WEBVTT - Biotech Sector Under the Microscope

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<v Speaker 1>These sees. Bloomberg Business Week with Carol Messer and Tim

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<v Speaker 1>Stanovic on Bloomberg Radio. All right, Tim, time take a

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<v Speaker 1>little bit of a deep dive into biotech stocks, because

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<v Speaker 1>as a whole, they were down about last year compared

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<v Speaker 1>with a thirty three percent drop in the now's deck

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<v Speaker 1>one hundreds. A little perspective there, and I do feel

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<v Speaker 1>like a day does not compile that there isn't some

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<v Speaker 1>news out of the biotech space regarding test trials on

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<v Speaker 1>some drug development or some kind of investment or deal

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<v Speaker 1>that going on. So really smart for us to take

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<v Speaker 1>a deeper look into this group. You're really excited to

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<v Speaker 1>speak to Debra net Shirt Health Sciences, portfolio manager at

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<v Speaker 1>the registered investment advisor Jennison Associates. It's got a hundred

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<v Speaker 1>and sixty four billion dollars in assets under management. Debra

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<v Speaker 1>joins us on the phone from New York City. Good

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<v Speaker 1>to have you with us this afternoon. So before we

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<v Speaker 1>we start about talking about what's happening this year, let's

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<v Speaker 1>just think back to the last couple of years, because

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<v Speaker 1>I think for a lot of investors, biotech came on

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<v Speaker 1>their radar with talking about you know, companies like Derna

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<v Speaker 1>developing an m R and a vaccine, and perhaps you know,

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<v Speaker 1>a different group of investors now paying attention to a

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<v Speaker 1>group of companies that has been historically volatile but has

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<v Speaker 1>also offered potentially a lot of promise. Yeah, I think

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<v Speaker 1>that's right. I think that when you look at all

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<v Speaker 1>of the different UM investors that came into the market

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<v Speaker 1>during COVID, they looked at the madernas and the biontics

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<v Speaker 1>and the Nova vaxes and all of the rapid development

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<v Speaker 1>of the COVID nineteen vaccines and started to think that

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<v Speaker 1>there was going to be an opportunity to see accelerated

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<v Speaker 1>development UM like this in other categories. And the problem

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<v Speaker 1>with UM, you know, with that is is all of

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<v Speaker 1>these vaccines were really developed under an emergency use authorization

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<v Speaker 1>and that was a very distinct pathway used at the FDA,

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<v Speaker 1>and and development takes time, and I don't think that

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<v Speaker 1>the pathway that the FDA used and the rapid development

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<v Speaker 1>we saw in COVID nineteen vaccines is really going to

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<v Speaker 1>be relevant. And so some of these investors really expected

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<v Speaker 1>us to see follow on with with UM. COVID nineteen

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<v Speaker 1>paired with RSC, paired with flu and really start to

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<v Speaker 1>be able to see these vaccines kind of coming out

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<v Speaker 1>a really rapid rate and UM and some of the

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<v Speaker 1>reality of the kind of going back to the normal

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<v Speaker 1>drug development timelines, and then just the reality of the

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<v Speaker 1>you know, the bulliest of patient population that these vaccines

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<v Speaker 1>were serving kind of brought people back to reality. You know.

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<v Speaker 1>I have to say I always love UM the different conferences,

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<v Speaker 1>whether it's ASCO which looks you know, into cancer, because

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<v Speaker 1>you always get a lot of news out of it

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<v Speaker 1>in terms of drug development or what companies are working

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<v Speaker 1>on what So what might kind of be some really

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<v Speaker 1>innovation UM or innovation that we're going to get out

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<v Speaker 1>of the biotech sector this year that investors should maybe

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<v Speaker 1>take note of. Well, there's I would say, there there's

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<v Speaker 1>there's always a lot of innovation, and there's a lot

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<v Speaker 1>of UM. There's a lot of data that comes out

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<v Speaker 1>at all the of all of the conferences, So you know,

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<v Speaker 1>there's We're we're starting to see a lot of things

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<v Speaker 1>UM you know coming out a lot of a lot

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<v Speaker 1>of innovation is actually interestingly happening in the larger cap

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<v Speaker 1>companies and it's the first time that we've we've seen

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<v Speaker 1>the larger cap companies start to UM enter new product cycles,

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<v Speaker 1>have a resurgence and growth and and have the ability

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<v Speaker 1>to to really positively impact their revenue and EPs profile

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<v Speaker 1>over the next couple of years by some of these

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<v Speaker 1>big markets. Obviously, we've seen UM a huge increase in

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<v Speaker 1>the use of the g lp ones that are approved

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<v Speaker 1>for diabetes but are also UM in certain instances, UM

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<v Speaker 1>approved for obesity and and soon to hopefully be approved

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<v Speaker 1>for obesity for for other companies. And you're seeing a

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<v Speaker 1>huge use of this group of drugs, and I think

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<v Speaker 1>you're gonna start to see a lot of additional indications

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<v Speaker 1>coming out of that. UM. We're starting to see some UM.

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<v Speaker 1>You know, we have gene therapies that have now been

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<v Speaker 1>approved better on the market. So it's going to be

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<v Speaker 1>really interesting to see how the business models for these

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<v Speaker 1>single very expensive yet UM. You know, sometimes curative UM

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<v Speaker 1>are really gonna be able to be Now debor forgive

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<v Speaker 1>me for interrupting, And I know your portfolio manage, and

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<v Speaker 1>I don't know how deep you can go for us.

