Your browser is out-of-date!

Update your browser to view this website correctly.

Disclaimer
To continue, please select your country of domicile and investor type. Depending on your domicile and the investor type that you select, you will have full or restricted access to the information due to legal reasons.

Retail clients: according to Art. 4 Abs. 2 FinSA

Professional/Institutional investors: according to Art. 4 paragraph 3-5 and Art. 5 paragraph 1 and 3-4 FinSA and Art. 10 paragraph 3 and 3ter CISA in conjunction with Art. 6a CISO

Important

Principles 

By using the website www.bbbiotech.com, you confirm that you have read, understood and accepted the general information provided by the BB Biotech AG as well as these legal provisions. These may be subject to change and the use of the site may be restricted or terminated at any time without prior notice.

No recommendation and/or offer for subscription (or for purchase) and/or redemption (or for sale)

The information, products, data, services, tools and documents contained or described on this site ("website content") are for information purposes only and constitute neither an advertisement or recommendation nor an offer or solicitation (to buy) or redemption (sell) investment instruments, to effect any transaction or to enter into any legal relations.

The financial products mentioned on this site are not suitable for all investors. The information contained on this site does not constitute a financial, legal, fiscal or any other recommendation. Investment or other decisions should not be made solely on the basis of this document. In particular, you should not enter into any investment before you have read the corresponding fund agreement or legal prospectus, the annual and semi-annual reports, the articles of association (as far as they are applicable), as well as all other documents, as required in accordance with local legislation or the regulations applied in the legal jurisdictions or countries in which the corresponding investment fund has been licensed or approved for public offer or sale to the public.rlich sind.

The financial products mentioned on this site are not suitable for all investors. The information contained on this site does not constitute a financial, legal, fiscal or any other recommendation. Investment or other decisions should not be made solely on the basis of this document. In particular, you should not enter into any investment before you have read the corresponding fund agreement or legal prospectus, the annual and semi-annual reports, the articles of association (as far as they are applicable), as well as all other documents, as required in accordance with local legislation or the regulations applied in the legal jurisdictions or countries in which the corresponding investment fund has been licensed or approved for public offer or sale to the public.

In order to determine whether the investment in shares of a certain investment fund meets your specific requirements and matches your envisaged risks, we recommend that you contact an independent financial adviser. Furthermore, we recommend that you consult an independent tax adviser in order to obtain information on the tax regulations relating to a specific investment in your legal jurisdiction and with regard to your personal circumstances. In particular tax treatment depends on individual circumstances and may be subject to change.

As the funds are recognised (ie. registered) but not authorised in the UK, the UK Financial Services Authority's financial services compensation scheme does not apply to investments in the fund but the Financial Services Authority regulated firm approving this document for the purposes of UK regulation has taken reasonable steps to satisfy itself that Bellevue will deal in an honest and reliable way and is so satisfied.

Performance

Past performance is not an indication or guarantee of the future performance of the investment. The value of investments may be subject to fluctuations and, under certain circumstances, investors may not get back the full amount invested. The performance data are calculated without taking account of commissions and costs that result from subscriptions and redemptions and commissions and costs have a negative impact on performance. Changes in foreign-exchange rates may also cause the value of investments to go up or down.

Data protection

By accessing this website you state that you agree with the data protection statement. If you do not agree with this statement you should refrain from accessing any further pages of this website. This statement may be updated at any time. We therefore recommend that you check this statement regularly.

Confirmation

By clicking on "Accept", you confirm that you agree to the legal provisions. Alternatively, you can select "I don't accept" if you wish to leave the website.

The steadily growing importance of small and mid-cap biotech companies with innovative product pipelines has not yet been fully acknowledged by financial markets.

Market commentary: Underestimated newcomers

The steadily growing importance of small and mid-cap biotech companies with innovative product pipelines has not yet been fully acknowledged by financial markets.
08.04.2022 - Daniel Koller

Many investors think biotech is not a particularly attractive place to be at the moment. The Nasdaq Biotechnology Index, the bellwether index for the biotechnology industry, has fallen nearly 20% over the past 12 months. Although a few sector heavyweights such as Moderna or Regeneron have made considerable gains, most small and mid-cap biotech stocks are trading sharply lower than they were a year ago. This trend is reflected in the 40% drop in the value of the S-Network Medical Breakthroughs Index (PMBI) and the S-Network Healthcare Innovation Index (PHIX). Both indexes include only biotech and pharma stocks in the small and mid-segments that have at least one drug in Phase II or III FDA clinical trials.

