Quarterly update

Investors showed renewed interest in biotech sector

After a lackluster first half, biotech stocks displayed more vitality in the third quarter. BB Biotech’s share price advanced 7.8% in CHF. It gained 9.4% in EUR and 8.8% in USD. Net Asset Value (NAV) increased by nearly the same amount, up 7.3% in CHF, 8.9% in EUR and 8.3% in USD. Net profit for the period amounted to CHF 242 million (Q3 2017: CHF 365 million). BB Biotech's inclusion in the SMIM index of stocks bolstered investor demand for its shares and widened the gap (premium) between the stock's NAV and its market price. Further action was taken to realign the portfolio. Smaller and mid-sized firms represent a growing percentage of the portfolio, while the weighting of large cap stocks is declining. The latter segment made an outstanding contribution to portfolio performance in past years, but it is likely to relinquish its status as the sector's preeminent growth driver going forward. Through its active investment style, BB Biotech is increasing its exposure to novel treatment methods and thereby gradually shifting away from small molecule and recombinant protein treatment avenues. Challenging monoclonal antibodies, RNA-based therapeutic agents, and gene and cell-based therapies offer greater potential.

Performance

Performance Q3 2018

01.07.2018-30.09.2018 USD CHF EUR
Nasdaq Biotech Index +11.2% n.a. n.a.
BB Biotech NAV +8.3% +7.3% +8.9%
BB Biotech Share +8.8% +7.8% +9.4%

Portfolio adjustments in the third quarter

Given the challenges of biotech markets, the companies have been re-analyzed once more and the portfolio has been adjusted promptly and decisively. BB Biotech remains highly committed to best-of-breed innovators with exciting new technologies.

Positions build up:

  • Argenx
  • Exelixis
  • Nektar Therapeutics
  • Alnylam
  • Macrogenics
  • Voyager Therapeutics
  • Wave Life Sciences
  • Radius Health

Profit taking

  • Celgene
  • Gilead
  • Novo Nordisk
  • Regeneron
  • Neurocrine

Positions sold

  • Probiodrug
  • Five Prime Therapeutics

New positions

  • Scholar Rock

Outlook

BB Biotech expects further pipeline progress including Phase III data reports and new product approvals in US and Europe during the remaining three months of 2018. The momentum for BB Biotech’s portfolio is expected to remain high for the last quarter of 2018 and well into 2019. Multiple late stage clinical trial results and product approvals are expected. As large pharma market capitalizations increase, M&A activity may pick up.