Polar capital healthcare opportunities fund presentation october 2012 citywire italy

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  • 1. Polar Capital Healthcare Opportunities FundOctober 2012“Finding the growth opportunities in a changing healthcare world” This presentation is for one-on-one use with non-US professional investors only www.polarcapital.co.uk
  • 2. We See A Compelling Opportunity In Healthcare• The resurgence of the healthcare sector has been unsung and largely unnoticed – Healthcare has been an unloved sector – drug patent expirations, healthcare reform and government austerity have together led investors to question the growth opportunities – recent interest has focused on defensive growth• Underlying fundamentals have not changed and are still positive – An aging population in the developed world will demand more healthcare and GDP growth is set to drive increased healthcare spending in emerging markets• We think healthcare systems across the world have begun a process of major structural change – Technological innovation is the catalyst for what we think will be a “once in a generation” transformation• Government austerity plans accelerate the need to reform the 20th century infrastructure – Companies with products or services that deliver better healthcare for less will be able to grow despite a difficult macroeconomic environment• To take advantage of the investment opportunities we think you need to have a broad investment universe – Healthcare investing is not about big drug stocks, our investment universe covers the entire value chainFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 2
  • 3. 40 Years of Relevant Healthcare Experience Daniel Mahony Ph.D. – Fund Manager Daniel joined Polar Capital to set up the healthcare team in 2007. He has more than 13 years’ investment experience in the healthcare sector, with over 4 years as a Portfolio Manager and 9 years as a sell-side analyst. Prior to joining Polar Capital, he was head of the European healthcare research team at Morgan Stanley, covering the European biotechnology, medical technology and healthcare services sectors. He also previously worked in New York for ING Barings Furman Selz following the US biotechnology sector. Before working in the investment field, Daniel worked as a research scientist for 7 years with the majority of his time at Schering Plough Corporation in California. Daniel received his PhD from Cambridge University in 1995 and a first class honours degree in biochemistry from Oxford University in 1991. Gareth Powell CFA – Fund Manager Gareth joined Polar Capital in 2007 to set up the healthcare team. He has over 12 years’ investment experience in the healthcare sector, with 10 years as a portfolio manager. He joined Framlington in 1999 becoming a portfolio manager on the Framlington health fund. In 2002, he helped launch and then run the Framlington biotech fund. Gareth became a CFA charter holder in 2003. Gareth studied biochemistry at Oxford from 1995 to 1999 and during that time worked at Astellas, the Sir William Dunn School of Pathology, the Wolfson Institute for Biomedical Research and the Oxford Business School. Anna Sizova MBA – Analyst Anna joined Polar Capital in February 2008 as an analyst for the healthcare team. She has over 5 year’s investment experience in the healthcare sector that started with her time at Morgan Stanley as a healthcare analyst covering the European medical technology sector. Prior to working in investment, she spent 5 years at Johnson & Johnson, working in both the marketing and finance departments. Anna holds an MBA degree from the London Business School and a degree in Theoretical and Applied Linguistics from Moscow State University.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 3
  • 4. Healthcare FundamentalsA long-term secular growth sectorFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 4
  • 5. Aging Populations Point To A Key Inflection PointWe are in the middle of a significant change in demographics• The first of the US baby-boomers reached retirement age last year – The baby boomers expect a higher quality of life than their parents’ generation• Developed markets will witness strong growth in demand for at least a decade – We expect to see a large increase in chronic conditions associated with old ageComparison of demographic trends Old-age dependency ratios (in percent)Source: United Nations (2009), hhtp://esa.un.org/unpp.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 5
  • 6. Emerging Markets Are A Second Growth Driver EM spending on healthcare is far below the developed world• As developing nations get richer, healthcare becomes a spending priority – We expect healthcare spending by the BRICS to increase from 4-6% to 7-9% of GDP over the next decade US (off scale) GDP/cap 47,369 Pharma spend/cap 954 Pharma spend per capita, US$, 2008 GDP per capita, US$, 2008Source: World Market Monitor, IMS, AstraZeneca.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 6
