Interim / Quarterly Report • Jul 24, 2020
Interim / Quarterly Report
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Nasdaq Biotechnology Index
| As of 06/30/2020 | 1 year | 3 years | 5 years | since inception |
|---|---|---|---|---|
| Switzerland | 11.7% | 37.4% | 62.6% | 2 652% |
| Germany | 17.0% | 42.0% | 59.8% | 2 147% |
| Italy | 15.1% | 40.8% | 57.6% | 415% |
| Orphan diseases | 37.0% |
|---|---|
| Oncology | 29.6% |
| Neurological diseases | 14.2% |
| Cardiovascular diseases | 7.6% |
| Metabolic diseases | 5.6% |
| Infectious diseases | 0.3% |
| Other | 5.7% |
| As of 06/30/2020 | 1 year | 3 years | 5 years | since inception |
|---|---|---|---|---|
| Switzerland | 11.7% | 11.2% | 10.2% | 13.3% |
| Germany | 17.0% | 12.4% | 9.8% | 14.8% |
| Italy | 15.1% | 12.1% | 9.5% | 8.7% |
Source: Bloomberg, 06/30/2020
| 06/30/2020 | 2019 | 2018 | 2017 | 2016 | |
|---|---|---|---|---|---|
| Market capitalization at the end of the period (in CHF mn) | 3 833.7 | 3 670.3 | 3 235.4 | 3 576.1 | 3 052.5 |
| Net Asset Value at the end of the period (in CHF mn) | 3 626.3 | 3 393.0 | 2 884.5 | 3 538.7 | 3 003.0 |
| Number of shares (in mn) 1) | 55.4 | 55.4 | 55.4 | 55.4 | 55.4 |
| Trading volume (in CHF mn) | 1 437.1 | 2 004.2 | 2 610.7 | 2 864.7 | 3 204.5 |
| Profit/(loss) (in CHF mn) | 421.7 | 677.4 | (471.3) | 687.5 | (802.1) |
| Closing price at the end of the period in CHF 1) | 69.20 | 66.25 | 58.40 | 64.55 | 55.10 |
| Closing price (G) at the end of the period in EUR 1) | 65.20 | 61.40 | 52.00 | 55.68 | 51.70 |
| Closing price (I) at the end of the period in EUR 1) | 64.70 | 61.00 | 52.00 | 55.20 | 51.60 |
| Stock performance (incl. distributions) 2) | 11.4% | 18.5% | (5.2%) | 22.9% | 0.2% |
| High/low share price in CHF 1) | 71.00/45.44 | 73.20/59.35 | 74.10/56.10 | 67.80/52.10 | 58.20/40.78 |
| High/low share price in EUR 1) | 66.90/43.04 | 64.70/52.10 | 64.80/48.60 | 59.10/48.42 | 53.98/36.74 |
| Premium/(discount) (annual average) | 9.3% | 11.8% | 9.7% | (2.5%) | (5.1%) |
| Cash distribution/dividend in CHF 1) | N.A. | 3.40 | 3.05 | 3.30 | 2.75 |
| Degree of investment (quarterly figures) | 109.1% | 109.1% | 108.4% | 103.1% | 109.9% |
| Total Expense Ratio (TER) p.a. 3) | 1.27% | 1.26% | 1.25% | 1.27% | 1.30% |
1) Five-for-one share split as at March 29, 2016 considered
2) All figures in CHF %, total return-methodology
3) based on market capitalization
| Letter to the shareholders | 2 |
|---|---|
| Portfolio | 6 |
| Investment strategy | 7 |
| Consolidated interim financial statements | |
|---|---|
| Selected explanatory notes | 12 |
| to the consolidated interim financial statements | |
| Report of the auditors | 17 |
| Shareholder information | 18 |
During the second quarter of 2020 monetary, fiscal and economic interventions around the world triggered an equity market rebound from its first quarter dip. Expectations for a prompt economic recovery gained appeal as lockdown measures were eased in China and European countries affected early by the SARS-CoV-2 pandemic. Rapid progress of leading COVID-19 vaccine and therapeutic candidates and their potential for launches in late 2020 or early 2021 sustained the exuberance.
Even while COVID-19 swept across the United States, accelerating late in the second quarter, equity investors seemed to shrug off indicators such as unemployment, and equity indices continued to rise. During the second quarter, the S&P gained 20.5%, the Dow Jones gained
BB Biotech's share price gained 32.1% in CHF and 32.9% in EUR during the second quarter 2020. With this, the Net Asset Value (NAV) grew 48.2% in CHF, 47.7% in EUR and 51.2% in USD. This meant that net profit for the second quarter was CHF 1.18 bn compared to a net loss of CHF 336 mn for the same period in 2019.
For the first half of 2020, the total share price return was 11.4% in CHF and 13.2% in EUR, including the dividend. This was slightly behind the Net Asset Value appreciation of 15.7% in CHF, 18.0% in EUR and 18.2% in USD. This resulted in a net profit of CHF 422 mn for the first half of
18.5% and the Nasdaq Composite Index gained 31.0% (all values in USD) as technology companies were seen as winners. European markets indexes as the EuroStoxx 50 (+17.8%, in EUR) and the DAX (+23.9%, in EUR) followed a similar pattern. A muted rebound was seen in the Swiss SPI index (+9.8% in CHF), which had held up better than most indices in the first quarter.
The healthcare markets showed similar resilience and bounce. The broad MSCI World Healthcare Index gained 14.7% (USD). Diagnostic, medicines and vaccine developers working on COVID-19 remedies again fared better than consumer-oriented and cyclical subsectors. The Nasdaq Biotech Index gained 26.9% (USD). Within biotechnology, large caps gained ground, but the mid caps and select smaller cap firms made the greatest gains. Following a longer cycle of fund withdrawal from the biotechnology sector, inflows fueled the rebound throughout the second quarter – including numerous initial public offerings and secondaries and debt offerings.
