21st May 2015 14:29
LONDON (Alliance News) - The Biotech Growth Trust PLC Thursday reported double-digit net asset value growth ahead of that achieved by its benchmark index.
In a statement, the trust said its net asset value increased by 67.4% to 834.7 pence in the year ended March 31, against a 63.7% increase in the NASDAQ Biotechnology Index (measured on a sterling adjusted basis).
"The company's positive performance during the year was due in part to the performance of holdings in Biogen, Gilead Sciences, Celgene, Neurocrine Biosciences and Medivation. Arrowhead Research, Prothena and Vanda Pharmaceuticals were poor performers during the year. Our experience with these investments is, whilst disappointing, symptomatic of investing in the biotechnolgy sector which can be volatile; inevitably there will be investments which do not deliver positive returns for shareholders," The Right Honourable Lord Waldegrave of North Hill, chairman, said in a statement.
Sven Borho, OrbiMed Capital LLC, portfolio manager, defended valuations being given to companies in the biotech sector, arguing that rising share prices have come with higher earnings estimates and breakthroughs in science and clinical practice.
"We continue to see new product cycles, earnings growth, and robust pipeline advancement as a solid justification for valuation of the major biotech companies. The price investors pay for the growth in these companies is far from the high end seen historically and is attractive compared to large pharmaceutical companies and the broader market," Borho said.
The portfolio manager said clinical results will be a key driver for the shares of emerging biotech companies, highlighting gene therapy as an area of opportunity, while he expects mergers and acquisitions to be a "major catalyst" for large pharmaceutical and biotech companies.
"Currently approximately 50% of the company's assets are invested in emerging biotechnology companies, and 50% are invested in major biotechnology companies. With attractive valuation and abundant clinical and regulatory catalysts, we believe that the sector though volatile is well positioned to continue its positive momentum," Borho said.
Biotech Growth Trust shares were down 0.9% at 783.00 pence Thursday afternoon.
By Samuel Agini; [email protected]; @samuelagini
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