Bellevue | Küsnacht, 11.01.2016.
MARKET REVIEW
The Nasdaq Biotech Index (NBI) ended the month of December up +1.3% in USD. BB Biotech’s NAV was up +0.2% in USD, -3.4% in CHF and down -3.0% in EUR. BB Biotech’s share price was up +2.6% in USD and lost -0.7% in EUR and -1.2% in CHF.
2015 was another year of outperformance for biotechnology versus general equity markets, with the Nasdaq Biotech Index NBI (+11.8% in USD) outperforming the S&P500 (+1.4% in USD) by +10%. BB Biotech AG closed the year up +28.2% (in USD), hence outperforming both its benchmark NBI and even more substantially the European indices such as the Swiss SMI (+1.1% in USD), the German DAX (-1.7% in USD) and the Euro Stoxx 600 (-0.9% in USD).
Celgene’s (+8.3% in USD) share price rose significantly after the company settled a patent dispute over its blood cancer drug Revlimid with India-based Natco. As such, the biggest overhang on Celgene’s stock has been lifted. In our view, this represents a near best case outcome for Celgene and it essentially provides clarity on a product runway that extends out another 10 years.
Actelion (+2.6% in USD) announced that the FDA has approved Uptravi (Selexipag) for the treatment of patients with pulmonary arterial hypertension (PAH). Timing of the US approval is in-line with expectations and Actelion plans on launching the product in the US early January 2016.
Juno Therapeutics (-22.0% in USD) and Kite Pharma (-25.2% in USD) presented further progress and clinical data from their ongoing immuno-oncology CAR-T pipeline (Chimeric Antigen Receptor – T-cells) at the American Society of Hematology ASH in Orlando. With market expectations met but not beaten, both companies’ shares sold off.
POSITIONING & OUTLOOK
In our view, innovation is still crucial – acting as the main tailwind for the biotechnology sector in 2016. Key new drug launches are generally performing well and FDA productivity remains high. Furthermore, we foresee M&A activity to continue to drive biotech performance. Political uncertainty and continued controversy around US drug pricing continue to fuel volatility – especially in a presidential election year. However, we are constructive on biotech in 2016, as fundamentals remain intact, but headline and fund flow risk make selectivity more important. Short-term, we expect news flow coming out of the JP Morgan Healthcare Conference, held in San Francisco from January 11-15, to clarify the outlook for 2016.
INVESTMENT FOCUS
BB Biotech aims to achieve an average annual double-digit return over the long term, thus outperforming the broad market indices by a significant margin. BB Biotech invests worldwide in fast growing companies developing and
marketing innovative biotech drugs. At least 90% of its shareholdings must be in listed companies. Positions in emerging-market biotech companies will be taken on a selective basis.
The target portfolio of BB Biotech will generally consist of 20 to 35 participations. Large positions will be taken in five to eight companies, the top holdings. Together they will account for no more than two-thirds of the portfolio and no single position will have a weighting greater than 25% of portfolio investments. Due to their substantial portfolio weighting, the top holdings should be generating both revenues and income. The portfolio’s smaller participations are companies with promising drug candidates in their R&D pipelines.
During the investment selection process BB Biotech relies on the well established experience of its Board of Directors and the fundamental analyses by the experienced management team of Bellevue Asset Management Group, with access to a network of physicians and specialists for the sectors in question. In doing so, a detailed financial model is created for each holding, which guarantees a compelling illustration of the potential for doubling asset values in a period of four years. This potential is based on the power for innovation, new products for serious or significant illnesses and outstanding management.
INVESTMENT SUITABILITY
The investment company’s objective is to generate attractive and competitive capital growth in the long term. It is therefore particularly suited to investors with an investment horizon of at least 5 years who want to selectively diversify their portfolio with investments in the biotechnology sector and who are willing to accept the equity risks typical of this sector.
FIVE GOOD REASONS
• Strong growth driven by innovative, high-margin new therapies
• Attractive valuations for fast-growing companies
• Long-term track record of 22 years with above average performance
• Long-term outperformance to industry benchmarks
• Experienced management with strong Board of Directors
CONTACT
BB Biotech AG
c/o Bellevue Asset Management AG
Seestrasse 16, CH-8700 Küsnacht
Phone +41 44 267 67 00
Fax +41 44 267 67 01
www.bbbiotech.com
