Holly Black: Welcome to Morningstar. I'm Holly Black. With me is Ailsa Craig, she's Manager of the International Biotechnology Trust (IBT). Hello.

Ailsa Craig: Hi, Holly.

Black: So yours has been an industry that's kind of been in the spotlight over the past 18 months with the covid pandemic, how has it affected valuations and how you're looking at companies?

Craig: Well, for the companies that have been right at the forefront of addressing the pandemic, such as the vaccine names, it's been incredible. So those companies have done really well. And those valuations have expanded. But the whole sector wide it's sort of a game of two halves, really. We've seen tech -- a strong performance from tech companies, and there are some biotech companies that can get caught up in that. So we've seen some sort of futuristic, highly innovative early stage companies such as the CRISPR names being sort of brought up in valuations. But then the the listed companies, the more established companies, the areas that we invest in, in our portfolio, are relatively stable valuations. We're seeing some steady growth and reasonable valuations there. So not really sort of being caught up in the whole tech bubble.

Black: So obviously, we're seeing the rollout of the vaccine across the world. Now, what does that mean for the sector?

Craig: So the sector has played a huge role in addressing all aspects of the pandemic. So initially to sequence the virus and understand what it is and what we're dealing with, then testing side of things, and then to treat the disease or to prevent the disease with vaccines. And obviously, we've seen huge success on the vaccine front. And that was unpredictable, people thought that on the treatment side we'd see some successes first, but unprecedented at speed of less than a year, from lab bench to product to injection into people's arms, we've seen a successful vaccine. In terms of what that means I think that ultimately, it's really brought up the reputation of the sector. It's had an appalling reputation historically, worse than tobacco industry. And now I think people are much more educated as to what it takes to get a drug from lab bench to injecting a patient. And there's a real understanding of the costs behind that et cetera. So it's been really positive, I think, for the sector overall.

Black: So it's obviously easy to forget. But there are other things going on in the biotech world, than COVID. Biogen just had a breakthrough in an Alzheimer drug approval, what's going on there?

Craig: Yes, so this has been a real achievement for those guys. They originally worked in multiple sclerosis. And often we see in the biotech industry, companies launching a successful drug, a successful franchise and not really doing the second leg of growth, and Biogen have proven that they can do that. So that's great. So it's good for those guys. And it's great for the Alzheimer's community, there hasn't been a product approved in this area for a very long time that actually addresses the underlying causes of the disease. Much money has been spent in the past in trying to approach the drug by reducing these plaques in the patient's brain, and it hasn't worked. So, this is great. The impact on the sector means that there are many other companies out there looking at the same mechanism of action for dementia. So they will, this is a green light for those guys to continue their efforts. There are some in very late clinical trials as well. So it's positive in that respects. But it isn't without its controversy. So a lot of people are debating the efficacy of the drug. So it'll be interesting to see how much is actually used once it's launched.

Black: And has it been harder for those companies that are focusing on needs outside of COVID over the last 18 months?

Craig: I think in terms of clinical trials, we did see a slowdown in the recruitment of clinical trials in some instances. And some for example, some manufacturing plants were handed over to develop COVID vaccines, but otherwise, really it's been business as usual. So no major impact on the progression of the companies in our space.

Black: Ailsa, thank you so much for your time. From Morningstar I'm Holly Black.