20.04.2018 – 07:18

BB Biotech AG

DGAP-Adhoc: BB Biotech share gains value in first quarter 2018 - several large-cap biotech companies trading at well below fundamental value

DGAP-Ad-hoc: BB BIOTECH AG / Key word(s): Quarter Results
BB Biotech share gains value in first quarter 2018 - several large-cap biotech
companies trading at well below fundamental value

20-Apr-2018 / 07:00 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the Regulation
(EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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Media release as of April 20, 2018

Interim report of BB Biotech AG as of March 31, 2018


BB Biotech share gains value in first quarter 2018 - several large-cap biotech
companies trading at well below fundamental value


Volatility has returned to the markets, staging a revival in the first quarter
of 2018. Regardless of the cautious investor sentiment, the BB Biotech share
performed very well with an overall return (including dividend) of 8.8% in CHF
and 7.3% in EUR. The portfolio trended sideways on the market, generating a
profit of CHF 28 mn (CHF 375 mn in the corresponding period of the previous
year). At the AGM on March 13, 2018, the Board of Directors confirmed the
continuation of the payout policy. A number of portfolio companies - including
Novo Nordisk, Neurocrines Partner Abbvie, Esperion, Alexion and Alder -
published encouraging study results. Several large biotech companies are
currently trading at well below their fundamental value, with pipeline successes
and additional takeovers likely to boost key ratios and valuations.

Equity markets got off to a volatile start in 2018. The 2017 rally extended
briefly into the first quarter 2018 but reversed by February as US fiscal policy
tightened followed and faltered again in March as US and China trade wars
loomed. For the quarter, the S&P 500 held steady with a negative 0.8% return,
the Dow Jones lost 2.0% and the Nasdaq Composite Index gained 2.6% (all values
as total returns in USD). In contrast to the US which was buoyed by a weakening
US dollar, European market indices declined including Euro Stoxx 600, which was
down 4.0%, the DAX index was down 6.4% in EUR, and the SPI was down 5.2% in CHF.

Healthcare followed broader US equity indices. The drug space was subject to
speculative discussions about lower drug pricing. New ideas, such as payers
sharing rebates with patients and more debate about value-based pricing continue
to fuel intermittent anxieties about drug and other healthcare sub-sector
stocks. The MSCI World Healthcare Index (-1.0%) and the Nasdaq Biotechnology
Index (0.1%) traded sideways (all values in USD).

BB Biotech's performance for the first quarter 2018
Despite these headwinds, BB Biotech shares gained 8.8% in CHF and 7.3% in EUR in
the first quarter 2018. The portfolio was essentially flat at +0.4% in CHF,
-0.1% in EUR and +2.3% in USD. The net profit amounted to CHF 28 mn compared to
a net profit of CHF 375 mn for the same period in 2017. The currency impact was
-1.9% as the US dollar declined modestly against the Swiss Franc. Return
calculations for BB Biotech take into account the dividend distribution approved
by shareholders at the AGM on March 13, 2018.

Continued capital distribution
BB Biotech paid out that proposed dividend of CHF 3.30 per share. The Board
confirmed the continuation of the dividend policy and anticipates pay out of a
regular dividend of 5% of the prior December's average share price.

The eleventh share repurchase program, started in April 2016, which allows BB
Biotech to acquire up to 10% of the company's outstanding shares over a period
of up to three years, continues. BB Biotech did not trade on the second trading
line in the first quarter of 2018, which means it has not been used since April
2016.

Increase of investment levels in the first three months of 2018
The management team increased short-term credits - increasing investment levels
from 102.5% to 108.7% during the quarter. And in total, the dividend payout of
CHF 183 mn plus investments in promising new and existing portfolio holdings
modestly exceeded cash received from sale of Juno shares to Celgene which
generated USD 164 mn of cash inflow for BB Biotech.

First quarter portfolio activity
As always, existing portfolio positions were carefully adjusted amid choppy
equity markets. BB Biotech re-invested profits from holdings in Agios,
Neurocrine, Sage, Alnylam and Gilead into firms which offered attractive
re-entry levels such as Tesaro, Ionis and Regeneron and built further stakes in
Akcea Therapeutics and Voyager Therapeutics.

Continuing the strategy of investing in innovative smaller and mid-cap
companies, Moderna Therapeutics, a private company which is pioneering a new
class mRNA medicine, has been added to the portfolio. Their pipeline includes
candidates for vaccines and treatments in diverse therapeutic areas. Moderna has
ten clinical trials underway and has so far raised more than USD 1.5 bn in
equity and USD 1 bn in smart strategic deals. BB Biotech invested USD 70 mn into
Moderna's Series G, broadening our RNA technology exposure which reached 19% of
the portfolio by the end of the first quarter.

