Investment Opportunities in Brain Disease Treatments and ETFs

The rising demand for brain disease treatments presents lucrative investment opportunities.

### Investment Opportunities in Brain Disease Treatments: Insights from Samsung Active Asset Management
* 🧠 Today, Manager Jo Han-ki from Samsung Active Asset Management discussed the **growing market for brain disease treatments**, particularly focusing on **dementia, mental health disorders, and epilepsy**.
* 📈 The newly launched Coact U.S. Brain Disease Treatment Active ETF is specialized in treatments for brain diseases, reflecting a **high demand for solutions** as the incidence of degenerative diseases **increases with aging populations**.
* 👴 "The incidence of degenerative diseases like dementia **significantly increases after the age of 60**," highlighting the **urgent need for effective treatments** in a rapidly aging society.
* 💡 Technological advancements, particularly in AI and brain imaging, are accelerating the development of new treatments, with the degenerative brain disease market projected to **grow at an average annual rate of 29% by 2030**.
* 💊 Next-generation psychiatric medications are emerging with **improved efficacy and fewer side effects**, making them a **promising investment opportunity** in the mental health treatment market.
* 💵 The market for dementia treatments alone is expected to grow from **7 trillion to 42 trillion won**, indicating **substantial investment potential** in companies like Biogen, which is working on treatments for **Alzheimer's disease**.
* 🔬 Additionally, the non-opioid pain relief market is evolving, with Vertex preparing to submit a new pain treatment to the FDA, which could **replace traditional opioid-based analgesics**.
* 🌍 Overall, the discussion emphasized the **importance of investing in innovative treatments for brain diseases**, which are increasingly relevant in today's society as **mental health issues and degenerative diseases continue to rise**.

Lastly, the relevant items here are all foreign companies, so it would be good to explain them comfortably in English. We have new diseases, we have psychiatric diseases, and we have epilepsy. Oh, my English isn't working. Hello, I'm Lee Ho-seok. Today, we have Manager Jo Han-ki from Samsung Active Asset Management with us. Hello. Hello. Since this is your first appearance on our channel, could you please introduce yourself briefly? Hello, I am Manager Jo Han-ki, responsible for bio research operations at Samsung F&T. From what you're saying, it seems like your tongue is a bit tied, so is English more comfortable for you? Yes, that's right. I studied in the United States. Oh, you studied in the United States. Then, please feel free to share what you studied there in English. I studied brain engineering at the University of Michigan.

Next, you majored in biotechnology in Pennsylvania and also studied finance. I saw earlier that you were happy to be here, and it's an honor to have you. It seems you have just launched a new product. That's right. You graduated from a famous university and specialized in biology, so can we say that this ETF product is related to that field? Yes, it is a product specialized in treatments for brain diseases. It's called the Coact U.S. Brain Disease Treatment Active ETF. I see. I am quite interested in brain diseases, but this is the first time I've heard of an ETF product related to it. Speaking of which, I believe you also recently launched the Coact ES Biohealthcare Active ETF product.

I know that it seems to be quite popular these days, and the results are good. However, I think this concept is likely to expand beyond domestic bio to overseas as well. Yes, that's right. Among the aging strategies of Coact's Act, we consider aging to be represented by a figure like Bruce Willis, who is the most famous in this field. If I remember correctly, aging refers to getting older, and the second aspect is climate, followed by technology. The part we will discuss today is about aging and getting older, right? But looking at the picture you brought, it features Bruce Willis. Recently, it has been reported that the famous actor Bruce Willis is battling dementia with his family, and dementia has become so familiar that it feels like it's already among us.

It is a disease. The incidence of degenerative diseases like dementia significantly increases after the age of 60, and even healthy individuals are exposed to the risk of dementia as they age. Therefore, the market for degenerative brain diseases can be considered a market with very high growth potential, following the global aging trend. Diseases like dementia and Parkinson's are, in some ways, conditions that people are even more reluctant to contract than cancer. This expression is quite striking; it’s a disease that people want to avoid even more. This is because it not only burdens the individuals but also affects those around them, and the costs of caregiving are substantial. That's right. However, there are often no treatments available for these brain diseases, and there is a significant unmet need in the market. What does this mean? It means that there are many unmet needs. Yes, yes, yes. Therefore, it can be said that this is a market with high demand and an essential need for solutions.

