Quarterly update

With a total return for BB Biotech’s shareholders of 23.1% in CHF and 13.1% in EUR buoyed by the euro’s substantial appreciation against the dollar, BB Biotech delivered a strong performance in 2017. The underlying portfolio performed well, ending the year up 23.4% in CHF, 12.5% in EUR and 29.2% in USD – which is 7.5% ahead of the Nasdaq Biotech Index (NBI). Consolidated, but not yet audited, full year 2017 data showed a net gain of CHF 688 mn compared to a net loss of CHF 802 mn for full year 2016. A volatile fourth quarter saw a 4% decline in the value of the portfolio, in line with the sector, and declined only 1% to the BB Biotech share price in CHF. Continuing the 5% dividend policy based on the average December 2017 share price, BB Biotech will propose a record regular dividend of CHF 3.30 per share at the AGM.

Performance

Performance Q4 2017 


1.11.2017-31.12.2017USDCHFEUR
Nasdaq Biotech Index-4.0%n.a.n.a.
BB Biotech NAV-4.8%-4.2%-6.3%
BB Biotech Sharen.a.-0.8%-2.3%

Performance 2017 

2017USDCHFEUR
Nasdaq Biotech Index21.7%n.a.n.a.
BB Biotech NAV29.2%23.4%12.5%
BB Biotech Sharen.a.23.1%13.1%

Portfolio adjustments in the fourth quarter

In the fourth quarter, the remaining holding in Swedish Orphan Biovitrum (SOBI) was sold – thereby closing out a highly profitable holding initiated in early 2011 which realized a 3-fold return on total capital invested. In the large cap segment, profits were taken in Novo Nordisk following its strong recovery and the cash was reinvested in Celgene during a significant sell-off in late October. In the smaller and mid cap segments, BB Biotech bought additional shares of Radius Health, Macrogenics, and Esperion and took profits following the strong performances of Juno Therapeutics, Idorsia and Alnylam. BB Biotech also invested in Cidara Therapeutics’ private placement.

Following management’s late year strategic review, new positions were opened in Wave Life Sciences, Voyager Therapeutics and Akcea Therapeutics. Wave Life Sciences develops stereo-selective nucleic acid therapeutics with a focus on severe neurological diseases. Voyager Therapeutics is developing a gene therapy for advanced Parkinson’s disease and Akcea Therapeutics is addressing serious rare lipid disorders with antisense products

Dividend

Stocks with high dividend yields are usually found in the more defensive sectors of the stock market that have little upside potential. And then there’s BB Biotech, the investment company that combines fast growth with a hefty dividend yield.

For 2018 a dividend of CHF 3.30 is proposed to the Annual General Meeting on March 13, 2018. This corresponds to a 5% return on the weighted average share price for  December 2016. In times of lower interest rates, BB Biotech certainly offers an attractive alternative for investors.

This 5% dividend yield puts BB Biotech among the top payers of dividends.

IndexRanking BB Biotech*
SMIFirst quartile
DAXTop 3
Stoxx EuropeTop 100
FTSE 100First quartile
Star IndexTop 10 Percent

*Calculations based on share prices at the time the dividend was distributed in 2017

Outlook

Biotechnology valuations are attractive at current levels. The financial aspects of the US tax reform bill – including lower corporate tax rates and allowances for repatriation of ex-US cash may presage both improved and simplified balance sheets for US large cap pharma and perhaps an uptick in M&A activities in biotechnology.

More fundamentally, BB Biotech expects the biotechnology sector to grow based on its ever increasing strengths of innovation and an increasing share of novel drugs in 2018 and beyond. It looks forward to another productive and exciting year in 2018. BB Biotech remains dedicated to identifying leading-edge biotechnology firms developing market dominant drugs based on cutting-edge technologies.