A second new portfolio position was initiated with Argenx being an antibody
platform company with a range of mid-to-late stage clinical candidates -
ARGX-113 being the most advanced. This molecule is being studied in three
IgG-mediated autoimmune diseases. Important clinical trial read-outs are
expected in the coming 12 months. A second candidate, ARGX-110, should begin
proof-of-concept clinical trials for acute myeloid leukemia later in 2018.

Solid progress of the portfolio holdings
BB Biotech also saw key late-stage clinical trials data during the first quarter
of 2018. Novo Nordisk reported positive results from the Phase III, PIONEER-1
trial of orally available semaglutide for type 2 diabetes. Oral semaglutide
improved HbA1c (long-term blood sugar) at all dose levels tested. The highest
dose also caused impressive weight loss (>4 kg at 26 weeks). Novo Nordisk expect
to report nine more trials for oral semaglutide in 2018 and to file for approval
in 2019. Once approved, oral semaglutide will allow Novo Nordisk to target a
large and fast growing market segment.

Alder reported a second positive Phase III trial, PROMISE 2, for eptinezumab in
chronic migraine prevention. One third of patients achieved at least 75%
reduction of migraine days compared to baseline. About 15% of patients had no
migraines for three months. If approved, Alder is expected to launch eptinezumab
in 2019.

Alexion's late stage development candidate ALXN-1210 for complement inhibition
in PNH patients was tested successfully. ALXN-1210 given every two months is
similar in effect to Soliris given every two weeks for key endpoints such as
transfusion avoidance and lactate dehydrogenase normalization. These data
support a potentially attractive life-cycle extension play for Alexion as they
intend to submit regulatory applications in the US, EU and Japan in the second
half of 2018.

Neurocrine's partner Abbvie announced two positive Phase III studies, ELARIS
UF-I and -II, for elagolix. In combination with low-dose hormone (add-back)
therapy, elagolix reduced heavy menstrual bleeding in around 75% of women
compared to around 10% in the placebo group. Abbvie expects to secure US FDA
approval for the treatment of endometriosis in the third quarter of 2018 and
will submit another application for uterine fibroids in 2019.

Esperion's STUDY 4 of bempedoic acid met its primary endpoint - lowering LDL-C
by 24% in patients on either ezetimibe or low dose statin. The company is
expected to report four additional Phase III studies in 2018 and submit a new
drug application in early 2019.

Two of BB Biotech's portfolio companies scored FDA approvals in Q1 2018. Gilead
won approval for Bictarvy, a triple combination HIV pill. Vertex won approval of
Symdeko - their third cystic fibrosis drug - this one for patients >12 years old
with homozygous or heterozygous F508del mutation.

The management team was disappointed to learn that Celgene got a surprise
refusal-to-file letter from the FDA for ozanimod in relapsing multiple
sclerosis. Also, Radius got a negative vote from the EMA for Abaloparatide-sc
for treating osteoporosis in postmenopausal women.

Despite some Wall Street expectations, M&A activities have not accelerated yet -
even in the wake of cash repatriation and tax reform. BB Biotech continues to
enjoy and anticipates attractive exits such as Kite - sold to Gilead for USD 12
bn in 2017, and Juno - sold to Celgene for USD 9 bn in January 2018 - realizing
a net profit for BB Biotech of USD 96 mn. With this transaction, both BB Biotech
holdings focusing on cell-based therapies were taken over by large cap
biotechnology companies.

Outlook
Important milestones are expected in biotech for 2018 - and the management team
believes these will overcome the shortterm downturn in sentiment seen in the
first quarter. Several large cap biotechnology companies currently trade well
below fundamental value, so we expect pipeline successes and more takeovers to
drive multiples and valuations higher.

In a highly anticipated study, Incyte reported that Epacadostat, tested in
combination with Keytruda in patients with unresectable or metastatic melanoma,
did not add benefit over Keytruda monotherapy. However, BB Biotech assumes that
investor's attention will shift towards the company's remaining broad pipeline.
For the rest of the year, further late stage clinical trial results and product
approvals are expected to drive equity value. In addition, the management team
anticipates M&A activities will continue. Pharmaceutical and large biotechnology
companies have stated real interest in acquisition of leading technologies.

