ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:

Your international smaller companies fund, it's overweight in healthcare. Among the French stocks you own is a maker of drugs for respiratory allergies called Stallergenes. That stock is already up 26% last year. So how much more is there to run? Why buy that stock now?

David Nadel, Portfolio Manager, The Royce Funds (ENGLISH) SAYING:

I think there's still some room to go with Stallergenes. They are, in my opinion, on the cusp of winning FDA approval for their key drug. It has been already approved by a starting committee but not official FDA approval yet. And I think that that is going to happen. They are in the respiratory allergy pharmaceutical market which is about a $2 billion market within the larger $20 billion respiratory market that's served by things like Claritin. So if you have a severe case of allergies, your options now in the US are injectables, and in Europe they have sublingual solutions, so things you just put under the tongue. You don't have to go to a doctor to self-medicate. And that's the drug which is on the verge of approval here in the US. So I think that they are entering a whole new stage of their development. This is a six-year old company that produces 20% operating margins. So it's a very nice profitable business. It's not a biotech. But it trades at about roughly half the multiple of the global number one in this area. Stallergenes is the global number two.

ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:

So you still see this value play?

David Nadel, Portfolio Manager, The Royce Funds (ENGLISH) SAYING:

I still think on a relative basis there's quite a bit of value, yeah.

ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:

Another French stock you own, Virbac. It's the maker of drugs for animals. Now, this stock has got enough to Jack Rabbit start this year, up 9%. And it's trading at a high 21x forward earnings. So I'm wondering where you see the value there?

David Nadel, Portfolio Manager, The Royce Funds (ENGLISH) SAYING:

Yeah. Well, Virbac had a rough year last year. It has come up a bit this year. We look at companies on a pretax earnings basis, sort of a cap rate if you will, pretax earnings yield. And on that basis, it's at about an 8% pretax earnings yields, so not enormously expensive. This is a tremendous business which traditionally is very highly valued. When you see see the large cap pharma companies spin off their animal pharma businesses, they often get very big valuations or M&A have the big valuations.