Biotech sector continues to perform well / valuations still at attractive levels despite strong sector gains
(Thomson Reuters ONE) -
BB BIOTECH AG /
Biotech sector continues to perform well / valuations still at attractive levels
despite strong sector gains
. Processed and transmitted by Thomson Reuters ONE.
The issuer is solely responsible for the content of this announcement.
Interim Report of BB Biotech AG as of June 30, 2013
Strong sector fundamentals propelled biotech stocks to higher ground in the
second quarter of 2013 and BB Biotech AG again achieved positive performance,
gaining 6.4% in CHF and 6.2% in EUR for the quarter. The shares year-to-date
gain now stands at 33.8% in CHF and 33.2% in EUR. As a listed investment
company, BB Biotech has the advantage of a highly flexible investment strategy.
The company's well balanced portfolio consisting of large, mid and small cap
stocks with clearly defined priorities produced gratifying results during the
period under review. There has been no slow-down in new product launches and
three of the companies in BB Biotech's portfolio received marketing approvals
from the US or European regulatory authorities during the quarter. Four new
companies were added to the portfolio during the past quarter. These added to BB
Biotech's exposure in the fields of RNA-based medicines, leukemia, rare diseases
and infectious diseases. Despite the markup in biotech stocks, the average
price/earnings ratio for the sector is reasonable at around 22 times estimated
2013 earnings.
The primarily US-driven biotech sector continued its upward move in the second
quarter of 2013 and outpaced the broader market. While the S&P 500 gained 2.4%
in USD during the second quarter of 2013, most European and emerging equity
markets retreated. The Nasdaq Biotech Index (NBI) shrugged off the recent market
turmoil, gaining 8.6% (in USD) and lifting its year-to-date performance to
26.7% (in USD).
Following a new all-time high in mid-May 2013 for the NBI and other equity
markets, profit-taking accelerated into June as concerns surfaced related to US
Federal Reserve and Japanese monetary policies. Interestingly, bonds and
commodities sold off in addition to equities, as investors increased cash
allocations at the end of Q2 2013.
BB Biotech continues its strong performance
Since the beginning of 2013, BB Biotech's Net Asset Value (NAV) has increased by
more than a third (36.0% in USD, 40.4% in CHF and 37.8% in EUR). BB Biotech
closed the second quarter with another strong quarterly share price performance
- gaining 6.4% in CHF, and 6.2% in EUR. For HY1 2013, BB Biotech achieved an
attractive gain of 33.8% in CHF and 33.2% in EUR, including the cash
distribution of CHF 4.50 per share. Continued outperformance of the portfolio
combined with an investment ratio of over 100% (104% as of end of june) resulted
in a HY1 2013 profit of CHF 492.7 mn.
Assets under management grew to CHF 1.68 bn driven by the performance of
portfolio holdings. The cash distribution of CHF 4.50 led to a reduction in
assets of CHF 51.0 mn and the share buyback program utilized CHF 32.4 mn of cash
in HY1 2013. On June 17, BB Biotech cancelled its closed share repurchase
program and reduced the number of outstanding shares by 1.15 mn from 13.0 mn,
bringing the new fully diluted number of shares outstanding to 11.85 mn shares.
The company currently holds 459'323 BB Biotech shares, consisting of 311'823
treasury shares and 147'500 shares bought under the current share repurchase
program, in total 3.9% of outstanding shares.
Well positioned portfolio following a few selected changes
The portfolio holdings continue to perform well, both in absolute and relative
terms. The investment flexibility of an investment company proved to be a key
factor for successful HY1 performance. The investment in Isis is an example of
this. BB Biotech invested approximately 3% of the NAV into the company over the
2010/11 timeframe and - the Isis share price appreciated significantly over the
following 1.5 years, turning Isis into a core position, which now represents
more than 10% of the NAV.
A significant value driver for the shareholders of BB Biotech is the constant
flow of product approvals of portfolio companies. Following a very successful
Q1, three more companies gained a product approval either in the US or Europe
during Q2.
In May, Theravance with its partner GlaxoSmithKline received US approval of Breo
Ellipta, a combination of an inhaled corticosteroid (fluticasone furoate) and a
long-acting beta2 agonist (LABA, vilanterol) as a once-daily maintenance
treatment for airflow obstruction in patients with chronic obstructive pulmonary
disease (COPD). Importantly, Breo Ellipta is also indicated for reducing
exacerbations of COPD in patients with a such history. Following the 2012 US
approval of Xtandi for the treatment of patients with metastatic castration-
resistant prostate cancer (mCRPC) who have previously received docetaxel,
Medivation and its partner Astellas received a positive opinion from the CHMP
(Committee for Medical Products for Human Use) in April 2013 and full marketing
authorization for Xtandi (enzalutamide) in late June 2013. Halozyme will receive
royalty payments from Baxter post HyQvia's approval in all European Union (EU)
member states in late May 2013. HyQvia offers patients with primary and
secondary immunodeficiencies the ability to administer their treatment in a
single subcutaneous site every three to four weeks, representing a convenience
benefit for patients managing a chronic disease. Additionally, Halozyme's
partner Roche received a positive opinion from the CHMP for SQ Herceptin, for
the treatment of early and metastatic HER2+ breast cancer, with full approval
expected in Q3 2013. BB Biotech believes that this approval bodes well for
another product partnered with Roche, SQ MabThera, with a CHMP opinion expected
in late 2013 or early 2014 for patients with follicular non-Hodgkin's lymphoma.
