Health Care Sector Update and Outlook


Teresa McRoberts (continued): And there's just a huge amount of innovation. If anything, people have looked at COVID and said, we need to fund all sorts of innovation, it's important that we continue to make progress. If you think about how quickly the industry as a whole has been able to find out things, the genetic sequence of the virus within weeks. The vaccine companies put vaccine products in the clinic again within weeks because of the tremendous scientific knowledge we have about how to do these things. So I think that focusing on innovation is the one way to go and we'll have to pick and choose. But really this is what we've continued to do. I haven't shifted things that are really driving now. Dennis Hearns: You mentioned a number of times when we get back to normal. The last time we spoke, you said the number one question you were hearing from the portfolio managers was when do we get back to normal? So how are you responding to that question now? And what new questions are they asking you? Teresa McRoberts: Well, they're not really asking when we're going to get back to normal. I think they've all decided that this is something very variable and people have very different views on this about exactly what means normal. I think if we did a poll, there'd be some people on this call who would be willing to go to a restaurant and some who would not, and that may be a different group of people who are getting on an airplane and a different group who would not. So it’s what is normal and what is acceptable risk, I think vary greatly by person, by age, by underlying health status and a lot of other things. And I think that the one thing we've gotten a lot of questions about when we have a vaccine, I personally think there's a lot of confusion about vaccines. And they're not a magic bullet. They're very important and they're going to be very helpful to control this, but almost no vaccines are 100% effective. And we need to remember that. We also saw clear how long before we have enough capacity for a vaccine to vaccinate everyone. As I said, the flu vaccine is widely available and yet less than half the people in the country get it. I've seen recent polls when asked, would you take a COVID vaccine if it's available, about the same number of people said they would take a COVID vaccine, only about half the people out. So that in and of itself tells you something about rather that the vaccine is not a magic bullet.

I do think there's going to be some changes that are permanent like after 9/11, the security changes at airports are permanent. I think there'll be some things that come from COVID that will last a long time, but I'm not really hearing a lot of questions about the new normal. There are very specific questions about, will this vaccine be available? I mean, I forget that there's a lot of vaccines in development. Something will be available in the next year, year and a half, whether it's going to be available in six months and then that would, that'd be pretty heroic. So that's not ruling anything out. Dennis Hearns: Okay. So let's turn to the Alger Health Sciences strategy, where you're the portfolio manager. I've noticed that your top three sector weightings are biotech, health care equipment and suppliers, and then pharma. Is your high exposure to biotech a result of the current Coronavirus environment, or is your exposure part of a longer term theme or thesis? Teresa McRoberts: It's a little bit of both. Again, I think of biotech very much on a one-off basis, I mean, I don't just buy the index. I'm looking for very specific stories, if it's huge amount of innovation going on often with a lot of very interesting stories. A couple of things about both. I think the Coronavirus has made a lot of people think, oh, there is a value to therapeutics, biotech or pharma. We also have a group that had done very little in the last few weeks; biotech has broken out of the very long-term base. If you're a technician, you can look at it and see that this group has done very little and it is currently hitting all-time highs, which is something that the market had been doing a lot of last year. But biotech was not. So I think part of it is the group has underperformed for quite a while. It's also a group that I think a lot of people haven't had exposure to, and so I think that's the other reason. It's a lot of things, but we look at biotech and we see a lot of innovation and we see investors being willing to participate in that. And so that makes us also equally interested in participating in it. But so it's just a combination of factors and sometimes the groups just are left out and then they come back to life and that's one of these groups right now.

Conference Call 5/8

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