Interim Report of BB Biotech AG as of March 31, 2014
BB Biotech`s portfolio reflects strong drug launches and key clinical events
The Nasdaq Biotech Index advanced 4.3% (in USD) in the first quarter. After increased momentum in January and February, the market showed pronounced volatility in March, driven by macroeconomic events and attention to drug pricing. Yet, the fundamentals of the sector remain strong and positive regulatory and clinical newsflow remains robust. Consequently, BB Biotech AG`s shares ended the first quarter up 15.0% (in CHF), 15.5% (in EUR) and 16.1% (in USD), 11.8% higher than the benchmark index (in USD). Gilead`s Sovaldi, for hepatitis C, is set to be the most financially rewarding drug launch in history and Actelion`s Opsumit for PAH continues to perform well in the early days of its launch. Medivation presented convincing Phase III data for its prostate cancer drug Xtandi. Endocyte reported positive results for its personalized medicine Vintafolide for lung cancer, while also gaining a positive CHMP vote for conditional approval in Europe for ovarian cancer. Implementing the policy established in 2013, BB Biotech AG executed a cash distribution of CHF 7.00 per share corresponding to a yield of 5% of the average share price in December 2013.
Sector in positive territory but more trading volatility in the first quarter
The upward trend of the biotech sector continued in the first quarter 2014 with the Nasdaq Biotech Index (NBI) gaining 4.3%, performing better than the broader S&P 500 Index, which gained 1.8% in the same timeframe (in USD). The first two months of the quarter represented strong continued growth as in 2013, driven by successful drug launches, strong fourth quarter 2013 numbers, and key data read-outs.
However, in March the sector pulled back on concerns around pricing of Gilead`s Sovaldi, which had a spill-over effect on the sector. Gilead appears to be in a good position for pricing negotiations given the efficacy and advantages of HCV cures to the healthcare system. Gilead has expressed confidence that this issue can be resolved.
BB Biotech`s performance for the first quarter 2014
BB Biotech`s performance was driven mainly by the mid-cap holdings. In contrast, larger-cap names traded side-ways or down after a very strong 2013.
The share price of BB Biotech increased by double digits in the first quarter 2014 - adding 15.0% in CHF and 15.5% in EUR. These first quarter results included the tax-efficient cash distribution of CHF 7.00 - while the Net Asset Value (NAV) increased 2.8% in CHF, 3.6% in EUR and 3.8% in USD (including the cash distribution of CHF 7.00 per share).
BB Biotech`s portfolio continues to perform well based on strong fundamentals
The first quarter performance was driven by drug launches and key clinical data releases from BB Biotech holdings:
- Isis` SMNRx, an antisense compound for spinal muscular atrophy, demonstrated promising Phase II data in infants and children where no other therapies currently exist. The Phase III study is scheduled to begin this year.
- Medivation`s Xtandi, which is already approved for post-chemo prostate cancer, presented full Phase III data in the pre-chemotherapy setting at a medical conference. The results demonstrated efficacy and safety, setting it up as a potential preferred drug for these patients.
- Endocyte`s Vintafolide, a personalized medicine / drug conjugate therapy, demonstrated positive data in advanced lung cancer and received a positive opinion in Europe for conditional approval in advanced ovarian cancer.
- Gilead launched Sovaldi, a first in class nucleotide analog polymerase inhibitor for the treatment of hepatitis C Virus (HCV) infected patients, in combination with ribavirin for HCV genotype 2 and genotype 3 infected patients, and in combination with peg-interferon and ribavirin for the treatment of HCV genotype 1 infected patients.
- Actelion launched Opsumit, a novel endothelin receptor antagonist (ERA) for the treatment of PAH, with a highly differentiated product label compared to the currently marketed ERAs.
- Pharmacyclics/JNJ received an extended label for its bruton`s tyrosine kinase inhibitor Imbruvica for the treatment of patients with CLL (chronic lymphocytic lymphoma).
- Celgene received FDA approval for Otezla, making it the first oral drug approved for active psoriatic arthritis.