2020 compared to the CHF 554 mn figure reported for the same period of last year. Exchange-rate fluctuations in the USD/CHF currency pair blunted first half 2020 performance by approximately 2.5%.
Despite the pandemic crisis, our investment management team continued to pursue BB Biotech's long-term investment strategy and focus on innovative medicines for severe and/or chronic disorders, adding one small cap company during the second quarter, namely Generation Bio. The team took gains from sales of shares in top holdings, including further profit from our Moderna position as they reported rapid progress with mRNA-1273, a vaccine candidate for COVID-19. The cash was invested in recently added companies, such as Molecular Templates, Fate Therapeutics and Arvinas. We also participated in capital increases for existing portfolio companies, Argenx, Kezar and Crispr Therapeutics. Argenx will use the funds for commercialization of Efgartigimod; Kezar will continue to invest in the development of KZR-616 for autoimmune disorders. Crispr Therapeutics will progress the development of treatment for hemoglobinopathies and invest in cell manufacturing capabilities.
We increased further our portfolio allocation to genetic medicines in the second quarter of 2020 – investing in the initial public offering of Generation Bio. This follows our successful investments in other gene therapy companies, Avexis (acquired by Novartis) and Audentes (acquired by Astellas). Generation Bio is still early in the development cycle, but offers in our view important new approaches to gene therapy including potential for larger genetic inserts, tissue targeting and re-dosing for patients suffering either from rare or common diseases. The firm avoids the need for viral vectors such as the adeno-associated virus (AAV) capsid and can therefore deliver much larger and often full-length recombinant proteins in lipid nanoparticles (LNPs). Re-dosing will allow pursuit of targets with narrow therapeutic windows including retreatment after loss of efficacy. This cannot be done with today's first generation AAV constructs.
The substantial gains in the portfolio, combined with active management of various positions, led to a reduction of the investment level from 113.5% to 104.6% during the second quarter 2020. The investment team can now identify and invest in novel opportunities within the established investment guidelines of 95% to 115% distributed among a maximum of 35 portfolio positions.
«While investor focus on COVID-19 projects, important positive development milestones were reported by firms in our portfolio during the second quarter of 2020»
While investor focus on COVID-19 projects, important positive development milestones were reported by firms in our portfolio during the second quarter of 2020:
– Myokardia announced positive topline data from its Phase III pivotal EXPLORER-HCM clinical trial of Mavacamten for the treatment of patients with symptomatic, obstructive hypertrophic cardiomyopathy. Mavacamten, an oral modulator of cardiac muscle protein, myosin, showed a robust treatment effect – improving oxygen consumption and clinical features of heart failure compared to placebo. Mavacamten was well tolerated, and was also associated with improvements in daily life functioning and quality. The company plans to file data for regulatory review by early 2021.
Positive, earlier stage results were reported by Moderna, Crispr Therapeutics, Arvinas and Agios.
Regulatory agencies met most scheduled milestones even during the COVID-19 crisis so far. Halozyme, Neurocrine and Incyte reported product approvals while Intercept received an unanticipated complete response letter:
– Halozyme received two important approvals for their Enhanze platform. Janssen received FDA approval for Darzalex Faspro (daratumumab hyaluronidase humanfihj) in a wide range of multiple myeloma patients. The new formulation allows delivery of treatment in 3 – 5 minutes rather than multi-hour intravenous infusions. The FDA also approved Roche's Phesgo, a fixed-dose combination of Perjeta and Herceptin with Enhanze technology, for breast cancer. Halozyme's Enhanze technology allows for a 5 – 8 minute subcutaneous delivery in a single injection, rather than the far lengthier sequential intravenous infusions previously needed.
During the second quarter, only one substantial business development deal was reported by our portfolio companies. Alnylam, traded half of its inclisiran (an investigational siRNA that lowers cholesterol) royalties for a USD 1 bn payment and a further USD 1 bn loan facility from Blackstone Life Sciences.
With lockdowns creating pressure on the global economy and society, governments invested in diagnostic testing and began negotiating bulk buying arrangements for COVID-19 therapeutics and vaccines. We will monitor these developments closely.
Against the evolving picture of COVID-19 diagnosis, treatment and vaccination, trials of importance for both individual pipeline assets as well as platform technologies for the upcoming months include the following:
A number of regulatory review decisions are also expected in the second half of 2020, including:
Margetuximab (Macrogenics) for the treatment of breast cancer, with an FDA action date of December 18, 2020
Relugolix (Myovant) for the treatment of prostate cancer, with an FDA target action date of December 20, 2020
In anticipation of a continued steep increase in growth and density of data generated by the biopharma industry and academia, the investment management team is expanding its technical capabilities and resources, so that we can use advanced analytical techniques for evaluation and diligence. We believe that momentum in the biotechnology sector will support further IPOs and capital increases, strengthening the balance sheet of firms pursuing the development of next-generation technology and assets, offering the investment team broader selection and new investment opportunities. The COVID-19 pandemic is not likely to disappear as quickly as it appeared. But the relentless progress of biotechnology will, we believe, provide medically and economically attractive solutions. Meantime, progress with many other diseases and therapies will continue apace. This is a good time to invest in biotechnology.
We thank you for the trust you have placed in the Company.
