BB Biotech - A key milestone with significance for the sector

BB Biotech (BION) invests in innovative, rapidly expanding biotech companies. BION’s portfolio company Wave Life Sciences (Wave) recently announced a significant milestone in the field of genetic medicine: the first successful therapeutic RNA editing in humans. This news lifted Wave’s share price by c 60%. It follows recent positive developments in three of BION’s largest holdings, Alnylam, Intra-Cellular Therapies and Agios, which all saw substantial improvements in their longer-term revenue prospects after positive Phase III readouts. Wave’s news adds to the recent positive momentum in BION’s NAV, which rose by 5.2% in the year ended 30 September 2024, after several years of annual declines, although this return lagged the Nasdaq Biotech Index’s 12.3% rise. Yet the company’s share price declined by 8.1% over this period and the share price discount to NAV is currently over 15%, in stark contrast to an average NAV premium of c 10% over the past 10 years. With interest rates falling and the outlook for the biotech sector potentially brightening accordingly, as we argued in our August 2024 update, this may represent an opportunity for investors to acquire access to the exciting opportunities offered by this industry at what may be an uncommonly wide discount.