Tariq Dennison
GFM Asset Management, Hong Kong
Title: A Fund Manager’s Investment Outlook on the Biotechnology and Pharmaceutical Sectors
Biography
Biography: Tariq Dennison
Abstract
Statement of the Problem: Biotechnology and pharmaceutical stocks have significantly outperformed broader equity benchmarks over the past 10 years, but these companies remain uniquely difficult to value and risk manages, even for professional investors. Fund Manager Tariq Dennison presents a financial outlook of stocks in the biotechnology and pharmaceutical sectors, starting with a top-down look at how broad and industry focused funds and ETFs choose to invest in these sectors, using examples from actual funds. Next, a few examples of financial models of select companies are highlighted to show some of the challenges and opportunities in valuing shares of companies focused on different stages of drug development. Research and early development stage companies are more often valued and risk managed using a “real options” model, while later stage companies with mature cash flows may be valued with classic “discounted cash flow” models. These top-down and bottom up views are then combined to pave an outlook for investing in funds and shares in the bio & pharma space, and what factors might change fund managers’ views. Valuation is a key emphasis of this presentation and main difference between a practitioner and investor in technologies, since it is easy to lose money investing in even the best technologies if the price paid is too high.