The number of patients is gradually increasing, but there is currently no accurate treatment available. Therefore, the side effects of the medication are severe. However, there are treatments that can somewhat slow the progression of the disease, and related technologies are advancing rapidly. It used to be a difficult topic to bring up, but now there are treatments being released that can increase the pace of progress. In fact, the brain is an area we are very interested in and is arguably the most important part of our body, yet it's surprising that there have been no treatments related to the brain until now. But is it true that they are finally available? Yes, that’s correct. The brain is encased in a hard skull and is extremely complex, making it difficult to assess due to the limitations of imaging technologies. Additionally, for medications to penetrate the brain, they must pass through the blood-brain barrier.

It is indeed difficult to deliver medication effectively. Recently, advancements in video technology have been unlocking the mysteries of the brain, much like Elon Musk's Neuralink project. This means we are now able to observe in real time how treatments penetrate the brain. The more I hear about this, the more intriguing it seems. The number of patients with brain diseases is expected to rise significantly in the future, and coincidentally, technology is advancing to produce related treatments, making it hard not to be interested. Therefore, I think it would be beneficial to consider investments in this area. Let's summarize the investment points. The first investment point appears to be the rapidly increasing incidence of dementia due to an aging population.

Aging is likely to accelerate more and more. As people age, the incidence of dementia increases. However, the number of older individuals is also rising, which means there will be more people overall. Yes, that's correct. The second investment point this time is also AI. With the advancement of AI brain imaging technology, it has become possible to conduct clinical studies on the entire brain, rather than just parts of it. Consequently, clinical data is rapidly accumulating, and blockbuster treatments for dementia are being expedited. So, once again, AI is having a positive impact. Therefore, AI imaging technology becomes another investment point. Dementia blockbuster treatments are currently being developed. Lastly, if you invest in ETFs that focus on brain diseases, it would be good for the ETF name to include brain disease. My product is currently the only ETF listed that includes brain diseases in its name.

There is an ETF that includes the term treatment in its name. This suggests that it is focusing on brain diseases. But does the incidence of brain diseases really increase with age? It's not the case for all diseases, but for degenerative diseases like dementia and Parkinson's, the incidence significantly increases after the age of 60, especially after 70. Looking at the data, it's clear that there is a distinct rise. Yes, that's right. The trend of aging is evident not just in our country but globally as well, considering the population distribution by age. It is clear that this trend is accelerating. Therefore, the development of new drugs in the context of aging and increasing average life expectancy makes the degenerative disease treatment industry look very promising. However, while degenerative diseases due to aging are a concern, in our stress-laden modern society, mental health issues such as depression, anxiety, and panic disorders are also significant problems.

Mental health issues are on the rise, and the expression mental illness really resonates. Many people are indeed struggling with mental health conditions. Just as one takes cold medicine when they catch a cold, mental illnesses can also be treated with medication. As I will mention later, compared to the medications that caused side effects in the past, the next-generation drugs have many improved features, which gives us great hope for the mental health treatment market. Speaking of which, I remember joking in the past about whether it was time to take my medication, but in reality, when it comes to mental illness, it’s often said that one should take their medication promptly as needed. I think you might have a better understanding of this since you studied in the U.S. What is the perception of mental health medications like in the U.S. currently?

In the United States, over 16 million patients are suffering from depression. However, there is relatively less negative perception regarding the use of medication among depression patients. As a result, the number of prescriptions is increasing every year. Just as a cold requires cold medicine, receiving prescriptions for antidepressants is considered very natural in the U.S. It is indeed seen as completely normal to take depression medication there. 

However, I've heard that there are many brain disorders for which there are no effective treatments. What led to the advancement of brain disorder medications? We believe that we are currently in the best time for this. In the past, the clinical success rate for brain disorder medications was not very high. The brain is the most complex organ in the human body.

As we have mechanisms in place, there are many areas we do not yet understand. However, recent advancements in technology are providing significant assistance. With the development of imaging technology for the brain and the AI industry, we are entering a golden age for treatments of brain diseases. Now, with the introduction of new imaging technologies and AI, the secrets of the brain are gradually being revealed. The pace of developing new drugs for brain diseases is accelerating. It seems we can expect blockbuster-level treatments to emerge soon from the previously uncharted areas of brain diseases. This means that blockbuster treatments will soon be available. So, we can consider that we are officially starting now. How much can we expect the market for brain disease treatments to grow? Initially, we are focusing on degenerative brain diseases such as dementia, mental disorders like depression and schizophrenia, and conditions like seizures.

