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BB Biotech tops biotech trust league in January

BB Biotech tops biotech trust league in January

BB Biotech tops biotech trust league in January

Swiss-listed BB Biotech (BBB), managed by Bellevue Asset Management, was the best performing biotech-specialist investment trust in January, achieving a 4.8% rise in sterling-denominated NAV total return. Furthermore, with a tightening of its discount to NAV, BB biotech saw a 10.4% rise in its sterling-translated share price over the month, also the best performance in the group.

BB Biotech holdings showing a healthy share price rise in the month included Vertex Pharmaceuticals, Gilead and Radius Health, but declines were seen for the two top holdings of Celgene and Incyte.  Incyte is fast approaching a major stock price catalyst this year in the form of the outcome of its Phase III trial of epacadostat in combination with Keytruda in advanced melanoma. The study aims to show the combination outperforming Keytruda as monotherapy and, if this proves to be the case, it is likely to be seen as validating the IDO inhibitor drug class. It will also be seen as providing a positive read-through for Incyte’s multiple other IDO + PD-1 trials in other tumour types. Analysts believe the stock could move up by as much as 50% if the combination shows a benefit on progression free survival but could fall by 20% if the endpoint is missed, neatly highlighting the fact that even a $19bn market cap biotech may be too volatile to be held outside of a collective vehicle.

Notably, all of the CHF3.6bn trust’s top 10 holdings, which account for 69% of its portfolio, are US biotechs. Sage Therapeutics is a newcomer to the BB Biotech’s top 10 in December, after rising 78% on the back of positive Phase II results for SAGE-217 in the treatment of adults with moderate to severe major depressive disorder in that month. The company also showed a strong performance in January. The table below shows BB Biotech’s top holdings, as of December 31, with the share price change (in US dollars) over the month.

 BB Biotech Holdings  % of NAV price % change
Celgene 11.0 -4.7%
Incyte 9.6 -10.5%
Ionis Pharmaceuticals 9.4 6.6%
Vertex Pharmaceuticals 5.9 9.1%
Neurocrine Biosciences 7.2 5.0%
Gilead 5.3 13.1%
Radius Health 4.9 14.3%
Halozyme 4.6 -8.5%
Sage Therapeutics 4.6 13.9%
Alexion 4.3 -3.8%

BB Biotech was also the only trust among 13 monitored by Marten & Co whose NAV beat the 4.4% rise in the Nasdaq biotechnology index in the month period.  A majority of the trusts achieved a rise in NAV over the month, but these were otherwise all below that of the benchmark index. Second ranked was Tekla Life Sciences, a US closed end fund, just came in behind the index, although its share price lagged this slightly.

Surprisingly, HBM Healthcare came in bottom in terms of NAV but had the second best share price performance (+6.6%), as the discount  – which, as has been noted in a previous post, was out of step with peers  – narrowed.  The NAV and share price total return performance of the 13 biotech-specialist investment trusts in January is shown in the table below.

Investment Trust % change in NAV % change in price
BB Biotech 4.8 10.4
iShares Nasdaq Biotechnology ETF (benchmark) 4.4 4.4
Tekla Life Sciences Investors 4.3 2.7
Biotech Growth 3.6 0.0
Worldwide Healthcare 3.1 1.7
International Biotechnology 3.0 -1.2
Tekla Healthcare Investors 2.9 2.5
Polar Capital Global Healthcare 2.5 -0.7
BB Healthcare 2.3 -0.9
BlackRock Health Sciences 2.1 -3.3
Tekla Healthcare Opportunities 2.0 2.4
Tekla World Healthcare 2.0 1.2
Woodford Patient Capital Trust -1.1 -1.1
HBM Healthcare Investments -1.3 6.3

BB Biotech tops biotech trust league in January

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