The Biotech Growth Trust PLC
Information as at 29 February 2024
Investment Objective and Benchmark Index
The Biotech Growth Trust PLC (the "Company") seeks capital appreciation through investment in the worldwide biotechnology industry. Performance is measured against its benchmark index, the NASDAQ Biotechnology Index (sterling adjusted).
Five Year Performance (%)
Past performance is not a guide to future performance. The value of investments and the income from them may fall as well as rise and is not guaranteed; an investor may receive back less than the original amount invested.
140 | |||||
120 | |||||
100 | |||||
80 | |||||
60 | |||||
40 | |||||
20 | |||||
0 | |||||
-20 | |||||
Feb-19 | Feb-20 | Feb-21 | Feb-22 | Feb-23 | Feb-24 |
Share Price (total return) +36.9%
Net Asset Value per share (total return) +39.1%
Benchmark: NASDAQ Biotechnology Index (sterling adjusted) +31.4%
Source: Morningstar, Index - Bloomberg.
Ten Largest Holdings as at 29 February 2024 (% of total investments)
Name | Total |
Amgen | 6.8 |
Biogen | 5.8 |
Janux Therapeutics | 5.6 |
Regeneron Pharmaceuticals | 4.3 |
Sarepta Therapeutics | 4.0 |
Neurocrine Biosciences | 3.9 |
Vaxcyte | 3.3 |
Apellis Pharmaceuticals | 3.2 |
Argenx | 3.2 |
Scholar Rock | 3.0 |
Total | 43.1 |
Portfolio Manager | Portfolio Manager |
Geoffrey Hsu | Josh Golomb |
Fast Facts | As at 29 February 2024 |
Launch Date | June 1997 |
AIC Sector | Biotechnology & | |||
Healthcare | ||||
Date of Appointment of OrbiMed | ||||
19 May 2005 |
Annual Management Fee (payable by the Company)
0.65% of net assets plus 0.30% per annum on the Company's market capitalisation up to £500m, 0.20% on market capitalisation above £500m to £1bn and 0.10% on market capitalisation over £1bn
Performance fee | See Annual Report | |||
for details | ||||
Ongoing Charges | 1.1% | |||
Ratio (OCR) * | ||||
Continuation Vote | 2025 AGM and every | |||
5th AGM thereafter | ||||
Year / interim end | 31 March / 30 | |||
September | ||||
Capital Structure | 34,163,778 Ordinary | |||
Shares of 25p | ||||
Trust Characteristics
Number of Holdings | 62 | |
Net Assets (£m) | £369.8m | |
Market Capitalisation (£m) | £338.6m | |
Dividend | It is not anticipated that the | |
Policy | Company will pay a dividend | |
Gearing (AIC basis) | 9.7% | |
Leverage** | Gross | |
109.7% | ||
Commitment | ||
109.7% | ||
Share Price (p) | 991.00 | |
NAV (p) | 1,082.43 | |
(Discount) / Premium | (8.4%) | |
Portfolio Turnover p.a. | 98.7% | |
Active Share*** | 70.5% |
biotechgt.com @biotechgt
The Biotech Growth Trust PLC
Information as at 29 February 2024
Geographical Breakdown as at 29 February 2024 (%) | *Calculated at the financial | year end, includes | ||||||||||||||||||
management fees and all other operating | ||||||||||||||||||||
expenses, excludes performance fees. | ||||||||||||||||||||
North America | 88.0% | |||||||||||||||||||
**The Board has set the leverage limit for both the | ||||||||||||||||||||
Continental Europe | 4.8% | |||||||||||||||||||
Gross and the Commitment basis at 130% of the | ||||||||||||||||||||
China (quoted) | 3.9% | Company's Net Asset Value. | ||||||||||||||||||
Unquoted ‡ | 3.3% | ***Active Share is expressed as a percentage and | ||||||||||||||||||
shows the extent to which a fund's holdings and | ||||||||||||||||||||
their weightings differ from those of the fund's | ||||||||||||||||||||
benchmark index. A fund that closely tracks its | ||||||||||||||||||||
index might have a low Active Share of less than | ||||||||||||||||||||
20% and be considered passive, while a fund with | ||||||||||||||||||||
an Active Share of 60% or higher is generally | ||||||||||||||||||||
Total | 100.0% | |||||||||||||||||||
considered to be actively managed. | ||||||||||||||||||||
‡ No more than 10% of gross assets will be invested in unquoted investments at the time of | ||||||||||||||||||||
Investment Policy | ||||||||||||||||||||
