Biotech bucks macro uncertainties - strong quarterly results for BB Biotech
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BB BIOTECH AG /
Biotech bucks macro uncertainties - strong quarterly results for BB Biotech
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Interim Report of BB Biotech AG as of September 30, 2014
BB Biotech advances 18.2% (in CHF) in the third quarter 2014
The biotechnology industry continues to advance despite the unsteady trends on
global stock markets and the volatility witnessed in the second quarter. Large
biotech stocks performed especially well during the third quarter while the mid
and small cap companies were not quite as strong. The Nasdaq Biotechnology Index
sustained its solid performance, advancing 6.5% in USD during the third quarter.
BB Biotech's share price rose 18.2% in CHF and 18.9% in EUR. The positive
performance of portfolio investments translated into a quarterly profit of CHF
482.8 mn for BB Biotech. Two new positions in the mid cap segment were added to
the portfolio. More new products with considerable sales potential are expected
to be launched during the remaining months of the year.
The third quarter 2014 proved to be challenging for equities in most sectors. By
virtue of the growth characteristics of the biotechnology sector, the Nasdaq
Biotechnology Index continued to perform well in the third quarter achieving a
total return of 6.5% in USD. Biotech growth is happening against complex
macroeconomic and global equities picture. Escalating regional conflicts and
poor economic reports for the Euro zone distracted investors. By contrast the US
economy continued its steady recovery and US equity markets reached new highs in
September 2014 supported in part by continued low interest rates.
The contrast shows in mixed performance of equity indices. For the third
quarter, the S&P Index was up 1.1%, the Euro Stoxx unchanged at +0.3%, the DAX
was down 3.7% and the SMI was up 3.4% (all values being total return, in local
currency). Expectations that the US Federal Reserve System will raise interest
rates strengthened the US dollar over most currencies, including the Euro, the
Yen, and the Swiss Franc.
For biotech, the sector specific news flow was dominant. Questions surrounding
sustainability of the various biotech business models and associated pricing
power for innovative drugs led to increased volatility in April and May. The
recovery of biotechnology confidence in June as well and through the third
quarter was based on strong quarterly earnings reports from large cap biotech
companies, important product approvals, positive clinical data from late stage
trials, and continued M&A activity. The third quarter was also positive for
large cap stocks. Mid cap and small cap biotech companies were less favorable.
Nevertheless, overall year-to-date, the total return for the NBI was +20.9% in
USD, outperforming the broad equity indices.
BB Biotech's performance
BB Biotech had strong third quarter results. Its share price increased 18.2% in
CHF and 18.9% in EUR. Continued positive portfolio performance led to a profit
of CHF 482.8 mn. NAV increased 12.6% in USD, 21.2% in CHF, and 22.0% in EUR.
Corresponding returns for BB Biotech's shareholders for the first nine month of
2014 were +37.9% in CHF and +39.7% in EUR. The portfolio of BB Biotech drove a
company profit of CHF 743.9 mn for the same period, reflecting a strong NAV
total return of 27.4% in USD, 36.3% in CHF, and 38.7% in EUR.
Alongside the strong performance from large cap stocks such as Gilead, Celgene
and Novo Nordisk, key contributors to performance included Puma Biotechnology,
Medivation, Isis Pharmaceuticals, Pharmacyclics, Agios Pharmaceuticals and
Radius Health in the third quarter. On the other hand Synageva BioPharma, Incyte
and Swedish Orphan Biovitrum underperformed the markets.
Board compensation for 2014 and 2015
On the background of the Swiss law following the Minder initiative, the Board
decided to hire a global consulting firm to develop a "state of the art"
compensation plan. Following a thorough and comprehensive peer group selection
process, this consulting firm not only reviewed the current Board compensation
situation in Switzerland, but also brought in an international perspective. This
is essential, since over the last years the BB Biotech shareholder base has
become more international. The outcome of the analyses was a clear advice to go
for a fix Board compensation. This solution is preferred in Switzerland as well
as abroad and is considered best corporate governance by the current " Swiss
code of best practice for corporate governance". We therefore propose to our
shareholders on the occasion of the next Annual General Meeting in March 2015 a
fix compensation for the members of the board of BB Biotech AG. The fix
compensation will be paid in cash. Individual amounts will be published in the
Annual Report 2014.
