Close Brothers Seydler Research AG: BB Biotech - 1H spoiled by appreciating CHF and EUR

The negative performance in 2Q was mainly driven by the sharp appreciation of the CHF vs. the USD and a 21.6% fall of the Actelion share price. The negative performance in 2Q was mainly driven by the sharp appreciation of the CHF vs. the USD and a 21.6% fall of the Actelion share price.

The “big 4” (Actelion, Celgene, Gilead, Vertex) represented 53.2% of the portfolio securities at the end of 2Q 2011 vs. 62.1% in 1Q 2011. This reduction is in line with the strategy to reallocate assets from large cap companies to small and mid cap companies. In 2Q, six new positions were opened, thereof three Indian companies which are BB BIOTECH´s first investments in emerging markets.

Actelion will likely record a US GAAP operating loss for the full year due to provision reflecting the jury verdict of USD 577m, which has been made in 2Q/2011. An important milestone expected for the rest of the year is the results of key clinical trial data from Phase III study with Macitentan, a possible successor to Tracleer, which is expected to become available late 2011 or early in 2012.

Vertex posted robust results from STRIVE clinical trial with VX770. Furthermore, the company strengthens its pipeline by entering license agreement with Alios that will add two distinct nucleotide analogues to Vertex's hepatitis C portfolio.

The NAV in USD (dividend adjusted) increased by 8.2% in 1H while the NAV in CHF declined by 6.8% due to the sharp appreciation of the CHF vs. the USD. A similar picture was observed in EUR which also strongly appreciated vs. the USD.

Although the 2Q figures showed a loss we leave our estimates unchanged. However, we adjust our EPS estimates upwards to account for the ongoing share buyback program and consequently also adjust our price target moderately upwards to EUR 57.00 (old: EUR 56.00). Our recommendation remains BUY.

Bitte lesen Sie den Bericht auf Englisch im pdf-Dokument.