Edison Notes "Improved Performance" From Biotech Growth Trust

Fri, 24th Jan 2020 18:20

(Alliance News) - Biotech Growth Trust PLC on Friday noted a report from Edison highlighting a "much-improved investment performance" of late.

The report was commissioned by biotechnology sector investor Biotech Growth, a client of research and advisory firm Edison.

Edison said the trust's managers at OrbiMed Capital, Geoff Hsu and Richard Klemm, "are very encouraged by the trust's much-improved investment performance in recent months, noting they are being rewarded by the market for their in-depth fundamental research and portfolio positioning in favour of emerging rather than large-cap biotech stocks."

Biotech Growth's benchmark is the NASDAQ Biotechnology index, sterling adjusted, which its net asset value has outperformed over the last one, three, five, and ten years.

At present, Biotech Growth's share are trading at a 9.1% discount to cum-income NAV, worse than the 5.4% to 7.9% range from the last one, three, five, and ten years. Shares in Biotech Growth closed down 1.3% at 928.00 pence on Friday.

"There is scope for a higher valuation given the meaningful recent improvement in the trust's performance. The board actively repurchases shares, aiming for a maximum 6% discount in normal market conditions," said Edison.

According to Edison, Hsu said biotech stocks in 2019 are currently being influenced by the political backdrop in the US, especially in terms of Democratic Party candidate nominees.

While former vice president Joe Biden is currently frontrunner, there are concerns that candidates like Bernie Sanders or Elizabeth Warren might put pressure on the sector as part of healthcare reform.

There are also concerns around US price regulation, with proposed policies like international reference pricing for Medicare drugs, inflation-based price caps, and letting Medicare negotiate prices directly with pharmaceutical firms.

Hsu, however, told Edison he was not expecting "any dramatic changes to US drug pricing policy" even if a Democratic president wins as the US Congress is likely to stay split and political pressure on healthcare is likely to abate in 2020.

By Anna Farley; annafarley@alliancenews.com

Biotech Gwth