Going Beyond the Numbers

Investing in Health Sciences Breakthrough Therapies

Ziad Bakri, CFA, MD, Investment Analyst

Executive Summary

Our investment approach at T. Rowe Price is to go beyond the numbers when evaluating which companies offer the best future investment potential. Dr. Ziad Bakri, the portfolio manager of the T. Rowe Price Health Sciences Fund and former practicing physician, says that as the need for more innovative drug therapies continues, his research process takes him inside factories and pharmaceutical labs and to medical symposiums in search of the best insights for investors.

When Dr. Ziad Bakri is researching an investment idea within the biotech industry and the mounds of financial data on his desk don’t reflect what he believes comprises the entire story, the portfolio manager of the T. Rowe Price Health Sciences Fund puts aside the spreadsheets and heads out of the office. He visits specific biotech companies and their research labs to learn about discoveries from the people who are making them. He also regularly attends medical conferences to gain insights about new therapies. The best insights, he says, have come from a variety of sources. “I love meeting with entrepreneurs and scientists who are experts in their field and developing the latest breakthroughs in medicine. And I’ll fly wherever I need to get the complete investment picture.”

Going Beyond the Numbers Reveals the Full Story

At T. Rowe Price, our investment approach is to go beyond the numbers when evaluating which companies offer the best future investment potential. By meeting with executives and employees firsthand, we can ask the right questions to get a deeper understanding of where a company stands and where it could go in the future. This rigorous research strategy is integral to Ziad’s investment process within the health sciences sector.

Opening Quote I love meeting with entrepreneurs and scientists who are experts in their field and developing the latest breakthroughs in medicine. And I’ll fly wherever I need to get the complete investment picture. Closing Quote

Field Research Helps To Identify Opportunities Faster

Ziad, a former emergency room physician, and his investment team travel regularly to medical research hubs, where, during a recent trip to Boston, they visited nearly a dozen companies. He met with senior executives, including chief scientific officers and chief medical officers, and toured research labs to get a sense for what is going on at the companies. Ziad also meets with others in the health care industry to find new investment ideas, validate assumptions, and compare what he’s learning in site visits with the fundamental analyses that he conducts. “You can quickly tell if what you’re hearing is real or if what the company is telling you is just on paper,” he says.

Ziad believes that opportunity often comes from identifying trends early in the process. He aims to have a front-row seat and track developments as they happen. His strong research process helps him focus on the therapies that could offer the best potential for really good returns. He is particularly excited by immunotherapy companies that seek to use a patient’s own immune cells to fight cancer. The process is a complicated one but essentially it works like this: A physician extracts a patient’s own immune cells, ships those cells to a company’s manufacturing facility where they are altered through genetic engineering, and then the physician places those cells back into the patient to attack the cancer.

Positioning for Change

As the need for more innovative drug therapies grows, Ziad is keeping watch on the industry and key companies so he can respond quickly to take advantage of industry shifts and, when necessary, adjust his thinking to get ahead of change for his clients. Combining fundamental analysis with his on-site research allows Ziad to gather deeper insight that can help him make better informed investment decisions. “It’s like people who were looking for gold in 1800s. It’s just a different type of gold. You’ve got to do a lot of sifting and figure out if you’re looking at gold or lead,” he says.

Important Information

Download a prospectus.

This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.

The views contained herein are those of the authors as of July 2018 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

This information is not intended to reflect a current or past recommendation, investment advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Investors will need to consider their own circumstances before making an investment decision.

Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.

Past performance cannot guarantee future results. All investments are subject to market risk, including the possible loss of principal. Due to the Health Sciences Fund's concentration in health sciences companies, its share price will be more volatile than that of more diversified funds. Further, these firms are often dependent on government funding and regulation and are vulnerable to product liability lawsuits and competition from low-cost generic products. All charts and tables are shown for illustrative purposes only.

T. Rowe Price Investment Services, Inc., Distributor.

T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc. © 2018 T. Rowe Price. All rights reserved.

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