The Board of Directors of BB Biotech AG
Dr. Erich Hunziker, Chairman Dr. Clive Meanwell
Dr. Thomas von Planta Prof. Dr. Mads Krogsgaard Thomsen
| Company | Number of securities |
Change since 12/31/2019 |
Local currency |
Share price |
Market value in CHF mn |
In % of securities |
In % of shareholders' equity |
In % of company |
|---|---|---|---|---|---|---|---|---|
| Ionis Pharmaceuticals | 7 794 786 | (200 169) | USD | 58.96 | 435.4 | 11.5% | 12.0% | 5.6% |
| Neurocrine Biosciences | 2 920 000 | (308 074) | USD | 122.00 | 337.5 | 8.9% | 9.3% | 3.1% |
| Incyte | 2 920 000 | (480 000) | USD | 103.97 | 287.6 | 7.6% | 7.9% | 1.3% |
| Vertex Pharmaceuticals | 920 000 | (320 000) | USD | 290.31 | 253.0 | 6.7% | 7.0% | 0.4% |
| Agios Pharmaceuticals | 3 981 473 | 84 519 | USD | 53.48 | 201.7 | 5.3% | 5.6% | 5.8% |
| Argenx SE | 930 000 | (14 739) | USD | 225.23 | 198.4 | 5.2% | 5.5% | 2.0% |
| Moderna | 3 225 000 | (1 592 781) | USD | 64.21 | 196.2 | 5.2% | 5.4% | 0.8% |
| Esperion Therapeutics | 3 747 964 | 20 000 | USD | 51.31 | 182.2 | 4.8% | 5.0% | 13.6% |
| Alnylam Pharmaceuticals | 1 270 000 | (330 000) | USD | 148.11 | 178.2 | 4.7% | 4.9% | 1.1% |
| Halozyme Therapeutics | 6 645 552 | (1 317 504) | USD | 26.81 | 168.8 | 4.4% | 4.7% | 4.9% |
| Alexion Pharmaceuticals | 1 294 428 | (20 000) | USD | 112.24 | 137.6 | 3.6% | 3.8% | 0.6% |
| Macrogenics | 4 420 000 | (99 159) | USD | 27.92 | 116.9 | 3.1% | 3.2% | 9.0% |
| Myokardia | 1 179 913 | (85 000) | USD | 96.62 | 108.0 | 2.8% | 3.0% | 2.2% |
| Myovant Sciences | 4 600 000 | (215 109) | USD | 20.62 | 89.9 | 2.4% | 2.5% | 5.1% |
| Radius Health | 6 931 685 | 50 000 | USD | 13.63 | 89.5 | 2.4% | 2.5% | 14.9% |
| Intra-Cellular Therapies | 3 658 419 | 1 358 419 | USD | 25.67 | 89.0 | 2.3% | 2.5% | 5.5% |
| Exelixis | 2 835 000 | – | USD | 23.74 | 63.8 | 1.7% | 1.8% | 0.9% |
| Fate Therapeutics | 1 870 400 | 1 870 400 | USD | 34.31 | 60.8 | 1.6% | 1.7% | 2.2% |
| Nektar Therapeutics | 2 620 676 | – | USD | 23.16 | 57.5 | 1.5% | 1.6% | 1.5% |
| Crispr Therapeutics | 800 462 | 70 000 | USD | 73.49 | 55.7 | 1.5% | 1.5% | 1.3% |
| Black Diamond Therapeutics | 1 390 000 | 1 390 000 | USD | 42.16 | 55.5 | 1.5% | 1.5% | 3.9% |
| Sage Therapeutics | 1 400 104 | 120 000 | USD | 41.58 | 55.1 | 1.5% | 1.5% | 2.7% |
| Arvinas | 1 536 903 | 295 000 | USD | 33.54 | 48.8 | 1.3% | 1.3% | 3.9% |
| Scholar Rock Holding | 2 715 106 | 80 640 | USD | 18.21 | 46.8 | 1.2% | 1.3% | 9.1% |
| Molecular Templates | 3 445 240 | 2 149 553 | USD | 13.79 | 45.0 | 1.2% | 1.2% | 7.5% |
| Sangamo Therapeutics | 3 850 000 | – | USD | 8.96 | 32.7 | 0.9% | 0.9% | 2.7% |
| Voyager Therapeutics | 2 680 283 | – | USD | 12.62 | 32.0 | 0.8% | 0.9% | 7.2% |
| Intercept Pharmaceuticals | 696 976 | – | USD | 47.91 | 31.6 | 0.8% | 0.9% | 2.1% |
| Generation Bio Co. | 1 440 000 | 1 440 000 | USD | 21.00 | 28.6 | 0.8% | 0.8% | 3.1% |
| Wave Life Sciences | 2 602 858 | 200 000 | USD | 10.41 | 25.7 | 0.7% | 0.7% | 7.3% |
| Homology Medicines | 1 737 122 | 125 000 | USD | 15.19 | 25.0 | 0.7% | 0.7% | 3.8% |
| Kezar Life Sciences | 4 241 940 | 2 691 271 | USD | 5.18 | 20.8 | 0.5% | 0.6% | 9.3% |
| G1 Therapeutics | 721 925 | – | USD | 24.26 | 16.6 | 0.4% | 0.5% | 1.9% |
| Cidara Therapeutics | 2 822 495 | 527 223 | USD | 3.69 | 9.9 | 0.3% | 0.3% | 6.9% |
| Akcea Therapeutics | 600 000 | (1 848 948) | USD | 13.70 | 7.8 | 0.2% | 0.2% | 0.6% |
| Bristol-Myers Squibb – Contingent Value Right |
800 000 | – | USD | 3.58 | 2.7 | 0.1% | 0.1% | |
| Alder Biopharmaceuticals – Contingent Value Right |
2 766 008 | – | USD | 0.88 | 2.3 | 0.1% | 0.1% | |
| Total securities | 3 794.6 | 100.0% | 104.6% | |||||
| Other assets | 36.2 | 1.0% | ||||||
| Other payables | (204.5) | (5.6%) | ||||||
| Net asset value | 3 626.3 | 100.0% | ||||||
| BB Biotech registered shares 1) | – | – | – |
1) Correspond to the total of all own shares held including the second trading line
Exchange rate as at 06/30/2020: USD/CHF: 0.9473
BB Biotech invests in fast-growing biotechnology companies that are developing and marketing innovative drugs. It focuses on biotech companies whose products address areas of significant unmet medical needs and thus have above-average sales and profit-growth potential. Besides profitable large cap companies, BB Biotech is building up its investments in promising small and mid cap companies.
