Portfolio Analysis

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

As at 31 March 2017

Summary

IBT Portfolio NAV (m)£242
Number of Portfolio Companies87
Quoted Investments61
Unquoted Investments26

Investment Manager Comment

In March 2017, IBT’s NAV/share fell by 1.8% (GBP) while the NASDAQ Biotechnology Index was off 2.2% (GBP). The FTSE All-Share Index was up 1.2% (GBP) and the S&P 500 Index fell 0.9% (GBP). IBT’s share price increased 1.0% (GBP). The USD weakened 1.4% vs the GBP.

 

The main positive contributors to NAV in March were Vertex, Nektar and Achaogen. Vertex reported promising data for their next generation drug combination to treat a sub population of cystic fibrosis patients. The data showed better safety and efficacy than their marketed product Orkambi, raising the bar for competitors to enter the market. Nektar shares rose over 40% on the news that their opioid analgesic drug for treating pain succeeded in late stage trials. Achaogen shares recovered well out of a weak previous month on the back of speculation that their antibiotic Plazomicin may not reach the sales potential expected by analysts.

 

The main negative contributors to NAV in March were Alexion, Biogen and Intercept. Alexion shares fell as investors took the news of a new CEO as potentially signalling that the company will remain independent and have to rely on the lacklustre growth of its new drug launches to generate returns. Biogen shares were weak over concerns that the expected ramp in Spinraza (a new drug to treat a paediatric orphan indication Spinal Muscular Atrophy) would not be as strong as originally hoped. Intercept shares sold off as scepticism mounted that Gilead might capture the NASH market in totality and render the company’s own product obsolete.

 

On a relative basis, the healthcare sector is at a seven percent discount to the S&P 500 versus the historical premium of 10%. This most likely reflects the political concerns over pressure on drug prices. However, since the Republican administration has failed to propose a bill to replace Obamacare, we don’t believe that legislative approaches to address drug pricing will occur in the short to medium term. With the current relative valuation discrepancy to the broader market, we are hopeful that the sector will generate strong returns.


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 %

Celgene7.2%
Biogen6.8%
Regeneron5.8%
Incyte5.6%
Alexion 5.0%
Genmab4.9%
Vertex4.4%
Shire3.9%
Amgen3.6%
Illumina3.3%

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