BIOG : Another great period for Biotech Growth Trust
Biotech Growth Trust beat its benchmark over the six months that ended on 30 September 2014 delivering a return on net assets of 20.3% vs. a return on the NASDAQ Biotechnology Index of 19.1%. The share price return was 21.4%.
Top contributors to performance in the portfolio were Gilead Sciences, InterMune, Puma Biotechnology, Medivation, and Vertex Pharmaceuticals. Gilead shares appreciated due to the strong launch of Sovaldi for the treatment of Hepatitis C. In the first half of 2014, Sovaldi sales were $5.75 billion, significantly beating analyst expectations. InterMune shares increased due to the company’s acquisition by Roche for $8.3 billion. The deal offered shareholders a 38% premium to the share price preceding the merger announcement. Puma Biotechnology shares appreciated due to successful phase III results of neratinib for Her2+ breast cancer following Herceptin-based adjuvant therapy. Success in this trial was not widely expected; the shares increased nearly 300% following the announcement. Medivation shares appreciated over the period due to strong sales of Xtandi for prostate cancer. Additionally, investors became more optimistic about the potential of Xtandi for the treatment of breast cancer. Data in that indication will be released by year-end. Vertex shares increased due to positive phase III data for the combination of Ivacaftor and Lumacaftor for the treatment of cystic fibrosis patients with the most common mutation, F508del. This represents a multi-billion dollar opportunity.
The largest losses were from positions in Fluidigm, Prothena, and Vanda Pharmaceuticals. Fluidigm shares declined due to poor performance from the company’s recently acquired DVS BioScience division. Fluidigm revised growth expectations for DVS substantially lower than prior guidance due to disruptions in sales channels. Prothena shares declined due to the release of disappointing results from a phase I trial of NEOD001 for AL amyloidosis. Vanda shares declined due to a weaker than expected launch of Hetlioz for Non-24-hour sleep-wake disorder