Portfolio manager says pandemic has let the ‘genie out the bottle’ and believes fund allows investors to participate in substantial appreciation
The biotech industry could be on the verge of a raging bull market, according to the fund providers behind the Next Edge Biotech and Life Science Opportunities Fund.
Eden Rahim, the fund’s portfolio manager, told WP it focuses on owning small- to mid-cap U.S. and Canadian biotech and healthcare companies. Notably, it carries zero management fees and elects instead for performance fee.
By pursuing smaller mid-cap companies, Rahim believes it's positioned to allow unit holders to participate in substantial appreciation in companies that will grow to become commercial successes.
He said: “It’s a very young industry and has been around only for 40 years, but it's had several multi-year bull and bear market cycles. Generally, it's had severe bear markets that lasted several years and then amazing bull markets that appreciate between 100%-1,000%.
“We've just completed another five-year bear market cycle, between 2015 and 2020, but it’s now broken out of that range. If the past is prologue, then we think that the sector is about to embark on another one of those multi-year, plus-100% moves, and the kind of positions we focus on owning tend to be 2x or 3x whatever the index is doing.”
Last year was, of course, a monumental year for biotechnology. The whole planet turned to its expertise to develop vaccines in rapid order. Rahim said that has let the genie out the bottle in that people now know how quick companies can actually bring a product to market.
He said: “We're focused on owning companies [that address] the next largest unmet need – and we think that is central nervous-system based or brain-based conditions such as Alzheimer's disease, Parkinson's disease, Huntington's disease, epilepsy, and muscular dystrophy.
“We think that's where the next big opportunity is, which is where the fund is positioned. The fusion of technology with biotechnology is causing probably the greatest leap in development and will enable higher success rates and commercializing of drugs.”
He added: “Anyone who suffers from a chronic or fatal disease is going to look to the FDA and say it's unacceptable how it works right now to get treatments to market. These biotechnology companies need to be freed up to do what we have seen they can do in a much shorter period of time.”