  • 7. Controlling Costs Is A Long-Term Issue Governments need to manage the growth of health spending• OECD health spending has been increasing well above GDP growth for the last decade – We believe that this is unsustainable but an aging population creates upward pressure on budgets• It would be politically “difficult” for a Western government to cut its healthcare budget – But governments can change the way money is spent and we see a focus on improving efficiencyNote: Social Security and Medicare projections based on the intermediate assumptions of the 2005 Trustees’ Reports. Medicaid projections based on CBO’s January 2004 short-term Medicaid estimates and CBO’sDecember 2003 long-term Medicaid projections under mid-range assumptions.Source: GAO unless otherwise stated. GAO analysis based on data from the Office of the Chief Actuary, Social Security Administration, Office of the Actuary, Centers for Medicare and Medicaid Services, and theCongressional Budget Office.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 7
  • 8. Innovation Is A Key Part Of Healthcare Investing Innovation is the only solution to long-term cost containment• Delaying the onset of Alzheimer’s by 5 years could save $447 billion by 2050 – We expect data on three new Alzheimer’s treatments over the next 18 months Impact of treatment to delay AD onset on medical costs Projected medical spending (in Billions)Source: Alzheimer’s Association, “Changing the Trajectory of Alzheimer’s Disease: A National Imperative,” 2010 and innovation.org.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 8
  • 9. The Investment Strategy Has to ChangeWe think the mix of healthcare spending will change• Healthcare used to be about growing the size of the pie with little regard to cost ‒ We think less will be spent on people and buildings and more allocated to drugs, devices and technology US Healthcare spending – greater use of innovative technology can reduce cost escalation 1960 2010 10% 6% 9.5% CAGR 3 – 4% CAGR $29 billion $2,600 billion Drug spending Medical device spendingSource: Centers for Medicare and Medicaid Services.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 9
  • 10. Major Structural Change Seems InevitableTransitioning to a 21st century healthcare system Advances in Information Technology Better understanding of Devices with improved disease Healthcare IT functionality Improved Doctor/nurse Consumer Productivity New New drugs patient “in -isation in the diagnostics management the pocket” of healthcare hospital Technology helps move healthcare out of the hospital into cheaper cost settingsSource: Polar Capital.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 10
  • 11. Healthcare InvestingThe Polar Capital approach to healthcare investingFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 11
  • 12. Polar Capital Healthcare Opportunities Fund Growth portfolio 100% Portfolio of 40 - 45 stocks Market cap >US$5 billion US$1 - 5 billion <US$1 billion Projected portfolio 20 - 60% 20 - 40% 20 - 40% weighting• The Polar Capital Healthcare Opportunities Fund (HOF) is an open-ended UCITS IV fund – The euro share class has delivered a 43.5% return from inception in December 2007 to 28 September 2012• The Fund invests across healthcare sub-sectors, geographies and market capitalisations – The investment style for the HOF is best described as Growth At a Reasonable Price (GARP)Source: Polar Capital and Bloomberg, 28 September 2012. Past performance is not indicative or a guarantee of future results. Performance is quoted net of fees.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 12
  • 13. Healthcare Universe And The Economic CycleCertain sub-sectors are more sensitive to the economic cycle• In the US, changes in healthcare insurance have made individuals more cost-conscious – In particular, annual deductibles and co-pays have risen significantly over the last decade• Even in Europe, some parts of healthcare are discretionary – Most dental procedures are out-of-pocket and cosmetic procedures are more like luxury goods Discretionary Elective Acute/chronic Cosmetic surgery Hip implant Diabetes Dental Sports medicine Heart surgery LASIK Imaging Trauma Botox Diagnostics Oncology Senior living Vaccinations Respiratory Cyclical Defensive Healthcare facilities Healthcare distributors Pharmaceuticals Life science tools & services Medical devices Managed care Biotechnology Medical supplies Healthcare ITSource: Polar Capital. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities in this document. A list of all recommendations made within theimmediately preceding 12 months is available up on request.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 13
