BB Biotech’s investment management team says that it expects stock market volatility to climb higher over the next few quarters triggered by diverging central bank monetary policy and election news in the US, more large M&A deals, and more announcements of regulatory approvals.
Performance drivers within the biotech sector include new product launches, regulatory approvals and positive clinical data, and fundamentals for the sector remain positive, according to BB Biotech AG’s annual report.
“Moreover, the stock-market valuations of many companies have subsided to attractive levels in the wake of the recent sell-off, which has made them even more attractive takeover candidates for prospective buyers in the pharmaceutical and biotech industries,” the report stated.
The Pharmacyclics, Synageva and Receptos takeovers alone generated CHF 541m in cash in the first nine months of 2015, the managers said. The fund also sold minor holdings in Immunogen, Theravance and Theravance Biopharma last year, while increasing some existing shareholdings and acquiring eight new small and mid-cap positions
At the end of 2015 BB Biotech’s portfolio consisted of six core holdings: Celgene, Incyte, Ionis Pharmaceuticals, Actelion, Gilead and Radius Health. In total the investment portfolio includes 34 positions.
Biotech funds have done well lately. Last year and despite the volatile markets, the Nasdaq Biotech Index (NBI) increased with 11.8% in USD, compared with a mere 1.4% rise in the S&P 500 Index in USD, according to the report.
Meanwhile BB Biotech AG’s shares outperformed the benchmark index; gaining 28.2% in CHF, 41.2% in EUR and 27.1% in USD over the year. The results were driven by several factors: the positive sector developments, strong stock selection and ongoing high M&A activity, said the Swiss investment company.
