Andy Acker: I think RFK [Robert F. Kennedy, Jr., head of the Department of Health and Human Services] created a lot of worries and uncertainties, and markets don’t like uncertainty. So, we saw the sell-off. What have we been seeing more recently is, actually, healthcare has been standing out. I think it’s the best-performing sector year to date. We had believed the defensive qualities of the healthcare sector were getting underappreciated by the market, and whenever there’s some, more uncertainty now about tariffs and immigration, you’re seeing a rotation back into some of the healthcare sector, into companies like Novartis or some of the big pharma companies, some of the major biotech companies.

On the other side, though, you’re seeing smaller-cap companies that are still sort of suffering. And we’re seeing, especially within biotech, we’re seeing development-stage biotech companies that have been particularly weak. And that’s whether the fundamentals are good or not. We think that is the opportunity because we have to remember we’re dealing with an incredibly inefficient sector. In biotech, every year, there is a 17-fold difference between the winners and losers. And so, we’re always looking for those companies that have underappreciated clinical and/or commercial potential.

From the perspective of RFK, I think one thing we have to consider is that in order to get nominated, it was a close call. I was watching those videos; it was very contentious. The vote ended up being 52-48, so, he won by just a couple of votes. But he had to compromise on a lot of his historical beliefs. He had to say I’m actually pro-vax, not anti-vax. He had to say that I am not going to say that vaccines cause autism, which has been disproven time and time again in multiple studies. He’s going to have to report to certain members of Congress about his actions. So, I think, to some extent, in order to get the nomination, he’s been handicapped a little bit, and so, I would expect going forward…he said he’s not going to make changes, for example, on the ACIP [Advisory Committee on Immunization Practices], which is the one that recommends vaccines. So, there are a lot of compromises he had to make to get through to that nomination.

And then the other thing to think about is – and I think why some of these stocks have recovered – is the other members of the Cabinet are much more reasonable, medically driven, scientifically driven. The new head of the FDA [Food and Drug Administration] is [Johns] Hopkins [University] trained, so we have actual physicians and scientists in the other important positions in the administration. I think that has also calmed some nerves…

Andrew Cox: That’s what’s so interesting because the broader healthcare sector has stabilized, actually performed very well, top-performing sector year to date. Big pharma companies doing well, like Novartis. You just said that the FDA has got some much more sensible characters on it; there’s generally the view that the FDA isn’t going to shut down overnight, that some people may have feared about in November. Yet, the biotech stocks, the clinical stocks are still doing badly.

Acker: Yes, so the last thing to mention, I think there’s also a difference between commercial companies, where they’ve already gotten their drug approved, versus companies that are still in development and have to go through the FDA. And, I guess, one thing we’re hearing about and probably one of the things we’re focused on is will there be delays at the FDA. So, DOGE [the Department of Government Efficiency] is making, in some cases, indiscriminate cuts across the government, including members of FDA. So, when FDA feels short-staffed, things just can get a little bit delayed. It might be – I don’t know if Novartis is experiencing this as well – but it can be harder to get in-person meetings, so then you end up having to revert to phone calls or Teams calls. So, that’s what we’re monitoring right now. We could see things slowing down a little bit, but that doesn’t really change the fundamentals for these companies. If you have a groundbreaking therapy that, for example, can cover 95% of the strains that cause pneumonia versus the current standard of care that covers 50%, you know, those drugs are going to get approved. If you have therapies that improve overall survival for cancer or can replace chemotherapy with more effective and safer therapies, those are going to get approved.

Cox: And this is a good example. One of the companies…one of the therapies you mentioned up there, that day that Nvidia went down 20% a few weeks ago, that stock was up nearly 100%. So, again, that’s really reinforcing, I think, the opportunities are there when the catalysts happen.

Acker: And frankly, after the pullback we’ve seen in biotech, the risk/rewards are more attractive, not less attractive. So, as we’re looking forward, we’re extremely excited about what we’re investing in.