  • 14. The Growth Drivers For HealthcareValue means improving outcomes and cutting costs• Healthcare companies have to show that their products/services deliver value – Companies can maintain pricing power if they add real value but the era of “me too” drugs and modest technical improvements seems to have come to an end• Inefficiency is a major problem in healthcare systems across the world – Most healthcare systems reward volume not quality – we think reimbursement systems are beginning to change• Innovation is the best way to improve quality and reduce costs – We look to invest in companies with new drugs or technologies that can change the way medicine is practised or target unmet medical needs• Infrastructure is critical in both emerging markets and developed countries – Countries such as China are at the start of building an integrated healthcare system while developed countries, such as Germany, look to the private sector to cut costs The three “I”s of healthcare – addressing inefficiency through innovation and infrastructureFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 14
  • 15. Healthcare InvestingIdentifying the near-term catalystsFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 15
  • 16. Healthcare Is Cheap And Has ReboundedLong-term data suggest the potential for multiple expansion• Historically, healthcare has traded at a premium to the market ‒ The two exceptions are related to the election of a Democrat as US President• Slowing top-line growth for pharmaceutical companies has not helped ‒ However, we believe that the catalysts are in place for a sector recoveryPrice to book value: Healthcare/S&P 500 Index Price to forward earnings: Healthcare/S&P 500 Index 3.5 1.8 3.0 1.6 Long-term Average Long-term 1.4 +1 STD 2.5 +1 STD 1.2 2.0 1.0 -1 STD 1.5 -1 STD 0.8 1.0 0.6 Jan-80 Jan-83 Jan-86 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-80 Jan-83 Jan-86 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Price-to-Book Value: Health Care / S&P500 Price-to-Forward Earnings: Health Care / S&P500Source: Royal Bank of Canada, August 2012.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 16
  • 17. The Sector Is Breaking Out To New HighsThe healthcare resurgence has been unsung and unnoticed• Healthcare has been in a consolidating pattern for 15 years and is now breaking out – We think the technical analysis is indicative of the major structural change that we see occurringSource: Bloomberg, 27 September 2012. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities in this document. A list of all recommendationsmade within the immediately preceding 12 months is available up on request.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 17
  • 18. US Election Will Be Important for 2013President Obama is leading but Senate races are closer• If President Obama is re-elected then the expansion of healthcare provision will remain on track – This will be a positive for hospitals and Medicaid managed care stocks• The composition of the Senate is less certain but is critical for fiscal cliff discussions in 2013 – The concern is that healthcare spending may come under pressure when the fiscal deficit is addressed Intrade odds for the US presidential election Obamacare will extend healthcare coverage 80 70 Obama 60 50 40 30 Republican 20 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12Source: Intrade, Strategas, US Census Bureau, CBO, and WellPoint Investor Presentation.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 18
  • 19. Healthcare Sector DriversThe return of the pharmaceutical industryFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 19
  • 20. Pharma May Exit The Patent Cliff In Better ShapeManagements have prepared for upcoming patent expirations• The focus on cost control creates an opportunity for operating leverage – Management teams have started to eliminate waste and streamline their businesses• The patent cliff may not be as deep as was initially feared – Pfizer should deliver modest EPS growth as it passes through its patent cliff Consensus estimates suggest margin expansion Pfizer’s EPS trough is not that deep 7.0% 70 $2.60 6.0% 68 5.0% $2.50 66 4.0% $2.40 3.0% 64 2.0% 62 $2.30 1.0% 60 $2.20 0.0% 58 -1.0% $2.10 -2.0% 56 -3.0% 2011E 2012E 2013E 2014E 2015E 54 $2.00 2011 2012E 2013E 2014E 2015E Average Global Pharma Average Global Pharma Y-Y EPS Growth Y-Y Sales Growth Revenues EPSSource: Bloomberg. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities in this document. A list of all recommendations made within theimmediately preceding 12 months is available up on request.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 20
  • 21. R&D Productivity May Be Starting To ImproveCurrent valuations attribute little value to drug pipelines• We think that we may be at the beginning of a new wave of drugs – We think the low level of productivity seen over the last decade may be a function of the innovation cycle – similar to the fallow period seen in the 1970sNumber of new phase I clinical trials starting per year (2005-10)1 Clinical development activity is increasing 1,400 1,200 New trials started in a year 1,000 800 600 400 200 0 2005 2006 2007 2008 2009 20101.Source: Liberum Capital and Bank of America Merrill Lynch.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 21
