I am pleased to present International Biotechnology Trust’s factsheet for December 2019
2020 kicked off to an exciting start with the annual JP Morgan Healthcare Conference in San Francisco on 13 January. This event is more than a conference. With a number of parallel events hosted by other investment banks, biopharma companies and PR firms, it is arguably the most important event in the global healthcare calendar. We were there and had the opportunity to participate in 44 one-to-one meetings with management teams from both companies we invest in as well as future investment prospects. It is evident that there is no lack of investment opportunities for 2020!
I would like to take this opportunity to mention a few companies in the 1-10 bn USD market cap range that we feel positively about and currently include within our portfolio: PTC Therapeutics, Acadia Pharmaceuticals and ChemoCentryx.
- PTC Therapeutics develops drugs for rare genetic diseases, such as Duchenne muscular dystrophy and has global commercial operations with two drugs approved by the FDA.
- Acadia Pharmaceuticals commercialises Nuplazid for Parkinson’s Disease psychosis. They plan to submit an “sNDA” application to FDA for the drug in a second indication for dementia-related psychosis.
- ChemoCentryx is in the late stage development of its treatment for the disease ANCA Vasculitis and presented excellent results showing improvements in kidney function in a phase 3 clinical trial in November.
2019 ended on a positive note with a strong performance for the biotechnology sector. The Nasdaq Biotech Index was up 25.1% in USD and 20.2% in GBP. There have been references to the sector being overvalued – but I do not believe this to be true. At the end of 2018, the equity markets experienced a large V-shaped correction in response to the Federal Reserve Bank increasing the interest rates. Throughout 2019, the Reserve Bank has moderated its monetary policy and it is my view that the current low interest rate will continue for the short and medium term. Additionally, as evidenced by the graph below, the Nasdaq biotech index is currently in a growth phase and is certainly not overpriced.
Figure 1: 10-year performance of the NASDAQ Biotechnology Index to 12 December 2019 (Bloomberg)
What can we expect in 2020? With it being an election year in the US, we expect high drug prices on new drugs to be a popular topic of conversation. Consequently, our view is that the biopharma sector will trade sideways into the election. The outcome of an election is always uncertain, but it is my opinion that the US healthcare system will remain largely unchanged after the election with minimal impact to the overall pricing structure of pharmaceuticals in the US.
Thank you for taking the time to read my thoughts and outlook for the new year. I look forward to a successful 2020 and wish you all a prosperous year.
Thank you for taking the time to read our factsheet
December Factsheet (click link to open)