Epilepsy can be classified, and based on projections for 2030, the degenerative brain disease market is expected to grow at an average annual rate of 29%. The next-generation mental illness market is anticipated to grow at an average annual rate of 32%. The next-generation epilepsy market is expected to grow at around 16% per year. So, we can expect the degenerative brain diseases to grow by 29%, mental illnesses by 32%, and epilepsy by 16%.

In particular, the market for dementia treatments in the degenerative brain disease sector is projected to grow from 7 trillion to 42 trillion won, indicating that major stocks could see significant gains. The numbers related to dementia are quite substantial, as the growth from 7 trillion to 42 trillion represents an enormous increase in size.

That's correct. Could you introduce a few companies that are developing dementia treatments? This year, 2024, is truly a significant year in the dementia treatment market.

There are two representative companies that cannot be overlooked when it comes to treatment drugs: Biogen and its drug, Aducanumab, known by the brand name Aduhelm, which has been approved for Alzheimer's disease. Although it is not a fundamental cure, it is significant because there were almost no treatment options available previously. Slowing the progression of dementia can be a great benefit to patients. Even just delaying the progression of dementia has its significance. However, the sales forecast is extremely strong, and I am curious about what kind of story supports this outlook.

There are three main stories that underpin this growth. First, the story is that prices are becoming more affordable. In the U.S., the number of countries where Aducanumab is covered by insurance is increasing.

It seems to mean that there is a high unmet demand. Therefore, the first point is that prices will decrease. The second point is the scheduled launch of the SC formulation by 2025. As for the SC formulation, you might know that it is a hot technology these days, similar to insulin, which allows for easy self-administration at home. Currently, patients are receiving injections at university hospitals, but once the formulation is launched, it is expected that patients will be able to conveniently receive the SC formulation with the help of nurses at primary care hospitals, naturally increasing accessibility. When we talk about the SC formulation, we think of a hot domestic company, Alteogen, which is developing technology that makes it easier to receive injections. So, the first point is price, the second is the SC formulation, and the third point is that currently, neurologists face complicated procedures.

We are diagnosing dementia, and if the biomarker-based blood test receives approval as scheduled in the year after next, we will be able to provide patients with accurate diagnoses through a much simpler and faster process. The number of patients receiving diagnoses and prescriptions for dementia treatment is expected to increase, leading to a more widespread recognition and faster advancements in the field. Currently, neurologists have to go through a somewhat complicated process to determine whether someone has dementia. However, it seems that a day will come when we can know whether someone has dementia through a blood test. 

Now that we've talked about dementia, could you please discuss mental illness treatments? Yes, there have been significant advancements in mental illness medications from the first generation to the second and third generations, and now we are moving towards the next generation. Existing mental illness medications have serious side effects, such as tardive dyskinesia, diabetes, and headaches. However, next-generation treatments are showing improvements in side effects like drowsiness.

There are only mild side effects appearing. Traditional psychiatric medications had a lot of various side effects, but nowadays, the new treatments only show mild side effects like drowsiness or nausea. However, how effective are they? In terms of efficacy, next-generation treatments demonstrate a much broader mechanism of action, capable of restoring the entire damaged brain. Since they can restore the whole brain, it can be said that they are on a different level. Therefore, it seems that next-generation psychiatric medications will quickly replace existing treatments in the market. It appears that discussions are emerging about how next-generation psychiatric medications can rapidly substitute existing ones. Now, what investment opportunities are there in the field of epilepsy? Among those investing in domestic biotech, when it comes to epilepsy, SK Biopharm is notable.

Suddenly, I remember. Yes, you are well aware of the competition with UCB's Vynaqel. The epilepsy market was previously largely specialized in the adult epilepsy market. However, there is another market alongside the adult epilepsy market, which is the rare epilepsy market. The mechanisms of rare epilepsy differ from those of adult epilepsy, making it difficult to find treatments in the past. However, Jazz Pharmaceuticals' product received FDA approval in 2018 and is expected to achieve sales of 1.4 trillion won by 2024. It is said that such a drug has already begun to achieve significant sales. Is there anything else you would like to add? Lastly, I would like to talk about the painkiller market. Currently, the painkiller market is dominated by opioid-based analgesics, raising concerns about drug abuse due to addiction. Since they are opioids, there is a risk of becoming addicted.