Portfolio update
BB Biotech's portfolio remains balanced between large mid and small cap
companies. The selection includes exposure to the performance of promising drugs
in launch phase, and attractive pipeline assets. The portfolio is designed to
capture above industry average growth rates.
The core holdings, Celgene, Gilead, Actelion, Isis Pharmaceuticals and Incyte,
represent 47% of the portfolio. They are followed by six positions with a
weighting of between 3% and 5% each. 23 smaller holdings make up the remainder.
During the third quarter further profits were taken in the large cap segment and
the position in Agios was increased significantly to more than 5% of the company
by the end of the quarter. Smaller add-on investments were made in existing
portfolio companies - Infinity, Alnylam and Halozyme. With the emerging markets
trading up nicely, profits on holdings of Indian firms were realized. Strides
Arcolab divested its attractive injectable business to Mylan, and after
collecting the large one time dividend, BB Biotech sold its remaining position
in Strides Arcolab.
Two new mid cap positions were added. Receptos is developing a potentially best-
in-class S1P antagonist (RPC-1063), a drug in the same class as Novartis'
Gilenya. However, an improved side effect profile represents a strong potential
clinical advantage for Receptos' compound. Novavax is developing a novel
preventive vaccine for RSV (respiratory syncytial virus) for newborns, a
significant medical need since RSV continues to be the leading cause of
hospitalization in the US within the first twelve months of life.
Portfolio highlights in the third quarter 2014
Gilead continued to dominate the biotech landscape thanks to the strong launch
of Sovaldi for hepatitis C virus infected patients. With USD 3.5 bn of Sovaldi
sales reported for the second quarter 2014, expectations have increased to more
than USD 10 bn of Sovaldi revenues for first year sales. This represents the
strongest first year of sales by any product in history - and also puts Sovaldi
squarely in the sights of many stakeholders, including government and private
payers. Beyond Sovaldi, Gilead is expected to retain market leadership with its
next generations of oral combination pills, and some believe that these
compounds will drive revenues to levels even higher than Sovaldi. Gilead
recently signed manufacturing and distribution agreements with multiple generic
players for 91 emerging market countries. The substantially lower price for
Sovaldi in these countries will allow more HCV patients access to innovative and
effective drugs.
Puma Biotechnology announced positive top line results for its adjuvant breast
cancer trial for Neratinib, an investigational kinase inhibitor. Women with
early stage HER2-positive breast cancer given Neratinib showed a 37% improvement
in disease-free survival compared to the control arm. BB Biotech had increased
the Puma position in the months prior to these data.
Medivation gained on approval of Xtandi to treat metastatic castration-resistant
prostate cancer patients who have not received chemotherapy. This additional
indication allows Medivation and its partner Astellas to compete in this large
patient population. The approval is based on the previously reported PREVAIL
study results in which Xtandi achieving both a significantly reduced risk of
disease progression and reduced risk of death compared to placebo.
The shareholding in Agios Pharmaceuticals was increased to over 5% of the
company's outstanding stock. Investors seem to appreciate the continued progress
for the lead compound AG-221, an IDH2 inhibitor being developed in collaboration
with Celgene. In addition, there are increasing expectations that the company's
second molecule in clinical development, AG-120, an IDH1 inhibitor, will report
early but positive results in hematological malignancies.
Radius Health, listed on the Nasdaq since June 2014, has performed well based on
early data presented from its pipeline candidate RAD-1901. The company is
expected to report Phase III osteoporosis data in the coming months.
Abaloparatide is being tested in a head-to-head study against Eli Lilly's
Forteo. The company's earlier stage compound, RAD-1901, a SERD, is being tested
to prevent brain metastasis in women with breast cancer. The compound has gained
additional investor's interest post Genentech acquiring a similar Phase I SERD
company.