On the downside, Novo Nordisk continues to underperform the market due to
increasing worries around the incretin class of drugs (GLP's and DPP IV's) and
the continued debate about the company's valuation if the Tresiba US opportunity
is excluded. The company received a complete response letter in February 2013
for Tresiba from the US FDA, in which the regulatory authorities asking for a
cardiovascular (CV) outcome study, most likely in patients at higher CV risk.
The board, together with the portfolio management team, regularly reviews each
individual holding and overall portfolio composition. The portfolio is well-
balanced between established, large, profitable biotech companies with
attractive growth trajectory forecasts, and a significant number of mid-cap
companies with even stronger growth prospects albeit at slightly higher risk.
Given this effective balance, few changes have been made in the portfolio
throughout the second quarter of 2013. Four new investments were initiated as
smaller holdings.
The addition of companies focused on developing RNA-based medicines has so far
been successful - driven by the substantial value appreciation of Isis over the
last two years. In addition to Isis, which is developing antisense RNA
molecules, Alnylam is developing RNAi molecules targeting various liver
disorders. With the addition of Alnylam to the portfolio in Q2 2013, BB Biotech
is now covering the leaders in the antisense and RNAi drug development space,
both of which enjoy strong intellectual property positions.
Infinity was added given current developments in leukemia such as chronic
lymphocytic leukemia (CLL), the most common type of adulthood leukemias (cancers
affecting white blood cells). Significant developments in targeting new cellular
pathways are being made and therapeutic advances are anticipated in CLL and
other lymphatic indications. As more effective treatment options become
available, BB Biotech expects that CLL and other indications such as DLBCL, the
most common type of non-Hodgkin lymphoma among adults, will become important
therapeutic markets. Promising compounds include emerging BTK inhibitors and
PI3K inhibitors, which are currently furthest along in clinical studies.
Synageva is developing enzyme replacement therapies for severe and rare
conditions. Sebelipase alfa, their lead molecule currently undergoing a
registration study, is an active enzyme replacement therapy for Lysosomal Acid
Lipase (LAL) deficiency. The goal for sebelipase alfa is the correction of
disease abnormalities associated with the deficiency of the LAL enzyme,
including growth failure and liver dysfunction. The early onset form of the
disease is fatal in the first year of life for infants, while patients suffering
from the late onset form progress to liver fibrosis, liver failure and death.
BB Biotech successfully invested in virology (HIV and HCV). Another anti-
infective area, antibiotic development, has been less prominently in the
portfolio over the last few years. Now, with the addition of Trius, which is
developing a next generation oxazolidine, BB Biotech is selectively increasing
its exposure to the antibiotic field. Trius is developing Tedizolid (TR-701) as
a second generation oxazolidinone with improved properties over the blockbuster
Zyvox (linezolid, Pfizer) for different indications such as skin infections,
lung infections and endocarditis.
Attractive valuations despite continued outperformance
With biotechnology valuations expanding in the second half of 2012 and in HY1
2013, the current PE multiples of the profitable large cap names range from the
high teens to mid-twenties. Anticipated revenue growth rates for these companies
are in the mid-teens or higher and their projected compound four year earnings
growth rates exceed 20%, clearly above most other healthcare segments. The
average PEG ratio (PE divided by EPS Growth) for the established profitable
biotechnology companies is attractive at around 1 - particularly since large
pharmaceutical companies trade around 2.
Valuations also continue to look attractive from an M&A standpoint. Two
companies in the portfolio support this investment thesis. Optimer is currently
evaluating strategic transactions based on the value of its antibiotic, Dificid,
for the treatment of C. difficile infections. In addition, Onyx recently
received and rejected an unsolicited offer to be acquired from Amgen, Onyx have
announced that they will evaluate their strategic options actively and we
anticipate an auction process for the sale of the company may follow.
