WWH : InterMune helps drive good Worldwide Healthcare result
Worldwide Healthcare powered ahead over the six months ended 30 September as the net asset value delivered a total return of 16.8%. The rating stayed more or less the same so the return to shareholders was 16.2%. by contrast the benchmark index (MSCI World Health Care) returned 11.5% and the sector outperformed the wider MSCI World Index which returned just 5.9% over the period. The interim dividend is 6p.
The fund expanded in July as subscription shareholders exercised their shares, injecting £13m into the company. The Chairman says The principal contributors to net asset value performance included holdings in biotechnology companies InterMune and Gilead Sciences and also the for-profit healthcare facility operator HCA Holdings.
They say that, generally, the fund’s overweight position in large capitalisation biotechnology helped returns. Amongst emerging biotechnology stocks, stock selection, merger and acquisition (M&A) activity, and a lack of bad news, compounded by an overweight stance, also contributed to returns. Being underweight large capitalisation pharmaceutical stocks also aided relative performance.
InterMune, Inc. is a California-based, one product, biotechnology company. There had been long-term investors in the company, believing its key drug, Esbriet (pirfenidone), was a critical advance in the treatment of idiopathic pulmonary
fibrosis (IPF), a severe lung disease in which fibrosis (scar tissue) builds up in the lungs, compromising breathing, and eventually leading to death, typically in 3 to 5 years. The company presented an impressive pooled data analysis, showing a significant survival advantage for IPF patients taking Esbriet. Roche HoldingsAG, the Swiss-based, global pharmaceutical company, took notice. Wanting to add a specialty care, non-oncology product to help diversify the company’s marketed drug portfolio, Roche announced in August 2014 its intention to acquire InterMune for $8.3bn, nearly a 40% premium to InterMune’s share price.
Gilead Sciences, Inc., is a large capitalisation, California-based, biotechnology company. They say the launch of Solvaldi (sofosbuvir) in the U.S. at the beginning of 2014 proved to be record-shattering and the company’s share price rose by more than 50%.
HCA Holdings, Inc. is the largest for-profit hospital operator in the U.S., managing over 160 hospital facilities and over 110 freestanding surgery centres across the U.S. and the U.K. HCA is a beneficiary of Obamacare (the Affordable Care Act).