  • 22. A New Era of Drug Discovery And DevelopmentGenomics research is having a meaningful impact• Technology is the driver – it is now possible to sequence a human genome for $1,000 – The first human genome sequence cost over $1 billion back in 1999/2000• After a decade of basic research, there is now a more detailed understanding of disease at the molecular level – This means scientists have found new, and potentially better, ways of targeting disease• The biotechnology sector is leading the way but pharmaceutical companies are not far behind – Some made significant advances have been made in rare genetic diseases, cancer and inflammatory disease• Diagnostics tests will be an essential of this new era of medicine – Nearly all drug development programmes now incorporate a biomarker strategy to either select the right patients, monitor drug activity or identify potential safety issues• Companion diagnostics are already here – the era of personalised medicine has begun – Qiagen launched two tests this year that determine whether a colorectal cancer patient is eligible to receive an expensive cancer drug – saving money by targeting the right drug to the right patientFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 22
  • 23. Biotechnology Is The Drug Discovery EngineThe biotechnology sector is beginning to deliver on its promise• We are seeing the benefits of increased R&D investment over the last few years – We believe that innovation can provide companies with pricing power and reduce healthcare costs over the long term• 2011 saw the launch of 12 new biotechnology blockbuster products – We expect each of these to have a sales potential of >$500 millionIt should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities in this document. A list of all recommendations made within the immediately preceding12 months is available up on request.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 23
  • 24. Prostate Cancer – Treatment Is ChangingA number of new prostate cancer drugs are now availableNew drugs are expected to be used earlier in the progression of the diseaseSource: William Blair.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 24
  • 25. The Promise Of Growth Is Being RekindledPositive pipeline news can still drive stock performance• Bristol Myers’ clinical pipeline success has been rewarded – In our view, Bristol Myers is the only pharma stock with significant pipeline valueSource: Bloomberg, 4 September 2012. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities in this document. A list of all recommendationsmade within the immediately preceding 12 months is available up on request.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 25
  • 26. Healthcare Sector DriversThe key themes for growthFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 26
  • 27. Improving Efficiency In The Service SectorReimbursement systems will reward quality and not volume• Accountable care and evidence-based medicine are the new buzz words – We are seeing similar trends across all developed and developing markets• These changes have a massive impact for the entire healthcare value chain – All companies, whether they sell products or services, will need to focus on delivering valueSource: UnitedHealth and ACO management. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities in this document. A list of allrecommendations made within the immediately preceding 12 months is available up on request.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 27
  • 28. Innovation Can Change Medical PracticeEdwards has pioneered a novel approach for heart valves• The move to minimally invasive surgery eliminates significant hospitalisation costs – After only three years, we expect European sales to reach $250 million in 2012 Edwards’ SAPIEN eliminates the need for open heart surgerySource: Edwards LifeSciences and Polar Capital. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities in this document. A list of allrecommendations made within the immediately preceding 12 months is available up on request.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 28
  • 29. The Healthcare IT Era Has Just BegunHealthcare IT is a critical driver of change in healthcare• As part of the 2010 stimulus package, the US will spend $36 billion from 2010-2015 on healthcare IT – The US is a long way behind the rest of the world but looks set to overtake in the hospital setting• IT will enable not only better cost management but also the “consumerisation” of healthcare – There are many “easy” gains to be made from implementing IT systems – i.e. on-line booking of appointments – Ultimately, we see the potential for making individuals more responsible for their own careSource: Cerner and CMS. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities in this document. A list of all recommendations made within theimmediately preceding 12 months is available up on request.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 29
