International Biotechnology Trust (IBT) expressed its optimism for the future after emerging from a highly volatile year to 31 August with an underlying investment return of just 0.7%.
Kate Cornish-Bowden, chair of the £267m investment trust, said the flat net asset value (NAV) result, which underpinned a 3.5% total shareholder return, belied a sharp fall and recovery in the biotech market. In the first eight months of the financial year, the Nasdaq Biotechnology index, its benchmark, had plunged 22% before rebounding 25% in the next four months as fears about tariffs receded, ending a three-year bear market in the sector.
Cornish-Bowden said: “I am pleased to report that on an annualised basis over one, three, five and ten years to 31 August 2025, the Company’s NAV total return has outperformed the reference index.”
In the second half of the financial year, the sector had performed well and she said there were good reasons to expect this to continue.
“The need for cash-rich pharmaceutical companies to maintain growth and adapt to potential regulatory changes has led to a surge in M&A activity in recent months. The overall M&A activity trend reflects a shift by big pharmaceutical players to strengthen pipeline positions in high-value therapeutic areas such as oncology, neuroscience, and rare diseases.”
The chair added: “The outcome of the drug pricing debate will take more time to resolve, but the convergence of the transformational progress in scientific innovation, the impact of artificial intelligence on trials and approvals, and increasing demand for treatments should make biotechnology a lucrative investment for shareholders in the years to come.”
Our view
Matthew Read, senior analyst at QuotedData, said: “While its absolute returns may disappoint some shareholders, International Biotechnology Trust has navigated a choppy year well, with a 0.7% NAV total return and a 3.5% share price total return against a 6.0% fall in the Nasdaq Biotech index. Its tilt towards to late-stage, de-risked names has helped with five portfolio holdings being taken over during the year.
“There is little doubt that the biotech sector is still dealing with policy noise and periodic funding jitters, but valuations look undemanding and big-pharma companies have significant pipeline gaps to fill, which should be supportive of M&A. This should benefit all of IBT’s peers although IBT’s late-stage bias could position it well in this regard.
“It should be noted that, since IBT’s financial year end, the biotech sector has continued to motor ahead and, at the time of writing, IBT has the best performance amongst its peers over the last 12 months by a significant margin – returning 25.5% and 26.5% for NAV and share price total returns respectively, versus peer group medians of 3.1% and 9.1% respectively.”
