Emphasis mine......
Wednesday November 29, 10:38 am Eastern Time
Morningstar.com
Biotech Manager Leaves Franklin
By Frank W. Stanton
One of last year's hottest-performing biotech funds, Franklin Biotechnology Discovery
(Nasdaq: FBDIX - news), just lost its skipper, Kurt Von Emster, who has left the fund to
join MPM Capital, a venture-capital firm based in Cambridge, Massachusetts. Though
manager changes are rarely a welcome event for shareholders of a well- performing fund,
some transitions can be more problematic than others. In this instance, Von
Emster's departure is clearly a ``big loss'' for Franklin, according to Morningstar.com analyst Emily Hall.
Things could be worse, however. Franklin Biotech's new lead manager, Evan McCulloch, has comanaged the fund with Von
Emster since the fund's 1997 inception. But despite McCulloch's familiarity with the fund, the fact remains that Von Emster
specialized in rooting out tiny biotech firms with big potential, such as Aviron (Nasdaq: AVIR - news), while McCulloch
focused more on large pharmaceuticals such as COR Therapeutics (Nasdaq: CORR - news). Even though big pharmaceuticals
and tiny biotechs aren't entirely unrelated, it was largely Von Emster's talents in the small biotech arena that helped Franklin
Biotech outperform all but one of its biotech peers with a 97.91% return in 1999.
Those outstanding returns precipitated a flood of new assets, and even though the fund closed its doors to new assets in
February of this year, the fund rocketed from just a little over $200 million in assets in 1999, to $1.5 billion as of September
this year. Apparently, fund investors weren't the only ones who appreciated Von Emster's skills. His new home, the venture
capitalist firm MPM Capital, specializes in investments in fledgling biotechs, both public and private.
Joining McCulloch on the biotechnology fund are Paul Walker and Jake Nunn. Walker joined Franklin in 1996 with a degree in
biotechnology and cell biology from U.C. San Diego, while Nunn first worked for Franklin as a health-care research analyst in
1997 and joined the firm full-time in 1998 after earning a degree from Stanford Business School. Nunn will take over as lead
portfolio manager of the Franklin Global Healthcare Fund (Nasdaq: FKGHX - news), which was previously headed by Von
Emster, and will be assisted by McCulloch and Walker.
Despite the uncertainty surrounding Franklin Biotech, anxious shareholders should probably sit tight for now if they're holding
the fund in a taxable account, as a sale could trigger capital-gains taxes. Nevertheless, the fund bears close watching.
Frank W. Stanton can be reached at frank_stanton@morningstar.com. |
