%
Through 2025.

LRS Market Size
(Subset of Overall Sequencing Market)• Including sequencing consumables, instruments,and services, LRS revenues could expand from$250 million to $5 billion by 2025.
• SRS will continue to dominate the sequencing
market, especially as liquid biopsy becomes astandard of care in oncology.

$5 Billion

5(Billions, USD)

• ARK believes that the demand for LRS is reachingan inflection point, driven by lower sequencing
costs and the need for highly-accurate andcomplete results.

Total Addressable Market

6

4

82%
CAGR1

3

2

1
$250 Million
02020*Inclusive of all third-generation sequencing providers. [1] CAGR: Compound Annual Growth Rate.
Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

2025

99 •

Multi-Cancer Screening

Multi-Cancer Screening
Liquid Biopsies Could Prevent More Cancer Deaths
Than Any Medical Intervention in History

14•

According to ARK’s research, the convergence ofinnovative technologies has pushed the cost of multi-cancer
screening down by 20-fold from $30,000 in 2015 to $1,500 today
and it should drop another 80%+ to $250 in 2025.

•

As a result, the multi-cancer screening market should scale
to $150 billion in the US. A multi-cancer screening protocol could
avert 66,000 cancer deaths per year in the US, saving 1.4 million
human life years.

“An ounce of prevention is worth a pound of cure.”
Benjamin Franklin
Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security.

100 •

Multi-Cancer Screening

Diagnosed Early, Cancer Can
Be Treated Successfully
Distant (Metastatic) Cancers Are the Minority of New Cases
But the Majority of Deaths• Metastatic cancers comprise just 17% of newcases but cause 55% of all cancer deaths over a
five-year period.2• The weighted-average five-year survival rate for
localized cancers is 89%,3 but only 24% formetastatic cancers.2

60%
Resulting Deaths After Five Years• All solid tumors follow a predictable path fromlocal and treatable to metastatic and lethal,
providing the rationale for earlier detection.1

Distant(Metastatic)
17% of Cases
55% of Deaths

50%
40%
30%

Regional
24% of Cases
28% of Deaths

20%

Localized
59% of Cases
17% of Deaths

10%
0%
0%

10%

20%

30%

40%

50%

60%

Frequency of Stages at Diagnosis

Source: ARK Investment Management LLC, 2020. [1] Nowak, M. A., et al. “The Linear Process of Somatic Evolution.” Proceedings of the National Academy of Sciences, vol. 100, no. 25, 2003, pp. 14966–14969., doi:10.1073/pnas.2535419100.
[2] SEER. “SEER*Explorer.” Surveillance, Epidemiology, and End Results Program, 2020, seer.cancer.gov/explorer/. [3] The 89% is the mortality rate of late-stage cancer by itself.

70%

101 •

Multi-Cancer Screening

Based On A Single Blood Test,
Multi-Cancer Screening
Can Detect Dozens Of
Early-Stage Cancers

The Combination of Innovative Technologies
is Driving Down Screening Costs(2015-2025)• Along with somatic mutations, circulating
proteins, and immune signatures, machinelearning algorithms have surfaced DNA
methylation as a novel and highly sensitive
biomarker for earlier cancer detection.1• The rapid cost decline of next-generation DNA
sequencing (NGS) is enabling liquid biopsies.2• Advancements in synthetic biology are helping
clinicians to find faint signals of cancer in highnoise environments like the bloodstream.3

Targeted
Methylation

Multi-Cancer Screening
Cost-of-Goods-Sold (USD)$30,000

Deep
Sequencing

TargetCapture$1,5002015

2015
Prototype
Prototype

Deep
Learning
MachineLearning

NGS
NGS

$250

Synthetic
Biology2025 Commercial
2020
2025
Synthetic
2020
Prototype
Biology
Prototype
Commercial

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020. [1] Liu, M.c., et al. “Sensitive and Specific Multi-Cancer Detection and Localization Using Methylation Signatures in Cell-Free DNA.” Annals of Oncology, vol. 31, no. 6, 2020, pp. 745–759.,
doi:10.1016/j.annonc.2020.02.011. [2] Illumina. “Illumina Announces the NovaSeqTM 6000 v1.5 Reagent Kit Unlocking Deeper Discoveries with the $600 Genome.” Illumina, 2020, www.illumina.com/company/news-center/pressreleases/2020/9c48adf5-5b78-4e18-8116-3c7c8b3ad79f.html. [3] Twist Bioscience. “Targeted Methylation Sequencing.” Twist Bioscience, 2020, www.twistbioscience.com/resources/application-note/targeted-methylation-sequencing.

