Biotech Growth Trust PLC · LSE:BIOG
Biotech Growth Trust — The Biotech Growth Trust — Investor Presentation (November 2023)
37 slides from Biotech Growth Trust's investor presentation, Nov 21, 2023
Slide 1: The Biotech Growth Trust Investor Update
The Biotech Growth Trust Investor Update November 21, 2023 This document does not constitute an offer to sell, or the solicitation of an offer to purchase, any security or fund. Any such offer may only be made by means of a confidential private placement memorandum, which is available to prospective
Slide 2: The Biotech Growth Trust - Introduction
The Biotech Growth Trust - Introduction The Biotech Growth Trust is a closed-end investment trust designed to generate capital appreciation through investing in the global biotechnology industry. The biotech universe can be classified into two major categories: Major biotech – large, profitable, v
Slide 3: Portfolio Managers: Geoffrey Hsu & Josh Golomb
Portfolio Managers: Geoffrey Hsu & Josh Golomb Geoffrey Hsu, CFA Josh Golomb General Partner Partner Geoffrey C. Hsu, CFA, is a General Partner at OrbiMed and has Josh Golomb is a Partner at OrbiMed focused on biotechnology. He been portfolio manager of The Biotech Growth Trust since May joined the
Slide 4: OrbiMed Corporate Update
OrbiMed Corporate Update Global Healthcare-Dedicated Investment Firm with Over 25 Years of Experience Royalty Asia Private $2.8bn Equity $3.6bn $360 million $2.4 billion Other Public Equity $1.9b Private Equity (ex. Asia) Other Public Equity 139 300+ $6.8bn $1.2bn Global Years of Investment Employee
Slide 5: OrbiMed Has Extensive Resources to Invest in Biotech
OrbiMed Has Extensive Resources to Invest in Biotech Differentiated platform capable of delivering strong returns OrbiMed’s capabilities are well-suited to achieving the fund objective of generating capital appreciation by investing in biotech companies worldwide: • Global footprint • 12 locations w
Slide 6: Disciplined Investment Process
Disciplined Investment Process Real-time compliance Weekly dedicated biotech Comprehensive review with position limits, team reviews to review and analysis of exposure targets, portfolio, vet new ideas, significant binary counter-party and and manage exposure catalysts liquidity checks Primary Idea
Slide 7: Risk Management
Risk Management • Diversification across multiple parameters • Size and stage of company (large cap, mid cap, small cap); revenue versus pre-revenue • Geographical diversification (U.S., Europe, China) • Therapeutic area • Drug development technologies • Prudent position sizing • Sizing depends on c
Slide 8: Fund Performance
BIOG melare Performance
Slide 9: BIOG Performance since Inception
BIOG Performance since Inception 18 May 2005 through 15 November 2023 £1,800 BIOG NAV (£) NBI (£) FTSE (£) £% £1,600 £1,400 £1,200 £1,000 BIOG +723.8% £800 NBI +718.4% £600 £400 FTSE +219.4% £200 £0 Note: See Endnotes for additional information, including with regard to the calculation of these resu
Slide 10: Market Cap Performance Divergence in Biotechnology
Market Cap Performance Divergence in Biotechnology Small and Mid Cap Biotech Overdue For a Recovery Market Cap Breakdown BIOG NBI Delta 30% (classifications as of 31 October 2023) Large Cap (>$10bn) 45% 71% -26% 20% Mid Cap ($2-10bn) 19% 17% 2% Small Cap (<$2bn) 33% 12% 21% 10% *Snapshot exposure as
Slide 11: Size Divergence in the Broad Market
Size Divergence in the Broad Market (31 March 2021 – 31 October 2023) Russell 2000 (Small/Mid Cap) vs Russell 1000 (Large Cap) 20% 15% 10% Russell 1000 (Large Caps) 5% +2.4% 0% -27.6% Underperformance -5% -10% -15% Russell 2000 (SMID Caps) -20% -25.1% -25% -30% Note: Chart updated from 31 March 2021
Slide 12: Investment Opportunity
BIOG Investment Opportunity
Slide 13: XBI vs. S&P (SPX) Spread since XBI Inception