The US healthcare system - now largely influenced by the leadership of Alex Azar
(HHS) and Scott Gottlieb (FDA) - will move towards improved price transparency
driving changes in the somewhat testy relationships between payers, PBMs,
providers and the drug industry. BB Biotech's longstanding commitment to invest
in leading technologies, addressing unmet medical needs with sustainable
economic value continues to underpin its strong and optimistic commitment to the
sector. The management team will continue to add promising new smaller and
mid-cap positions to the investment portfolio and manage the portfolio actively
to produce the best results for the shareholders.

The complete interim report as at March 31, 2018 is available
onwww.bbbiotech.com


For further information:

Investor Relations
Bellevue Asset Management AG, Seestrasse 16, 8700 Küsnacht, Switzerland, tel.
+41 44 267 67 00
Dr. Silvia Schanz,ssc@bellevue.ch
Maria-Grazia Iten-Alderuccio,mga@bellevue.ch
Claude Mikkelsen,cmi@bellevue.ch

Media Relations
Bellevue Asset Management AG, Seestrasse 16, 8700 Küsnacht, Switzerland, tel.
+41 44 267 67 00
Tanja Chicherio,tch@bellevue.ch

TE Communications AG, Bleichestrasse 11, 9000 St. Gallen, Switzerland, tel. +41
79 423 22 28
Thomas Egger,teg@te-communications.ch

www.bbbiotech.com

Company profile
BB Biotech invests in companies in the fast growing market of biotechnology and
is one of the world's largest investors in this sector. BB Biotech is listed in
Switzerland, Germany and Italy. Its investments are focused on listed companies
that are developing and commercializing novel medical treatments and cures. BB
Biotech's investment selection process is guided by the fundamental research and
analysis of physicians and molecular biologists. Its Board of Directors has many
years of experience in industry and science.

Disclaimer
This release contains forward-looking statements and expectations as well as
assessments, beliefs and assumptions. Such statements are based on the current
expectations of BB Biotech, its directors and officers, and are, therefore,
subject to risks and uncertainties that may change over time. As actual
developments may significantly differ, BB Biotech and its directors and officers
accept no responsibility in that regard. All forward-looking statements included
in this release are made only as of the date of this release and BB Biotech and
its directors and officers assume no obligation to update any forward-looking
statements as a result of new information, future events or other factors.


Composition of BB Biotech's portfolio as of March 31, 2018
(in % of securities, rounded values)

                                      

Ionis Pharmaceuticals                9.8%

Incyte                               8.0%

Celgene                              7.7%

Neurocrine Biosciences               7.3%

Vertex Pharmaceuticals               6.3%

Radius Health                        5.5%

Agios Pharmaceuticals                5.4%

Gilead                               5.2%

                                      

Esperion Therapeutics                4.5%

Halozyme Therapeutics                4.3%

Sage Therapeutics                    4.2%

Alexion Pharmaceuticals              4.0%

Novo Nordisk                         3.6%

Alnylam Pharmaceuticals              3.1%

Regeneron Pharmaceuticals            2.5%

Tesaro                               2.4%

Myovant Sciences                     1.9%

Moderna Therapeutics1)               1.8%

Macrogenics                          1.7%

Akcea Therapeutics                   1.6%

Avexis                               1.3%

Intra-Cellular Therapies             1.2%

Voyager Therapeutics                 1.0%

Wave Life Sciences                   0.9%

Intercept Pharmaceuticals            0.9%

Argenx SE                            0.8%

Alder Biopharmaceuticals             0.7%

Novavax                              0.5%

Five Prime Therapeutics              0.4%

Prothena Corp.                       0.4%

Probiodrug                           0.4%

Cidara Therapeutics                  0.2%

Achillion Pharmaceuticals            0.1%

Idorsia                              0.1%

                                      

Radius Health Warrants, 04/23/2018   0.1%

Radius Health Warrants, 02/19/2019   <0.1%

                                      

Total securities                     CHF 3 679.8 mn

                                      

Other assets                         CHF 9.3 mn

Other payables                       CHF (305.0) mn

                                      

Net asset value                      CHF 3 384.1 mn

                                      
 
1) Unlisted company
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Language: English

Company:  BB BIOTECH AG

          Schwertstrasse 6

          8200 Schaffhausen

          Switzerland

Phone:    +41 52 624 08 45

E-mail:    info@bbbiotech.com

Internet: www.bbbiotech.ch

ISIN:     CH0038389992

WKN:      A0NFN3

Listed:   Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial
Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart; SIX



 

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676601  20-Apr-2018 CET/CEST