  • 30. The Device Industry Continues To InnovateAdvances in chip technology drive new types of innovation• We see smaller medical device companies as the engine of innovation – New technologies target niche markets and provide pricing power and growth opportunities• We are seeing a transition towards products that help doctors manage and not just treat disease – This could mean new sources of revenue and erect new barriers to entrySource: Polar Capital. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities in this document. A list of all recommendations made within theimmediately preceding 12 months is available up on request.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 30
  • 31. Managed Care Is A SolutionThe US Govt is using commercial health insurers to save cash• Medicare Advantage programme began under President Bush but penetration is still low – We see Humana and UnitedHealth as the best-positioned to take advantage of this move from fee for service to managed care• Moreover, the so-called dual eligibles are expensive to treat and could create a huge market opportunity – This could be a $300 billion opportunity compared to the current health insurance market of $600 billion Various revenue opportunities in managed care (as of 30 Jan 2012 $bn) $bnSource: CMS and Barclays Capital. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities in this document. A list of all recommendations madewithin the immediately preceding 12 months is available up on request.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 31
  • 32. Polar CapitalHealthcare Opportunities FundFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 32
  • 33. Portfolio As Of 30 September 2012 Large-cap Mid-cap Small-cap Allergan Pharmaceuticals Astellas Jazz (23%) Johnson & Johnson UCB Pfizer Alexion Actelion Biotechnology Biogen Idec Biomarin Celgene Cubist (23%) Gilead Medivation Onyx Asahi Intecc Agilent Cooper Cyberonics Medical Devices Covidien Heartware Dexcom Edwards Lifesciences Perkinelmer Endologix (26%) Sirona Insulet Spectranetics Advisory Board Services Express Scripts Air Methods Acadia Healthcare HCA Brookdale Senior Living AmSurg (25%) UnitedHealth Catamaran Corp Synergy Healthcare HMS Holdings WellcareSource: Polar Capital. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of securities in this document. A list of all recommendations made within theimmediately preceding 12 months is available up on request.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 33
  • 34. Investment Process – Filter / Due Diligence / Risk > 2,900 global healthcare companies US Europe RoW Gareth Powell Pharmaceuticals Daniel Mahony Biotechnology Anna Sizova Services Medical Devices Identify companies Industry contacts that meet our Industry periodicals opportunity criteria Company meetings Broker contacts 70 potential stock ideasFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 34
  • 35. Stage 1 – Primary FilterInvestment opportunities1. The operating leverage impact of new products can be underestimated – Detailed financial modelling can reveal the effect of a new product on operating margins and is also important when assessing the potential negative impact of competition2. A longer investment horizon to exploit the time-value proposition of healthcare – Given the long development times and product cycles in the drug and device industry, product candidates in early development are often under-valued3. Specialist or niche markets are regularly overlooked by investors – Small markets can create a significant commercial opportunity for a mid-sized company4. M&A activity is often under-rated by the market – M&A has been shown to drive long-term value for some healthcare companies but is often not reflected in the initial stock reaction to the news5. New technologies can generate significant investor returns – Healthcare relies on innovation and so keeping abreast of new breakthroughs creates an opportunity to profit from increased awareness of a new drug, device or technology6. Geographical and sector anomalies in valuation – US healthcare companies are often priced at a premium to global peers, especially in sectors such as biotechnologyFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 35
  • 36. Stage 2 – Due Diligence – Stock Picking 70 potential stock ideas Physician and consultant network Company meetings and site visits Investor conferences Medical meetings Detailed financial models Valuation • We build detailed market models when • We have developed proprietary valuation appropriate – the physician network is critical algorithms for biotechnology companies for gaining insights here • We prefer fundamental valuation approaches • Sensitivity analysis is important for stress such as DCF and residual income testing assumptions • We use peer group analysis – such as P/E, • We maintain our own P&L, Balance sheet and PEG and EV/EBITDA – to help identify good cash flow models entry and exit points 45 candidates for the portfolioFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 36