XBI vs. S&P 500 (SPX) Spread since XBI Inception Drawdowns in spread followed by historically strong recoveries 800 -43.8% Drawdown -30.0% Drawdown +68.0% Recovery +83.3% Recovery Drug Pricing Fed Quantitative (Increased Political Tightening Pressure) 400 Logarithmic Scale 200 Drug Pricing (Concerns
Slide 14: Biotech Valuations at Unprecedented Lows
Biotech Valuations at Unprecedented Lows Ratio of Market Cap to Net Cash on Balance Sheet (Median) 7 6 5 4 3 US/China Trade War & COVID-19 Dot Com Bust Hillary Drug Pricing Great Financial Tweet 2 Crisis Current Drawdown 1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20
Slide 15: Biotech Valuations at Unprecedented Lows
Biotech Valuations at Unprecedented Lows Percent of Biotech Companies Trading Below Number of Biotech Companies Trading Below Net Net Cash on Balance Sheet: Cash on Balance Sheet: 30.0% 180 160 25.0% 140 20.0% 120 100 15.0% 80 10.0% 60 40 5.0% 20 0.0% 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2
Slide 16: Interest Rate Impact on Biotech Abating
Interest Rate Impact on Biotech Abating Biotech has performed in rising interest rate environments previously £1,400 6.0% BIOG NAV (£) NBI (£) XBI (£) 10 Year Treasury £1,200 5.0% Biotech and 10-year interest £1,000 rates traded up together between 2016-2019, 4.0% suggesting biotech can perform even
Slide 17: BIOG Performance for Fiscal 2024
BIOG Performance for Fiscal 2024 31 March 2023 to 15 November 2023 15.0% As of 30 September 2023 £% BIOG Price -0.9% NBI 10.0% -3.0% BIOG NAV -4.1% 5.0% 0.0% BIOG Price -3.2% BIOG NAV -5.0% -3.5% NBI -10.0% -8.8% BIOG NAV (£) NBI (£) BIOG PRICE (£) -15.0% Note: See Endnotes for additional informatio
Slide 18: Investment Themes
BIOG Investment Themes
Slide 19: Innovation – Pipeline as Full as it's Ever Been
Innovation – Pipeline as Full as it’s Ever Been “Golden era” of innovation increasing number of drugs in development Number of pipeline products Phase I to regulatory submission by therapeutic drug class, 2011-2022: +70% Since 2016 Source: IQVIA Pipeline Intelligence, Dec 2022; IQVIA Institute, Jan
Slide 20: Novel Technologies Driving R&D Pipeline Growth
Novel Technologies Driving R&D Pipeline Growth Next-Generation Biotherapeutics Phase I to Regulatory Submission Pipeline by Mechanism, 2011–2022: Emerging technologies still in the early stages of reaching their full potential, with hundreds of candidates now in clinical trials We expect dozens
Slide 21: Notable New Drug Approvals Address Large Markets
Notable New Drug Approvals Address Large Markets Gene Therapy for Protein Modulation Antibody for Alzheimer’s Antibody Drug Conjugate Antibody Fragment Spinal Muscular Atrophy for Cystic Fibrosis Disease for Breast Cancer for Myasthenia Gravis $2.0bn peak sales $10 bn peak sales $10.9bn peak sales $
Slide 22: Innovation Well Reflected in BIOG
Innovation Well Reflected in BIOG Portfolio has exposure to a wide swath of novel technologies, as shown below: Antibody-drug drug Multispecific Gene Therapy Cell Therapy antibodies Oligonucleotide conjugates Gene Editing T-Cell Engagers therapeutics 15.1% NAV 13.7% NAV 27.9% NAV 14.4% NAV 22.1% NAV
Slide 23: FDA New Molecular Entity Approvals
FDA New Molecular Entity Approvals 60 53+? 50 40 30 59 53 50 48 45 46 20 41 40 39 36 37 30 27 26 27 24 24 21 22 21 22 10 20 17 18 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Dip in approvals in 2022 likely due to COVID; ru
Slide 24: Significant FDA Biotech Approvals in 2023
Significant FDA Biotech Approvals in 2023 Company Indication Product (MOA) Highlights Pompe Disease Pombiliti + Opfolda First treatment approved in (enzyme replacement + oral Pompe disease patients not chaperone) showing improvement on current enzyme replacement therapy Postpartum Depression Zyzyvae
Slide 25: Recent Technology Breakthroughs in Biotech
Recent Technology Breakthroughs in Biotech Company Indication Product (MOA) Highlights Chronic Inflammatory Vyvgart (anti-FcRN) Reported positive Phase 3 demyelinating polyneuropathy data; first novel treatment for (CIDP) CIDP in over 10 yrs Hidradenitis suppurativa (HS) Sonelokimab (anti-IL17/ AF R
