Biotech Growth Trust PLC · LSE:BIOG
Biotech Growth Trust — The Biotech Growth Trust — Investor Presentation (March 2024)
37 slides from Biotech Growth Trust's investor presentation, March 2024
Slide 1: The Biotech Growth Trust Investor Update
The Biotech Growth Trust Investor Update March 2024 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 invest
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 categories: Major biotech – large, profitable, valued
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 $3.3bn $420 million $2.5 billion Private Equity (ex. Asia) Other Public Equity 140 300+ $6.5bn $1.3bn Global Years of Investment Employees Experience Total AUM: $1
Slide 5: OrbiMed: Extensive Resources to Invest in Biotech
OrbiMed: 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 worl
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 Fund Performance
Slide 9: BIOG Performance since Inception
BIOG Performance since Inception 18 May 2005 through 29 February 2024 £1,800 £% BIOG NAV (£) NBI (£) FTSE (£) £1,600 £1,400 £1,200 BIOG +983.5% £1,000 NBI +843.0% £800 £600 £400 FTSE +228.7% £200 £0 Note: See Endnotes for additional information, including with regard to the calculation of these resu
Slide 10: Market Cap Performance Divergence in Biotech
Market Cap Performance Divergence in Biotech Small and mid cap biotech beginning to close performance gap Market Cap Breakdown BIOG NBI Delta 30% (classifications as of 29 February 2024) Large Cap (>$10bn) 38% 63% -25% 20% Mid Cap ($2-10bn) 33% 24% 9% Small Cap (<$2bn) 35% 13% 23% *%NAV Exposure of
Slide 11: Size Divergence in the Broad Market
Size Divergence in the Broad Market (31 March 2021 – 29 February 2024) Russell 2000 (Small/Mid Cap) vs Russell 1000 (Large Cap) Russell 1000 (Large Caps) 20% +24.9% 10% -32.4% Underperformance 0% Russell 2000 -10% (SMID Caps) -7.5% -20% -30% Note: The Russell 2000 Index is comprised of the smallest
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 Dot Com Bust Political Pressure on & COVID-19 2 Great Financial Drug Pricing Crisis Current Drawdown 1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 15: Biotech Valuations At Unprecedented Lows
Biotech Valuations At Unprecedented Lows Valuations have begun recovering from historical lows Percent of Biotech Companies Trading Number of Biotech Companies Trading Below Net Cash on Balance Sheet: Below Net 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
Slide 16: 10-Year U.S. Government Yield Stabilizing
10-Year U.S. Government Yield Stabilizing Data as of 29 February 2024 10.0% 10 Year U.S. Government Yield 8.0% • Fed appears to be taking a pause on further rate hikes • Year-over-year inflation has been declining since mid-2022 • Many expecting rate cuts in 2024, which would be a tailwind for biote
Slide 17: BIOG Performance for Fiscal 2024
BIOG Performance for Fiscal 2024 31 March 2023 to 29 February 2024 35.0% 30.0% BIOG NAV +27.0% BIOG Price 25.0% +26.6% 20.0% 15.0% 10.0% NBI 5.0% +5.1% 0.0% -5.0% -10.0% BIOG NAV (£) NBI (£) BIOG PRICE (£) -15.0% Source: Frostrow, Bloomberg. Note: See Endnotes for additional information, including w
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, 2012-2022: +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, 2012–2022: Emerging technologies are still in the early stages of reaching their full potential, with hundreds of candidates now in clinical trials We expect doz
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 $2.3bn peak sales $10.1 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 18.4% NAV 9.6% NAV 36.3% NAV 8.8% NAV 26.5% NAV S
Slide 23: FDA New Molecular Entity Approvals
FDA New Molecular Entity Approvals 70 67 59 58 58 60 53 12 2023 was a 5 7 50 7 49 45 record year for 1 FDA approvals 40 8 30 59 22 53 51 55 46 48 20 37 Nearly 400 new 10 22 drugs approved 0 over the past 7 2016 2017 2018 2019 2020 2021 2022 2023 years CDER CBER Dip in approvals in 2022 likely due to
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 Zurzuva
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: M&A Activity Has Been Robust
M&A Activity Has Been Robust M&A accelerated in 2023, and 2024 is off to a great start. 2023 Acquisitions 2023 Acquisitions continued… Date Target Acquirer %Premium Date Target Acquirer % Premium 01/08/23 >100% 10/05/23 109%* 01/09/23 >100% 10/08/23 63%^ 01/09/23 >200%* 11/30/23 95% 01/19/23 ~67%* 1
Slide 27: 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) $60 US Loss of ’23 Global Branded Sales at Risk ($bn) Company Drug Exclusivity Sales (Projected) ($bn) $50 2023 $14.4 2028 $25.0 $40 2026 $12.2 $30 2027 $4.9 $20 2025 $10.9 2028 $9.0 $10 2027 $4.8
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 29 February 2024 Market Price Pct. Market Price Pct. Market Price Pct. UNITED STATES $ Millions Value UNITED STATES $ Millions Value INTERNATIONAL $ Millions Value Emerging Biotechnology Emerging Biotechnology (cont.) Europe ALX Oncology Holdings Inc 10.3 2.2 Prelude Therapeutics
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% -59.2% -50% -60% -70% -80% The GS Non-profitable tech basket (GSXUNPTC) consists of non-profitable US listed companies in innovative industries. Technol
Slide 32: 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, suggesting biotech can 4.0% perform even
Slide 33: Emerging Biotech Taking R&D Lead
Emerging Biotech Taking R&D Lead Majority of Industry Pipeline & Approved Novel Drugs Originated from Emerging Biotech 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 nea
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 -40% trough: -67% -50% -60% -70% -70% -80% Note: Updated through 2/29/2024 China healthcare stocks are near all-time lows but should eventually rebound © 2024 OrbiMed Advisors LLC. All Rights
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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