  • 37. Stage 3 – Risk ManagementWe will manage the risk/reward profile of the portfolio• Our multi-cap approach should generate superior risk-adjusted returns versus the healthcare index – The portfolio comprises three “conceptual buckets” based on the expected holding period – We want to exploit the long-term upside potential of small-cap stocks but risk and volatility are high – Mid and large-cap stocks have greater liquidity but anomalies in valuation tend to be shorter duration Portfolio of c. 45 stocks Market cap >US$5 billion US$1 - 5 billion <US$1 billion Expected holding 3 – 12 months 12 – 24 months 1 – 5 years period Estimated portfolio 20 - 60% 20 - 40% 20 - 40% weighting Risk Potential reward Liquidity Market CapitalisationFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 37
  • 38. Portfolio Construction• Overview – Number of holdings 40-45 stocks – Top 10 holdings c. 40% of portfolio – Benchmark MSCI World AC Healthcare – Max. position size 10% of NAV – Geographic Exposure Global – Use of derivatives Tactical Protection• Independent risk control process managed by Chief Risk Officer – Independent of portfolio managers – Risk profile of each fund assessed at a monthly Risk Management Committee – Ensures risk managed relative to the investment objectives of Polar Capital’s clientsFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 38
  • 39. Polar Capital OverviewAs at 28 September 2012 Total assets underPolar Capital was Management management Strategies Fund managers AUMestablished in 2001 and Tim Woolley Technology Ben Rogoff 2 funds $5.3bn CEO/Co-Founder Nick Evans $1,321mhas $5.3bn AUM, with Tom Bartlam Japan James Salter $1,421m84 employees. Non-Executive Chairman Business infrastructure Gerard CawleyThe Firm was listed on John Mansell • Distribution and marketing UK Philip Hardy $295.2m Chief Operating Officerthe London Stock • Operational supportExchange (AIM) in European Robert Gurner 2 funds Ownership • Risk managementFebruary 2007. The Andrew Marsh $654.3m Polar Capital • Compliance Healthcare Dan Mahony 2 fundsFirm offers managers a 41% • Technology Gareth Powell $440.0mlevel of infrastructure XL Financials John Yakas 4 fundsand corporate 10% • Finance Alec Foster $526.6mgovernance normally Caledonia Nick Brind 10%found in much larger Emerging William Calvert 2 funds Free Floatorganisations. 39% Market $233.6m Convertibles David Keetley $40.5m Stephen McCormick North American Andrew Holliman $343.0m Richard Wilson European MN Ton Tjia 2 fundsSource: Polar Capital. $26.5mFor non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 39
  • 40. Important Information Polar Capital 4 Matthew Parker Street London SW1H 9NPHouse ViewThis document has been produced based on Polar Capital research and analysis and represents our house view. All sources are Polar Capital unless otherwise stated.Important InformationThe information provided in this presentation is for the sole use of those attending the presentation it shall not and does not constitute an offer or solicitation of an offer to make an investment into any fund managedby Polar Capital. It may not be reproduced in any form without the express permission of Polar Capital and is not intended for private investors.This presentation is only made available to professional clients and eligible counterparties. Shares in the fund should only be purchased by professional investors. Any other person who receives this presentationshould not rely upon it. The law restricts distribution of this document in certain jurisdictions, therefore, persons into whose possession this document comes should inform themselves about and observe any suchrestrictions.This document does not provide all information material to an investor’s decision to invest in the Polar Capital Funds Plc – Healthcare Opportunities Fund, including, but not limited to, risk factors. For moreinformation, please refer to the fund’s offer document and read it carefully before you invest.Statements/Opinions/ViewsAll opinions and estimates in this report constitute the best judgment of Polar Capital as of the date hereof, but are subject to change without notice, and do not necessarily represent the views of Polar Capital. PolarCapital is not rendering legal or accounting advice through this material; readers should contact their legal and accounting professionals for such information.Third-party DataSome information contained herein has been obtained from other third party sources and has not been independently verified by Polar Capital. Polar Capital makes no representations as to the accuracy or thecompleteness of any of the information herein. Neither Polar Capital nor any other party involved in or related to compiling, computing or creating the data makes any express or implied warranties or representationswith respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particularpurpose with respect to any of such data.HoldingsThis portfolio data is “as of” the date indicated and should not be relied upon as a complete or current listing of the holdings (or top holdings) of the fund. The holdings may represent only a small percentage of theaggregate portfolio holdings, are subject to change without notice, and may not represent current or future portfolio composition. Information on particular holdings may be withheld if it is in the fund’s best interest