Fears rise that COVID-19 infection may escalate into a pandemic

We are pleased to present International Biotechnology Trust’s factsheet for January 2020

Our outlook for 2020 remains unchanged. We expect the biotech sector will trade sideways until the market has gained more certainty regarding the potential outcome of the US election in November 2020. One determining factor will be the nomination of the Democratic Presidential Candidate in July. Healthcare reform has been a popular agenda item in the ongoing primaries and a candidate with a moderate healthcare reform agenda is viewed as positive for the healthcare sector.

Additionally, the COVID-19 epidemic, which started in China in late 2019, now seems to be spreading to the neighbouring nations. The biggest area of concern is that a direct antiviral medicine has not yet been discovered and there is no vaccine to prevent the disease. However, the majority of people infected will recover and develop an immunity that will prevent re-infection. Therefore, it is our view that while the epidemic will have serious short-term consequences, global economies will return to a normal state of operation and life will return to normal – hopefully by the end of this year. We have reacted to the emergence of the COVID-19 epidemic by reducing the gearing of the Company.

In last month’s blog, we mentioned PTC Therapeutics (“PTC”), a US company that develops drugs for rare genetic diseases. On 6 February 2020, PTC reported positive results from the pivotal SUNFISH clinical trial for Risdiplam, a drug intended to treat spinal muscular atrophy (“SMA”). In November 2019, the FDA accepted the NDA filing of Risdiplam and the FDA’s approval is expected by 24 May 2020, at the latest. This recent trial data has further strengthened the market potential of the drug candidate. Risdiplam is a collaboration between PTC, the SMA Foundation and Roche. We view this as a positive development and will continue holding PTC in our portfolio, which is our third largest holding at the end of January 2020.

BioMarin Pharmaceuticals (“BioMarin”), a US company that develops new therapies for rare diseases has moved into our “Top 10” in January 2020. Historically, the company has had several approved drugs that act as enzyme replacements. More recently the company is developing Valrox, a potential gene therapy for Haemophilia A. In early January 2020, the company published 3 years of follow-up data supporting a long-lasting effect of the drug. This positive outlook has caused us to increase our holding in BioMarin. On 21 February 2020, the company announced that the FDA had accepted its NDA filing for Valrox, with a potential approval expected by 21 August 2020.

Thank you for taking the time to read our January factsheet and some important highlights for the year thus far.

January Factsheet (click link to open)