Outlook
The biotech industry and equity markets are being carefully monitored and
significant potential product approvals and product launches are expected in the
coming months. For example, Gilead is expected to remain a key focus for
investors in the fourth quarter 2014, with the anticipated launch of the
combination of Sovaldi and Ledipasvir for HCV.
Within BB Biotech's portfolio, important Phase III results are expected for
Radius Health with RAD-1901 in osteoporosis and for Neurocrine Biosciences with
Elagolix for endometriosis. Celgene will also be monitored closely to follow
pipeline progress particularly for GED-301 in Crohn's disease, with Phase II
data presentation expected in October.
Investors are also focused on drug pricing sustainability for innovator drugs.
BB Biotech is confident that drugs which offer significant benefit for patients
with serious diseases, and which do so with an acceptable risk profile, will
continue to be highly valued by society and by payers. They will remain a
primary target of BB Biotech's investment activity.
The interim report as of September 30, 2014 is available on www.bbbiotech.com.
For further information:
Investor Relations
Bellevue Asset Management AG, Seestrasse 16, 8700 Küsnacht, Switzerland, tel.
+41 44 267 67 00
Dr. Silvia Schanz, ssc(at)bellevue.ch
Maria-Grazia Iten-Alderuccio, mga(at)bellevue.ch
Claude Mikkelsen, cmi(at)bellevue.ch
Media Relations
b-public AG, Pfingstweidstrasse 6, 8005 Zürich, Switzerland, tel.
+41 79 423 22 28
Thomas Egger, teg(at)b-public.ch
Bellevue Asset Management AG, Seestrasse 16, 8700 Küsnacht, Switzerland, tel.
+41 44 267 67 00
Tanja Chicherio, tch(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 more than CHF 2.8
billion 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 September 30, 2014
(in % of securities, rounded values)
Celgene 12.2%
Gilead 9.9%
Actelion 9.3%
Isis Pharmaceuticals 8.5%
Incyte 7.0%
Vertex Pharmaceuticals 5.0%
Medivation 4.7%
Alexion Pharmaceuticals 4.0%
Agios Pharmaceuticals 3.8%
Puma Biotechnology 3.8%
Novo Nordisk 3.4%
Pharmacyclics 2.8%
Regeneron Pharmaceuticals 2.8%
Synageva BioPharma 2.5%
Swedish Orphan Biovitrum 2.3%
Alnylam Pharmaceuticals 2.0%
Halozyme Therapeutics 1.9%
Radius Health 1.9%
Neurocrine Biosciences 1.6%
Receptos 1.3%
Immunogen 1.1%
Novavax 1.0%
Infinity Pharmaceuticals 1.0%
Glenmark Pharmaceuticals 0.9%
Clovis Oncology 0.8%
Ipca Laboratories 0.8%
Lupin 0.7%
Tesaro 0.6%
Bavarian Nordic 0.5%
Achillion Pharmaceuticals 0.4%
Theravance 0.4%
Theravance Biopharma 0.4%
Probiodrug (1)) 0.2%
Endocyte 0.1%
Radius Health warrants 23.04.2018 <0.1%
Radius Health warrants 19.02.2019 <0.1%
Cubist Pharmaceuticals contingent value <0.1%
rights - ex Optimer
Cubist Pharmaceuticals contingent value 0.0%
rights - ex Trius
Total securities CHF 2 880.9 mn
Other assets CHF 50.7 mn
Other payables CHF (159.4) mn
Total shareholder's equity CHF 2 772.1 mn
Treasury shares (in % of company) (2) 4.5%
1) Unlisted company
2) Correspond to the total of all own shares held including
the second trading line
Press Release (PDF):
http://hugin.info/130285/R/1863140/653738.pdf
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originality of the information contained therein.
Source: BB BIOTECH AG via GlobeNewswire
[HUG#1863140]
Datum: 16.10.2014 - 07:00 Uhr
Sprache: Deutsch
News-ID 344434
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