FCP OP MEDICAL BioHealth-Trends - medical.lu

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FCP OP MEDICAL BioHealth-Trends / Annual Report as of December 31, 2010 As at 30 December 2010, the 10 largest positions in the fund portfolio represented close to 28 % of the assets under management. The five largest positions were as follows: 6 Company Weighting in % Market capitalisation in USD m Segment Remarks ImmunoGen 4.3 640 Biotechnology Leader in antibody toxin conjugates Celera 3.2 508 Biotechnology Biomarkers, for personalised medicine among other things HBM Bioventures 2.9 463 Biotechnology Investment company with investments in 35 companies, mostly privately held Biomarin 2.8 2,785 Biotechnology Products (orphan drugs) against rare hereditary illnesses Ligand 2.8 175 Biotechnology Broad pipeline, already a variety of products on the market through partners Table 4: Five largest positions in the portfolio, as at 30/12/2010 The Fund mainly invests in companies that have at least one product on the market (71.8 % of assets under management) and are either already profitable (40.8 %) or on the way to profitability (31.0 %). A further 14.5 % of assets under management are invested in companies whose products are in the final stage of clinical development or in the approval process. Only 10.9 % of assets under management were invested in companies with products in the early stages of product development (see Fig. 3). In this latter group, care was also taken to ensure that companies had sufficient funding for at least two years or had products or technologies that would be attractive to a partner. Companies with products on the market 31,0 % Profitable companies with products on the market 40,8 % Liquidity and other 2,8 % Products in the early clinical phase 10,9 % Products in Phase III and in the approval process 14,5 % Figure 3: Portfolio structure of FCP OP MEDICAL BioHealth- Trends according to product status, in percentage of assets under management as at 30/12/2010 In accordance with the Fund's primary focus on young companies and small and mid cap securities, 46.9 % of the assets under management were invested in companies with a market capitalisation of less than USD 500 million (23.1 % in companies below USD 200 million and 23.8 % in companies between USD 200 and 500 million). 20.4 % of the assets under management were in companies whose market capitalisation was between USD 500 million and 1.5 billion, 6.7 % in companies with a market capitalisation of between USD 1.5 and 5 billion, and 23.2 % in companies with a market capitalisation greater than USD 5 billion (see Fig. 4). 30 25 20 15 10 5 23,1 0 < USD 200m USD 200-500m USD 500-1,500m USD 1,500 -5,000m > USD 5,000m Liquidity and other Number 32 26 11 4 13 Figure 4: Portfolio structure of FCP OP Medical BioHealth- Trends according to market capitalization, in percentage of assets under management (figures under the bars indicate the number of companies in each segment) as at 30/12/2010 In terms of the different investment segments in the healthcare sector, the main areas of Fund investment at period end were innovative drug developers in the biotechnology segment, with a weighting of 53.3 %, and the emerging pharmaceuticals sector with 30.2 %. 10.3 % of assets under management were invested in companies in the medical technology sector, and 3.4 % in the healthcare services sector. The regional breakdown of assets under management reflects the importance of each market and the number of innovative listed companies in the healthcare sector. A majority of the investments (67 %) are hence in North America. 29.0 % are in European countries and 1 % in other regions (see Fig. 5). Liquidity holdings were 3 %. 29,0% Fig. 5: Breakdown of assets under management according to region, as at 30/12/2010 Progress in product development, product partnerships and, finally, market approval by the examining authorities are key factors in the performance of portfolio companies. Companies in the FCP OP MEDICAL BioHealth-Trends portfolio also reported significant product advances in the last year. The following companies, for example, received market approval for their products (in the USA unless otherwise indicated): • Biomarin Pharmaceutical Inc. for Zenas (orphan product for treating Lambert-Eaton-Rooke syndrome, approved in the EU) 23,8 1,0% 20,4 3,0% 6,7 67,0% North America Europe Other Liquidity 23,2 2,8