Major product approvals in the near term
BB Biotech expects the biotech sector to continue to outperform broader equity
markets. With Gilead's Sofosbuvir launch approaching (the PDUFA date is in early
December 2013) one of the largest biotech products ever launched will be at the
center of attention for the coming months and quarters. Sofosbuvir will launch
initially in combination with peginterferon and ribavirin for genotype 1
Hepatitis C Virus (HCV) infected patients, and as an all oral treatment in
combination with ribavirin for genotype 2 and 3 patients. With a 'one tablet per
day' regimen (combining sofosbuvir and ledipasvir) reporting the strongest
clinical results to date, we expect that Gilead will build its market leading
role within the HCV market even further. Actelion is expected to see the product
label for Opsumit in pulmonary arterial hypertension (PAH) as well as the Phase
III trial outcome of Selexipag in mid-2014 - and these events will inform the
future for Actelion. Celgene's 2013 and 2014 product launch efforts will not
only include Pomalyst for relapse/refractory multiple myeloma patients, but also
Apremilast as a new oral treatment for several inflammatory disorders.
In addition to these important product updates, BB Biotech anticipates other
platform companies to deliver attractive shareholder value in the coming years.
These currently include targeted toxin delivery technologies, either through
antibodies (Immunogen) or a small molecule carrier (Endocyte), the RNA-based
drugs in development with antisense (Isis) and RNAi-based molecules (Alnylam),
as well as through improved delivery of complex biologics (Halozyme).
We believe that these and other significant milestones resulting in substantial
product launches will continue to drive revenue and earnings growth rates for
our portfolio holdings ahead of the biotechnology industry average and
considerably ahead of other healthcare sectors.
The complete interim report as of June 30, 2013 and a webcast with Dr. Daniel
Koller, Head Management Team BB Biotech, can be viewed at www.bbbiotech.com.
For further information:
Bellevue Asset Management AG, Seestrasse 16, 8700 Küsnacht, Switzerland
Thomas Egger, Tel. +41 44 267 67 09, teg(at)bellevue.ch
www.bbbiotech.com
Company profile
BB Biotech invests in companies in the fast growing market of biotechnology and
is one of the world's largest investors in this sector with CHF 1.7 bn in assets
under management. BB Biotech is listed in Switzerland, Germany and Italy. Its
investments are focused on listed companies that are developing and
commercializing novel medical treatments and cures. BB Biotech's investment
selection process is guided by the fundamental research and analysis of
physicians and molecular biologists. Its Board of Directors has many years of
experience in industry and science.
Disclaimer
This release contains forward-looking statements and expectations as well as
assessments, beliefs and assumptions. Such statements are based on the current
expectations of BB Biotech, its directors and officers, and are, therefore,
subject to risks and uncertainties that may change over time. As actual
developments may significantly differ, BB Biotech and its directors and officers
accept no responsibility in that regard. All forward-looking statements included
in this release are made only as of the date of this release and BB Biotech and
its directors and officers assume no obligation to update any forward-looking
statements as a result of new information, future events or other factors.
Composition of BB Biotech's portfolio as of June 30, 2013
(in % of securities, rounded values)
Celgene 13.5%
Actelion 11.6%
Isis Pharmaceuticals 11.2%
Gilead 10.2%
Incyte 6.3%
Vertex Pharmaceuticals 6.1%
Novo Nordisk 4.3%
Alexion Pharmaceuticals 3.9%
Medivation 3.8%
Ariad Pharmaceuticals 2.9%
Immunogen 2.9%
Onyx Pharmaceuticals 2.6%
Halozyme Therapeutics 2.4%
Swedish Orphan Biovitrum 2.2%
Theravance 1.8%
Glenmark Pharmaceuticals 1.8%
Endocyte 1.7%
Lupin 1.3%
Ipca Laboratories 1.1%
Optimer Pharmaceuticals 1.1%
Infinity Pharmaceuticals 1.0%
Bavarian Nordic 0.9%
Alnylam Pharmaceuticals 0.8%
Achillion Pharmaceuticals 0.7%
Probiodrug (1)) 0.7%
Radius Health (1) ) 0.7%
BioMarin Pharmaceutical 0.5%
The Medicines Company 0.5%
Strides Arcolab 0.4%
Idenix Pharmaceuticals 0.2%
Dendreon 0.2%
Valneva 0.2%
Synageva BioPharma 0.1%
Trius Therapeutics 0.1%
Novo Nordisk put options (short) <(0.1%)
Radius Health warrants <0.1%
Total securities CHF 1 753.6 mn
Other assets CHF 30.0 mn
Other payables CHF (103.3) mn
Total shareholder's equity CHF 1 680.2 mn
Treasury shares (in % of company) (2) 3.9%
1) Unlisted company
2) Correspond to the total of all own shares held including the second trading
line
Media Release (PDF):
http://hugin.info/130285/R/1717089/570833.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: BB BIOTECH AG via Thomson Reuters ONE
[HUG#1717089]
Datum: 18.07.2013 - 07:01 Uhr
Sprache: Deutsch
News-ID 279492
Anzahl Zeichen: 19988
contact information:
Town:
Schaffhausen
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 136 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Biotech sector continues to perform well / valuations still at attractive levels despite strong sector gains"
steht unter der journalistisch-redaktionellen Verantwortung von
BB BIOTECH AG (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
