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BB Biotech continues its strong performance - third-quarter profit CHF 338.8 mn / share price up more than 50% since beginning of the year


October 17, 2013 - London

BB BIOTECH AG /BB Biotech continues its strong performance - third-quarter profit CHF 338.8 mn / share price up more than 50% since beginning of the year . Processed and transmitted by Thomson Reuters ONE.The issuer is solely responsible for the content of this announcement.

Interim Report of BB Biotech AG as of September 30, 2013

The biotech sector continues its strong upward trend. Since the beginning of the year it has outperformed the broad S&P 500 index by more than 30% (in USD). BB Biotech shares ended the third quarter with a gain of 12.3% in CHF and 11.8% in EUR. The interim results released by biotech firms impressed investors and confirmed the sector's good growth prospects. Capital resulting from the acquisition of several portfolio companies was invested by the Management Team in five promising companies during the course of the third quarter.

The strong upward trend of the biotech sector continued in the third quarter of 2013 with the Nasdaq Biotech Index (NBI) gaining 20.8% (in USD), once again clearly outperforming the broader S&P 500, which gained 5.2% in the same time. In the first nine months of 2013, the NBI gained an impressive +53.3% (in USD) compared to the S&P 500 with a plus of 19.8%.

The strong upward move in the third quarter was driven by further progress across multiple clinical programs, H1 2013 financial results demonstrating the continued strong growth trajectory of many biotechnology companies, as well as further M&A transactions in the sector. With the biotech sector offering one of the most attractive growth profiles, further flow of funds has entered the biotech sector.

BB Biotech performance and profit for Q3 and first 9 months 2013
The performance of BB Biotech was driven by growth across the portfolio. Stock selection and the portfolio structure extended the outperformance against both the NBI and the broader equity indices.  

The share price of BB Biotech gained a further 12.3% in CHF in the third quarter, contributing to a YTD 2013 share price increase of 52.1% in USD, 50.3% in CHF and 49.0% in EUR (including the cash distribution of CHF 4.50 per share). Net Asset Value (NAV) increased 25.2% in USD, 19.8% in CHF and 20.5% in EUR in the third quarter - and year-to-date, NAV increased 70.3% in USD, 68.2% in CHF, and 66.1% in EUR (including the cash distribution of CHF 4.50 per share). The increase in NAV resulted in a profit of CHF 338.8 mn for the third quarter 2013 compared to CHF 148.6 mn in Q3 2012. For the first nine months of 2013, BB Biotech achieved a net profit of CHF 831.5 mn compared to CHF 502.4 mn for the same period in 2012.

In the third quarter, turn-over in investments was higher than usual consequent to M&A activity, including Onyx receiving an offer from Amgen and both Trius and Optimer being taken over by Cubist. Strides' transaction with Mylan is expected to be completed in the fourth quarter. In addition to M&A related exits, BB Biotech realized profits in BioMarin and The Medicines Company - and sold out of a minor position. The Management Team made five new investments in the third quarter.

BB Biotech continued the share repurchase program in the third quarter acquiring 137'500 shares through the second trading line for CHF 17.17 mn. To date, a total of 285'000 of the 1'185'000 total shares approved for buybacks by the Annual General Meeting on March 18, 2013, was repurchased. With the difference between the book value and the share price widening in the later stages of the third quarter, the program will continue as planned.

Change in management fee as of January 1, 2014
In order to enable the portfolio manager to maintain its investment activities in line with the growth strategy of the investment company, the Board of Directors has decided to revise the management fee. The fee cap which had been set at a market cap of CHF 1 bn will be removed, with the all-in fee being reduced from 1.2% to 1.1% p.a. in return. With this change the Board of Directors is bringing the interests of the company's shareholders into better balance with those of its portfolio manager. This change will take effect on January 1, 2014.

The investments include in particular the continual build-up and optimization of its research and portfolio management capabilities with the US footprint recently increased. Ongoing efforts to enhance its resources, strengthen the current shareholder structure and attract new investors in established and new markets will also be intensified.

