Contrasting movements likely for Biotech Growth Trust investees

Contrasting movements likely for Biotech Growth Trust investees

Orbimed-managed Biotech Growth Trust (BIOG) looks set to see some contrasting fortunes for key investments in its January update, due in the middle of next month, but could nevertheless be able to offer investors a positive report.  On the plus side, the trust will have seen its investment in Juno Therapeutics, which ranks outside its top 10,  more than doubled this month, as a result of the recent $9.7bn offer for the company from Celgene. However, Biotech Growth’s larger holding in Puma Biotechnology,  which represented 3.3% of NAV, has fallen by 25% today, after the European drug regulator indicated it was unlikely to approve its breast cancer drug Nerlynx.

Biotech Growth has reported that Juno and Puma were its two largest negative contributors in December in most recently published update. This report also highlighted the performance of US-listed, China based biotech Beigene in December.  Beigene’s stock has performed well and is up by more than 30% this month.

Eight of the trust’s top ten holdings are posting stock price gains this month, four of which are in double digit percentages (see table below), suggesting Biotech Growth might see a larger gain in its NAV than is suggested by the 1.5% rise in its own share price. Biotech Growth is trading currently at ~1% premium to NAV.

Biotech Growth managed to largely match the performance of the benchmark Nasdaq Biotechnology index last year in sterling terms, according to the analysis published yesterday by Marten & Co. The table below shows Biotech Growth’s top 10 holdings, as of December 31st 2017, and the share price gain from close of December 29, the last trading day of 2017.

BIOG : Contrasting movements likely for Biotech Growth Trust investees