todo so. A complete list of the portfolio holdings may be made available upon request. It should not be assumed that any of the securities transactions or holdings discussed was or will prove to be profitable, or thatthe investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein. The information provided in this document shouldnot be considered a recommendation to purchase or sell any particular security.BenchmarksThe following benchmark index is used: MSCI All Country World Index/Healthcare. These benchmarks are generally considered to be representative of the Global Healthcare market universe. These benchmarks arebroad-based indices which are used for comparative/illustrative purposes only and have been selected as they are well known and are easily recognizable by investors. Please refer to www.mscibarra.com for furtherinformation on these indices.Comparisons to benchmarks have limitations because benchmarks have volatility and other material characteristics that may differ from the fund. For example, investments made for thefund may differ significantly in terms of security holdings, industry weightings and asset allocation from those of the benchmark. Accordingly, investment results and volatility of the fund may differ from those of thebenchmark. Also, the indices noted in this presentation are unmanaged, are not available for direct investment, and are not subject to management fees, transaction costs or other types of expenses that the fundmay incur. In addition, the performance of the indices reflects reinvestment of dividends and, where applicable, capital gain distributions. Therefore, investors should carefully consider these limitations and differenceswhen evaluating the comparative benchmark data performance. The information regarding the indices are included merely to show the general trends in the periods indicated and is not intended to imply that the fundwas similar to any of the indices in composition or risk.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 40
  • 41. Important Information Cont. Polar Capital 4 Matthew Parker Street London SW1H 9NPRegulatory StatusThis document is Issued in the UK by Polar Capital.Polar Capital LLP is a limited liability partnership number OC314700. It is authorised and regulated by the UK Financial Services Authority (”FSA”) and is registered as an investment adviser with the US Securities &Exchange Commission (“SEC”). A list of members is open to inspection at the registered office, 4 Matthew Parker Street, London SW1H 9NP.Information Subject to ChangeThe information contained herein is subject to change, without notice, at the discretion of Polar Capital and Polar Capital does not undertake to revise or update this information in any way.ForecastsReferences to future returns are not promises or even estimates of actual returns Polar Capital may achieve, and should not be relied upon. The forecasts contained herein are for illustrative purposes only and arenot to be relied upon as advice or interpreted as a recommendation. In addition, the forecasts are based upon subjective estimates and assumptions about circumstances and events that may not yet have takenplace and may never do so.PerformancePerformance is shown net of fees and expenses and includes the reinvestment of dividends and capital gain distributions. Many factors affect fund performance including changes in market conditions and interestrates and in response to other economic, political, or financial developments. Investment return and principal value of your investment will fluctuate, so that when your investment is sold, the amount you receive couldbe less than what you originally invested. Past performance is not a guide to or indicative of future results. Future returns are not guaranteed and a loss of principal may occur. Investments are not insured by theFDIC (or any other state or federal agency), are not guaranteed by any bank, and may lose value.Investment Process - RiskNo investment process or strategy is free of risk and there is no guarantee that the investment process or strategy described herein will be profitable. Investors may lose all of their investments.AllocationsThe strategy allocation percentages set forth in this document are estimates and actual percentages may vary from time-to-time. The types of investments presented herein will not always have the same comparablerisks and returns. Please see the private placement memorandum for a description of the investment allocations as well as the risks associated therewith. Please note that the fund may elect to invest assets indifferent investment sectors from those depicted herein, which may entail additional and/or different risks. The actual performance of the fund will depend on the Investment Manager’s ability to identify and accessappropriate investments, and balance assets to maximize return to the fund while minimizing its risk. The actual investments in the fund may or may not be the same or in the same proportion as those shown herein.For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 41