102 •

Multi-Cancer Screening

Thanks To Rapidly Declining
Costs, Multi-Cancer Screening
Is Approaching A
Reimbursable Price Point

The Multi-Cancer Screening Market:
Costs and Reimbursement$2,000 Test

$1,500 Test

$1,000 Test

Willingness-to-Pay$1,200 Test

• As prices drop below $1,000, nearly
all age groups above 40 years could
be screened for cancer costeffectively, potentially saving up to
1.4 million human life years in the US
alone.

$300$250(Thousands, USD)

• As population-scale clinical utility
data proliferates, ARK believes a$1,500 price tag will unlock themulti-cancer screening market for
those aged 65 to 80—the age range inwhich the incidence of cancer peaks.

Incremental Cost / Life-Year Gained*

$350

$200
$150
$100
$50

Eligible for Reimbursement ($100,000/Life-Year (LY) Threshold)

$0
20

30

40

50
Patient Age*Life Years gained is a modified mortality measure where remaining life expectancy is considered.
Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC., 2020

60

70

103 •

Multi-Cancer Screening

Multi-Cancer Screening Could Prevent Roughly
66,000 Cancer Deaths Annually In The US
Earlier Detection Could Lower Cancer Mortality• Even without improvements incancer therapy, ARK estimatesthat earlier intervention could
prevent 66,000 cancer deaths
per year in the US alone.

70,000
Annual Number of Cancer Deaths Averted• Routine blood-based, multicancer screening combined withimprovements in single-cancer
screening could prevent 40% of
metastatic diagnoses andincrease loco-regional
diagnoses by 10%.

60,00050,00040,00030,00020,00010,0000Motor Vehicle
DeathsNarrow Panel,
Age 50-80

Broad
Panel, Age 50-80

Note: Narrow panels seek to detect a limited number of cancers, typically about a dozen (12). Broad panels, or pan-cancer panels, aim to find as many as fifty different cancers.
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC., 2020

Broad Panel,
Age 40-80

104 •

Multi-Cancer Screening

Multi-Cancer Screening And Other Genomic Technologies
Are Transforming Oncology

Hereditary Cancer
Testing can influence
the onset and frequency
of cancer screening.1

Multi-Cancer Screening candetect cancers in early andtreatable stages.2
Single-Cancer Screening
plays a vital role in detecting
several forms of cancer.

Molecular Prognostic
Testing can help
pathologists differentiate
between aggressive andindolent cancers, reducing
overtreatment.3

Somatic and Minimal Residual
Disease (MRD) Testing enables
oncologists to optimize surgicalresection, identify precision
therapies, and monitor
for cancer recurrence.4

Source: ARK Investment Management LLC, 2020. [1] Hu, Chunling, et al. “The Contribution of Germline Predisposition Gene Mutations to Clinical Subtypes of Invasive Breast Cancer From a Clinical Genetic Testing Cohort.” JNCI: Journal of
the National Cancer Institute, 2020, doi:10.1093/jnci/djaa023. [2] Lennon, Anne Marie, et al. “Feasibility of Blood Testing Combined with PET-CT to Screen for Cancer and Guide Intervention.” Science, vol. 369, no. 6499, 2020,
doi:10.1126/science.abb9601. [3] “Our Products.” Our Products, 2020, www.veracyte.com/our-products. [4] “Personalized Cancer Monitoring.” Edited by ArcherDx, Personalized Cancer Monitoring, 14 Aug. 2020, archerdx.com/diagnosticproducts/personalized-cancer-monitoring/.

105 •

Multi-Cancer Screening

SIZING THE OPPORTUNITY

While a $1,500 unit price could
unlock the market, a $1,000 unit
price could transform thecancer mortality curve.

Multi-Cancer Screening is Potentially One of theLargest Genomics Markets1• The convergence between and among innovativetechnologies has pushed the cost of multi-cancer
screening down by 20-fold from $30,000 in 2015 to$1,500 today and, according to ARK’s research, byanother 80% to $250 in 2025.
• If fully adopted, multi-cancer screening should
scale to a $150 billion market* in the US alone.

