Biotech Growth tops bio-trust league with 47% NAV rise –

Orbimed-managed Biotech Growth Trust (BIOG)  recorded the rise 47% rise in NAV in 2019, representing the best performance of the 14 specialist biotech/pharma closed end investment vehicles monitored by Marten & Co. Biotech Growth’s rise in NAV was more than double that of the benchmark Nasdaq biotechnology index, which itself saw a creditable 19% rise over the year in sterling terms. Biotech Growth was nevertheless something of a standout, with a performance that was 15 percentage points ahead of the second best performer in the biotech/pharma-specialist trust group. That company was the more pharma orientated Worlwide Healthcare Trust (WWH) –  which is also managed by the US-based fund manager Orbimed. Indeed Biotech Growth was also the fifth best performing of all the investment trust listed in the UK in 2019.

Biotech Growth’s top 10 holdings, as of November, were: Vertex Pharmaceuticals (9.9% of NAV), Amgen (5.2%), Neurocrine Biosciences (5.2%), Mirati Therapeutics (5.0%), CRISPR Therapeutics (4.9%), Biogen (4.6%), Sarepta Therapeutics (4.2%), Gilead Sciences (4.0%), Alexion Pharmaceuticals (3.8%) and MeiraGTx (3.5%).

Swiss-listed BB Biotech (BBB) and two of the four US-listed closed end funds managed by Tekla managed to beat the Nasdaq index, while the diversifed health fund Polar Capital Global Healthcare (PGCH) and QuotedData/Marten & Co-covered International Biotech Trust (IBT), came in just a shade behind the rise in the index. IBT attempts to offer investors exposure to the US biotech sector, while manage risk by avoiding “binary events”, such as the outcomes of Phase III trials.

interestingly, HBM Healthcare (HBM) managed a “relatively” modest 12% rise in NAV, but its share price rose by a disproportionate 40%, such that it now trades at a 13% premium. HBM is more of a hedge fund and maintains a short position on the  biotech index, so will tend to under-perform in a rising market. This is designed to accentuate the effect of its stock-picking strategy (and also protects investors in a down market).

Schroder UK Public Private Trust languished at the bottom of this table, with an abysmal -45% return on NAV, although this was attributable to catastrophic collapse of Woodford Investment management and its prior incarnation, Woodford Patient Capital Trust. The new manager has yet to report much on the state of the fund, which under its previous strategy became over-exposed to illiquid stocks, including a number of very poor performing UK biotechs, as was widely reported last year.

2019 NAV and price performance of the major specialist biotech/healthcare closed end funds is tabulated below.

Group/Investment NAV
% change
Price % change Discount to NAV, %
Biotech Growth 47.4 48.5 -6.8
Worldwide Healthcare 32.4 32.3 1.4
BB Healthcare 25.9 22.6 -1.4
Tekla Life Sciences Investors 21.6 20.7 -10.6
Tekla World Healthcare 21.0 27.8 -6.9
BB Biotech AG 21.0 15.9 8.1
iShares Nasdaq Biotechnology  19.9 20.4
Polar Capital Glb Healthcare 19.9 19.2 -6.7
Tekla Healthcare Investors 19.2 21.9 -11.5
International Biotechnology 19.1 13.7 -2.1
BlackRock Health Sciences 17.6 19.4 3.2
Tekla Healthcare Opportunities 17.3 17.9 -8.8
HBM Healthcare Investments AG 12.5 40.1 13.1
Syncona 3.4 -17.3 10.0
Schroder UK Public Private Trust (formerly Woodford Patient Capital) -44.7 -53.3 -28.9

 



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