Matthew Harrison, a Managing Director in Research, covers the biotech industry, focusing on companies with market capitalizations of $10 billion and up. He has also covered pharmaceutical stocks, and has been highly ranked among biotech analysts on Institutional Investor’s All-American Research Poll.
Matthew received his Bachelor’s in Physics from Yale University and a Master’s in Physics, as well as a Master’s in Financial Management, from Case Western Reserve University.
I originally thought I was going to be a physicist. After graduating from college, I entered a doctoral program where my research was on particle physics and dark matter. After two years, I realized that academia wasn’t the right fit. After some networking, I moved to a healthcare hedge fund, which is where I started analyzing biotech companies. I also worked as a sell-side associate covering pharma stocks and as a publishing analyst on small/midsize biotech stocks before I came to Morgan Stanley. I now run the biotech research efforts for the firm.
I love the intellectual challenge of digging through and analyzing clinical data and asking the key questions that are top of mind for me and our clients: What is the company’s risk? What is its strategy for the next year, five years, 10 years? In an industry that moves very quickly, but is also difficult to understand given its technical complexity, being able to distill the factors that reveal the company’s viability and opportunity remains fascinating.
As an industry, the most interesting thing about biotech is its constant stream of innovation. When I think about biotech advances overall, I like to put it in historical context. Biotech companies innovate in two major ways: by either discovering a new type of biology or a new way to interact with the body to deliver a therapeutic intervention. When it comes to new biology, I find senolytic drugs—those that may slow the aging process—the most exciting. When cells age, they become “senescent” and stop dividing, and may potentially cause a lot of damage to the body’s normal operations. However, when researchers remove those cells from lab mice through senolytic intervention, those mice live roughly 35% longer.
When it comes to major therapeutic changes, I think we are at the cusp of the third great wave. The first was when chemists figured out how to make pills, the second when scientists discovered how to make drugs from living cells, or so-called biologics. Now, the third is direct gene manipulation. Companies that harness this technology can direct it to a variety of applications, from potentially curing a disease by replacing the gene which encodes the wrong instructions in the body to using genes to manipulate the body’s immune system so that it can recognize and attack a cancer much more effectively. We are only scratching the surface of this third wave, and it will be amazing to see how it develops.
Many of my team members have scientific backgrounds and are often experts in their areas of study, so whenever possible, I let them focus on companies that deal with their areas of expertise. However, scientific analysis isn’t the same as stock analysis, so sometimes I have to be more hands-on when initially guiding new team members through our stock selection methodology. It can take a while to develop an affinity for picking stocks, but once they recommend one that does well, it’s immensely gratifying.
Also, I encourage everyone to be vocal about new ideas, no matter what their level. The team overall has a sizable amount of academic experience, so a consistent, free-flowing stream of new topics always provides inspiration.
I always enjoy speaking with founders and owners of biotech companies; they’re very smart and have real entrepreneurial mindsets, and I’ll invariably learn something new. Of course, whenever a company I’ve recommended has a good day of trading, it’s always uplifting. Conversely, if I pick a stock that doesn’t do well that’s certainly a challenge. In those instances, I’ve found that it’s best to walk clients through my analysis to show them how I came up with my conclusion. They generally appreciate a frank explanation, as well as the time I’ve taken to discuss their portfolio.
On a firmwide level, what do you think Morgan Stanley is doing to ensure a culture of long-term success?
Morgan Stanley sets a high bar for our culture as a firm. That culture attracts qualified and talented people who take their jobs seriously and know that they have the encouragement and support to do the kind of work they love. Importantly, we nurture collaboration and the sharing of ideas, regardless of rank or title, which I think inspires the kind of creativity that makes Morgan Stanley that much better.
As we saw with the financial crisis [in 2008], there are always going to be unexpected events that affect the firm and the larger global economy. However, surrounding ourselves with smart, insightful colleagues who are the best at what they do is the best insurance and protection that we have against uncertainty, above and beyond the work that our risk management professionals do to ensure a steady course.