$160

2025 Commercial$1,000 ASP($250 COGS)

$140
$120
$100
$80

2015 Prototype( $30K COGS**)$100,000

2020 Prototype$1,500 ASP($1,500 COGS)$10,000

Recommendation for
Age to Begin Screening:
45 (USPSTF,*** Current)
40 (Possible, 2025)$1,000

$60
$40
$20

Total Addressable Market (Billions, USD)

$180

$0
$100

Reimbursement Price (USD) [Log Scale]*A $150 billion market opportunity is dependent upon high patient adherence to all screening guidelines inclusive of multi- and single-cancer screening modalities. Screening providers likely will price lower than the top of thereimbursement envelope to accelerate system adoption and enable other payment options—such as patient pay. Finally, we expect that comprehensive germline testing is a prerequisite to screening persons younger than age 40.
**COGS: Cost of Goods Sold. *** USPSTF: A volunteer group of health experts who review published research and make recommendations about prevention health care methods such as screening tests, counseling, immunizations, andmedicines. Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2020 based on data sourced from https://www.medpagetoday.com/hematologyoncology/coloncancer/89352. [1] United States Preventive Services Task Force (USPSTF).

106 •

Cell and Gene Therapy: Generation 2

Cell and Gene Therapy:
Generation 2
Cell And Gene Therapies Are In Early Days
•

15

•

The second generation of cell and gene therapies should shift from:•liquid to solid tumors•

autologous to allogeneic cell therapy1•

ex vivo to in vivo gene editing2

New cell and gene therapy innovations could increase the total
addressable market for oncology therapeutics by more than 20-fold.

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice, or a recommendation to buy, sell or hold any particular security.
[1] Autologous cell therapy is a novel therapeutic intervention that uses an individual's cells, which are cultured and expanded
outside the body, and reintroduced into the donor. Allogeneic cell therapy relies on donor cells to treat many patients. [2] Ex vivo
gene therapy means that the targeted cells are removed from the patient and gene therapy is administered to the cells in vitro
before they are returned to the patient's body. In vivo gene therapy means that therapy is administered directly to the patient. The
targeted cells remain in the body of the patient.

107 •

Cell and Gene Therapy: Generation 2

Cancer Therapies Are Shifting From Liquid To Solid Tumors
Cancer Therapy Timeline• Typically, cancer therapies are tested on
liquid tumors first. Solid tumors, however,comprise 88%1 of diagnosed cancers.

Liquid Tumor• The US Food and Drug Administration (FDA)
approved Gleevec, an oral chemotherapy,
after ten years of trials, seven years of whichwere in solid tumors. This timeline suggeststhat the FDA could approve the first CAR-T
therapy for solid tumors in 2025.
• Because of artificial intelligence (AI), geneediting, and next generation sequencing(NGS), failure rates and time-to-market
should fall, accelerating approval rates.

Solid TumorFirst Human Trial Initiated2015

First Human Trial Initiated2011

First Human
Trial Initiated2001

Gleevec

CAR-T

CAR-T

Therapy
Approval
TBD?

Therapy Approved
2017

Therapy Approved
2008

First Human
Therapy Approved
Trial Initiated Gleevec
2001
1998

1995

2000

2005

2010

2015

2020

2025

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security. | [1] Dunn, Barbara.
“Cancer: Solving an Age-Old Problem.” Nature News, Nature Publishing Group, 29 Feb. 2012, www.nature.com/articles/483S2a. Source: ARK Investment Management LLC, 2020 based on data sourced from: The US National Library ofMedicine ClinicalTrials.gov; Nature News, Nature Publishing Group, www.nature.com/scitable/topicpage/gleevec-the-breakthrough-in-cancer-treatment-565/; A Brief History of CAR-T Cells: From Laboratory To The Bedside, Styczyński,Jan. " A brief history of CAR-T cells: from laboratory to the bedside". Acta Haematologica Polonica 51.1 (2020): 2-5. https://doi.org/10.2478/ahp-2020-0002, Imatinib In Chronic Myeloid Leukemia: An Overview; Sacha, Tomasz. “Imatinib in
Chronic Myeloid Leukemia: an Overview.” Mediterranean Journal of Hematology and Infectious Diseases, Università Cattolica Del Sacro Cuore, 2 Jan. 2014, www.ncbi.nlm.nih.gov/pmc/articles/PMC3894842/; Cancer Facts & Figures 2020,
American Cancer Society, https://www.cancer.org/research/cancer-facts-statistics/all-cancer-facts-figures/cancer-facts-figures-2020.html.

108 •

Cell and Gene Therapy: Generation 2

Oncology Trials Are Shifting From Autologous
To Allogeneic Cell Therapies• Allogeneic cell therapy involves cells 'off the shelf’,or donated, whereas autologous celltherapy modifies the patient's own cells.

