Dr. Christiana Bardon, Portfolio Manager at MPM Capital
CNBC
The ongoing Covid-19 pandemic has turned biotech companies into hot new tech sectors as investor demand drives record IPOs, a panel of top investors told CNBC on Wednesday.
The biotech sector has drawn a lot of attention over the past two years during the pandemic, largely because “we have all developed life-saving drugs, vaccines and therapeutics that have literally just saved the world,” said Christiana Bardon, portfolio manager at private Public company MPM Capital, CNBC’s Meg Tirrell said at the Delivering Alpha conference.
The hugely successful Covid vaccines from Pfizer and Moderna, for example, were developed in record time in the United States and use messenger RNA or mRNA technology that has never been released to humans before. More than 370 million doses have been administered in the United States, according to the Centers for Disease Control and Prevention.
“I think, you know, we always thought we were a little less interesting than our tech brothers,” said Bardon. “But honestly, we’ve done the same job for cancer and all the other big unmet medical needs for the past 20 years since the dawn of modern biotech with the revolution in human genome sequencing.”
The increased interest in the novel technology during the pandemic has driven a lot of capital into the sector and fueled record financing and IPOs, she said.
The iShares Biotechnology ETF, which tracks the largest players in the biotech industry, has risen by around 62% in the last two years, outperforming the S&P 500, which has risen by around 47% over the same period.
Alex Denner, founding partner and chief investment officer of Sarissa Capital Management, said investors are pouring “huge” sums of money into the sector in anticipation of what the industry will do after the pandemic subsides.
“I see a lot of people very excited about the potential to accelerate drug development much faster than was thought reasonable a few years ago,” he said.
The increased interest has made it “absurdly” difficult for some companies to find laboratories or qualified researchers with experience in clinical development, he said.
“I think you will see this overheating, but there will be some consolidation and there will be a lot of opportunities to fall in there,” he added.
Bardon said she expected areas like cancer research could benefit from it.
“Not only can we understand the mutations that cause cancer in humans, but we can also design drugs specifically for those mutations,” she said. “It also means that clinical trials can be more efficient as we only identify patients with no mutations who need to go through the clinical trial process.”
