BB Biotech
A key milestone with significance for the sector
21 October 2024
BB Biotech (BION) invests in innovative, rapidly expanding biotech companies. BION’s portfolio company Wave Life Sciences (Wave) recently announced a significant milestone in the field of genetic medicine: the first successful therapeutic RNA editing in humans. This news lifted Wave’s share price by c 60%. It follows recent positive developments in three of BION’s largest holdings, Alnylam, Intra-Cellular Therapies and Agios, which all saw substantial improvements in their longer-term revenue prospects after positive Phase III readouts. Wave’s news adds to the recent positive momentum in BION’s NAV, which rose by 5.2% in the year ended 30 September 2024, after several years of annual declines, although this return lagged the Nasdaq Biotech Index’s 12.3% rise. Yet the company’s share price declined by 8.1% over this period and the share price discount to NAV is currently over 15%, in stark contrast to an average NAV premium of c 10% over the past 10 years. With interest rates falling and the outlook for the biotech sector potentially brightening accordingly, as we argued in our August 2024 update, this may represent an opportunity for investors to acquire access to the exciting opportunities offered by this industry at what may be an uncommonly wide discount. MORE »
Lower rates and news flow to support recovery
14 August 2024
BB Biotech (BION) offers investors exposure to the innovative, rapidly expanding biotech sector. It is the largest biotech investor among its investment company peers, focused on high-quality biotech assets that target substantial market opportunities. The company recently released its interim report for the period ended 30 June 2024, which provided an update on recent performance and developments with portfolio companies, and outlined the major milestones expected from these holdings during the second half of 2024. This note summarises the key points from the report, and the reasons why BION’s managers are optimistic about the outlook for the biotech sector and for their portfolio. MORE »
Positive trial news lifts two portfolio holdings
26 June 2024
In our last BB Biotech (BION) review note, published in May 2024, we noted that the biotech sector was eagerly awaiting some key milestones, the most important being Alnylam Pharmaceuticals’ late-stage clinical trial of vutrisiran for patients with ATTR cardiomyopathy, a deadly heart disease. Alnylam, which comprised 4.3% of BION’s portfolio at end March 2024, released very positive, statistically significant, Phase III trial results this week. Assuming regulatory clearance, Alnylam expects that vutrisiran has the potential to become the new standard of care for the treatment of this disease, driving substantial future growth for the company. These results may have favourable implications for sentiment across the broader global biotech sector, and for Ionis Pharmaceuticals, BION’s largest portfolio position, which is also developing gene-silencing technology. MORE »
A recovering sector with a healthy prognosis
20 May 2024
BB Biotech (BION) offers investors exposure to the innovative, rapidly expanding biotech sector. It is the largest biotech investor among its investment company peers, focused on high-quality biotech assets that target substantial market opportunities. BION’s performance has picked up in recent months, supported by an improvement in the market environment. Its managers are optimistic about the outlook as declines in interest rates, whenever they eventuate, begin to boost investor sentiment towards the sector, especially the mid- and small-cap companies that BION favours. The fund’s managers also expect ongoing progress by portfolio holdings, as several reach key milestones over the coming months. Unlike most of its peers, BION pays an attractive 5% dividend, calculated on average share price over December each year. MORE »
Looking for innovation beyond the pandemic
1 March 2021
BB Biotech (BION) provided a solid platform of growth for its investors in FY20, with Swiss franc share price and NAV total returns of 19.3% and 24.3% respectively, outperforming the Nasdaq Biotechnology index in NAV terms amid a weaker environment for the US dollar. While the fund’s investment in mRNA platform company Moderna (share price +509% over 12 months) was the standout story after the rapid development of its successful COVID-19 vaccine, the BION team has been focused on backing companies bringing new technologies to bear in a number of innovative areas. This included investments at IPO in companies such as Generation Bio and Relay Therapeutics. BION has declared a cash distribution of 5% (CHF3.60) for FY20, which equates to a current yield of 4.3%. MORE »
RNA focus provides a possible COVID-19 solution
16 April 2020
BB Biotech (BION) recently updated the market on its views on the COVID-19 pandemic and how they are reflected in its portfolio (see video link below and the investor update). While direct exposure to infectious disease specialists in the portfolio is low, lead manager Daniel Koller expects a promising vaccine candidate could arise from one of the fund’s holdings in companies with RNA-based technologies (five RNA medicine-focused positions make up c 25% of the portfolio). The BION team recently finished an 18-month process of rebalancing the portfolio towards promising small and mid-cap companies to drive future growth. While this has proved a headwind for recent performance, over the long term BION has produced double-digit annual total returns in both share price and NAV terms. MORE »
Concentrated portfolio offering true differentiation
18 June 2019
