Magda Wierzycka: 80% probability for Oxford Covid-19 vaccine availability by September

Magda Wierzycka is the co-founder of disruptive financial services company Sygnia. In this podcast, the outspoken actuary, economist and businesswoman speaks to BizNews founder Alec Hogg about what drives her to get up in the morning and the seismic shift in the way that South Africa's public resources are going to be invested. Wierzycka believes that Covid-19 is a wake-up call to the whole world – a catalyst for rethinking a lot of things- and that this is not the only pandemic that we are going to see in our lifetime. On the subject of the IMF loan to South Africa, she expresses gratitude that South Africa is unable to borrow more offshore as that would send the country to a sovereign default within five years. An update on the status of the Oxford University Covid-19 vaccine is also provided in this podcast. – Nadya Swart.___STEADY_PAYWALL___.Well, very exciting news coming out of Sygnia, whose founder Magda Wierzycka is with us now. You guys are doing innovative stuff, Magda. Do you see yourselves as a big disruptor? We'll talk about the latest innovation in a moment, but is that what gets you up in the morning? .Absolutely, Alec. I look for new products. I look for new themes, trends, ideas. So, you know, we've had a 4th Industrial Revolution Global Equity Fund. We've had the FAANG Fund. Last year we launched the Sygnia Oxford Science Innovations Fund. And now the latest addition to the family is the Health Innovation Global Equity Fund. So, yes, definitely an innovator. .Covid-19 – the catalyst.And that's, again, the time. It sounds, I suppose, a little opportunistic, but actually – Covid-19 is changing everything. .You know, I think Covid-19 is a catalyst for rethinking a lot of things. And, you know, one thing – particularly with my exposure to Oxford Sciences Innovation – has been this exposure to the healthcare sector and the fact that as investors inside Africa, we have very, very limited availability to anything with that theme in mind. And yet worldwide, it's a giant theme, because it's not just about provision of healthcare. .It's prevention, it's devices, it's therapeutics, it's vaccines. So, there is a huge amount of stuff happening in that space – both listed and unlisted – and South African investors have absolutely no exposure and ways of accessing it domestically. You know, the market cap of the top five largest pharma companies outstrips the size of the entire JSE. .Read also: Magda Wierzycka to join The Apprentice South Africa TV show as CEO in 2021.How the new Health Innovation Global Equity Fund is made up.Are they companies that you're gonna be investing in in this new Health Innovation Global Equity Fund? .Yes. So the idea is: 97% of the Fund is in the listed space. Investing in companies, primarily in the healthcare sector. But the Fund also has a mandate to expand into anything that's groundbreaking:R&D, life sciences, biotechnology, nanotechnology, IT, genetic engineering, 3D printing. So, you know, anything that is new in the field of medicine and provision of healthcare. .And then, you know, interestingly enough, obviously, we looked at Covid-19 and there is a tilt to the Fund in the sense that at least 50% of the Fund will be invested in companies which are involved either in Covid-19 vaccine development or in treatment therapies or in testing for Covid-19. So, you know, on this assumption that Covid-19 is here to stay – it is a theme that will grow and, you know, feed growth in that sector. But that's not the only reason. .The other reason is the demographics. If you look at the ageing baby boomers, our healthcare expenditure is an ever growing percentage of GDP. In the US, it's already 17% of US GDP – it's a humongous number. So, it's a huge trend that we are seeing and we would like to bring it to South Africa and to South African investors. .So, where is the Fund going to be focusing its attention? We know the US has got most of the big pharma companies, but there are some interesting options elsewhere in the world – like you showed with your Oxford investment. .Absolutely. So about just under 70% of the Fund are US based companies, but around 10% are Switzerland, 4% in the UK, about 6% in Japan, there's a large Denmark based pharmaceutical company that we are looking at. And then the rest of it is the rest of the world. So, it's global. .Read also: Sygnia founder Magda Wierzycka lifts lid on how her company bought into Oxford's Covid-19 vaccine.And how do you pick the constituents of the portfolio? .So, we do it by market cap, because it is a dynamically managed index tracking fund in the sense that we look at the top hundred and fifty largest companies in the healthcare sector and then we apply an ESG screen on it. .So, what we want to make sure of is that, you know, the companies we invest in are doing good and are well rated in terms of this kind of environmental, social and governance factors and are not involved in any controversies with drugs that poison people or overpriced medicine. So, there is an ESG screen applied on top of that index. .And then 3% of the Fund will be invested in Oxford Sciences Innovation, which, you know, I love completely. .Well, I think that's enough for any South African to decide to support it, because we've had a lot of coverage of OSI here on BizNews and many South Africans have invested. I know one of your big fans – Magnus Heystek – has got lots of his clients and is a friend of OSI. So that will also be in the Fund – a percentage of it will be in there. .What about looking ahead, though? Is this Covid-19, perhaps, just a flash in the pan that maybe – once that's over, once the pandemic's over – things will go back to normal and the investment universe will then revert elsewhere?.I think that Covid-19 is a wake up call to the whole world because it has highlighted a lot of things. It has highlighted inequality. It has highlighted the inadequacy of health care provision in developed markets – never mind emerging markets – but developed markets. I think that it will become a focus, just healthcare provision generally will become a focus of governments worldwide. It will become a political issue. If you are going to stand on a platform, you're going to stand on a political platform of healthcare provision, because now you have this pandemic to reference. .And, you know, this isn't the first pandemic we are living through. I think it's the first pandemic we're living through that comes together with social media. So, there have been other pandemics after the Spanish flu. It's just that there was no social media to blow them up into what this has become, you