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BB Biotech may have to take hit on Incyte stake

BB Biotech may have to take hit on Incyte stake

BB Biotech may have to take hit on Incyte stake

Switzerland’s BB Biotech (BBB.S) looks set to be in for a difficult month in terms of performance as a result of the negative result reported in a Phase III trial of a drug from Incyte Pharmaceuticals (Nasdaq:INCY), which was the trust’s third largest holding accounting for 9.4% of its NAV at its last reported date (December). Incyte’s stock was initially down by 22% on the news, wiping some $3.5bn from its market cap. Marten & Co assumes that the trust must still hold its stake, as no SEC filings relating to a disposal have been made.

Incyte’s study, known as ECHO-301, tested the IDO inhibitor epacadostat in combination with Merck’s Keytruda in the first-line treatment of advanced melanoma and had been billed as the biggest biotech binary event of 2018. The study had been designed to show whether the combination could outperform Keytruda alone and, if successful, was this was expected to have been seen as validating the IDO inhibitor drug class. However, in the event the drug conferred no additional benefit and this is seen as a direct read-across to other trials. There are eight other Phase III trials underway with epacadostat, six in combination with Keytruda and two with Bristol-Myers Squibb’s Opdivo, in various cancer indications and all of these must now be called into question.

However, even though it may have to abandon its two combination Opdivo/epacadostat trials, Bristol-Myers Squibb is a modest beneficiary of the news, as its existing combination of Opdivo with Yervoy, which is already approved for melanoma and will likely be so for renal cell carcinoma, is no longer likely to face competition.

Hitherto a consistently strong performer, BB Biotech fell to the bottom of the biotech specialist trust league table maintained by Marten & Co in March, after some setbacks for other large investments including Celgene, its second largest holding, which received a receipt of a refuse-to-file (RTF) letter from the FDA for ozanimod for multiple sclerosis.

Leading holdings, as of 31 December, are shown in the table below.

 Holding % NAV
Ionis 11.0%
Celgene 9.6%
Incyte 9.4%
Neurocrine 7.2%
Vertex 5.9%
Gilead 5.3%
Radius Health 4.9%
Halozyme 4.6%
Sage 4.6%
Alexion 4.3%
Agios Pharmaceuticals 4.2%
Esperion Pharma 4.2%
Novo Nordisk 4.0%
Alnylam 3.6%

BBB.S – BB Biotech may have to take hit on Incyte stake

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