One of several longer-term themes for healthcare investors is prevention, probably the most valuable form of healthcare. We believe that our current healthcare systems are predominantly organised to react to acute and chronic health challenges whereas the goalposts are moving more towards preventative care. As a result, we seek to discover strategies that aim to prevent or at least lessen the implications of a full-blown crisis, or worse, a state of health we cannot improve.

In our view, the appreciation of prevention had been overlooked and it has taken a global medical crisis to move it front and centre. The coronavirus pandemic has highlighted the value of prevention and we would like to think this will help a much needed refocus going forwards. We passionately believe prevention should be a top priority and seek to capture investment opportunities accordingly.

We passionately believe prevention should be a top priority and seek to capture investment opportunities accordingly.

The challenges in terms of developing products or services focused on prevention include the lack of research spend available, the length of time it can take to receive approval for such strategies and their limited reimbursement. Again, the COVID-19 health crisis has called to question the perceived wisdom here. While the current system is not likely to shift to being more heavily weighted towards prevention overnight, as with most medical conditions, the sooner we can identify (or diagnose) the challenge at hand, increasingly there is an opportunity to get ahead of it.

One example where there is a move to prevention is in the treatment of kidney disease. End stage kidney disease (ESKD), where a patient is reliant on frequent hemodialysis and potentially a kidney transplant, is devastating both for the quality of life for patients as well as the costs incurred to healthcare systems. In 2016, in the US alone more than 726,000 patients had ESKD, with more than 500,000 requiring dialysis at least three times a week. To give some idea of cost, the US alone spends $120m annually, or 20% of the entire Medicare budget, for care of chronic kidney disease, including ESKD patients.

Treatment to date has been about improving care once patients have become dependent on dialysis. However, more recently both pharmaceuticals that work to delay the onset of ESKD as well as predictive tests to determine which patients are most at risk have the potential to improve the course of kidney disease.

Renalytix AI, a small-cap, UK-listed, in vitro diagnostics company, has formed a public/private partnership with a major academic centre of excellence in kidney health, Mount Sinai Health System, to identify and develop important biomarkers of kidney disease. These blood-based biomarkers, coupled with inherited genetics and traditional measures and metrics of kidney function, feed into an artificial intelligence-enabled algorithm to produce an at-risk score of low, moderate or severe. This allows the clinician to readily and easily identify those at the greatest level of risk and to take preventative measures accordingly. In turn, patients are afforded a better understanding of their kidney function risk and why it is important to improve upon their score today by complying to prescribed healthier dietary and lifestyle measures in conjunction with preventative pharmacotherapy as warranted.

This is a great example of the type of preventative opportunity we look for. Good medicines and strategies often exist for patients of many types but if we do not know who is most at risk it is hard to apply them for the greatest impact. There should be more and more similar examples coming through, as quality clinical practice and data meet the power of information technology plus artificial intelligence to meaningfully improve the standard of care and, ultimately, the lives of patients.

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 the immediately preceding 12 months is available upon request.