Portfolio Analysis

SV Health Managers LLP was appointed Investment Manager of the Company on 1 January 2005 and Alternative Investment Fund Managers (‘AIFM’) on 21 July 2014. SV Health Managers LLP provides life sciences focused Investment Management services to publicly listed investment funds and venture capital funds.

As at 31 August 2017

Summary

IBT Portfolio NAV (m)£252
Number of Portfolio Companies92
Quoted Investments66
Unquoted Investments26

Investment Manager Comment

In August 2017, IBT’s NAV/share rose by 5.1%, adjusted for dividends, (GBP) while the NASDAQ Biotechnology Index was up 7.0% (GBP). The FTSE All-Share Index increased by 1.4% (GBP) and the S&P 500 Index rose 2.6% (GBP). IBT’s share price rose 2.0% (GBP). The USD strengthened by 2.2% vs the GBP. A dividend of 11.5p was paid on 31 August.

 

The main positive contributors to NAV in August were Kite, Biogen and Paratek. Gilead announced the acquisition of Kite at a valuation of USD11.9BN, a 30% premium to the previous close. Kite is nearing the approval of their cell therapy treatment ‘axi-cel’ which the company developed to treat relapsed/refractory diffuse large B cell lymphoma. Biogen, as well as other large cap biotech companies, in our view is beginning to re-rate with an expansion to their P/E multiple. We are confident this will continue after an extended period of mostly political uncertainty in the US depressing valuations in the healthcare sector. Paratek valuation increased after the company announced they are working with advisers to review potential interest to acquire the company.

 

The main negative contributors to NAV were Shire and investments in the unquoted part of the Trust’s portfolio. The valuation in the unquoted portfolio was reduced by approximately GBP 1m. Shire continued to be weak on the perception that Roche’s ACE910 haemophilia drug candidate could capture future share from Shire’s franchise.

 

It is our view that the political debate in the US, regarding the pricing of innovative drugs and price increases of drugs, is ebbing away. Innovative drugs will continue to command premium pricing, price increases on marketed drugs will be capped, and generic drug pricing will remain under pressure. Mergers and Acquisitions, a major theme for the biotechnology sector, should recover, with Gilead’s acquisition of Kite being the first move.


Performance

 (NAV, Share Price Change, 5 years)

Source: Bloomberg, mid-mid (share price), quoted in sterling and SVLSM. Past performance is not a guide to future performance
Note: All performance data are quoted net of all costs to the Company.


Top Ten Investments by NAV %

 

Gilead7.8%
Celgene7.7%
Regeneron6.5%
Biogen5.9%
Vertex4.5%
Alexion 4.0%
Incyte3.3%
Shire3.2%
Biomarin3.0%
Genmab3.0%

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