Shares in RTW Biotech Opportunities (RTW), International Biotechnology (IBT) and Biotech Growth (BIOG) have jumped around 3% after Novartis of Switzerland became the latest drugs giant to ink a big deal, agreeing to pay $12bn for Avidity Bioscience.
Over the weekend Avidity (RNA), a US, Nasdaq-listed rare muscles disease specialist, obtained a binding offer of $72 a share in cash from Novartis, representing a 46% premium to its $49.15 closing price on Friday.
This is good news for RTW, which held 7% of net assets in Avidity, its third biggest position. It is the fifth acquisition of a portfolio company for RTW since 30 June as deal making in the sector hots up.
Shares in the £556m investment company rose 2.9% to $1.75 and have rallied 54% since their lows in early April when US tariff uncertainty was at its height. However, they remain below their $2.44 peak in February 2021 and stand around a 20% discount below net asset value (NAV). Last week RTW said it would use some of its recent bid gains to extend buybacks of its “materially” cheap shares by $15m (£11m).
IBT, which held 3.4% in Avidity at 30 September, rose 3% to 851p, extending its advance to 77% from an April low of 480p. Shares in the £268m Schroders-run investment trust, which has also enjoyed a string of bids for portfolio companies, have now surpassed their 846p peak in December 2021 and trade 9% below NAV.
BIOG, which held 3.7% in Avidity, added 2.3% to £11.15, bringing their gain since President Trump’s “Liberation Day” lows to 80%, though they too remain well below their £16.86 high in January 2021. Shares in the £245m Orbimed-managed investment trust stand on a 8% discount with the board seeking shareholder authorisation to continue its high level of buybacks.
Polar Capital Global Healthcare (PGCH), the £467m investment trust hoping lots of shareholders will roll over into the next phase of its corporate journey, also held 3% in Avidity, putting it just outside its top 10. Shares that have returned a total of 68% over five years, firmed 0.8% to 388p today, up from 306p in April, on a 1% discount.
Neither IBT or BIOG issued an update on Avidity, leaving the field clear for RTW’s chief investment officer Rod Wong, who commented: “Novartis’s acquisition of Avidity underscores the strategic value of RNA therapeutics in neuromuscular disease and the urgency among large pharma to secure assets that can drive growth beyond upcoming patent expiries.”
Our view
QuotedData’s head of investment company research James Carthew said: “Another day, another deal for RTW’s portfolio. This one (the Novartis bid for Avidity) adds 3.2% to its NAV. Avidity is also International Biotechnology’s and Biotech Growth’s fourth largest holding (the uplifts here are 1.6% and 1.5%, respectively). It feels as though the sector’s recovery has a way to go yet.”
