Health Sciences Update
There is innovation everywhere in health care. Innovation is becoming a standard of care. There are many areas that are exciting
avoid investing in companies that are not innovating and you can direct your assets into high-innovation areas, such as biotechnology and pharmaceuticals.
Where are you seeing the most impressive innovations within health care? There are many areas that are exciting to me within health care today, including: genomics, diabetes treatment, gene/cellular therapy and minimally invasive therapy. Innovation is becoming the standard of care. One of the most notable examples is in our understanding of the human genome. Companies are using genetic information to assess and select therapy for cancer patients. If patients are initially treated with a drug that matches the genetic cause of their cancer, they are more likely to respond to treatment and possibly avoid the cancer spreading. Do you have any examples that you can share? One specific example is in the BRCA1 gene, which signifies a genetic predisposition to breast cancer. This was popularized recently by Angelina Jolie when she announced to the world that she underwent a double mastectomy because she carried this gene. At Alger, we invest in a range of companies within this genomics sphere, from the companies creating the tools that help discover these abnormalities, to the diagnostic testing companies that test people for these on a regular basis, and finally in the pharmaceutical and biotech companies that are working to find cures for these deadly diseases. Are there any other innovations in the health care space that are compelling? Another example of innovation involves diabetes treatment. In the U.S., there are over 1.5 million people with Type 1 diabetes who are reliant on insulin injections. There are an additional 25 million people with Type 2 diabetes involving patients who are resistant to insulin and around 4 million people globally with Type 2 diabetes who require multiple daily injections of insulin. In the past, Type 1 patients had to prick their fingers approximately six times per day to test their blood glucose levels. Each one of those six fingersticks provided patients with a single point in time glucose reading. However, now new technology has been developed that allows for continuous glucose monitoring (“CGM”). These are sensors that a person can wear to measure glucose levels on a real-time basis. This eliminates the need for the regular finger pricks and even further, provides constant and trend-related information about internal blood glucose levels, as these fluctuate throughout the day. As an additional benefit, CGM will use audible alarms to alert the patient should he need to address his glucose levels. These advancements allow diabetes patients to live more full, normal lives as they don’t have to constantly worry about their glucose levels. What else are you seeing that is contributing to your optimism? Over the past few years, the FDA has been ramping up its approval process. It has been fast-tracking new drugs and therapies and granting approvals at a record pace. This accommodative environment has led to more drugs and more treatments coming to market quicker than they have in years past, further accelerating growth and innovation. We expect this pace to continue in the first half of 2020 and possibly thereafter as well depending on the results of the election. There is always a good amount of political risk within health care, particularly in an election year. However, in our view, the fear of major changes created by political rhetoric has mostly been priced into the most exposed health care stocks (pharmaceuticals, biotechnology and managed care). In the first half of 2019, when certain popular democratic presidential candidates were proposing single payer systems, health care significantly underperformed the broad market. Since Biden looks to be the Democratic nominee, the fear of government overreach has dissipated and once the virus fears lift, we expect to see health care outperform the broader market. Is there any concern that the political climate could cause the health care sector to underperform the market?
and they fall into “unmet needs.”
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