FCP OP MEDICAL BioHealth-Trends / Annual Report as of December 31, 2010 • Ligand Pharmaceuticals Inc. for Revolade (for treating idiopathic thrombocytopenic purpura, partnership with Glaxo, EU approval) • AtriCure Inc. for AtriClip (closure system for cardiac atrial appendages) • BSD Medical Corp. for MicrothermX (for tumour radiation) • Prostrakan Group PLC for Fortesta (for treating hypogonadism, partnership with Endo Pharma) The following companies are examples of holding that entered into product partnerships and platform deals: • Basilea Pharmaceutica AG issued Astellas a license for Isavuconazole, a drug undergoing approval studies for the treatment of serious systemic fungal infections. In addition to an advance payment of CHF 75 million, Basilea can receive further milestone payments of up to CHF 478 million and double-digit royalties based on product sales. The company also retained co-promotion rights. • Neurocrine Biosciences Inc. entered into a partnership with Abbott for an endometriosis product, receiving advanced payments of USD 75 million, as well as future performance payments of up to USD 500 million and royalties on future sales. The Fund also profited from the ongoing process of consolidation in the drug and medical technology sectors. A number of portfolio companies were acquired at high price premiums or received takeover offers during the reporting period: Acquired Sub-segment From Takeover premium Bioform Medical technology Merz Pharma 60% OSI Pharma Biotechnology Astellas 55% Javelin Emerging pharmaceuticals Hospira 61% ATS Medical Medical technology Medtronic 54% Zymogenetics Biotechnology Bristol Myers Squibb 84% Crucell Biotechnology Johnson & Johnson 58% Cypress Emerging Financial 160% pharmaceuticals investors Genzyme Biotechnology Sanofi 40% Table 5: Portfolio companies acquired in 2010, the takeover premium is based on the share price before the takeover announcement The importance that stock picking has for the investment performance of FCP OP MEDICAL BioHealth-Trends is clearly demonstrated by the fact that selected investments are able to achieve price gains that far exceed the average. For example, the companies listed below achieved the largest price gains in the Fund during the reporting period. Above-average price losses were mainly the result of development setbacks (e.g. Ipsen, Curis and Neuroseach), denial of approval (e.g. Xenoport), disappointing sales or earnings (e.g. Biodelivery, Dyax, Auxilium), or the end of a partnership (e.g. Response Biomedical). Company Sub-sector Reasons Price gains (in LC) Amarin Emerging pharmaceuticals Successful completion of an approval study for lipid reducer Approval for tumour radiation device 487% BSD Medical Medical technology 259% Neurocrine Biotechnology Successful completion of 233% Bioscience Phase II study of Elagolix and partnership with Abbott Swedish Orphan Biotechnology Merger with Swedish 149% Biovitrum Orphan and advances for haemophilia products Cypress Emerging Acquired by financial 119% pharmaceuticals investors Staar Surgical Medical Improved financial 107% technologies structure and progress in approval of Visian TICL YM Biosciences Biotechnology Advances in development of JAK inhibitors 88% OSI Pharmaceuticals Biotechnology Acquired by Astellas 85% Ziopharm Biotechnology Start of approval study for Zymafos 82% Atricure Medical Sales growth and 78% technology introduction of a new product Table 6: Companies with above-average price gains (in local currency, LC) during the reporting period In the case of pre-market investments, the Berlin biotechnology company Noxxon now has a second proprietary Spiegelmer product in clinical development, NOX-A12 (for stem cell mobilisation), to follow NOX-E36 (for inflammatory kidney diseases). The start of clinical development for another preparation (NOX-H94 to mobilise iron metabolism for anaemia) is scheduled for the beginning of 2011. Based on these product advances, Noxxon was able to successfully raise EUR 35 million in funding in May (new lead investor NGN Capital). FCP OP MEDICAL BioHealth- Trends participated in this funding. The Fund also participated in the private funding for six other companies, namely YM Biosciences, Neurocrine Biosciences, Dyax and Pharming, Cerus and WorldHeart. It was hence able to purchase shares at a discount from the current market price, together with warrants in some cases. Change in fund units and assets under management The Fund had EUR 101.6 million in assets under management at the end of the reporting period (beginning of period: EUR 78.5 million). This growth was due to price increases as well as net inflows of EUR 6.8 million. The number of Fund units rose by 8.3 % from 667,697 to 722,926. Outlook Forecasts for the global healthcare market assume that it will grow 1.25 to 1.5 times as fast as gross domestic product over the next 10 years. In absolute terms, the leading markets in 7
Page 1: FCP OP MEDICAL Sub-fund: FCP OP MED
Page 4 and 5: Distribution of the fund’s units
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