Biotech shares were weak in the six months that ended 30 September 2015. Biotech Growth Trust reports that its NAV fell by 18.6% over this period, 5% more than the 13.6% fall in the NASDAQ Biotechnology Index. The company’s shares fell by 19.3%.
The Chairman said the fall in the value of many biotechnology companies was due in large part to concerns over the potential for stricter regulation of drug pricing, a cause championed by prospective Democrat Presidential candidate Hillary Clinton. He says though that the Manager believes that while discussions regarding drug pricing will make
headlines in the media, they doubt that any fundamental change will be brought about as a result.
The Manager’s report says the largest losses included positions in Biogen, Esperion Therapeutic, Puma Biotechnology and Fluidigm.
Biogen shares declined due to poor performance from the company’s Tecfidera franchise. The company reported lower-than-expected second quarter sales and lowered annual guidance. We believe its deep pipeline and abundant
clinical catalysts in 2016 will support the stock. Esperion shares declined due to investor concerns that the U.S. Food
and Drug Administration (FDA) will not approve the company’s drug without the need to run a lengthy cardiovascular outcomes trial. Puma shares declined due to concerns about the approvability and market
potential of neratinib for breast cancer following presentation of phase III data. Fluidigm is a leader in single cell analysis allowing researchers to isolate and examine cells on individual levels compared to the traditional
method of analysing cells in groups. 2015 proved to be a difficult year for Fluidigm with execution issues stemming largely from mismanaging multiple new product launches earlier in the year. Aggressive expansion plans caused
salesforce confusion in their core product lines. Execution issues caused Fluidigm to miss expectations for two straight quarters causing significant underperformance in its stock price.
Top contributors to performance included Synageva, Anacor Pharmaceuticals, Receptos, and Incyte. Synageva shares appreciated due to the company’s acquisition by Alexion for U.S. $8.4 billion. The deal offered shareholders a 140% premium to the share price preceding the merger announcement. Anacor shares appreciated due to positive phase III results of crisaborole for atopic dermatitis. Receptos shares appreciated due to the company’s acquisition by Celgene for U.S. $7.2 billion. Incyte shares increased due to encouraging initial data from its combination immunotherapy regimen for cancer and positive phase III data of baricitinib for rheumatoid arthritis reported by collaborator Eli Lilly.
BIOG : Biotech Growth Trust shrugs off drug pricing fears