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How to invest in companies battling cancer and Alzheimer’s

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12/06/2018
A number of investment trusts are investing in businesses, which are addressing major challenges to our health.

If you want to invest in companies at the cutting edge of medical advancement, there are plenty of firms to choose from.

But if picking individual stocks isn’t your thing, you might be better off opting for a fund.

Investment trusts have been around for 150 years and are the oldest form of collective investment. Many trusts are investing in pioneering medical treatments for illnesses such as cancer, Alzheimer’s and diabetes.

Here’s a closer look at three of them:

International Biotechnology Trust

The trust has invested in companies, which treat cancer – the second largest cause of death, according to the World Health Organisation – since its launch in 1994. Its managers are scientifically and medically trained.

Some of its biggest holdings include Amgen, Celgene and Gilead Sciences.

On 31 March 2018, 42% of the portfolio was invested in companies focused on oncology.

Lead manager, Carl Harald Janson, says: “Our increased interest reflects the advancement in the treatment of cancer over the last two decades.

“Scientists have significantly improved their understanding of this disease, which has led to a meteoric increase in both the number of ways to treat the disease and new drugs.

“The treatment of lung cancer is testament to the headway made by scientists. In 1996, there were only four approved chemotherapy drugs approved for this disease. By 2016, 19 drugs had been approved covering five different therapeutic categories. Now trials using drug combinations show increased treatment efficacy, which also increases the options available to patients.”

Polar Capital Global Healthcare

The managers take a long-term view and back management teams with “global aspirations and ambitions”.

Manager Dan Mahony says their investment in Medaphor is a good example of the type of company they invest in.

Medaphor has developed state-of-the-art simulation technology for training medical professionals in the use of ultrasound. The company is close to commercialising a fetal scanning technology that uses artificial intelligence to increase the capabilities of medical professionals to speed up workflows and improve the quality of ultrasound screening.

“This is a great example of UK science and technology helping to improve the quality and efficiency of healthcare systems around the world,” says Mahony.

“The closed-ended structure allows us to allocate capital to companies such as Medaphor with ground-breaking technology that should not only provide our shareholders with good investment returns but also have a positive impact on society.”

Scottish Mortgage

The trust invests in “innovative and ambitious” companies that rarely feature in more conventional and less long-term portfolios.

Manager James Anderson says: “We have investments in companies dealing with problems that at present seem intractable. Two such companies in the form of Denali (aiming at treating Alzheimer’s in time) and Unity (increasing healthy life spans) have just gone public.”

But he says their most crucial investments in recent years have been in gene sequencing pioneer Illumina and its unquoted spin-off, Grail.

“We helped defend Illumina from an unwanted and unwarranted takeover by Roche so it could continue to focus on driving sequencing performance up and costs way down. Meanwhile Grail is showing serious signs of being able to identify many of the most ravaging cancers at much earlier stages through its remarkable liquid biopsy innovations. Their approaches are both causing particular excitement in China as it seeks to confront modern healthcare requirements for the first time. We’re excited by the prospects.”

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