Existing portfolio continues to perform well
Third quarter performance was driven by key progress for several portfolio holdings. Celgene's Revlimid met the primary endpoint for the MM-020 study in newly diagnosed multiple myeloma patients. Detailed results will be presented at ASH in December 2013. Regulatory approval for such newly diagnosed patients will be significant as Revlimid is likely to become first line therapy, driving Celgene's future revenue growth. Competitive oral therapies could soon impact the other frequently diagnosed lymphoid cell malignancies. These may include Pharmacyclics' BTK inhibitor Ibrutinib, and PI3 kinase inhibitors currently being developed by Gilead and Infinity. 

Alnylam presented first clinical data for its novel sugar-linked RNA-interference molecule (ALN-TTRsc) in a subcutaneous delivery form. Dosing of ALN-TTRsc significantly reduced serum transthyretin (TTR) levels in ATTR patients. Patients with high serum TTR levels suffer from peripheral nerve and heart damage, shortening life expectancy.

Halozyme reported two product approvals in Q3 2013 for another platform technology, designed to deliver large molecules in a subcutaneous (sc) form. The Halozyme share price increased when partner Baxter announced EMA approval for HyQivia, in primary immunodeficiency. Another Halozyme partner, Roche, announced regulatory approval for a novel sc formulation of their blockbuster drug Herceptin for breast cancer patients. In the coming months, Roche is expected to receive EMEA approval for the sc formulation of its blockbuster lymphoma drug, Rituxan. 

Swedish Orphan Biovitrum (SOBI) and its US partner, Biogen Idec, are moving towards improved patient convenience in severe and chronic disease, hemophilia, a market with annual sales reaching USD 6 bn. Their longer acting factor VIII and factor IX replacements are expected to reach the market soon. Increasing investor confidence in this potential market opportunity has led to a substantial increase in the valuation of SOBI.

BB Biotech now has two new mid-cap portfolio companies within its top five holdings. Isis established further partnerships and made progress with pipeline candidates, such as ApoC3. The company announced significant triglyceride lowering activity in patients with very high triglyceride levels treated with ApoC3. Incyte's share price also rose following promising results in a Phase II clinical study testing Jakafi as a treatment for patients with pancreatic cancer.

As an investment company, BB Biotech is ideally structured to capture significant valuation appreciation by investing into small and mid-cap companies which over time become major core holdings.

Five new attractive entries into portfolio in Q3 2013
Following the announcement of four M&A transactions involving portfolio companies (Trius, Optimer, Onyx and Strides) in the second quarter of 2013, the funds that have so far been released through sales or settlements have been invested in five new promising holdings. Pharmacyclics (2.3% of the portfolio), a company focused on hematologic malignancies, is currently applying for regulatory approval of Ibrutinib, a BTK inhibitor for chronic lymphocytic leukemia and multiple forms of lymphoma. Regeneron Pharmaceuticals (1.3%) which has already reached large-cap status due to the successful launch of Eylea for the treatment of acute macular degeneration (AMD), has further anticipated valuation upside driven by their leading late stage antibody pipeline. Investors are particularly focused on the upcoming data read out for the PCSK-9 antibody as treatment for high LDL cholesterol.

Neurocrine Biosciences (0.9%) focused on women's health, has a promising lead compound Elagolix in clinical Phase III development for endometriosis and in Phase II for uterine fibroids. Clovis Oncology (1.0%) has an appealing anti-cancer agent, a covalent EGFR inhibitor for non-small cell lung cancer (NSCLC), which targets the mutant receptor but spares the wild type form. Tesaro (0.6%) is developing Rolapitant, a NK-1 receptor antagonist in Phase III trials for the prevention of chemotherapy induced nausea and vomiting.

Outlook
BB Biotech believes that its investment strategy can bring significant benefit to patients, the healthcare system and investors. BB Biotech will continue to build and mold the portfolio around innovative new drugs which have the potential to become the treatments of choice.

