Bellevue | Küsnacht, 07.04.2016
MARKET REVIEW: The Nasdaq Biotech Index (NBI) ended the month of March up +2.6% in USD. BB Biotech’s NAV was up +6.1% in USD, +2.1% in CHF and up +1.3% in EUR. BB Biotech’s share price was up +9.3% in USD, up +5.4% in CHF and +3.7% in EUR. In the month of March, BB Biotech outperformed its benchmark NBI, with both the NAV and even more so with the share price. However, as the share price continuously moved higher than the NAV, the discount closed significantly. BB Biotech’s annual general meeting took place on March 17, 2016 in Schaffhausen. Shareholders voted in favor of all proposals, amongst them: Distribution of CHF 14.50 per share, new share buyback program of up to 10%, and the 5-for-1 stock split, effective as of March 29, 2016. Alder (+19.3%, in USD) reported positive Phase-IIb-results for its CGRP inhibitor, ALD 403, in chronic migranes, hitting both primary and secondary endpoints.
We believe this is a highly compelling class of emerging drug candidates that hold substantial commercial potential. Alder’s stock rallied on the day of the announcement, with an approximate +50% intraday move.
Ionis (+12.7%, in USD) A federal jury upheld the validity of two patents held by Ionis and Merck & Co in a dispute with Gilead Sciences concerning IP for HCV treatments. As a result, Ionis and Merck will likely receive royalty payments from Gilead on products containing Sovaldi. Ionis claimed to receive 20% of the damages awarded to Merck, including future payments and excluding litigation costs. Puma Biotechnology (-36.6%, in USD) announced that it will delay its NDA filing for neratinib from 1Q16 to mid-2016 based on an FDA request. The FDA asked Puma to make an amendment to its statistical plan for their trial ExteNET. While another delay was certainly not the headline we were looking for from Puma, taking care of the request now should theoretically derisk the NDA acceptance, in our eyes.
POSITIONING & OUTLOOK: Short-term, we expect the market volatility to continue due to economic uncertainties and the politically motivated debate about drug pricing. However, we continue to be constructive on biotech in 2016, as fundamentals remain intact and valuations have reached very attractive levels. We continue to believe in innovation acting as the main driver for the biotechnology sector, which we would expect to pick up again mid-term. Key new drug launches are generally performing well and FDA productivity remains high.
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
MANAGEMENT TEAM:
Dr. Daniel Koller, Dallas Webb, Felicia Flanigan, Dr. Stephen Taubenfeld, Dr. Christian Koch
CONTACT:
BB Biotech AG
Schwertstrasse 6
CH-8200 Schaffhausen
Phone +41 52 624 08 45
www.bbbiotech.com