know, which then comes with political pressure – and then we have seen the economic destruction that followed. .Just before, you know, there were bad flu seasons that happened: 1968, 69 – very similar to what's happening right now. And yet, you know, when you talk to people about the very bad flu season, 68, 69, no one knows about it or remembers. So, I think we are going to have more pandemics and more incidents. They might be localised like Ebola was. But this isn't the one and only pandemic we are going to see in our lifetime. .How are you reading the way that South Africa's been handling all of this? There's a lot of confusion. I know you're an actuary, so you know the numbers, but there's much confusion here. Some people really exaggerated the mortalities, to start with, and we had this heavy lockdown – and some are very critical that the damage that that will cause to the economy will be greater than Covid-19 ever would. .On PANDA.Alec, that was me in March. When Cyril Ramaphosa stood up and said we're going into lockdown – I literally wanted to scream. All my PR people and marketing people said, stop, do not talk about it. And I just looked at the fact that, you know, we've got no ability to really expand a healthcare profession. So, this lockdown served no purpose but to push out the actual infection curve by three months while flattening the economy, which we couldn't afford then. And now, of course, we are where we are. .I'm a big supporter of the work done by the PANDA group to the general criticism of the actuarial profession. I tweeted something about the PANDA group research, which, in fact, had been the most accurate in terms of predicting the death rates inside Africa. So, it's really research worth reading. So, I tweeted something about the PANDA group, because I have been following their research and speaking to them. And I got an email from the Actuarial Society being critical of my expressing support publicly for someone else but the Actuarial Society of South Africa. .On South Africa's response to Covid-19.I think the modellers got it very wrong in terms of their death predictions. Cyril had no choice but to react, because as a politician, he couldn't afford to have EFF – another political party – saying you've got blood on your hands, blood of South Africans on your hands. So, he almost needed to do what he did and then wait for the ground support to swell up against the lockdown measures. .But then, of course, we've got the rise of a dictatorship that has come with it. You know, the ridiculous tobacco – and I'm not a smoker – ban, the absolutely ridiculous ban on alcohol sales. The effect all of that is having on the fiscus and tax collections – it's horrific. I mean, I just want to cry. It's not like I have solutions. .It's going to take quite a while to work our way out of this as well. The IMF loan – do you think it's a good or a bad thing?.Oh, my God, Alec. I'm so pleased that they will only lend us $4.3bn and not more without conditions. They were in South Africa, they wanted to lend us more money. But any further lending would come with associated conditions of having to cut public service, which obviously ANC is not going to do. .But if I look at the future of the rand and all I'm seeing is depreciation and further weakening – if we start borrowing in dollars, we are heading for a sovereign default within five years. So the very fact that we are unable to borrow in dollars without committing to conditions, which the ANC is not going to commit to – is a savings grace and savings grace for future generations..Wow. Well, thanks, as always for giving us your insights here. Just to close off with going back to the fund, because it is an exciting development and unusual in South Africa, how have they performed these stocks, health stocks?.Alec, incredibly well. But there is a little bit of a timing issue right now. So, you just need to strip through the noise. Look, these companies are giants and they get there through patents and medicines, through acquisitions, through mergers. So over the years, the healthcare MSCI World Health Care Index has outperformed the general MSCI World Index. .Right now, obviously, any company that has been involved in vaccine development has seen a massive spike in its market cap: Moderna, for instance, has gone from 20bn, I think, to 76bn. But I think that those are kind of flashes in the pan that you need to look through..So it's a long-term, almost a seismic shift in the way that public resources are going to be invested – given what you said earlier about politicians being able to reference this pandemic? .Indeed. And you know, what is also happening, which is very positive for these companies is: they are receiving a lot of non-dilutive grant funding from governments. So, it's literally like Vaccitech in the UK – which is involved in the Oxford Vaccine Project – received 19 million pounds from the UK government, which doesn't dilute its shareholders – so it's great for investors. .But at the same time, you know, it enables the company to continue with their research and development. And that kind of grant funding is happening all around this space, where governments are throwing money at healthcare already. And I think that that trend will accelerate because of the pandemic. .The latest on the Oxford vaccine.Can you give us any update on the Oxford vaccine? .So, there was quite a lot of media coverage around it in the UK last week. And basically: they think that they've got 80% probability of being successful. Obviously, AstraZeneca is manufacturing millions and millions of doses. It will be a two-dose vaccine. It will be an annual vaccine. .Those are the predictions: that it's an annual vaccine, two dose vaccine..Wow. But there's no benefit in the short term. However, thereafter, the company will benefit. .Indeed. Oxford is not making any money out of the vaccine. So Vaccitech, which owns the IP and signed the agreement for the manufacturing of the vaccine with AstraZeneca – which is a pharmaceutical company, includ(ed) in our unit trust – will make absolutely no profit, receive no royalties until 12 months after the World Health Organisation no longer regards Covid-19 as a pandemic. .Only then will it receive royalties, and only then will AstraZeneca be permitted to make a profit. But a large number of companies working, particularly American companies working on the vaccine, have already announced that this is a for-profit initiative and that they intend to sell it at a huge premium. Trust the Americans.

Magda Wierzycka: 80% probability for Oxford Covid-19 vaccine availability by September

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