Autologous

Allogeneic

Autologous and Allogeneic Trials
Autologous

Cost, USD

• One risk of allogeneic therapies is graft vs. hostdisease, causing a patient's immune system toattack the newly engineered cells. Despite this risk,
allogeneic cells can facilitate therapies at earlier
stages of cancer and reduce costs by an order ofmagnitude.

Scalability• Among gene therapy trials today, 40% of thosecompleted and 47% in the patient recruitment
phase were allogeneic. In ARK’s view, the shift toallogeneic trials will continue.

Ability
to re-dose$100,000+

Allogeneic<$10,000

47%

40%

No risk ofcell rejection
Product
consistency

100%

53%

60%

Expandedaccessto the sickest
patients
Recruiting

Source: ARK Investment Management LLC, 2020 based on data sourced from: The U.S. National Library of Medicine ClinicalTrials.gov.

Completed

Approved
Therapies

109 •

Cell and Gene Therapy: Generation 2

Gene Therapies Could Shift From Ex Vivo To In Vivo Editing• Ex vivo modifies a patient's cells outside thebody and then transplants them back into
the patient. In vivo gene therapy modifies apatient’s cells inside the body.
• Unlike ex vivo, in vivo therapies cannot checkedited cells before transduction. That said, invivo gene therapy is more cost effective andeasier to manufacture and scale. It also enables
more access to the liver, eye, central nervous
system (CNS), and muscles.

Cost, USDEx Vivo

In Vivo

HigherLower

Clinical Trials with Active
Genome Editors
Ex Vivo

Scalability

In Vivo
34

Ability to check edited
cells before
transduction
Product consistency
Non-toxic conditioning
regimens
Expanded access totreatable diseases (i.e.
muscle disorder)

8

7

0
Until 20152016 - 2020

Source: ARK Investment Management LLC, 2020 based on data sourced from: The U.S. National Library of Medicine ClinicalTrials.gov; Hirakawa, Matthew P et al. “Gene editing and CRISPR in the clinic: current and future perspectives.”
Bioscience reports vol. 40,4 (2020): BSR20200127. doi:10.1042/BSR20200127, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7146048/

110 •

Cell and Gene Therapy: Generation 2

Gene Therapy And Editing Trials Have Increased Five-Fold Since 2010
To date, the FDA has approved only 10 gene therapies. As of year-end 2020, 712 active gene therapy clinical trials were underway,
238 of them initiated in 2020. Adjusting for the typical trial fail-rate, roughly 170 gene therapies are likely to be approved andcommercialized1 during the next decade.
Gene Therapies: Stages of Advancement

Phase III37

Phase IV
1

Phase II
351

Approved Today
10

Approved Drugs

Phase I
323

Active Trials

Expected
170

Expected Commercializations

Forecasts are inherently limited and cannot be relied upon. | [1] Number of expected commercializations include expectations of increased success. At historical fail rates, 134 commercializations are expected. Source: ARK Investment
Management 2021, FDA Approved Cellular and Gene Therapy Products, https://www.fda.gov/vaccines-blood-biologics/cellular-gene-therapy-products/approved-cellular-and-gene-therapy-products and https://clinicaltrials.gov/

111 •

Cell and Gene Therapy: Generation 2

SIZING THE OPPORTUNITY

Liquid and Solid Tumor Therapies: Total Addressable Market
Solid Tumors

ARK Estimates That Allogeneic.
Cells And Cellular Immunotherapies Could
Create $250 Billion In Incremental Revenues.

$30bn• Innovation in cellular immunotherapies, including TILs, TCRs
and CAR T cell therapies could increase the addressable market
by nearly three-fold, adding $30 billion to the current $13 billion
total addressable market (TAM).

Potentiallyaddressablewithinnovations
in cellularimmunetherapies.

• The combination of cell therapy innovation and allogeneic cells
could add an additional $150 billion and increase the overall
TAM for oncology gene therapy by roughly 20-fold to morethan $260 billion.
• In vivo gene therapy could enable gene-editing to curethousands of rare diseases over time.

Liquid Tumors• Allogeneic therapies enable easier applications in earlier stagesof cancer, potentially increasing the TAM by $70 billion.

$13bn

Currently
addressable
by celltherapy.

$150bnPotentially addressablewith allogeneic advances
and innovations in cellularimmunotherapies.

$70bn

Potentially addressable withallogeneic advances.

Late Stage

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management 2021, BCC Research Blood Cancer Therapeutics, https://www.bccresearch.com/market-research/pharmaceuticals/blood-cancer-therapeutics-markets-report.html,
Global Solid Tumor Therapeutics Market Size 2020, https://www.marketgrowthreports.com/global-solid-tumor-therapeutics-market-16188814

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