Ask A Fund Manager
In part 1 of our interview, Platinum Asset Management portfolio manager Dr Bianca Ogden took us through her journey from working in healthcare to finance. Now in part 2, she uses that insider knowledge to pick 2 underrated stocks plus 2 others that will continue to bathe in sunshine.
Overrated and underrated shares
The Motley Fool: What's your most underrated healthcare share at the moment?
Dr Bianca Ogden: I've got several of them. So, there's always some.
There is a company in the US called Coherus Biosciences Inc.
It's a company that works in the biosimilar space. It has an approved product for a biosimilar that basically is taking share from one of the branded products that has come off patent.
And it's got sales, it's got profits – it's doing quite well. But people get a bit bored and just say, 'Well, there's price competition. And they will kind of lose out in the end'. But what this company has done is build a pipeline.
It's got a very interesting deal with a Chinese company called Junshi Bio. Essentially Coherus is the US arm now for Junshi. And I think over time, this company will have nice growth ahead of it.
But at the moment, the market doesn't find that very interesting. It's not a genomics company, it's not a gene therapy company or proteomics company. It's just a normal company that has built great commercial infrastructure. And it's going to plug in different products now to utilise that commercial infrastructure.
I've got another one in China. There's a company called CStone Pharmaceuticals. While other biotechs in China have done quite well, this one is kind of lagging – but it has a lot of interesting products to launch. Pfizer has a stake in it. So I kind of like it as it's off people's radar screen.
MF: What do you think is the most overrated stock at the moment?
BO: I tend not to have overrated stocks.
MF: Not even all the companies that are involved in COVID-19 vaccines – you wouldn't say they're overrated now?
BO: I own several of them. And to be honest, I think with mRNA, I think there is a different story to it as well. Yeah, I think there is a bit of excitement in that, but in the end, it's long term… Although we have sold out of Moderna Inc (NASDAQ: MRNA), we still have BioNTech SE (NASDAQ: BNTX) and others in there.
So, no, I wouldn't totally characterise that they're [too] hot because in the end, we will all have to have at some stage in our life, mRNA vaccines.
MF: Is it fair to say that the COVID-19 vaccines really put mRNA technology into the mainstream consciousness?
BO: We've been owners of this technology for quite some time, for a couple of years. But yeah, I think in the mainstream it's there [now].
I think we're probably now trying to work out how big can this class be and where can it go? There's a bit of work to go into it until we twiddle that all out. But yeah, I think it definitely is something that it has put itself on the map now as a modality, which is great.
MF: If the market closed tomorrow for 5 years, which stock would you want to hold?
BO: I would hold onto a company called Recursion Pharmaceuticals Inc. Recently listed. We have known this company for a little while.
That's a company that really is trying to industrialise drug discovery. And for me, in the next 5 years that will be an interesting one to hold. They have their work cut out, but I think they've done quite an interesting job of putting automation into drug discovery.
MF: Did you manage to buy some during the initial public offering?
BO: Yes, we did. So, we kind of know the team there. [The IPO price] was $18.
I think if this company sets out what they want to do, the sky's the limit. It is really to try to industrialise drug discovery, which we're seeing gradually.
Looking back
MF: Which stock are you most proud of from a past purchase?
BO: Look, I think most proud of, I think is probably mRNA. Did I ever suspect it would happen that way? No. But it's a classic example of how Platinum or how I do my work is I go where others don't really want to go.
I remember me telling someone how I was excited about mRNA [during] Moderna's IPO and about BioNTech's in 2018, 2019. They looked at me and thought I was absolutely nuts.
But look, we always try and get to know the management. What do they do? And how has it evolved over time? What mistakes have they made? What have they learned? And we did exactly that. And these guys have absolutely come through with the goods.
That is quite exciting to see. And it gives you confidence because you just think that, 'Well no, this is right how we do it' – and ignore the crowds.
MF: In pre-pandemic days, would you fly to the US often to meet with management?
BO: I like to go and see the scientists in their habitat… Often biotechs are quite small, where you go and make your coffee or tea with the CEO, and you chat and you get to know them.
What I find fascinating is when they make mistakes – things fail often in this industry – how do you motivate your scientists to keep going and to just dust yourself off to do the next thing?
I think you only get to know that when you spend a bit of time and see what the office looks like. Do they have vampires when you walk in? Do they make their own tea?
MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.
BO: I think in this field, there are always missed opportunities… There's so many great things happening.
MF: Yeah, you can't buy everything, can you?
BO: No. And you have to put that past you. But one of the biggest regrets I have is that you never have enough [invested], never invested or backed yourself fully. Because as a human, you always have some doubts. So you always try to plan.
I think one of the big things is biotechs can blow up. So you always are probably more cautious. But I think one of the things that I've learned over the years is, you've got to back yourself and you've just got to keep getting better at it. You can't beat yourself up.
For example, Daiichi Sankyo Co Ltd, we picked very early. Their division in oncology [was] really changing. We sold out too early, because we thought, 'Look, we doubled our money. That'd be fine'.
Same with AstraZeneca plc (LON: AZN). So, over time you get better at it, but the big thing is you got to learn from it and you got to assess it and just work on it.
MF: To a lot of retail investors, they would see the biotech or even the healthcare sector as 'high risk, high reward'. Is that a fair characterisation?
BO: I think if you don't invest for the long-term, yeah, you can look at it that way. [Some] of my best investments have also been companies that had a setback.
Given my experience… I kind of know when to go back in and when to say, 'Okay, they have a great R&D engine'. They can come up with the next [thing] – and it wasn't their fault, it was just a normal setback during clinical trials. That's what happens'.
And then you make your 300%, 400% return. So yeah, I can see that from the outside, but to me, no, I don't really see the volatility.
It's never nice when something falls… But in the end, if there is a good foundation, good people and a plan B, these companies come good very quickly again.
