Innovative Immunology: Danish Healthcare Leader
There is a perception that pharmaceutical companies have lost their “safe growth” status. They have previously been seen as quality, given that people’s health needs are not affected by the economic cycle. Healthcare fits squarely in the “needs not wants” camp. However, medicine is changing.
We saw during the pandemic how new platforms for drug discovery enabled swifter discovery of vaccines. AI and existing technologies are driving rapid change and opening the door for new drug development models.
Today, there is an increasing focus on harnessing what we naturally have inside us. This is immunology: using carefully developed drugs to weaponise the immune system against disease, using antibodies for precision medicine.
The modern journey of antibody use in drug development began with the 1975 invention of the “hybridoma technique”, which enabled mass production of antibodies. The first antibody drug was approved in 1986 to prevent kidney transplant rejection. However, being mouse-derived, it caused immune reactions in humans.
Advances in the late 1980s and 1990s introduced fully human antibodies, which reduced side effects. Since then, antibody drugs have gained approval for treating cancers, autoimmune diseases, and more, and have become integral to precision medicine. Continuous innovations, including bispecific antibodies and antibody-drug conjugates, promise further advances.
Our next recommendation in ByteTree Quality is field-leading in these emerging areas. It comes from the biotech space, which after a bull run to 2015, has gone nowhere in a decade.
Biotech Returns
Founder-led, it has developed a strong culture of technology, innovation, and excellence, which have driven high and consistent revenue growth, and a successful transition to strong profitability in the early 2010s.
A decade on, the platform is stronger than ever with a dual-revenue stream model delivering high cash generation, enabling greater investment in its own portfolio of drugs. A single disappointment in its clinical pipeline and the 2030 patent cliff for its current leading drug have led investors to sell it in recent years.
Nonetheless, we see a market leader of the future selling at a heavy short-term discount and consider it a fine early addition to the portfolio given promising recent price action.
This is a rare case of a wonderful company that is undervalued with a bright future.
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Investment Director: Charlie Morris. Editors or contributors may have an interest in recommendations. Information and opinions expressed do not necessarily reflect the views of other editors/contributors of ByteTree Group Ltd. ByteTree Asset Management (FRN 933150) is an Appointed Representative of Strata Global Ltd (FRN 563834), which is regulated by the Financial Conduct Authority.
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