'We’re very bullish on the ability of innovation in the biopharma space': Portfolio Manager

Mark Charest, AlphaCentric LifeSci Healthcare Fund Portfolio Manager joins Yahoo Finance’s On The Move to share what opportunities investors can find in healthcare investing, amid the coronavirus pandemic.

Video Transcript

JULIE HYMAN: We've been hearing a lot about these sort of tentative various vaccines and treatments. But we also don't know sort of monetization, how that is all going to work when there is such a big public need for this stuff. So how are you thinking about this pandemic and where you maybe should be putting your money?

MARK CHAREST: Yeah. Thank you for having me, Julie. Glad to be here from San Juan.

I think that-- let me just step back from the big-picture perspective. We believe it's more a question of when, not if, there will be therapeutics and vaccine options available to treat COVID-19. We're very bullish on the ability of innovation in the biopharma space and the pharma space to really bring forward innovative solutions in record speed.

So with that said, I think one of the things that the industry has done is come out pretty universally and speak to the willingness to provide options at limited cost or no cost in some cases. We think this is really a reflection on a lot of the value that the industry is bringing forth, despite some of the negative headlines that they've seen in the past.

So for example, Johnson & Johnson has come out and sort of committed to providing their vaccines at or near cost when and if it becomes available. I mean, that's really an amazing sort of development.

And I think that across other opportunities, you look at Gilead's announcement over the weekend, the CEO penning an open letter describing that they're going to make a million and a half doses of remdesivir available on a compassionate use basis free of charge, while the clinical trials are ongoing.

So we think those two, I think, really speak to the willingness of the industry to really provide these options at a very modest cost.

ADAM SHAPIRO: Mark, a lot of us are desperate for any medicine to work. And I think we all want the cure to be there. But the question no one can answer-- and we had Paul Stoffels, the chief scientific officer from J&J on. No one can talk about, for instance, efficacy of these trial vaccines that may be coming down the pipeline.

And even in the case of medicines that are already approved for other uses, antivirals are specifically targeted to that which they treat. So how do you determine where you're going to invest with a company that might be using a medicine that's already out there, and yet it may not work?

MARK CHAREST: Those are good concerns. So what we've done is we've reviewed some of the scientific literature. And I should say that I have a background in drug discovery development. I'm a co-inventor of an approved drug. So let me speak to how you can get comfort with the potential for benefit for some of these therapies in development.

So first of all, starting with the repurposed therapies, so these are drugs that operate generally on an inhibition of mRNA viral replication. So these mechanisms by which these viruses replicate are somewhat conserved. And there is an ability to look in vitro in a test tube to sort of test these various drugs that are out there, that generally work against mRNA viruses, and look to see if they have an effect in the test tube.

And what we can say is, with hydroxychloroquine, with remdesivir, with some of these other ones you've heard about, is that in in vitro studies, you can see pretty robust inhibition of viral replication, which, generally speaking, should translate into efficacy in a person assuming you get enough exposure. So that's really the basis for excitement for some of these repurposing therapies.

And of course, we need to see larger clinical trials with randomized designs read out to unambiguously show the clinical benefit. But you know, the promise is there based on the in vitro study. So it's not like we don't have any evidence here. We do have in vitro studies that show unambiguously inhibition of viral replication for the same viral isolates.

Moving to some of the other therapeutic approaches, the other thing you often do in drug discovery development, and certainly as an investor in this space, to try to understand if something is going to work in probabilized success, is you like to look at predicates. So how have similar approaches worked in other similar diseases or proximal diseases? And look at the outcome there.

And so here, I can highlight Regeneron's efforts to develop these engineered antibodies. Regeneron had used a similar approach for Ebola, where they were able to generate, in a period of about five or six months, a number of these different candidates that are antibodies against the Ebola virus.

And they actually ultimately ran these antibodies in a randomized clinical trial, which is published in the "New England Journal of Medicine." And the data unambiguously show that this antibody intervention significantly reduced the rate of death and morbidity and mortality in these Ebola patients.

So based on that predicate, I think that there's very high expectations for Regeneron's antibody approach to work, given that it showed very robust effect in a proximal disease in recent time.

RICK NEWMAN: Mark, Rick Newman. So another piece of this puzzle is the antibody test to tell which individuals have the antibodies in their bodies. For lay people among us, can you just tell us where that fits in?

MARK CHAREST: So the antibody test is going to provide a very rapid way to quickly identify patients that had been exposed to the virus and they have developed antibodies against it. So that means that they've been exposed, and presumably have mounted an immune response robust enough so that they haven't developed severe symptoms. So they're sort of a quote-unquote "protected person."

And it is believed, based on what we know about the virus today, that if you do generate an antibody response, that you should be protected against infection over some meaningful period of time. We'll have to see how that plays out over time. But that's the expectation.

So this changes things in two ways. One, the test enables you to identify these patients or these individuals who have a protected sort of status. And maybe there's an argument to be made that they could be allowed to go about more normal activities with a lower risk profile. That's one.

And two is, antibody test itself is something that could be more easily done in a lot of hospitals and could potentially be done more quickly. So it could provide another, perhaps more rapid and more easily disseminated testing option for various hospitals, and certainly for some areas that, at a point of care, where maybe you're in an emerging market or an area that doesn't have a ability to do PCR, or one of these sort of high-quality PCR tests, is that you might be able to do this more broadly.

JULIE HYMAN: Mark, quickly, I want to take the opportunity to ask you about Puerto Rico, since you are there. And as we know, Puerto Rico has been hammered by various disasters in the past, natural disasters in the past. What is their preparedness in this case, as far as you can tell, as the lay person who's there right now? And what is it like being there?

MARK CHAREST: Yeah. So Puerto Rico was pretty early to go under a curfew, and I would say more restrictive lockdown measures. That happened in the middle of March. And you know, we've been sort of under that since then. And it's actually increased a little bit.

So from 7:00 PM until 5:00 AM, there's a curfew where you're not supposed to be out in transit at all, unless you're going to a hospital or you have an emergency situation. So Puerto Rico, I'd say, has been early, and really tried to be purposely careful.

I think that there is some concern here on the island that the local health care infrastructure may not be robust enough to handle a major wave of infection. You know, if you think about what's happening in New York, I mean, New York is one of the premier sort of health care infrastructure locations in the world.

And certainly, compare to that, I think there's some concern that Puerto Rico would not be able to maintain operations from a health care integrity standpoint, given a very severe wave of infections. So I think that's why there's been more restrictive measures.

I can say that from here and the folks that I correspond with, a lot of fund managers down here, a lot of people, entrepreneurs, big entrepreneurial community here, that I spend a lot of time with, and you know, I think that folks are generally concerned.

We're doing our best to stick to the quarantine. I, myself, really haven't been out much, following the guidelines the best I can. And I think that there's some optimism here that if we follow these measures, that there will be some curtailment.

I should also say that there's also this belief that there will be some appreciable temperature dependence on the viral spread, even though the data is early. And I would caution this by saying that if you look at countries like Singapore, where the climate is actually warm right now, you're still seeing some spread. So there is evidence of spread given higher temperature. But that said, I think that there is optimism that at least the temperature could curtail the spread a little bit.

And the last thing I'll maybe leave you with is if you look at the 1918 flu pandemic, it was pretty minimal in Puerto Rico. So Puerto Ricans are optimistic that that might be a good harbinger for what's to come here.