Slide 26: Big Pharma Patent Cliff Drives Biotech M&A
Big Pharma Patent Cliff Drives Biotech M&A Nearly $250 billion in branded sales are at risk (2025-2030) $60 US Loss of ’22 Global Branded Sales at Risk ($bn) Company Drug Exclusivity Sales (Projected) ($bn) $50 2023 $21.2 2028 $20.9 $40 2026 $11.8 $30 2027 $5.8 $20 2023 $9.7 2028 $8.2 $10 2027 $5.1
Slide 27: M&A Activity Picking Up
M&A Activity Picking Up 2022 Acquisitions 2023 Acquisitions Date Target Acquirer % Premium Date Target Acquirer % Premium 11/29/22 48% 10/08/23 63%^ 11/29/22 $320m (private) 10/05/23 109%* 11/21/22 107% 10/3/203 87% 09/26/23 82% 10/23/22 50% 08/14/23 226% 10/18/22 43% 08/09/23 169%* 10/18/22 121% 07
Slide 28: 2024 Strategy and Outlook
2024 Strategy and Outlook • Strategy to emphasize emerging biotech over large cap biotech will continue in order to fully capture sector rebound o Will capitalize on compelling investment opportunities in companies that need to finance at low share prices o Gearing level will generally stay between
Slide 29: Appendix
BIOG Appendix
Slide 30: BIOG Holdings
BIOG Holdings As of 31 October 2023 Note: securities with asterisks (*) are unquoted or include unquoted securities © 2023 OrbiMed Advisors LLC. All Rights Reserved. CONFIDENTIAL. 30
Slide 31: Unprofitable Tech Has Declined Meaningfully
Unprofitable Tech Has Declined Meaningfully Goldman Sachs Unprofitable Tech Basket 20% 10% 0% -10% -20% -30% GS Unprofitable Technology Basket -40% -67.7% -50% -60% -70% -80% The GS Non-profitable tech basket (GSXUNPTC) consists of non-profitable US listed companies in innovative industries. Technol
Slide 32: 10 Year U.S. Government Yield Stabilizing
10 Year U.S. Government Yield Stabilizing (USGG10YR Index) Data as of 31 October 2023 10.0% 10 Year U.S. Government Yield • Fed appears to be taking a pause on further rate hikes 8.0% • Year-over-year inflation has been declining since mid-2022 • Many expecting rate cuts in 2024, which would be a ta
Slide 33: Majority of Industry Drug Pipeline Originated by Emerging Biotech Companies
Majority of Industry Drug Pipeline and Approved Novel Drugs Originated by Emerging Biotech Companies Share of Industry R&D Pipeline by Source of Origination for Novel Active Company Type: Substances (NASs) Launched: Emerging biopharma companies (EBPs)* are now responsible for nearly two-thirds of
Slide 34: China Recovery Yet to Occur After Re-opening
China Recovery Yet to Occur After “Re-opening” Hong Kong Healthcare Index (HSHCI) 0% -10% -20% -30% Peak to Peak to -40% trough: trough: -67% -67% -50% -60% -70% -80% China healthcare stocks hit all-time lows last fall but should eventually rebound with post-COVID recovery and economic stimulus © 20
Slide 35: What Could a Recession Mean for Biotech Stocks?
What Could a Recession Mean for Biotech Stocks? 25% Median Excess Return vs. S&P 500 During the Last 4 Recessions 20% 15% 10% 5% 0% -5% -10% XBI (Biotech) LC Biotech MedTech US Pharma Hospitals Life Science Tools Managed Care S&P 500 HC Biotech returns have been the most robust across Healthcare dur
Slide 36: Endnotes
Endnotes General Notes 1. The information presented herein relates to The Biotech Growth Trust PLC (the “Fund”). OrbiMed Capital LLC (“OrbiMed”) is an investment adviser registered with the U.S. Securities and Exchange Commission (the “SEC”) that specializes in the investment of clients’ assets, inc
Slide 37: Endnotes
Endnotes Indices Information about indices is provided to allow for comparison of the performance of the Shares to the Fund’s benchmark and certain other recognized indices. Investors cannot invest directly in an index, which also does not take into account trading commissions and costs. The indices
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