Further results from clinical studies and new product approvals are anticipated in the coming months - including for Sofosbuvir (Gilead) and Opsumit (Actelion). BB Biotech expects the momentum in the biotech market to continue into 2014 driven by positive fundamental developments across the portfolio and the sector as a whole.

The complete interim report as of September 30, 2013 and a webcast with Dr. Daniel Koller, Head Management Team BB Biotech, can be viewed at www.bbbiotech.com.

For further information:

Investor Relations
Bellevue Asset Management AG, Seestrasse 16, 8700 Küsnacht, Switzerland, tel. +41 44 267 67 00
Dr. Silvia Schanz, ssc@bellevue.ch
Maria-Grazia Iten-Alderuccio, mga@bellevue.ch
Claude Mikkelsen, cmi@bellevue.ch

Media Relations
b-public AG, Pfingstweidstrasse 6, 8005 Zürich, Switzerland, tel. +41 79 423 22 28
Thomas Egger, teg@b-public.ch

Bellevue Asset Management AG, Seestrasse 16, 8700 Küsnacht, Switzerland, tel. +41 44 267 67 00
Tanja Chicherio, tch@bellevue.ch

www.bbbiotech.com

Company profile    
BB Biotech invests in companies in the fast growing market of biotechnology and is one of the world's largest investors in this sector with CHF 2.0 bn in assets under management. BB Biotech is listed in Switzerland, Germany and Italy. Its investments are focused on listed companies that are developing and commercializing novel medical treatments and cures. BB Biotech's investment selection process is guided by the fundamental research and analysis of physicians and molecular biologists. Its Board of Directors has many years of experience in industry and science.

Disclaimer
This release contains forward-looking statements and expectations as well as assessments, beliefs and assumptions. Such statements are based on the current expectations of BB Biotech, its directors and officers, and are, therefore, subject to risks and uncertainties that may change over time. As actual developments may significantly differ, BB Biotech and its directors and officers accept no responsibility in that regard. All forward-looking statements included in this release are made only as of the date of this release and BB Biotech and its directors and officers assume no obligation to update any forward-looking statements as a result of new information, future events or other factors.

Composition of BB Biotech's portfolio as of September 30, 2013
(in % of securities, rounded values)

Celgene 13.0%
Isis Pharmaceuticals 11.4%
Actelion 10.4%
Gilead 9.6%
Incyte 7.7%
Vertex Pharmaceuticals 4.5%
Alexion Pharmaceuticals 3.7%
Novo Nordisk 3.7%
Medivation 3.7%
Ariad Pharmaceuticals 2.9%
Swedish Orphan Biovitrum 2.6%
Halozyme Therapeutics 2.6%
Immunogen 2.4%
Pharmacyclics 2.3%
Synageva BioPharma 1.9%
Onyx Pharmaceuticals 1.8%
Theravance 1.5%
Regeneron Pharmaceuticals 1.3%
Glenmark Pharmaceuticals 1.3%
Endocyte 1.3%
Alnylam Pharmaceuticals 1.3%
Lupin 1.1%
Clovis Oncology 1.0%
Infinity Pharmaceuticals 1.0%
Neurocrine Biosciences 0.9%
Ipca Laboratories 0.9%
Optimer Pharmaceuticals 0.8%
Bavarian Nordic 0.7%
Tesaro 0.6%
Probiodrug 1) 0.6%
Radius Health 1) 0.6%
Strides Arcolab 0.4%
Idenix Pharmaceuticals 0.3%
Achillion Pharmaceuticals 0.2%
Valneva 0.2%
Cubist Pharmaceuticals Contingent Value Rights 0.0%
Radius Health Warrants 0.0%
Total securities CHF 2 138.7 mn
Other assets CHF 44.9 mn
Other payables CHF (149.4) mn
Total shareholder's equity CHF 2 034.2 mn
Treasury shares (in % of company) 2) 2.9%

1) Unlisted company
2) Correspond to the total of all own shares held including the second trading line

Media Release (PDF)



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Source: BB BIOTECH AG via Thomson Reuters ONE

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