Biotech Growth sells Amgen, buys Regeneron and Alexion in March

Biotech Growth sells Amgen, buys Regeneron and Alexion in March

OrbiMed-managed Biotech Growth Trust (BIOG) sold a large proportion of its stake in Amgen last month, while increasing its holdings in Regeneron and Alexion, according to an analysis of its top holdings disclosed in its latest factsheet. The shareholding in Amgen, which accounted for just over 10% of NAV in February, has been cut by around 40%, so that it now represents 5.4% of the trust’s assets – Amgen’s stock also fell by around 7% in the month.  Meanwhile, the holding in Regeneron has been increased from 4.3% to 7.2% of NAV, helped by a 7.5% share price rise in the month. The third holding within the top 10 that looks to have been changed is in Alexion, which increased from 3.4% to 4.6% of NAV.

The contrasting share price fortunes of Amgen and Regeneron in March largely reflected the market’s reception of the Odyssey Outcomes trial, which was reported at the American College of Cardiology Conference last month. This huge study involved 18,600 patients treated for up to five years with Praluent, a PCSK9 antibody developed by Regeneron in collaboration with Sanofi for hypercholesterolaemia, and it showed a 15% reduction in the risk of major cardiovascular events.

Sanofi/Regeneron are locked in a fiercely intense competitive struggle with Amgen, which markets a broadly similar antibody called Repatha in the same segment. Furthermore, both groups have struggled to make the projected commercial headway since their launches in 2015, largely because US payors (insurance groups etc) have restricted coverage and played the two off parties off against each other to gain large price discounts. Outcomes studies were conducted by both groups in a bid to provide data on the life saving benefits to justify high prices in a otherwise largely generic cardiovascular market. In the event, Sanofi/Regeneron’s Odyssey Outcomes delivered a broadly similar cardiovascular benefit to that seen in Amgen’s Fourier study, but its response to this seems to have pleased the markets. Regeneron and Sanofi effectively said they would substantially reduce the cost of their drug, which the markets seem to have decided should help their product compete with Amgen’s where it has hitherto been losing market share.

Separately, Regeneron also announced a positive result in the month from the Panorama Phase III trial of Eylea in moderately severe to severe non-proliferative diabetic retinopathy without diabetic macular edema (DME), which will form the basis for a regulatory submission later this year.

The trust’s topping up of its stake in Alexion in most likely linked to the positive data from a study of ALXN1210 in the ultra-rate disease of paroxysmal nocturnal haemoglobinuria (PNH). This product is expected to give a much longer commercial life to Alexion’s blockbuster Soliris franchise. ALXN1210 is a long acting version of Soliris that was given once every eight weeks, which compares with every two weeks for Soliris. In the study, ALXN1210 was shown statistically to be non-inferior to Soliris, although it was better numerically on all primary and secondary endpoints.

Biotech Growth reported a 3.5% fall in NAV in March, which was more than the 2.9% fall in the sterling-adjusted value of the benchmark NASDAQ Biotechnology Index. It reported that Sarepta, Amicus and Regeneron were its top positive contributors to performance during the month. Sarepta shares appreciated 18% in the month as a result of a positive regulatory update for its Duchenne muscular dystrophy candidate golodirsen allowing for the potential for accelerated approval, while those of Amicus rose 9% in the month following approval of its Fabry disease treatment Galafold in Japan.  The top holdings of the trust, as at the end of March, and the share price change in each of these stocks, is shown in the table below.