The team of investment experts is concentrating not only on established target areas such as oncology, orphan diseases and neurological indications, but also on the technologies of tomorrow that could lead to novel treatment methods with attractive therapeutic profiles and substantial economic rewards. These future technologies include RNA platforms and cell and gene therapies. A total return of 15% p.a. over a medium- to longer-term investment horizon is targeted.
The asset classes available to BB Biotech are direct investments in the shares of listed companies, equity interests in unlisted companies, corporate bonds, and options on a range of underlying assets. BB Biotech invests almost Team of Bellevue Asset Management AG when making its investment decisions. It can also turn to an extensive international network of physicians and specialists in individual sub-segments of the biotech industry for further support and advice. The Investment Management Team creates detailed financial models for all portfolio holdings and they must provide compelling arguments that these holdings have the potential to double in value over a fouryear time frame. The team is guided by its convictions, not by benchmark considerations. Upside potential is driven in most cases by the power of innovation, the launch of new products for serious or significant illnesses, and successful company management. Each investment case is constantly monitored and evaluated within the scope of our stringent and disciplined risk management process and corrective action will be taken if and when necessary.
BB Biotech's investment portfolio will usually consist of between 20 to 35 biotechnology companies. There are estblished, large cap companies as well as small and mid cap companies in the portfolio. Smaller positions will be taken in innovative biotech companies with promising R&D pipelines. From a regional perspective, the US bio-
exclusively in stocks for liquidity and risk/return reasons. At least 90% of its shareholdings must be in listed companies, while always holding more than 50% of its assets in equity investments. Corporate bonds are an alternative primarily when stock market trends are negative. Options on the stocks of portfolio companies can be bought and sold at opportune times and as a means of hedging currency exposure.
Exhaustive, multi-stage due diligence precedes the selection of individual investments. We must have a thorough understanding of every company we invest in. Before an investment is made, the team analyzes a company's financial statements in detail and assesses its competitive environment, R&D pipeline, and patent portfolio as well as its customers' perceptions of its products and services. Close contact with company executives is of high importance to us in this due diligence process, but also afterwards, as we believe that it takes strong leaders to achieve strong results.
BB Biotech builds on the long-standing experience of its distinguished Board of Directors and on the fundamental analysis of the experienced Investment Management tech sector has displayed a high level of innovation and so this regional bias is also reflected in BB Biotech's portfolio. The predominance of the US biotech industry can be traced to the country's stellar research clusters, industryfriendly regulatory frameworks and myriad financing options, among other factors.
New investments in small and mid cap companies will have a weighting of between 0.5% and a maximum of 4% to ensure that both upside potential and R&D risks are adequately addressed. Because it is an investment company, BB Biotech has the flexibility to increase portfolio weightings considerably over time as a position increases in value. Smaller positions may become a top holding as their business develops and milestones such as positive Phase III outcomes, drug approvals, the successful marketing of products, and a sustainable flow of profits are achieved. All positions and their valuations are continually monitored, taking into account their growth potential and other aspects, and will be reduced if and when appropriate.
(in CHF 1 000)
| Notes | 06/30/2020 | 12/31/2019 | |
|---|---|---|---|
| Current assets | |||
| Cash and cash equivalents | 30 286 | 30 707 | |
| Receivables from brokers | 5 829 | – | |
| Securities at fair value through profit or loss | 4 | 3 794 556 | 3 523 670 |
| Other assets | 108 | 190 | |
| 3 830 779 | 3 554 567 | ||
| Total assets | 3 830 779 | 3 554 567 | |
| Current liabilities | |||
| Short-term borrowings from banks | 5 | 197 000 | 150 000 |
| Payables to brokers | 2 802 | 6 359 | |
| Other short-term liabilities | 4 429 | 4 992 | |
| Tax liabilities | 229 | 243 | |
| 204 460 | 161 594 | ||
| Total liabilities | 204 460 | 161 594 | |
| Shareholders' equity | |||
| Share capital | 6 | 11 080 | 11 080 |
| Retained earnings | 3 615 239 | 3 381 893 | |
| 3 626 319 | 3 392 973 | ||
| Total liabilities and shareholders' equity | 3 830 779 | 3 554 567 | |
| Net asset value per share in CHF | 65.45 | 61.25 |
The notes on pages 12 to 16 are an integral part of these condensed consolidated interim financial statements.
The condensed consolidated interim financial statements were approved by the Board of Directors on July 21, 2020.