Sector rotation in the wake of rising rates of inflation is to blame for the aforementioned downward trend. Investors have been rotating from growth into value and this rotation has been fairly indiscriminate in the biotech sector. Biotech companies that are not yet generating any sales from approved products that they can use to finance their R&D activity have been marked down the most. As interest rates point higher, the discount rates analysts use in their valuation models have climbed as well, which lowers the present value of a company’s future earnings streams. That explains the sweeping sell-off of the biotech sector. However, many small and mid-cap biotech stocks today have strong funding profiles over a mid to long-term horizon and much bigger cash piles than in the past.

From a fundamental standpoint, small and mid-sized biotech companies could benefit the most from a broad recovery in biotech stocks. According to a study by the IQVIA Institute for Human Data Science, 65% of all active ingredients in clinical development worldwide in 2021 were being investigated by biotech companies with less than USD 500 mn in annual sales and an annual R&D budget of less than USD 200 mn. As recently as 2016, less than 50% of all clinical trials were being conducted at such companies, which are classified by IQVIA as Emerging Biopharma Companies. Another statistic in the IQVIA's report indicates just how much these companies have matured in their business development: they filed 76% of their regulatory approval applications in 2021 on their own. That is clear proof that these companies have obtained a high degree financial independence and are thus in a position to commercialize their products on their own without a partner, which translates into higher potential earnings.

Promising R&D pipelines
Within the overall biotech industry, small and mid-caps are becoming better and better at commercializing their discoveries as the leading pioneers of next-generation therapies. Prime examples include cell and gene therapies, gene editing and mRNA technology, which made its big breakthrough with the Moderna and BioNtech COVID-19 vaccines. With some 800 clinical candidates currently attributable to such novel approaches, small and mid-sized biotechs are fundamentally well positioned. The kind of topline news likely to drive stocks higher is there in abundance, too, with plenty of clinical trial results and approval decisions expected this year in areas including oncology, neurology, and rare genetic diseases.

We expect BB Biotech's investment portfolio to reap above average benefits from this activity, with portfolio companies estimated to more than double their annual sales over the next three years. The lion’s share of product approvals are in cancer, metabolic and neurological diseases (Charts 1 and 2). Our portfolio companies Alnylam and Ionis are each anticipating an approval decision in 2022 on a therapy to reduce the symptoms of hATTR amyloidosis, an inherited disorder that causes proteins to accumulate and seriously damage body organs. There are currently no effective treatments for the condition and pricing power is high as a result. 

Expected future revenue growth from portfolio companies

open glightbox
Source: Bellevue Asset Management Research, Bloomberg, May 2021

 

In cancer medicine, Arvinas is on the verge of a major breakthrough with its novel technology platform for molecules able to degrade disease-causing proteins, primarily targeting molecules that are untreatable by conventional methods. The pivotal trial for its most advanced product, ARV-110, is scheduled to start this year, and Arvinas is exploring the potential for accelerated FDA approval of this prostate cancer treatment. The company is also launching another two Phase III clinical trials in partnership with Pfizer for ARV-471 in heavily pretreated patients with advanced metastatic breast cancer. Another frontrunner in our investment portfolio is Relay Therapeutics, which leverages artificial intelligence (AI) and machine learning (ML) to uncover the most promising drug candidates. Specifically, Relay models and analyzes protein motion on screen in early clinical trials to study drug-target interactions and uses those insights to identify the molecule with best efficacy profile. 

Sentiment is getting better
As positive announcements from the biotech sector grow in number, investor interest in the sector is likely to pick up again. Sentiment is already starting to slowly shift in favor of the biotech sector as a whole. According to a recent investor survey by RBC Capital Markets, 66% of the survey respondents expect biotech to outperform this year. In the latter half of 2021, the percentage of respondents who considered biotech stocks to be undervalued was 49%; now it is 64%. And 58% of the respondents said they were planning to increase their exposure to biotech.

This might also interest you