Investing in Health Care

Hi, Sameh. Thank you so much for being with me today.

Sameh Ahsan:

Hi, Elana. Thank you for taking the time to join the podcast with Eisner. Very excited to speak to you.

EMS:

Great, Sameh. To kick off the conversation, tell us a little about Exome and how you got to where you are today.

SA:

Yeah, of course. I'll start off on the personal side. I went to New York University for undergrad, and growing up I was a very big science fan, did a lot of work in the lab, clinical research during my undergrad. I majored in economics and chemistry, and following college I think my path forward was to go into clinical medicine as a possibility. I did take a couple years to further my education with a master's in biotechnology at Johns Hopkins University, and during that period was when I first started to get aware of the biotech world, then the biotech industry as a whole, as well as the biotech on the finance side.

There was a class I took with a professor who was a very big venture capitalist instructor, and in that class I learned a lot about sort of how biotech companies are seeded and will go through the process to go through series A, series B, and then onto the public market. That sort of opened my eyes to sort of a new world that I was not very familiar with, and so following my time at Johns Hopkins University I did some recruiting and found myself with Sam Isaly, who's the managing partner and founder of Exome Asset. I initially started off as an intern covering gene therapy as that was sort of my background in research, and Sam at the time had been... I guess a year after he left OrbiMed.

He was the founder of OrbiMed back in the '90s, which grew to be a $15 billion global healthcare fund. Starting in 2020, Sam had decided he was looking for the next chapter in his career. He seeded a family office called Exome Asset Management in 2020, and I joined the Exome team in about fall of 2020. Since then, we've raised about $200 million through 2023. Some background on Exome Asset. We are a global healthcare fund. We have two strategies, a developed market strategy focusing on healthcare in the United States and Europe, and then another strategy focusing on emerging markets healthcare. Over the past few years, we've had a lot of success. I'm now covering the therapeutics between biotech and pharmaceuticals at Exome.

EMS:

Great, Sameh. To shift gears, love hear about your outlook for investing in healthcare.

SA:

Yeah, of course. We definitely think it's a very critical time for healthcare investing. Healthcare has definitely lagged in 2023 relative to the general market, and that's been weirdly both in sort of the defensive names such as pharmaceuticals, managed care, as well as some of the more risk on names such as biotech and life science tools. Obviously part of that might be due to the euphoria of tech and AI, which has clearly put some pressure on the healthcare market, but I think looking forward we're entering a really critical time. Obviously there's some really hot themes in the healthcare world and specifically within drug development as it relates to obesity and gene therapy and gene editing, which are taking major steps forward.

EMS:

Sameh, I'd love for you to touch on where you see some of the greatest opportunities investing in healthcare and why.

SA:

Yeah. I think as it relates to therapeutics, there's a ripe... The ample space right now, especially within the rare disease market, the FDA over the past few years has really increased the flexibility and on rare diseases in particular they've been more flexible on novel endpoints and flexible trial designs to ensure that therapies are reaching the market. Currently, only about 1% of all rare diseases have a treatment today so there's a lot of space that's ripe for development in these orphan diseases where the FDA has shown some leniency in terms of allowing companies to come up with innovative trial designs to get drugs to patients.

EMS:

Sameh, on the other hand what are some of the greatest challenges you face when it comes to investing in healthcare?

SA:

Yeah. I think when it comes to healthcare, there's definitely quite a few challenges. I think on the biotechnology side, you see a lot of competition within the same markets, especially more lately. Post-COVID, we saw a huge rush of new biotech companies come to the market and come to get funding, but a lot of these companies were going after the same target or the same disease and that's made it difficult for people to really parse through which companies are the ones that are going to be able to make it to the finish line because drug development can take 10 years sometimes to go from a first patient to approval. I think the competition in healthcare is very fierce. You obviously also have political and government intervention such as the IRA, which is now starting to set drug pricing negotiations. Just this past week, we saw the first 10 drugs that Medicare will be negotiating on behalf of CMS starting in 2026. So we have a lot of factors both on the competition side and Congress to account for when looking at healthcare companies.

EMS:

Sameh, I wanted to go back on something you touched upon earlier in our conversation about weight loss drugs. I know there's been a lot of news about them, so would you be able to describe for listeners how they work and impact these have to our healthcare system?

SA:

Yeah, of course. These obesity drugs that you're probably hearing such as Ozempic, Wegovy, Mounjaro, they've actually been around for quite a long time. GLP-1s as a mechanism of action has been approved for about 20 years. Some of the older drugs include Saxenda, Victoza, Ozempic, Rybelsus, Trulicity. What we've seen in the past few years is companies like Novo Nordisk and Mounjaro have now evolved the innovation of these drugs to the point where not only are they able to provide glycemic control for type 2 diabetes patients, but they're now able to impact weight loss in a meaningful way.

The way that these drugs work is that they create a hormone which is called GLP-1 that goes to your brain and basically signals to your brain that when you eat food, that you've become full and it suppresses your appetite. That allows people to control portion sizes, and for people with obesity they're able to manage the amount of intake of food that they put in. So while it's a new drug for the obesity indication, the safety of these drugs have been proven for almost two decades now and we know that there's very limited toxicity with the current versions of these drugs. There are going to be some GI side effects like nausea, but for the most part, they are limited.

More recently, Novo Nordisk unveiled the results from the SELECT trial, which tested the cardiovascular benefits of Ozempic in an obese population. This study showed there was a 20% reduction in heart attacks, stroke, and death in patients that were taking Ozempic versus patients that were not taking Ozempic. Yeah, this development is quite substantial because it should allow for more coverage and reimbursement and payer access, whether it's commercial or Medicare, to come forward to fruition.

EMS:

Sameh, we've covered a lot of ground today and wanted to see if you have any final thoughts you'd like to share with us or future plans about Exome or anything along those lines.

SA:

Yeah, no, of course. I mean, at Exome we can continue to scout across the healthcare industry both in developed markets and emerging markets for the best of the best companies, and we continue to invest in those companies with products or innovations that are going to improve the lives of patients and we continue to look forward to our success.

EMS:

Sameh, I wanted to thank you so much for sharing your perspective with our listeners. Thank you for listening to the EisnerAmper podcast series. Visit eisneramper.com for more information on this and a host of other topics, and join us for our next EisnerAmper podcast when we get down to business.

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