(in CHF 1 000)
| Notes 01/01/–06/30/2020 01/01/–06/30/2019 04/01/–06/30/2020 | 04/01/–06/30/2019 | |||
|---|---|---|---|---|
| Operating income | ||||
| Net gains from securities 4 |
444 506 | 578 347 | 1 191 232 | – |
| Interest income | 7 | 17 | 7 | 17 |
| Dividend income | 243 | 951 | – | 432 |
| Other income | 3 | 21 | – | 18 |
| 444 759 | 579 336 | 1 191 239 | 467 | |
| Operating expenses | ||||
| Net losses from securities 4 |
– | – | – | (323 695) |
| Finance expenses | (491) | (612) | (266) | (377) |
| Foreign exchange losses net | (4) | (412) | (42) | (297) |
| Administrative expenses 7 |
(19 788) | (21 519) | (10 103) | (10 838) |
| Other expenses | (2 736) | (2 783) | (1 151) | (1 048) |
| (23 019) | (25 326) | (11 562) | (336 255) | |
| Operating income before tax 8 |
421 740 | 554 010 | 1 179 677 | (335 788) |
| Income taxes | (34) | (34) | (17) | (17) |
| Net income for the period | 421 706 | 553 976 | 1 179 660 | (335 805) |
| Total comprehensive income for the period | 421 706 | 553 976 | 1 179 660 | (335 805) |
| Income per share in CHF | 7.61 | 10.00 | 21.29 | (6.06) |
| Diluted income per share in CHF | 7.61 | 10.00 | 21.29 | (6.06) |
The notes on pages 12 to 16 are an integral part of these condensed consolidated interim financial statements.
(in CHF 1 000)
| Share capital |
Treasury shares |
Retained earnings |
Total | |
|---|---|---|---|---|
| Balances at January 1, 2019 | 11 080 | – | 2 873 432 | 2 884 512 |
| Dividend | – | – | (168 970) | (168 970) |
| Total comprehensive income for the period | – | – | 553 976 | 553 976 |
| Balances at June 30, 2019 | 11 080 | – | 3 258 438 | 3 269 518 |
| Balances at January 1, 2020 | 11 080 | – | 3 381 893 | 3 392 973 |
|---|---|---|---|---|
| Dividend | – | – | (188 360) | (188 360) |
| Total comprehensive income for the period | – | – | 421 706 | 421 706 |
| Balances at June 30, 2020 | 11 080 | – | 3 615 239 | 3 626 319 |
The notes on pages 12 to 16 are an integral part of these condensed consolidated interim financial statements.
(in CHF 1 000)
| Notes 01/01/–06/30/2020 | 01/01/–06/30/2019 | ||
|---|---|---|---|
| Cash flows from operating activities | |||
| Proceeds from sales of securities | 4 | 420 021 | 242 659 |
| Purchase of securities | 4 | (255 787) | (248 051) |
| Dividend receipts | 243 | 951 | |
| Interest receipts | 7 | 17 | |
| Payments for services | (23 004) | (23 819) | |
| Income taxes paid | (46) | (39) | |
| Total cash flows from operating activities | 141 434 | (28 282) | |
| Cash flows from financing activities | |||
| Dividend | (188 360) | (168 970) | |
| Borrowing of bank loans | 5 | 47 000 | 185 000 |
| Interest payments | (491) | (612) | |
| Total cash flows from financing activities | (141 851) | 15 418 | |
| Foreign exchange difference | (4) | (412) | |
| Change in cash and cash equivalents | (421) | (13 276) | |
| Cash and cash equivalents at the beginning of the period | 30 707 | 22 072 | |
| Cash and cash equivalents at the end of the period | 30 286 | 8 796 |
The notes on pages 12 to 16 are an integral part of these condensed consolidated interim financial statements.
BB Biotech AG (the Company) is listed on the SIX Swiss Exchange, in the «Prime Standard Segment» of the German Exchange as well as in the «Star Segment» of the Italian Exchange and has its registered office in Schaffhausen, Schwertstrasse 6. Its principal activity is to invest in companies active in the biotechnology industry for the purpose of capital appreciation. The investments are held through its wholly owned subsidiaries.
| Company | Capital in CHF 1 000 |
Capital and voting interest in % |
|---|---|---|
| Biotech Focus N.V., Curaçao | 11 | 100 |
| Biotech Growth N.V., Curaçao | 11 | 100 |
| Biotech Invest N.V., Curaçao | 11 | 100 |
| Biotech Target N.V., Curaçao | 11 | 100 |
The condensed consolidated interim financial statements of the Company and its subsidiary companies (the Group) have been prepared in accordance with International Accounting Standards (IAS) 34 «Interim Financial Reporting,» as well as the provisions of the rules of the SIX Swiss Exchange for Investment Companies and should be read in conjunction with the consolidated annual financial statements for the year ended December 31, 2019. The preparation of the condensed consolidated interim financial statements requires management to make assumptions and estimates that have an impact on the balance sheet values and items of the statement of comprehensive income in the current financial period. In certain circumstances, the actual values may diverge from these estimates.
The condensed consolidated interim financial statements have been prepared in accordance with the accounting policies set out in the consolidated annual financial statements.
The following amended standards, valid since January 1, 2020, have been applied in these condensed consolidated interim financial statements:
– IFRS 3 (amended, effective January 1, 2020) – Business Combinations
– IAS 39, IFRS 7, IFRS 9 (amended, effective January 1, 2020) – IBOR-Reform
The Group assessed the impact of the above-mentioned amended standards. Based on the analysis, the Group concluded that these amended standards have no impact on the Group's accounting policies and overall results and financial position.
The Group holds assets denominated in currencies other than the Swiss franc, the functional currency. It is therefore exposed to currency risk, as the value of the securities denominated in other currencies will fluctuate due to changes in exchange rates. Depending on the market situation the Group could use foreign currency options and/or forward contracts to reduce the currency risk.