acquisition. This limit includes any investment or commitment to invest in private equity funds | ||||||||||||||||||||
managed by OrbiMed or an affiliate thereof. Investments or commitments to invest in such | In order to achieve its investment objective, | |||||||||||||||||||
private equity funds will be limited to US$15m, after the deduction of proceeds of disposal and | ||||||||||||||||||||
the Company | invests | in a | diversified | |||||||||||||||||
other returns of capital. Of the 3.3% unquoted investments, 3.0% was in China and 0.3% was | ||||||||||||||||||||
portfolio of shares and related securities in | ||||||||||||||||||||
in Asia. | ||||||||||||||||||||
biotechnology companies on a worldwide | ||||||||||||||||||||
Source: All portfolio information sourced from Frostrow Capital LLP | basis. The Company will not invest more | |||||||||||||||||||
than 15% of the value of its gross assets in | ||||||||||||||||||||
any one individual stock at the time of | ||||||||||||||||||||
acquisition. No more than 10% of gross | ||||||||||||||||||||
Discrete Performance - Calendar Years (%) | ||||||||||||||||||||
assets will be invested in unquoted | ||||||||||||||||||||
investments at the time of acquisition. This | ||||||||||||||||||||
Percentage Growth | 2019 | 2020 | 2021 | 2022 | 2023 | YTD | limit | includes | any | investment or | ||||||||||
12 Month Return | commitment to invest in private equity funds | |||||||||||||||||||
managed by OrbiMed or an affiliate thereof. | ||||||||||||||||||||
NAV | 47.4 | 52.4 | -23.1 | -13.6 | -7.2 | 14.2 | ||||||||||||||
Investments or commitments to invest in | ||||||||||||||||||||
Share Price | 48.5 | 67.7 | -24.6 | -22.1 | -3.5 | 10.9 | such private equity funds will be limited to | |||||||||||||
US15m, after the deduction of proceeds of | ||||||||||||||||||||
Index | 19.6 | 22.1 | 0.2 | -0.3 | -1.7 | 2.5 | ||||||||||||||
disposal and other returns of capital. The | ||||||||||||||||||||
Company's borrowing policy is that | ||||||||||||||||||||
borrowings will not exceed 20% of value of | ||||||||||||||||||||
the Company's net assets. The Company | ||||||||||||||||||||
Standardised Discrete Performance (%) | ||||||||||||||||||||
may be unable to invest directly or | ||||||||||||||||||||
efficiently in certain countries or share | ||||||||||||||||||||
Percentage Growth 12 | Feb 19- | Feb 20- | Feb 21- | Feb 22- | Feb 23- | classes. In these circumstances, the | ||||||||||||||
Month Return | Feb 20 | Feb 21 | Feb 22 | Feb 23 | Feb 24 | Company may gain exposure by investing | ||||||||||||||
indirectly through swaps or other derivative | ||||||||||||||||||||
NAV | 29.7 | 52.9 | -39.0 | 5.7 | 8.8 | |||||||||||||||
instruments. Exposure to these financial | ||||||||||||||||||||
Share Price | 23.8 | 69.2 | -38.6 | -2.3 | 8.9 | instruments will count towards and be | ||||||||||||||
subject | to the | following | limits: Derivative | |||||||||||||||||
Index | 5.2 | 26.0 | -15.7 | 12.9 | 4.2 | |||||||||||||||
transactions (excluding equity swaps) can | ||||||||||||||||||||
be used to mitigate risk and/or enhance | ||||||||||||||||||||
Past performance is not a guide to future performance. The value of investments and the | return and will be restricted to an aggregate | |||||||||||||||||||
income from them may fall as well as rise and is not guaranteed. | net exposure of 5% of the value of the gross | |||||||||||||||||||
Source: NAV (total return; fully diluted) & Share Price (total return) - Morningstar. Index - | assets measured at the time of the relevant | |||||||||||||||||||
transaction; Equity swaps may be used for | ||||||||||||||||||||
Bloomberg. | ||||||||||||||||||||
efficient portfolio management | purposes | |||||||||||||||||||
and aggregate net counterparty exposure through a combination of derivatives and equity swap transactions is restricted to 12% of the value of the gross assets of the Company at the time of the transaction.
