Marsico Seeing Opportunities With 2 Health-Care Names

Please note: Since original publication, the transcipt for this video has been revised at the interviewee's request to correct/clarify certain statements.

Karin Anderson: It would be also interesting to hear about your passion for health care these days, and particularly biotechs. You've mentioned how you think that these are poised to do quite well in a slow-growth environment, as well. Could we hear about some of those names?

Tom Marsico: Sure. I've had a great passion to invest in the health-care industry over a long period of time. My degree is there; my interests are there. But for the last six or seven years we have not been investors in the health-care area. We did not know what the road map would look like for the new health-care plan that's being introduced in 2014. With the rules put forth, we wanted to look at those novel drugs, those novel experiences that meet unmet medical needs, and one of those is in the multiple sclerosis area. The company that has a new molecule there, TECFIDERA, is a company called Biogen Idec.

Biogen has ... [transcript edited] great expertise with TYSABRI and AVONEX, and now TECFIDERA, which is one of the first oral-only multiple sclerosis drugs. On a daily basis, people generally have to inject themselves. AVONEX is a drug for people that have moderate MS. TYSABRI is for people who have very aggressive MS. TECFIDERA fits somewhere in the middle, but it's an oral medication and has very, very few side effects. There is a little nausea for three or four weeks generally. It hasn't been found to be an aggressive side effect, so the launch of this drug has been exceptional.

We think that over a period of time of about four or five years, the sales in this MS area could actually increase quite dramatically. We've looked out to 2015, and it looks like the stock is trading at 8 or 9 times earnings. We think it's a very cheap stock.

The other stock that we have in this area that's been very successful has been Gilead Sciences. As you may know, Gilead has tremendous expertise in the development of new drugs ... [transcript edited], but also the great new expansion area is to control hepatitis C. In a 12-week period taking the dose of the new drug that’s been developed by Gilead for hepatitis C, you can actually cure the problem [in our opinion]. The number of people who have the hepatitis C virus, even though it might not be expressing itself right now, is in the millions. We think that the hep C drug could actually quadruple the size of Gilead over the next few years, so this is a very big area.

To treat a hepatitis patient right now, it's about $100,000 to go through a very long process. The drug will be priced at a much more reduced rate than the $100,000 rate, which does not cure a patient. This [Gilead] product will cure the patient. So we're very interested in some of these biotech stocks.