Roche bid Shines spotlight in biotech sector

Roche's unsolicited bid to acquire the 44% of Genentech it does not already own has put the spotlight on the biotechnology sector, which has been mooted as a safe haven by many investors. While Gartmore sub-adviser Marsico Capital Management would refrain from an across-the-board endorsement of safe-haven status - especially given the general paucity of pipeline drugs, it applies its best-of-breed approach to the sector. Among its best-of-breed holdings is Genentech, in which Tom Marsico, manager of the Gartmore US Growth Fund, has a position. Commenting on Switzerland-based Roche's initiative, Tom says "investors may be expecting some upside as they believe Genentech's independent directors are likely to be won over eventually to the Roche bid, which they have initially rejected as undervaluing the company."

Tom, who originally trained as a biologist, takes a particular interest in biotechnology. Genentech, a long-standing position in the Fund, is a company generally perceived as founding the biotechnology industry. Its experimental drug Avastin, whose failure in a key trial earlier in the decade caused Wall Street at one point to fall out of love with Genentech, has come into its own. Avastin became the first US Food and Drug Administration-approved therapy designed to inhibit angiogenesis. That is, Avastin serves to inhibit the process by which new blood vessels develop and carry vital nutrients to a tumour, a targeted approach rather than bombarding the whole body with chemicals as in chemotherapy. Avastin, used for treating breast cancer, is also showing promise as a drug in the treatment of colorectal cancer and lung cancer. "That Genentech has been able to develop drugs that have a wider application underscores our enthusiasm for the company," says Tom.