BB Biotech (BION) has continued the process of refocusing its portfolio on innovative smaller and mid-cap stocks, selling out of bigger names such as Novo Nordisk and Regeneron, and taking new positions in smaller stocks at the cutting edge of genetic medicine. The Switzerland-based fund retains a highly concentrated portfolio of c 30–35 stocks (and five to eight core holdings make up more than half of total assets), but has a broad spread of clinical indications and development stages. Lead Manager Daniel Koller says that focusing the portfolio away from the big index names allows BION to remain relevant to investors who may hold such stocks directly. The fund has a high distribution policy (funded out of capital returns) and currently yields 4.6%. MORE »
Strong focus on emerging clinical areas
25 October 2018
BB Biotech (BION) is a Switzerland-based closed-end fund focusing on the high-growth opportunities available in the global biotechnology space. Founded in 1993 by industry specialist Bellevue Asset Management, BION holds a concentrated (c 30–35 stocks) portfolio of biotech names, which are diversified across a range of clinical focuses. The fund’s strong record of NAV outperformance versus the headline NASDAQ Biotechnology index has suffered a setback in the past 12 months. However, the managers remain optimistic on medium-term clinical catalysts and have recently refreshed the portfolio with a number of new holdings. BION has a policy of paying c 5% of its share price annually as a dividend, which, along with a shift in the shareholder base to include more long-term investors and fewer discount players, has supported a strong re-rating in the shares. The fund has traded at an average 7.1% premium to NAV in the past 12 months. MORE »
High-conviction specialist with impressive record
23 November 2017
BB Biotech (BION) is a long-established (since 1993), Switzerland-based global investor in the innovative area of biotechnology. It is differentiated from peers by its short list of stocks (typically 30-35) and high-conviction approach, with five to eight core holdings accounting for half to two-thirds of the portfolio. While the fund can be vulnerable to short-term sentiment dips (such as in the period immediately before and after the US presidential election in 2016), its performance record is impressive in both absolute and relative terms, with a NAV total return of c 270% over five years, and NAV and share price outperformance of the benchmark NASDAQ Biotechnology index over three, six and 12 months, and three, five and 10 years to 31 October 2017 (all in Swiss franc terms). A high distribution policy of 5.0% underpins the current dividend yield of 4.3%. MORE »
Strong rebound for established specialist
27 February 2017
BB Biotech (BION) is a long-established investor in biotech innovation, offering access to a concentrated portfolio of c 30 companies covering a range of therapeutic areas. It seeks to provide long-term capital growth, but also offers a yield of c 5% as a result of a capital distribution policy adopted in 2012. Performance has been strong both over the long term and more recently, with the fund ranking first among peers (in Swiss franc terms) over one and five years, and also outperforming the benchmark NASDAQ Biotechnology Index over one, three, five and 10 years. Although biotech and healthcare stocks may continue to see some near-term share price volatility as the direction of US policy becomes clearer, BION’s managers point to lower-than-average biotech valuations as a source of support. MORE »
Deutsches Eigenkapitalforum | November 2015 1 Taking opportunities after market correction
9 November 2015
BB Biotech (BION) is a Switzerland-based investment company aiming to generate long-term capital growth from innovative biotechnology companies. BION has a concentrated investment portfolio of 20-35 holdings, built around a core of five to eight positions. At 30 September there were six core holdings (two large and four mid-cap) making up 52.7% of the portfolio. Reflecting the make-up of the biotech industry, the majority of holdings (87%) are US-based, with the balance in European stocks. The portfolio is diversified by clinical focus, with the largest portion (38.9%) in oncology. Following the late-summer correction in global markets, BION has been reinvesting its substantial cash balance in promising companies at more favourable valuations. MORE »
Performing biotech fund at a discount
8 January 2014
BB Biotech AG (BION) is a Switzerland-based investment company investing in mid- to large-cap biotech companies. Its strong performance has continued during the last 12 months (BION's share price and NAV are c 16% and c 29% ahead of the benchmark NASDAQ Biotechnology Index respectively). The managers believe that new products being developed by portfolio companies could drive an acceleration of their average earnings, and M&A could enhance returns. BION's significant discount and capital distribution policy (5% cash distribution, up to 5% buybacks per year) also merit attention (see page 7). MORE »
Promising pipeline
7 March 2013
BB Biotech AG (BION) is a Swiss-based investment company investing in mid- to large-capitalisation biotech companies. Over the past, year BION’s net asset value beat comparable indices and was more than 10% ahead of its benchmark, the NASDAQ Biotechnology Index. In 2012, BION resisted an attempt to unitise the company and implemented a strategy to reduce its discount. The managers believe their stocks are attractively valued and see the prospect of M&A activity, driven by patent expirations in the pharmaceutical industry. BION’s portfolio contains a number of drugs in the later stages of development and these could help drive further NAV growth. MORE »
Discount management tops agenda
31 July 2012
BB Biotech (BION) invests globally in companies active in the biotechnology sector. Biotech has been one of the best-performing elements within healthcare in recent months, supported by fundamental drivers and M&A interest from big pharma companies seeking to replenish their product pipelines. Within this, individual stock performance reflects the binary nature of biotech investing, and individual investors may benefit from the diversification offered by a collective fund managed by a sector specialist. The proposed tax-efficient distribution policy implies a yield of c 5%, with continuing share buybacks. MORE »
