You’ll often hear that we are living in the “golden age of biotech.” Sure, it sounds romantic, but if you look at the performance of biotech stocks in the last five years, it gives you some inkling as to the wealth creation potential in the sector.
This is a sector I’ve been tracking closely for decades. I was working on an undergraduate degree in chemistry and biology at McMaster University when my interest in investing grew to complement my love of the sciences.
When I’m following the biotech sector, it helps that I understand the science to a certain degree. The technology of today goes well beyond my studies, of course, but I have a history of tracking developments in the industry and I know what the company milestones mean during the process of bringing an innovation to market.
Immuno-oncology is a fascinating area of biotech right now – one that is relatively new to the investment world. A current holding in this area is Incyte Corp.*, a Delaware-based biopharm company that makes small molecule drugs, mainly for cancer treatment. Celgene Corp.*, another biopharm firm that develops cancer drugs, is a top-five holding in Trimark U.S. Companies Fund. It is particularly interesting because it partners strategically with many smaller companies, giving us exposure to innovations from less-established businesses. (Holdings data as at January 30, 2015.)
I regularly attend biotech conferences in the U.S. and around the world. On the last day of a conference, after lunch is finished and things are breaking up, I’m the guy mingling with the management teams from little-known companies. These conversations are fruitful – I gain industry knowledge and hear about emerging technology.
One of the reasons I go to these conferences is that these areas advance quickly and it gives me an opportunity to learn about developing trends and new businesses. Another reason is competitive analysis. A huge part of my job is making sure the companies we own are staying on an innovative path – keeping up, so to speak. If a company becomes stagnant, the competitive advantage is threatened and market share is more easily eroded.
In many ways, the media hasn’t caught up with the real world in this sector. It’s happening fast, and a lot of what we read in the newspaper is a light, superficial version of what’s really occurring on the ground. Going to conferences gives me deep insights and a good sense of the people and infrastructure involved in turning the technologies into solid companies.
The biotech world is complex and ever-changing, but it also provides the potential for explosive growth. My approach is to stay educated, have a curious mind and keep looking.
If you have any questions about the biotech holdings in the Fund, my background or other thoughts around the Funds, please don’t hesitate to leave a comment below.
*The above companies were selected for illustrative purposes only and are not intended to convey specific investment advice.
Trimark U.S. Companies Fund, Series A provided the following performance returns as at January 31, 2015: 1 year, 31.60%; 3 years, 28.51%; 5 years, 20.16%; 10 years, 6.62%.
Learn more about the Trimark Investments team.