Increased investment level
Given the attractive valuations in the market, the investment management team increased short-term borrowings, raising investment levels from 103.8% to 113.5%. In total, the dividend payout of CHF 188 mn plus investments in two new portfolio companies and selected portfolio holdings exceeded cash received from profits from exits and successful longer-term holdings. We will continue to work within the proven investment guidelines, which include an investment range of 95% to 115%.
Two new companies in the portfolio
The investment management team added two small cap companies to the portfolio in the first quarter of 2020, Fate Therapeutics and Black Diamond Therapeutics. As for existing positions, the team reduced some of the portfolio’s top holdings and realized profits in Moderna after the stock made considerable gains driven by updates on its mRNA vaccine development efforts. These proceeds were re-invested in Molecular Templates and in the capital increases conducted by Intra-Cellular, Kezar and Cidara. The funds raised by these three portfolio companies will be used to back the launch of Caplyta and advance the clinical development of Rezafungin and KZR-616. Regardless of the difficult market environment, the companies in BB Biotech’s portfolio continued to make good progress and reported important clinical trial results.
Licensing deals and takeovers
Volatile markets and social distancing may delay business development activities such as mergers and acquisitions. That said, Incyte and Morphosys signed a global collaboration and license agreement to further develop and commercialize an anti-CD19 antibody. Morphosys and Incyte will co-commercialize the antibody in the US, while Incyte has secured exclusive commercialization rights outside the US. An FDA decision is expected in mid-2020. Furthermore, Sangamo and Biogen announced a global collaboration agreement to develop gene regulation therapies for Alzheimer’s, Parkinson’s, neuromuscular and other neurological diseases.
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