London, UK, 20 March 2024

Edison issues update on The Biotech Growth Trust (BIOG): Onwards and upwards for performance recovery

The Biotech Growth Trust’s (BIOG’s) two co-managers, Geoff Hsu and Josh Golomb, at global healthcare specialist OrbiMed, believe that now could be an opportune time to consider the biotech sector as it is recovering from the longest and largest absolute and relative drawdown since 2006. The sector was negatively affected by sharply rising interest rates rather than a deterioration in industry fundamentals; indeed, the managers continue to refer to a ‘golden era’ of innovation within the biotech sector. BIOG’s relative performance has been through a difficult period given its high weighting in emerging (smaller-cap) biotech stocks, which performed significantly worse than the shares of large-cap biotech businesses during the sector sell-off.

BIOG’s managers are very excited about the trust’s prospects and encouraged that investors are once again rewarding biotech companies that deliver positive outcomes. For example, Janux Therapeutics recently reported positive Phase I data for its product for the treatment of prostate cancer and its shares appreciated by more than 200%. This move has catapulted the company into BIOG’s list of 10 largest holdings. In keeping with many other investment companies, the trust’s discount is wider than its historical averages. This offers scope for BIOG to be afforded a higher valuation now that its performance is back on track, and there is potential for an improvement in investor sentiment in a less uncertain economic environment.

 
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