Our favorite biotech/healthcare fund boasts more than just a savvy sub-advisor; this fund has got PhDs, scientists, and researchers nitpicking the details behind every investment.
We caught up with the fund's Assistant Portfolio Manager, Anna Damato, PhD, to learn a little bit about her and to find out how a woman with a PhD in neuroscience ended up in finance.
AlphaWatch: Hi Anna! Thanks for spending some time with us today. We love the fund and the biotech/healthcare space in general. We have so many questions for you. But first - we have to know - were you always attracted to science?
Anna Damato: Science is all around us. I’ve always been interested in nature, and as I started learning biology and physics in school, I started to realize that those concepts explained a lot of what I was observing outside. I think this is when I officially decided to focus on science, biology in particular.
AlphaWatch: How did you come to choose your specialized interest in neuro-oncology?
Anna Damato: Starting out at The College of Wooster as a biology major, I began working with plants. I had a wonderful research mentor who taught me DNA extraction from plant leaves and tasked me with care of the campus greenhouse.
Plants are interesting and essential to life, but I really wanted to know more about mammals. This steered me away from plants and toward animals, which led to questions around behavior and the brain. I switched to a major in neuroscience and did my senior thesis on the impact of surface water contaminants like antidepressants and heavy metals on the behavior of a nematode found naturally in that environment, C. elegans.
This was my first foray into applied neuroscience. It wasn’t until my first year at WashU in the Herzog Lab that I started thinking about oncology. A program in the lab researching circadian (time of day dependent) medicine in Glioblastoma, the most common primary adult brain tumor, piqued my interest. This became the subject of my neuro-oncology focused PhD thesis.
AlphaWatch: Incredible! What led you to a career that blends science and investing?
Anna Damato: During my PhD, I began volunteering with a student-run non-profit consulting group, The BALSA Group, for biotech and life science companies. We typically completed 12-week engagements with smaller private companies that were looking for help with market sizing, competitor research, or some other strategic question.
This exposed me to how small companies develop drug candidates, and it got me interested in the business side of science. In addition to continued involvement in this organization throughout my PhD, I also obtained an entrepreneurship citation from WashU, a supplemental coursework program that allowed me to take some MBA classes and participate in a leadership program. Through these programs, I met another student participating in the Kennedy Capital Management Biotechnology Equity Research Fellowship, a program that I now run. It was my two-year internship with KCM that made me think investing is the career for me!
AlphaWatch: The biotech fellowship program is fascinating. How does the program find new candidates?
Anna Damato: We cast a wide net using student-directed job posting boards, advertising through student groups like BALSA, mentioned above, and I network directly with WashU students and faculty to make sure they know the opportunity exists. Since we only have four spots and fellows can stay with us for a year or two (depending on their professional development goals), we’re often looking to fill only one or two spots a year. This means we can be highly selective and wait for the best applicants.
AlphaWatch: Having gone from being a fellow in the program to actually running the program itself is quite an achievement. What's next for you in terms of career goals or mileposts?
Anna Damato: Up until a month ago, I would have said I hope to be promoted to Assistant Portfolio Manager! Most immediately, related to being APM, I want to gain more experience with portfolio construction and client-facing activities, in addition to continuing to hone my stock-picking skills. There’s no shortage of wisdom and experience here at KCM for me to try to absorb.
AlphaWatch: Speaking of stock-picking skills - how do you know when to invest or to stay away?
Anna Damato: If there was a straightforward answer to this, my job might not exist! This is very situation-dependent and sometimes, it's as simple as concerns about a company not having sufficient cash to reach key pipeline data points (stay away!). Other times it can be extremely complex. An example of a complex decision could be one that involves multiple moving parts. There could be a mix of clinical trial risk (will the drug work?), regulatory risk (will the change in administration impact how the FDA views the drug or how Medicare/Medicaid pays for it?), and financial risk (will interest rates stay high and make additional funding hard to come by?). In a situation like this, we have to employ all our resources like expert networks, years of experience, valuation analysis, and scientific analysis to conduct a risk/reward assessment on each part of the equation.
AlphaWatch: And that's why we leave those decisions up to people like you and your peers at KCM. Thanks again for spending time with us today, Anna!
To watch Anna analyze biotech and healthcare stocks live each month, save your spot for the "Dr is IN" call. Register here: https://zoom.us/webinar/register/WN_1sICDudeRcy7EJ4ObSXtZg#/registration
To read some of Anna's work, visit: https://orcid.org/0000-0003-3283-3958 or check out the publications at KCM: https://www.kennedycapital.com/category/insights/
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