The following exchange rates have been used for the preparation of these condensed consolidated interim financial statements:
| Currency | 06/30/2020 | 12/31/2019 |
|---|---|---|
| USD | 0.94730 | 0.96760 |
| ANG | 0.53219 | 0.54360 |
| EUR | 1.06415 | 1.08550 |
| GBP | 1.17470 | 1.27970 |
The following table presents the Group's assets that are measured at fair value (in CHF 1 000):
| 3 789 537 | – | – | 3 789 537 |
|---|---|---|---|
| 5 019 | |||
| 3 792 250 | – | 2 306 | 3 794 556 |
| 2 713 | – | 2 306 |
Securities at fair value through profit or loss
| Total assets | 3 521 315 | – | 2 355 | 3 523 670 |
|---|---|---|---|---|
| – Derivative instruments | 2 330 | – | 2 355 | 4 685 |
| – Shares | 3 518 985 | – | – | 3 518 985 |
The table below summarizes the transactions in level 3 instruments (in CHF 1 000):
| 01/01/–06/30/2020 | 01/01/–06/30/2019 | |
|---|---|---|
| Opening balance | 2 355 | – |
| Purchases | – | – |
| Reclassification | – | – |
| Income included in net gains from securities | (49) | – |
| Closing balance | 2 306 | – |
| Total income on level 3 instruments included in net gains from securities | (49) | – |
The level 3 instrument was allocated as part of a corporate action in 2019. There were no transfers between level 1,2 and 3 during the reporting period.
For assets and liabilities carried at amortised cost, their carrying values are a reasonable approximation of fair value.
Securities
Securities comprise the following:
| Company | Number 12/31/2019 |
Change | Number 06/30/2020 |
Market price in original currency 06/30/2020 |
Valuation CHF mn 06/30/2020 |
Valuation CHF mn 12/31/2019 |
|
|---|---|---|---|---|---|---|---|
| Ionis Pharmaceuticals | 7 994 955 | (200 169) | 7 794 786 | USD | 58.96 | 435.4 | 467.3 |
| Neurocrine Biosciences | 3 228 074 | (308 074) | 2 920 000 | USD | 122.00 | 337.5 | 335.7 |
| Incyte | 3 400 000 | (480 000) | 2 920 000 | USD | 103.97 | 287.6 | 287.3 |
| Vertex Pharmaceuticals | 1 240 000 | (320 000) | 920 000 | USD | 290.31 | 253.0 | 262.7 |
| Agios Pharmaceuticals | 3 896 954 | 84 519 | 3 981 473 | USD | 53.48 | 201.7 | 180.1 |
| Argenx SE | 944 739 | (14 739) | 930 000 | USD | 225.23 | 198.4 | 146.7 |
| Moderna | 4 817 781 | (1 592 781) | 3 225 000 | USD | 64.21 | 196.2 | 91.2 |
| Esperion Therapeutics | 3 727 964 | 20 000 | 3 747 964 | USD | 51.31 | 182.2 | 215.1 |
| Alnylam Pharmaceuticals | 1 600 000 | (330 000) | 1 270 000 | USD | 148.11 | 178.2 | 178.3 |
| Halozyme Therapeutics | 7 963 056 | (1 317 504) | 6 645 552 | USD | 26.81 | 168.8 | 136.6 |
| Alexion Pharmaceuticals | 1 314 428 | (20 000) | 1 294 428 | USD | 112.24 | 137.6 | 137.5 |
| Macrogenics | 4 519 159 | (99 159) | 4 420 000 | USD | 27.92 | 116.9 | 47.6 |
| Myokardia | 1 264 913 | (85 000) | 1 179 913 | USD | 96.62 | 108.0 | 89.2 |
| Myovant Sciences | 4 815 109 | (215 109) | 4 600 000 | USD | 20.62 | 89.9 | 72.3 |
| Radius Health | 6 881 685 | 50 000 | 6 931 685 | USD | 13.63 | 89.5 | 134.2 |
| Intra-Cellular Therapies | 2 300 000 | 1 358 419 | 3 658 419 | USD | 25.67 | 89.0 | 76.4 |
| Exelixis | 2 835 000 | – | 2 835 000 | USD | 23.74 | 63.8 | 48.3 |
| Fate Therapeutics | – | 1 870 400 | 1 870 400 | USD | 34.31 | 60.8 | – |
| Nektar Therapeutics | 2 620 676 | – | 2 620 676 | USD | 23.16 | 57.5 | 54.7 |
| Crispr Therapeutics | 730 462 | 70 000 | 800 462 | USD | 73.49 | 55.7 | 43.0 |
| Black Diamond Therapeutics | – | 1 390 000 | 1 390 000 | USD | 42.16 | 55.5 | – |
| Sage Therapeutics | 1 280 104 | 120 000 | 1 400 104 | USD | 41.58 | 55.1 | 89.4 |
| Arvinas | 1 241 903 | 295 000 | 1 536 903 | USD | 33.54 | 48.8 | 49.4 |
| Scholar Rock Holding | 2 634 466 | 80 640 | 2 715 106 | USD | 18.21 | 46.8 | 33.6 |
| Molecular Templates | 1 295 687 | 2 149 553 | 3 445 240 | USD | 13.79 | 45.0 | 17.5 |
| Sangamo Therapeutics | 3 850 000 | – | 3 850 000 | USD | 8.96 | 32.7 | 31.2 |
| Voyager Therapeutics | 2 680 283 | – | 2 680 283 | USD | 12.62 | 32.0 | 36.2 |
| Intercept Pharmaceuticals | 696 976 | – | 696 976 | USD | 47.91 | 31.6 | 83.6 |
| Generation Bio Co. | – | 1 440 000 | 1 440 000 | USD | 21.00 | 28.6 | – |
| Wave Life Sciences | 2 402 858 | 200 000 | 2 602 858 | USD | 10.41 | 25.7 | 18.6 |
| Homology Medicines | 1 612 122 | 125 000 | 1 737 122 | USD | 15.19 | 25.0 | 32.3 |
| Kezar Life Sciences | 1 550 669 | 2 691 271 | 4 241 940 | USD | 5.18 | 20.8 | 6.0 |
| G1 Therapeutics | 721 925 | – | 721 925 | USD | 24.26 | 16.6 | 18.5 |
| Cidara Therapeutics | 2 295 272 | 527 223 | 2 822 495 | USD | 3.69 | 9.9 | 8.5 |
| Akcea Therapeutics | 2 448 948 | (1 848 948) | 600 000 | USD | 13.70 | 7.8 | 40.1 |