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<v Speaker 1>I know our audience always loves whether it's sectors specifically

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<v Speaker 1>or talking some names like are there, And again I

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<v Speaker 1>don't know how deep you can go. Can you throw

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<v Speaker 1>out some names to us that you think, Wow, these

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<v Speaker 1>are definitely on my radar, Or if I'm looking to

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<v Speaker 1>commit some new money for investors, that's what I'm going

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<v Speaker 1>to think about. I would love to do that, but

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<v Speaker 1>unfortunately I would have had to UM, I would have

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<v Speaker 1>had to have things cleared before doing that. On today's program,

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<v Speaker 1>No problem at all, Deborah. We needed to ask, Hey, Um,

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<v Speaker 1>one thing that I really want to hear from you is,

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<v Speaker 1>obviously the investment question is is really fascinating. But at

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<v Speaker 1>the same time, your cover a space that is just

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<v Speaker 1>really exciting from a human perspective. We all know people

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<v Speaker 1>who have been affected by just terrible diseases, and I wonder,

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<v Speaker 1>given what you cover and how much research you do

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<v Speaker 1>into these companies, what just excites you about living in

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<v Speaker 1>a world where we could soon, you know, be living

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<v Speaker 1>longer and saying goodbye to some diseases that previously were

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<v Speaker 1>death sentences. I mean, I think exactly that I think

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<v Speaker 1>you know. I always I always say that it's a

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<v Speaker 1>gift to be able to get what I do, because

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<v Speaker 1>if you have endless intellectual curiosity like I do, UM,

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<v Speaker 1>you can't you really are able to stay on the

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<v Speaker 1>forefront of really looking at the at the diseases and

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<v Speaker 1>UM and all of the new innovative treatments that are

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<v Speaker 1>coming out and UM. You know. And I also view

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<v Speaker 1>my job as a shareholder of companies to be helping

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<v Speaker 1>companies who are going at this for the first time

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<v Speaker 1>and helping them to Okay, so fall into paint a

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<v Speaker 1>picture for us, you know, ten fifteen years from now

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<v Speaker 1>when it comes to some of these moon shots. I mean,

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<v Speaker 1>do we say goodbye to to chemotherapy and and instead

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<v Speaker 1>we can talk about gene therapy or I'm taking well,

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<v Speaker 1>I mean, look, I you know, I hope that in

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<v Speaker 1>ten years we are saying goodbye to to chemotherapy or

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<v Speaker 1>we're finding a way. We've seen innovation with chemotherapy through

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<v Speaker 1>UM drugs called antibody drug conjugates that take the chemotherapy

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<v Speaker 1>and develop it to only the cells that need it,

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<v Speaker 1>as opposed to a blading all fills, and so that

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<v Speaker 1>has allowed cancer patients to already receive chemotherapy in a

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<v Speaker 1>way that it's not so toxic. UM. So hopefully we're

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<v Speaker 1>either you know, continuing down that and you know, there

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<v Speaker 1>could always be a use for chemotherapy. But hopefully in

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<v Speaker 1>a decade we are we're really changing the curve on

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<v Speaker 1>personalized medicine where we're really starting to understand and individual

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<v Speaker 1>cancer in the individual person and being able to target

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<v Speaker 1>that cancer in a super specific way. UM and you know,

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<v Speaker 1>and curing cancer individually, one person at a time. And

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<v Speaker 1>we know that you're you're um. You know. Part of

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<v Speaker 1>the managers for the PGM, Jennison Health Science has fun

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<v Speaker 1>And I just want to because our audience cares about

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<v Speaker 1>things like this. Three years, if I look at the

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<v Speaker 1>average annual performance according to Bloomberg Data up about eleven,

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<v Speaker 1>putting it in the ninety percentile UM and United Healthy,

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<v Speaker 1>like literally Mark, these are some names that are in it, Humana.

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<v Speaker 1>I mean, as you say, there's a lot of large

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<v Speaker 1>cap names. While we often think of biotech, it's kind

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<v Speaker 1>of smaller startups. It really is a lot of these

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<v Speaker 1>bigger cap names that are very involved in setting the

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<v Speaker 1>trends of what's to come when it comes to healthcare.

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<v Speaker 1>It is the larger companies are definitely the ones who

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<v Speaker 1>are saying the trends in a in a way, UM

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<v Speaker 1>and the innovation happens in both camps a lot of this.

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<v Speaker 1>A lot of the innovation that is currently in the

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<v Speaker 1>hands of Eli Lily or a Murk or or you

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<v Speaker 1>name the large cap company came from a small cap biotech.

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<v Speaker 1>So it's not to say that it's the innovation starts

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<v Speaker 1>at the larger or the small. It kind of happens

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<v Speaker 1>across the spectrum. But you know, the super innovative companies

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<v Speaker 1>that develop drugs that are going to be incredibly efficacious,

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<v Speaker 1>typically we'll wind up becoming part of a larger company

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<v Speaker 1>over time. So there's an ecosystem there that that has worked,

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<v Speaker 1>you know, pretty well over time. And listen, do you

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<v Speaker 1>really care about what the Fed does or what inflation does?

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<v Speaker 1>And just got about thirty seconds. Does that really shape

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<v Speaker 1>your investment decisions? I mean it has to around the edges.

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<v Speaker 1>I think all of us have had to have had

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<v Speaker 1>to become armchair macro um macro experts here and there um.

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<v Speaker 1>But at the end of the day, my colleagues and

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<v Speaker 1>I Agena been really trying to focus on the fundamentals.

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<v Speaker 1>All right, really appreciate it, Deborah and uh look forward

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<v Speaker 1>to next time and maybe digging a little bit deeper

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<v Speaker 1>into your portfolio holdings. A Debora net Church. She is

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<v Speaker 1>health Sciences portfolio man and your Jennison Associates a