This is how it is. Vertex is establishing principles for non-opioid pain management and is currently focusing on medical applications. However, Vertex has completed clinical trials for a non-opioid pain reliever and is preparing to submit it to the FDA next year. This new pain treatment, which is based on a new mechanism, is expected to gradually replace existing opioid pain relievers for the first time in 20 years. It is particularly anticipated to be effective for neuropathic pain as well. So, it seems that the non-opioid pain reliever developed by Vertex is a very rare drug that has come out after a long time. We can expect good results from it. Hearing about brain diseases is refreshing and very interesting, especially with someone who has specialized in this field explaining it, which makes it even more engaging. Here we have the Active ETF for American brain disease treatments.

Now, I'm curious about which stocks are included. The Active ETF portfolio that was listed on September 3rd includes approximately 34% in degenerative diseases, 28% in mental disorders, and 38% in other types of epilepsy. It is composed mainly of representative small and mid-cap stocks. We plan to invest in key stocks that follow the major trends in brain diseases, while effectively managing clinical risks among small and mid-cap stocks to generate alpha through major event investments. So, as you mentioned earlier, the portfolio consists of 34% in degenerative diseases, 28% related to mental disorders, and 38% in other types of epilepsy. You are originally much more comfortable speaking English, but you've really worked hard to speak in Korean. It seems like you've practiced a lot. Lastly, could you please list the relevant stocks? After all, they are all foreign companies, so could you just say them in English comfortably?

I think it would be great if you could explain what kinds of stocks are available. I spoke in English, but now that the subtitles are in, I believe you can confirm that. Anyway, since you invest a lot in foreign stocks and speak English well, it gives me a sense of trust. Today’s topic is quite challenging; the brain is indeed a difficult subject, but I appreciate your effort in explaining it. While listening to your talk, I was reminded that as we age, there are treatments available for conditions like dementia and depression, which many people suffer from. I'm really pleased to see investment opportunities in companies that can develop these treatments, and I hope you continue to show interest in this area. So far, this has been Samsung Active Asset Management.

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이효석아카데미

Launching ETFs for Brain Disease Treatments

Manager Jo Han-ki from Samsung Active Asset Management, with a background in brain engineering and biotechnology, has launched the Coact U.

Brain Disease Treatment Active ETF, specializing in treatments for brain diseases.

The ETF's launch is part of Coact's aging strategy, which also includes the Coact ES Biohealthcare Active ETF, aiming to address the growing market for degenerative brain diseases like dementia and Parkinson's.

With a significant unmet need for treatments and a high demand for solutions, the market for brain disease therapies is considered to have strong growth potential.

The Increasing Need for Brain Disease Treatments

The number of patients with brain diseases is rising, but effective treatments are still lacking, leading to severe medication side effects.

Advancements in technology, particularly AI and video imaging, are now enabling real-time observation of brain treatment penetration.

The aging population is driving the increasing incidence of dementia, making investments in brain disease-related treatments and ETFs focused on this area a promising opportunity.

The Growing Importance of Mental Health Treatment

Mental health issues are increasing, with over 16 million patients suffering from depression in the U.

, where taking medication for mental illness is seen as normal.

Recent advancements in technology, including brain imaging and AI, are accelerating the development of new drugs for brain disorders, leading to a promising future for treatment.

The market for brain disease treatments, particularly for dementia, mental disorders, and epilepsy, is projected to grow significantly, with dementia treatments expected to increase from 7 trillion to 42 trillion won.

Biogen's Aducanumab and the Future of Alzheimer's Treatment

Biogen's Aducanumab, approved for Alzheimer's disease, is significant in offering treatment options and slowing dementia progression.

The drug's sales forecast is supported by three main factors: increasing affordability and insurance coverage, the upcoming launch of a self-administered SC formulation, and the potential approval of a biomarker-based blood test for accurate dementia diagnoses.

Advancements in mental illness medications are also notable, with next-generation treatments showing improvements in side effects compared to previous generations.

Next-Generation Psychiatric Medications and Investment Opportunities

Next-generation psychiatric medications are showing only mild side effects and have a broader mechanism of action, capable of restoring the entire damaged brain.

SK Biopharm is a notable investor in the domestic biotech field for epilepsy, with Jazz Pharmaceuticals' product achieving significant sales since its FDA approval in 2018.

Vertex is developing a non-opioid pain reliever, expected to replace opioid analgesics and effectively treat neuropathic pain, marking a rare breakthrough in pain management.

The Active ETF portfolio, listed on September 3rd, allocates 34% to degenerative diseases, 28% to mental disorders, and 38% to other types of epilepsy, focusing on small and mid-cap stocks.

The investment strategy aims to generate alpha through major event investments while managing clinical risks.

The portfolio targets key stocks following major trends in brain diseases, with a commitment to developing treatments for conditions like dementia and depression.