Following strong 2013 performance, Celgene`s shares underperformed in the first quarter due to a court hearing overhang regarding its lead drug Revlimid and lack of major catalysts to start 2014. Gilead received a letter from three US Congress Members requesting justification of the pricing of Sovaldi. While Gilead`s response is awaited, BB Biotech believes the pricing reflects the strong clinical profile of the drug. Clinical uptake and financial data for the launch has exceeded expectations. Nonetheless, the controversy on pricing may have fueled the sector correction in March. BB Biotech believes that the fundamentals of the sector are intact and valuations remain attractive.
First quarter portfolio actions
In the first quarter, the management team of BB Biotech used the strong sector performance of January and February as a profit taking opportunity - selling several positions in the portfolio. The weaker sector performance in March, despite intact fundamentals, provided us with a buying opportunity. One new position was initiated, Puma Biotechnology. Puma is developing a novel drug for breast cancer which could surpass the efficacy seen with GlaxoSmithKlines`s Tykerb. Furthermore, if studies in early breast cancer are positive, the potential for the drug could be considerable.
The continued success of BB Biotech will be based on diligent selection of companies with drugs that have the potential of important medicines for critical diseases.
BB Biotech believes that Medivation`s Xtandi has the potential to become the standard of care in chemotherapy-naïve prostate cancer patients. As the only drug of its class with data on clinical outcomes included in labeling by regulators, Actelion`s Opsumit is highly differentiated and should therefore capture significant market share. Furthermore, if the data readout for Actelion`s Selexipag, expected this summer, is also positive, then the firm could have the means to grow the PAH market substantially. Pharmacyclic`s Imbruvica, for lymphoma indications, is another drug that may have blockbuster potential.
Gilead`s all-oral combination therapy of Sovaldi and Ledipasvir is another highly anticipated potential approval. Data published to date suggest that this combination can eliminate the need for PEG-interferon in most patients in HCV. The approval may come as soon as the second half of 2014.
New orphan drugs are also in late stage clinical development to address rare and severe diseases. In addition, BB Biotech is invested in certain platform technologies, such as the RNA-based medicines (antisense and RNAi), antibody drug conjugates, small molecule drug conjugates as well as novel delivery approaches for current intravenously administered biologics which show promise.
2014 is expected to be another exciting biotech year with a stream of clinical trial results, product approvals, and drug pipeline news.
BB Biotech believes that the sector remains attractively valued, with large-cap names such as Gilead and Celgene trading at less than 20 times 2014 earnings and around 10-15 times 2015 earnings. Pipelines continue to deliver innovative products, and other characteristics of the sector remain strong. BB Biotech continues to anticipate strong sector performance and aims to deliver double digit returns to investors.
The interim report as of March 31, 2014, and the webcast with the first quarter update is available on www.bbbiotech.com.
For further information:
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Dr. Silvia Schanz, email@example.com
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b-public AG, Pfingstweidstrasse 6, 8005 Zürich, Switzerland, tel. +41 79 423 22 28
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Bellevue Asset Management AG, Seestrasse 16, 8700 Küsnacht, Switzerland, tel. +41 44 267 67 00
Tanja Chicherio, email@example.com
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 2.1 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.
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 March 31, 2014
(in % of securities, rounded values)
|Swedish Orphan Biovitrum||2.7%|
|Radius Health 1)||0.7%|
|Cubist Pharmaceuticals Contingent Value Rights - ex Optimer|
|Cubist Pharmaceuticals Contingent Value Rights- ex Trius||0.0%|
|Radius Health Warrants 23.04.2018||0.0%|
|Radius Health Warrants 19.02.2019||0.0%|
|Total securities||CHF 2 258.1 mn|
|Other assets||CHF 25.3 mn|
|Other payables||CHF (182.4) mn|
|Total shareholder`s equity||CHF 2 101.0 mn|
|Treasury shares (in % of company) 2||4.1%|
1) Unlisted company
2) Correspond to the total of all own shares held including the second trading line
This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: BB BIOTECH AG via GlobeNewswire
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