3 Choices to Increase Drug Breakthroughs

  • Biotech stocks can offer some of the best returns available to investors who choose them wisely.
  • After a sharp decline in assets recently, experts see a high likelihood of a resurgence soon.
  • Managers of the $380 million International Biotechnology Trust have identified five key themes for investors to target.

Biotech stocks can offer some of the best returns for investors, as it is a sector that is always rich in innovation and scientific breakthroughs that can be monetized.

After a period of stellar returns in 2020 and early 2021, as pharmaceutical companies and biotech companies around the world raced to find an effective vaccine against Covid-19, the sector saw a pullback as investors reserved profits and the momentum has faded.

A further recovery may well be on the cards in 2022, but being such a large sector, some parts of the market are likely to do much better than others.

Marek Poszepczynski and Ailsa Craig, principal investment managers of the $380 million International Biotechnology Trust, know the sector better than anyone. The trust also has Kate Bingham listed as a manager; the woman who led the hugely successful supply of the Covid vaccine to the UK.

The stock selection behind the fund paid off. According to data from Bloomberg, the fund has beaten 69% of its rivals over the past 10 years and 72% of its peers since 2020.

Poszepczynski and Craig have identified five key themes to target when picking stocks in the sector this year.

Back to normal (really)

“Although Covid-19 may continue to dominate the news agenda this year, we are confident that 2022 will mark the end of the pandemic,” Poszepczynski said. “We expect the Omicron variant to increase immunity worldwide, without a corresponding increase in severe symptoms and deaths.”

“Increased global resilience to the virus, combined with ongoing vaccination programs and improved treatment options provided by the biotech sector, should lead to reduced Covid-related restrictions across the world,” a- he declared.

Poszepczynski said this would be a boon for the biotech space, as companies would benefit from the resumption of standard medical activities. “Increased face-to-face interactions should also enable greater trade execution in the industry,” he said.

M&A on the rebound

“After a flurry of deals towards the end of 2021, we are confident of a resurgence in biotech M&A this year,” Craig said. “Strong buyout activity is crucial for the biotech space, as it relies on mergers and acquisitions to propel innovation and get drugs to those who need them most. Buyouts enable an effective division of labor , whereby nimble companies and universities specialize in innovation and are acquired by larger players, while larger players use their scale to optimize drug manufacturing, distribution and commercialization,” she said. declared.

Big pharma names are particularly well positioned to take advantage of normalizing valuations and easing pandemic-related restrictions as they can use their strong cash balances to replenish product pipelines, she said. declared.

“This is critical for mainstream biotech players, who face constant pressure to acquire new technologies and products before patent protections on existing drugs expire. Additionally, industry leaders will seek to meet the growing demands of an aging global population,” Craig added.

fight cancer

“Oncology remains an area of ​​unmet medical need in the biotech space,” Poszepczynski said. “However, several exciting events are expected in the first quarter of 2022 that could mark significant progress in the fight against deadly forms of cancer.”

A stake in the IBT portfolio, Therapeutic Mirati, is expected to file its drug for KRAS-mutated lung cancer, which affects 10-15% of lung cancers and is a well-known contributor to many solid tumors. Mirati’s drug hopes to be the best-in-class treatment, competing with Amgen, which launched its KRAS inhibitor last year.

Craig and Poszepczynski also expect to see final clinical results from Trodelvy, a product acquired by Gilead Sciences. Trodelvy is a prescription drug used to treat a subset of breast cancer patients, and evidence of its success in clinical trials would expand the patient pool and be a major step forward,” they said.

Clinical breakthroughs await

“Alongside advances in the fight against cancer, 2022 could see the completion of potentially groundbreaking clinical trials,” Craig continued. “We anticipate critical data from gene-editing companies, which could provide new pathways to treat diseases in very precise ways by modifying human genomes.”

Craig reported Intellia Therapeutics, which should show early clinical results for many gene-editing programs. The company uses this technology to treat rare diseases, including transthyretin amyloidosis, hereditary angioedema and hemophilia, as well as to mitigate some of the effects of sickle cell disease and acute myeloid leukemia.

“We also expect new advances in cell therapy, where a patient’s immune cells are engineered to identify and kill tumor cells. Initial cell therapies are highly effective against cancers specific such as blood cancer, but their side effects mean patients often need intensive care,” Craig said.

The treatment is generally long, cumbersome and expensive. One treatment that attempts to improve all of these is allogeneic cell therapy, which eliminates the need for patients to supply their own cells to manufacture.

“Instead, ‘off the shelf’ donor cells can be used, which significantly reduces the time to effective treatment and expands the pool of potential patients,” Craig said.

Scientific innovation abounds

Despite the community’s best efforts to identify, treat and prevent Covid-19 during the pandemic, innovation has grown exponentially, Poszepczynski said.

“Despite challenging clinical trial recruitment and approval processes due to pandemic-related restrictions, the U.S. Food and Drug Administration still managed to approve 50 new drugs in 2021, illustrating productivity, the continued resilience and adaptability of the sector, despite the shift to a virtual world,” he said.

He added that the number of ongoing clinical trials had already surpassed pre-pandemic levels, with 37,033 trials registered worldwide at the end of December 2021, compared to 30,957 at the end of 2018.

“On the demand side, the expected doubling of the over-65 population over the next 50 years, combined with the developing world’s insistence on better access to healthcare, underpins strong demand for the sector to the future,” he said.


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