Over the year to 31 March 2016, Biotech Growth Trust’s net asset value per share fell by 24.8% during the year, underperforming the Company’s benchmark, the NASDAQ Biotechnology Index, measured in sterling terms, which fell by 21.8%. The Company’s share price fell further, by 26.3%, as the discount of the Company’s share price to the net asset value per share widened from 4.9% at the beginning of the year to 6.8% as at 31 March 2016.
The Chairman’s statement says the company’s negative performance during the year was due in part to the performance of holdings in biotechnology company Biogen and biopharmaceutical companies Esperion Therapeutic and GW Pharmaceuticals. Our modest level of gearing of 11.1% also had a negative effect on performance. Positive performance came from holdings in biopharmaceutical companies Ono Pharmaceutical, Synageva BioPharma and Anacor Pharmaceuticals.
The manager’s report goes into more detail on these stocks. Shares of Japanese company Ono Pharmaceutical appreciated due to the continued clinical and commercial success of Opdivo, a novel immunotherapy for cancer. The launch of Opdivo has been robust since its initial approval for melanoma in 2014. In 2015, Opdivo received regulatory approvals in four additional cancer indications in the U.S. and two in Japan, which have further expanded the drug’s sales potential. Bristol-Myers Squibb, Ono’s U.S. partner, has also reported positive data from multiple clinical trials of Opdivo, providing the opportunity for further label expansion.
- Synageva BioPharma, a rare disease company developing a late-stage drug for LAL deficiency, was acquired at a 140% premium by Alexion Pharmaceuticals for U.S.$8.4 billion.
- Anacor Pharmaceuticals shares rose due to the announcement of favourable data from its phase III trials of crisaborole for atopic dermatitis.
- Receptos, a biotechnology company developing a drug for ulcerative colitis and multiple sclerosis, was acquired by Celgene for U.S.$7.2 billion.
- Innate Pharma shares appreciated following the licensing of its novel immune-oncology drug candidate IPH2201 to AstraZeneca for up to U.S. $1.25 billion in potential payments plus royalties.
Biogen, Esperion Therapeutics, GW Pharmaceuticals, Puma Biotechnology, and Bluebird Bio were the principal detractors from performance in the portfolio during the fiscal year.
- Biogen shares declined due to slowing commercial performance of its multiple sclerosis drug Tecfidera, after a rare side effect was discovered with the drug.
- Esperion Therapeutics shares declined due to investor concerns that the U.S. Food & Drug Administration (FDA) would not approve the company’s cholesterol-lowering drug unless they first conducted a lengthy and expensive
cardiovascular outcomes trial. - GW Pharmaceuticals shares declined due to investor risk aversion ahead of results of a Phase III trial testing Epidiolex, a derivative of marijuana, for paediatric epilepsy.
- Puma Biotechnology shares declined due to mixed data from its phase III study of neratinib for the treatment of breast cancer in the extended adjuvant setting.
- Bluebird Bio shares declined as investors became more cautious about the company’s lead product candidate, LentiGlobin.
BIOG : Biotech Growth’s NAV shrinks by a quarter