BB Biotech: Positive development in a volatile market environment
The total shareholder return in 2020 was 19.3% in CHF and 18.1% in EUR, slightly below the performance of the underlying portfolio. In addition to Mersana and Beam Therapeutics, BB Biotech has added large cap Biogen to its portfolio – an evergreen company that BB Biotech would not actually classically invest in, according to Daniel Koller, Head Investment Team BB Biotech.
BB Biotech published its business figures for 2020 at the end of last week – and they were positive. The intrinsic value (NAV) of the portfolio of the investment company increased by 24.3% in CHF. The consolidated 2020 numbers showed net income of $767 million (CHF 691 million), up from $752 million (CHF 677 million) a year earlier.
The total shareholder return in 2020 was 19.3% in CHF and 18.1% in EUR, slightly below the performance of the underlying portfolio. The Board of Directors will propose a dividend of CHF 3.60 to the Annual General Meeting on March 18th, 2021. This corresponds to a dividend yield of 5% on the average share price in December 2020.
Erich Hunziker, Chairman of the Board of Directors of BB Biotech, notes a positive development in a volatile market environment. “Although regulatory authorities were mainly dedicated to the SARS-CoV-2 situation in 2020, the U.S. Food and Drug Administration (FDA) still managed to approve an impressive number of new drugs. In Q4 2020, it granted approval to 13 compounds, bringing the total number of drugs approved in 2020 to 53. In addition, two SARS-CoV-2 vaccines and several other compounds received emergency approval in 2020,” Hunziker wrote in the shareholder letter.
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BB Biotech already invested in Moderna since 2018
The emergency approval of Moderna’s Covid vaccine is good news for BB Biotech, which has already invested in the mRNA company in the first quarter of 2018 because this technology was considered promising, especially for immuno-oncology and vaccine development. This was a private equity investment, as Moderna only went public on Nasdaq in December 2018. Moderna now supplies the second approved Covid vaccine after Pfizer/Biontech. The position has grown to 6.7% in the BB Biotech portfolio.
In addition, BB Biotech made portfolio shifts in Q4. Myocardia was acquired by Bristol-Myers Squibb for USD 225 per share, representing a purchase price of $13.1 billion. BB Biotech sold its stake in Myokardia in November and realized cash proceeds of $248 million and a gain of more than $205 million over the holding period from the sale. BB Biotech sold its positions in G1 Therapeutics, Intercept and Sangamo due to changing investment rationale, BoD Chairman Hunziker wrote.
In addition, gains were taken in Halozyme, Moderna, Myovant, Crispr Therapeutics and Scholar Rock, Hunziker added. The funds were reinvested in existing small- and mid-cap positions such as Molecular Templates, Arvinas, Generation Bio and Relay Therapeutics.
In the video interview with Martina Fuchs, Daniel Koller, Head Investment Team BB Biotech, explained why the investment year 2020 was very successful, what consequences the production of the SARS-CoV-2 vaccine will have for Moderna and what the investment in an evergreen company like Biogen means for BB Biotech.
Biogen to be added to BB Biotech’s portfolio
In addition to Mersana and Beam Therapeutics, BB Biotech has added large cap Biogen to its portfolio – an evergreen company that BB Biotech would not actually classically invest in, according to Daniel Koller, Head Investment Team BB Biotech. However, with the U.S. FDA’s surprisingly positive stance on the drug aducanumab to fight Alzheimer’s disease, Koller sees an opportunity for Biogen to move from a low-growth company to one with tremendous acceleration.
BB Biotech expects numerous SARS-CoV-2 vaccine campaigns to kick off in 2021, led by Moderna’s mRNA-1273 vaccine and Pfizer/Biontech’s bnt162b2, with approvals for adenovirus vector-based vaccines as well as traditional recombinant subunit vaccines to follow. In addition, in BB Biotech’s eyes, the year will bring further significant technological advances and new products to address the unmet medical needs of many patients. Therefore, the investment team’s asset allocation continues to focus not only on established areas – such as oncology, rare diseases and neurological indications – but also on rapidly developing future technologies that promise high economic value thanks to their excellent therapeutic profile.
Growth scenario remains intact
Some areas of the industry, such as genetically engineered drugs, are currently attracting considerable investor interest, which drove valuations of corresponding companies up sharply in H2 2020. As a result, BB Biotech continues to see attractive valuations, especially in small- and mid-cap biotech companies, said Chairman Hunziker.
“The investment team continues to believe the growth scenario is intact, both for the biotech industry as a whole and for BB Biotech,” he said. The team is therefore confident that BB Biotech will continue to be able to generate attractive investment returns in the future,” Hunziker concluded his positive outlook.
(Featured image by Pexels via Pixabay)
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