3 top picks in global healthcare |
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29/09/2020
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<p><strong>Lex Hall:</strong> Hi, I'm Lex Hall for Morningstar. Michael Li is the Co-Manager of the Healthcare Impact Fund at American Century Investments. And today, we're going to talk about three key holdings in the fund and why he likes them.</p>
<p>Michael, welcome to Morningstar.</p>
<p><strong>Michael Li: </strong>Hello, Lex. Thank you for having me.</p>
<p><strong>Hall: </strong>My pleasure. Now, let's talk about three key holdings in your fund. The first name on the list is Biogen. Tell us about your interest in Biogen: what it does and why you see so much promise in it.</p>
<p><strong>Li: </strong>Sure, Lex. So, Biogen is a biotech company based in Boston, Massachusetts in the US and the company is a leader in the neuroscience area. So, they have multiple treatments for multiple sclerosis. At the same time, they have invested in the neurodegenerative diseases for many years. So, they have multiple programs in that particular area. So, as we all know, Alzheimer's is one of the major diseases that affects millions of people around the globe, and we don't have really much of an effective treatment at this point.</p>
<p>So, through its innovation, they have one drug that shows good efficacy in treating the Alzheimer's patients to really improve the decline in the cognitive ability for those patients; and the drug is an antibody targeting beta amyloid, and the name of the drug is aducanumab. So, they right now have the drug application with the FDA. And so, we're still just waiting for the FDA approval. And if approved by the agency, it could become really one of the first disease-modifying therapies for Alzheimer's patients. So, in our opinion, like if they can get that on the market, it can create potentially a huge impact on the society through the unmet medical needs.</p>
<p><strong>Hall: </strong>And how long have you held Biogen for, Michael?</p>
<p><strong>Li: </strong>So, we invested in Biogen since the inception of the strategy.</p>
<p><strong>Hall: </strong>OK. So, 2018…</p>
<p><strong>Li: </strong>In late 2018, correct.</p>
<p><strong>Hall: </strong>OK. The second name on your list is one that we've heard a lot about this year with covid-19. It's Gilead Sciences. Again, how long have you been exposed to it and why do you hold it in such a steam?</p>
<p><strong>Li: </strong>Yeah. So, invested in the company in late 2018 when we started the strategy. And the one thing I want to remind people is that this is a very low turnover strategy for us. We are really trying to identify the best companies out there and really hold them for a long time.</p>
<p>So, this is a great example to really illustrate the combination of impact with financial returns. So, Gilead Sciences is a biotech company based in California. It's a leader in antivirus treatment. So, for example, that includes HIV, HCV, and more than 80 per cent of the HIV patients treated used one of their therapies or drugs.</p>
<p>So, through its innovation and R&D work it has quickly developed an effective treatment for severe covid-19 patients. So, as we go through the pandemic today, this is really the only approved therapy right now by the FDA to treat those patients, and it offers some of the last resort for those patients. And overall, this overall effort is creating a huge impact on society because given what we are going through and that we do think that this is a very good example of how we can generate financial returns while also creating the social impact that we're looking for.</p>
<p><strong>Hall: </strong>OK. And the final name on your list of three today Michael is Teladoc. Tell us about Teladoc.</p>
<p><strong>Li: </strong>Yeah. So, Teladoc is relatively a smaller company. It's what I call the leader in telemedicine. So, what they do is they provide virtual care or virtual access to healthcare for patients who either have limited access or have worries to go to see a doctor. So, for example, as we are in the pandemic today, a lot of the patients are afraid to go to the hospitals or the clinics to see their physicians face to face. So, through Teladoc, they can schedule a virtual session with the doctor and still be taken care of. So, that is a really sort of effective way of how people can get access to medicine. So, for example, last year they treated over 2 million visits and this year they multiplied that by a few times because of the demand for telemedicine certainly skyrocketed with the pandemic.</p>
<p>The second thing that's really interesting about Teladoc is—or the virtual visits is—it lowers cost as well. So, for example, if patients go to see a doctor through Teladoc's platform, they pay $40, $50 per visit. But if they go actually to see a doctor of face-to-face, that's going to cost close to $100 in the US. They not only transformed the way how healthcare can be delivered, also they are lowering the overall healthcare cost through very effective way.</p>
<p><strong>Hall: </strong>I'm curious to know when you picked that stock up, did you pick it up at the beginning of this year or since inception or…?</p>
<p><strong>Li: </strong>No, we really invested in the company since the inception. So, we have paid attention to this space for a long time and we always felt that this is a very innovative company that's leading the space, and this could potentially really transform the way. So, we really invested in it very early on.</p>
<p><strong>Hall: </strong>And it sounds like the Zoom of healthcare, if you like. How has it been performing?</p>
<p><strong>Li: </strong>Very much so. It has done very well.</p>
<p><strong>Hall: </strong>All right. Well, that's some fascinating insights there. That's Biogen, Gilead Sciences, and Teladoc. Michael Li from American Century Investments, thanks very much for your insights today.</p>
<p><strong>Li: </strong>Thank you, Lex.</p>
<p> </p>
<p><strong>Hall: </strong>I'm Lex Hall for Morningstar. Thanks for watching.</p>
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