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Biotech Growth Trust lags benchmark in first half

Biotech Growth's NAV shrinks by a quarter

Biotech Growth’s net asset value per share increased 20.5% during the six month period ended 30 September. The Company’s benchmark, the Sterling-adjusted NASDAQ Biotechnology Index, increased 23.2% during the same period. The Company’s share price increased 21.7% during the period. Currency movement contributed significantly to performance, as the Dollar appreciated 10% relative to the Pound during the review period, and over 90% of the Company’s investments are in U.S. listed securities.

The top contributors to performance in the portfolio were Biogen, Amgen and Incyte.

Biogen shares appreciated due to the announcement of positive data from a Phase III study of Nusinersen in spinal muscular atrophy and market speculation that the company could be an acquisition target.

Amgen shares were strong due to positive clinical data from erenumab for migraine.

Additionally, Amgen received a favourable trial decision on the validity of the company’s patents related to PCSK9 antibodies.

Incyte shares appreciated as investors became more positive on the outlook for epacadostat, an immuno-oncology drug which could be a major value driver for the stock going forward.

The largest losses were from positions in Ono Pharmaceutical, Impax Laboratories and Dynavax.

Ono shares, which had been sold by the period end, underperformed due to unexpected negative data from a pivotal Phase III study of Opdivo in previously untreated lung cancer conducted by its U.S. partner Bristol-Myers Squibb, as well as concerns of a large price cut for Opdivo in Japan. The stock is not present in the benchmark index, so it was therefore overweight throughout the reporting period. The stock had been a positive contributor to our performance in previous periods, and we had reduced exposure prior to the release of data by Bristol.

Impax Laboratories shares were weak after reporting disappointing quarterly results and the company subsequently lowered its financial guidance. The stock was overweight within the portfolio during the reporting period, although exposure had been reduced given the growing concerns on pricing in the specialty pharma subsector.

Dynavax shares, which had also been sold by the period end, were weak due to increased uncertainties after the U.S. Food and Drug Administration (FDA) cancelled a previously scheduled Advisory Committee meeting to review the company’s filing for a Hepatitis B vaccine. The stock is also not present in the benchmark index so it was therefore overweight throughout the reporting.

BIOG : Biotech Growth Trust lags benchmark in first half

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