biotechgt.com @biotechgt
The Biotech Growth Trust PLC
Information as at 29 February 2024
Return vs Volatility (Annualised since Date of Appointment of OrbiMed) - Chart (%)
Biotech Growth (Price) | NASDAQ Biotehcnology Index (total return) |
15
14
13
Return12
11
10 | |||||||||
18.0 | 19.0 | 20.0 | 21.0 | 22.0 | 23.0 | 24.0 | 25.0 | ||
Volatility | |||||||||
Commentary
In February, the NAV per share was up 10.3%, the share price was up 7.6% and the benchmark NASDAQ Biotechnology Index (sterling adjusted) was up 1.8%.
Small and midcap biotech continued the upward momentum that this segment has demonstrated since last fall. The strength was likely due to a combination of recent mergers and acquisitions ("M&A") activity, obesity-themed moves and a macro backdrop that remains favorable for risk assets. Also, the rise in healthcare stocks has forced some short sellers to buy shares to close out their positions, further pushing up prices. Investors are increasingly optimistic that elevated interest rates will not cause a recession in the U.S. (a so-called "soft landing"). Anticipated reductions in interest rates later this year, as predicted by the Federal Reserve itself, continue to boost appetite for higher-risk,higher-rewarddevelopment-stage biotech companies. Given our continued overweight positioning in small cap biotech, the Company was able to capture outsized gains versus our benchmark index. We believe the long-awaited valuation recovery in small and midcap biotech is underway and should continue in the months ahead.
A couple of M&A transactions were announced in February. Novartis agreed to acquire MorphoSys for about $2.9 billion and will gain access to pelabresib, an investigational treatment for a type of bone marrow cancer, and tulmimetostat, a potential therapy for patients with solid tumors or lymphomas. The offer represents an 18% premium to MorphoSys' last closing price. Gilead Sciences reached a deal to acquire CymaBay Therapeutics for $4.3bn, representing a 27% premium to its last closing price. Gilead will gain access to CymaBay's seladelpar, which had a successful Phase 3 trial readout in primary biliary cholangitis. While the Company did not own either of the targets mentioned above, the transactions illustrate the continued robust M&A activity in the emerging biotech space. The trend continues to be driven by Big Pharma's urgency to acquire new biotech drugs to offset expected revenue losses from patent expirations of key products.
Janux Therapeutics, Tyra Biosciences, and Vera Therapeutics were the largest positive contributors to performance during the month. Janux outperformed following the release of positive Phase 1 data in prostate cancer, which suggested that the company may have a best-in-class asset for prostate cancer. The data also suggested that Janux's technology could be successfully applied to additional tumor types such as lung, kidney, and head and neck cancer. Tyra outperformed following the announcement of a financing, which was completed in February. Investors are looking forward to first-in-human updates later this year from the company's metastatic bladder cancer clinical program. Vera shares appreciated after announcing in January positive data for its drug atacicept in IgA nephropathy, which showed stabilization of kidney function.
