Biotech Growth’s big-bio focus a cause of underperformance in February
OrbiMed-managed Biotech Growth Trust (BIOG) saw a 3.9% fall in its NAV in February, under-performing against a 2.6% decline in the sterling-denominated value of the benchmark NASDAQ Biotechnology Index. The value of investments held by the trust were hit in the market wide sell-off in February, and this was exacerbated by its bias towards the large caps stocks, as can be seen by the across-the-board declines in share prices across the trust’s top ten investments (see table below).
Orbimed highlighted good performances for Array BioPharma, whose shares rose by 15% in February on the back of strong survival benefit for its combination melanoma treatment binimetinib/encorafenib, while Biogen and Celgene were the largest negative contributors to the trust’s performance during the month. Biogen shares fell as a result of concerns following its decision to increase in the size of Phase III trials of aducanumab in Alzheimer’s disease, while shares of Celgene declined as a result of the receipt of a Refuse to File letter from the FDA for ozanimod, its ulcerative colitis treatment, a highly unusual occurrence for a major company.
It appears as that BIOG’s managers have re-based their top holdings in the month and, as a result, increased the stake held in Amgen while reducing exposure to Biogen, based on the share price changes of these two stocks in February. This gives BIOG roughly equal exposure (and slightly overweight versus the index) to Amgen, Biogen and Vertex, while being somewhat underweight in Celgene and Gilead, amongst the big caps. Amgen, Biogen, Gilead and Celgene have roughly 8% weightings in the index. Regeneron has a 5% weighting, while Vertex Illumina and Alexion are between 3-4%. Bluebird Bio is the largest over-weight holding in the top ten, shown in the table below. The fund has net gearing of 6.2%.
| % NAV | share price % change 1/2-28/2 | |
| Amgen | 10.3% | -3.9% |
| Biogen | 10.1% | -18.0% |
| Vertex | 10.1% | -4.0% |
| Celgene | 6.6% | -14.2% |
| Gilead | 4.6% | -5.7% |
| Illumina | 4.5% | -1.0% |
| Alnylam | 4.4% | -7.2% |
| Regeneron | 4.3% | -12.6% |
| Bluebird | 3.7% | -2.1% |
| Alexion | 3.4% | -2.5% |
Biotech Growth’s big-bio focus underperformance in February