| Bristol-Myers Squibb Co. | 800 000 | (800 000) | – | USD | n.a. | – | 49.7 |
| Total shares | 3 789.5 | 3 519.0 | |||||
| Bristol-Myers Squibb – Contingent Value Right | 800 000 | – | 800 000 | USD | 3.58 | 2.7 | 2.3 |
| Alder Biopharmaceuticals – Contingent Value Right | 2 766 008 | – | 2 766 008 | USD | 0.88 | 2.3 | 2.4 |
| Total derivative instruments | 5.1 | 4.7 | |||||
| Total securities at fair value through profit or loss | 3 794.6 | 3 523.7 |
The changes in value of securities at fair value through profit or loss by investment category are as follows (in CHF 1 000):
| Listed shares |
Unlisted shares |
Derivative instruments |
Total | |
|---|---|---|---|---|
| Opening balance as at 01/01/2019 at fair values | 3 063 972 | – | 203 | 3 064 175 |
| Purchases | 485 239 | – | 1 490 | 486 729 |
| Sales | (753 455) | – | (370) | (753 825) |
| Net gains/(losses) from securities | 723 228 | – | 3 363 | 726 591 |
| Realized gains | 251 993 | – | 167 | 252 160 |
| Realized losses | (12 865) | – | – | (12 865) |
| Unrealized gains | 693 965 | – | 3 196 | 697 161 |
| Unrealized losses | (209 865) | – | – | (209 865) |
| Closing balance as at 12/31/2019 at fair values | 3 518 985 | – | 4 685 | 3 523 670 |
| Opening balance as at 01/01/2020 at fair values | 3 518 985 | – | 4 685 | 3 523 670 |
| Purchases | 252 230 | – | – | 252 230 |
| Sales | (425 850) | – | – | (425 850) |
| Net gains/(losses) from securities | 444 173 | – | 334 | 444 506 |
| Realized gains | 76 827 | – | – | 76 827 |
| Realized losses | (9 392) | – | – | (9 392) |
| Unrealized gains | 622 137 | – | 383 | 622 520 |
| Unrealized losses | (245 399) | – | (49) | (245 448) |
| Closing balance as at 06/30/2020 at fair values | 3 789 537 | – | 5 019 | 3 794 556 |
At June 30, 2020, a CHF 197 mn short-term loan is outstanding with interest payable at 0.40% p.a. (December 31, 2019: CHF 150 mn at 0.40% p.a.).
The share capital of the Company consists of 55.4 mn fully paid registered shares (December 31, 2019: 55.4 mn) with a par value of CHF 0.20 each (December 31, 2019: CHF 0.20).
At the General Shareholders' Meeting held March 17, 2016, a resolution was approved to start a share buy-back program, whereby up to 5 540 000 shares may be repurchased by the Company. Until the end of the program, at April 11, 2019, no shares had been repurchased under this share buy-back program.
The Board of Directors has approved the repurchase of a maximum of 5 540 000 own registered shares with a nominal value of CHF 0.20 each. The share buy back program will run from April 12, 2019, until April 11, 2022, at the latest. Until June 30, 2020, no shares had been repurchased under this share buy-back program. A repurchase would take place via second trading line for the purpose of a subsequent capital reduction.
At June 30, 2020, and December 31, 2019, the Group holds no treasury shares.
(in CHF 1 000) Administrative expenses comprise the following:
| 01/01/–06/30/2020 | 01/01/–06/30/2019 | ||
|---|---|---|---|
| Investment manager | |||
| – Management fees (incl. VAT) | 19 012 | 20 765 | |
| Personnel | |||
| – Board of Directors remuneration | 580 | 518 | |
| – Wages and salaries | 131 | 161 | |
| – Social insurance contributions and duties | 65 | 75 | |
| 19 788 | 21 519 |
The remuneration model of BB Biotech AG is determined by the Board of Directors.
Since 2014 the remuneration paid to the investment manager is based upon a 1.1% p.a. all-in fee on the average market capitalization without any additional fixed or performance-based elements of compensation. The compensation of the Board of Directors consists since 2014 of a fixed compensation.
The Group has only one business segment, namely the holding of investments in companies active in the biotechnology industry.
The geographical analysis of the operating income before tax is as follows – all income from financial assets are attributed to a country based on the domiciliation of the issuer of the instrument:
| Operating income before tax | 01/01/–06/30/2020 | 01/01/–06/30/2019 |
|---|---|---|
| USA | 352 714 | 590 552 |
| Netherlands | 55 094 | 39 755 |
| Great Britain | 22 269 | (27 392) |
| Switzerland | 6 769 | (3 114) |
| Singapore | 5 496 | (23 600) |
| Curaçao | (20 602) | (22 191) |
| 421 740 | 554 010 |
At June 30, 2020, the securities in the amount of CHF 3 794.6 mn (December 31, 2019: CHF 3 523.7 mn) are a collateral for a credit line of CHF 700 mn (December 31, 2019: CHF 700 mn). At June 30, 2020, a CHF 197 mn short-term loan is outstanding (December 31, 2019: CHF 150 mn).