Ionis Pharmaceuticals, Biogen, and Amgen were the largest negative contributors to performance during the month. The share price of Ionis fell on investor nervousness due to a clinical trial design change and data delay for a competitor developing a similar drug to Ionis in transthyretin amyloid cardiomyopathy. Biogen underperformed in February due to underwhelming quarterly sales for its Alzheimer's drug Leqembi. Amgen's stock price declined on the publication of Phase 1 data for one of the company's obesity compounds that raised questions about its efficacy and safety profile.
Codes
Sedol | 0038551 |
ISIN | GB0000385517 |
Legal Entity Identifier (LEI)
549300Z41EP32MI2DN29
Global Intermediary
Identification Number (GIIN)
U1MQ70.99999.SL.826
Bloomberg | BIOG LN |
EPIC | BIOG |
Discount / Premium Control
Mechanism
The Directors have adopted an active discount management policy to establish and support an improved rating in the Company's shares through the use of share buybacks, with a view to limiting the discount to NAV per share at which the shares trade to no more than 6%. Shares bought back will be cancelled.
How to Contact Us
Frostrow Capital LLP
25 Southampton Buildings
London, WC2A 1AL
Tel.: 0203 008 4910
Fax: 0203 043 8889
Website:www.frostrow.com
Email:info@frostrow.com
biotechgt.com @biotechgt
The Biotech Growth Trust PLC
Information as at 29 February 2024
Risk Warnings
This document is for information purposes only and does not constitute an offer or invitation to purchase shares in the Company and has not been prepared in connection with any such offer or invitation. Before investing in the Company, or any other investment product, you should satisfy yourself as to its suitability and the risks involved, and you may wish to consult a financial adviser.
Any return you receive depends on future market performance and is uncertain. The Company does not seek any protection from future market performance so you could lose some or all of your investment. Shares of the Company are bought and sold on the London Stock Exchange (LSE). The price you pay or receive, like other listed shares, is determined by supply and demand and may be at a discount or premium to the underlying net asset value of the Company. Usually, at any given time, the price you pay for a share will be higher than the price you could sell it. For further information on the principal risks the Company is exposed to please refer to the Company's Annual Report or Investor Disclosure Document available at www.biotechgt.com. The Company can borrow to purchase investments, this could potentially magnify any losses or gains made by the Company.
Target Market
The Company is suitable for investors seeking an investment that aims to deliver total returns over the longer term (at least five years), is compatible with the needs for retail clients, professional clients and eligible counterparties, and is eligible for all distribution channels.
The Company may not be suitable for investors who are concerned about short-term volatility and performance, have low or no risk tolerance or are looking for capital protection, who are seeking a guaranteed or regular income, or a predictable return profile. The Company does not offer capital protection.
Value Assessment
Frostrow Capital LLP has conducted an annual Value Assessment on the Company in line with Financial Conduct Authority (FCA) rules set out in the Consumer Duty regulation. The Assessment focuses on the nature of the product, including benefits received and its quality, limitations that are part of the product, expected total costs to clients and target market considerations.
Within this, the assessment considers quality of services, performance of the Company (against both benchmark and peers), total fees (including management fees and entry and exit fees as applicable to the Company), and also considers whether vulnerable consumers are able to receive fair value from the product.
Frostrow Capital LLP concluded that the Company is providing value based on the above assessment.
Important Information
The Biotech Growth Trust PLC is a public limited company whose shares are premium listed on the LSE and is registered with HMRC as an investment trust. The Company has an indeterminate life, although shareholders consider and vote on the continuation of the Company every five years (the next such vote will be held will be held in 2025).
This financial promotion is issued by Frostrow Capital LLP which is authorised and regulated by the Financial Conduct Authority ("FCA").
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The Biotech Growth Trust plc published this content on 14 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 March 2024 10:51:02 UTC.