Detailed information regarding the remuneration model for the Board of Directors and the investment manager are mentioned under note 7, «Administrative expenses».
The Group had no commitments or other off-balance sheet transactions open at June 30, 2020 and December 31, 2019.
The operations of the Group are affected by legislative, fiscal and regulatory developments for which provisions are made where deemed necessary. The Board of Directors concludes that as at June 30, 2020, no proceedings existed which could have any material effect on the financial position of the Group (December 31, 2019: none).
The Board of Directors is not aware of any major shareholder with a holding exceeding 3% of all votes as at June 30, 2020 and December 31, 2019.
There have been no events subsequent to June 30, 2020, which would affect the condensed consolidated interim financial statements.
Report on the Review of condensed consolidated interim financial statements to the Board of Directors of BB Biotech AG Schaffhausen
We have reviewed the condensed consolidated interim financial statements (balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flow and selected explanatory notes) (pages 8 to 16) of BB Biotech AG for the period ended 30 June 2020. The Board of Directors is responsible for the preparation and presentation of these condensed consolidated interim financial statements in accordance with International Accounting Standard 34 «Interim Financial Reporting» and article 14 of the Directive on Financial Reporting (DFR) of the SIX Swiss Exchange. Our responsibility is to express a conclusion on these condensed consolidated interim financial statements based on our review.
We conducted our review in accordance with Swiss Auditing Standard 910 and International Standard on Review Engagements 2410, «Review of interim financial information performed by the independent auditor of the entity». A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Swiss Auditing Standards and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with International Accounting Standard 34 «Interim Financial Reporting» and article 14 of the Directive on Financial Reporting (DFR) of the SIX Swiss Exchange.
PricewaterhouseCoopers AG
Daniel Pajer Roland Holl Audit expert Audit expert Auditor in charge
Zürich, 22 July 2020
PricewaterhouseCoopers AG, Birchstrasse 160, Postfach, CH-8050 Zürich, Switzerland Telefon: +41 58 792 44 00, Telefax: +41 58 792 44 10, www.pwc.ch
PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.
| Official listing and share structure as at June 30, 2020 | ||
|---|---|---|
| Foundation: | November 9, 1993; Schaffhausen, Switzerland | |
| Issue price adj. November 15, 1993: | CHF 4.752 | |
| Official listing: | December 27, 1993 in Switzerland; December 10, 1997 in Germany; October 19, 2000 in Italy |
|
| Share structure: | CHF 11.08 mn nominal, 55 400 000 registered shares with a par value of CHF 0.20 each |
|
| Shareholders, free float: | Institutional and private investors, 100.0% free float |
|
| Security number Switzerland: | 3 838 999 | |
| Security number in Germany and Italy: | A0NFN3 | |
| ISIN: | CH0038389992 |
| B Official listing and share structure as at June 30, 2020 Foundation: November 9, 1993; Schaffhausen, Switzerland Issue price adj. November 15, 1993: CHF 4.752 Official listing: December 27, 1993 in Switzerland; December 10, 1997 in Germany; October 19, 2000 in Italy Share structure: CHF 11.08 mn nominal, 55 400 000 registered shares with a par value of CHF 0.20 each Shareholders, free float: Institutional and private investors, 100.0% free float Security number Switzerland: 3 838 999 Security number in Germany and Italy: A0NFN3 ISIN: CH0038389992 Shareholder information The Company publishes its net asset value daily via the major stock market information services and on its website www.bbbiotech.com. The portfolio composition is published at least every three months within quarterly reports. Quotes and reports NAV: in CHF – Datastream: S:BINA in EUR – Datastream: D:BBNA – Reuters: BABB – Reuters: BABB – Telekurs: BIO resp. 85, BB1 – (Investdata) – Finanz & Wirtschaft (CH) Stock price: in CHF – Bloomberg: BION SW Equity in EUR – Bloomberg: BBZA GY Equity (SIX) (Xetra) – Datastream: S:BIO – Datastream: D:BBZ – Reuters: BION.S – Reuters: BION.DE – Telekurs: BIO in EUR – Bloomberg: BB IM Equity (STAR) – Finanz & Wirtschaft (CH) – Datastream: I:BBB – Neue Zürcher Zeitung (CH) – Reuters: BB.MI Corporate calendar 2020/2021 Interim Report as at September 30, 2020 October 23, 2020, 7.00 AM CET Portfolio as at December 31, 2020 January 22, 2021, 7.00 AM CET Annual Report 2020 February 19, 2021, 7.00 AM CET Annual General Meeting 2021 March 18, 2021, 3.00 PM CET Interim Report as at March 31, 2021 April 23, 2021, 7.00 AM CET The BB Biotech interim report is published in English. A translated German and Italian version is also available. In case of any deviations the English shall prevail over the German and Italian text. |
|---|
| 18 BB Biotech Shareholder information |
Dr. Silvia Siegfried-Schanz Phone +41 44 267 72 66 E-Mail [email protected]
Claude Mikkelsen Phone +44 755 704 85 77 E-Mail [email protected]
Maria-Grazia Iten-Alderuccio Phone +41 44 267 67 14 E-Mail [email protected]
Tanja Chicherio Phone +41 44 267 67 07 E-Mail [email protected]
Schwertstrasse 6 CH-8200 Schaffhausen E-Mail [email protected] www.bbbiotech.com
Seestrasse 16/P. O. Box CH-8700 Küsnacht Phone +41 44 267 67 00 Fax +41 44 267 67 01 E-Mail [email protected] www.bellevue.ch
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