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BB BIOTECH
Germany/Financial Services Analyser
BB BIOTECH (Buy)
Buy
Recommendation unchanged
Share price: EUR
closing price as of 07/05/2012
Target price: EUR
Target Price unchanged
Reuters/Bloomberg
63.10
73.00
BION.DE/BBZA GR
Market capitalisation (EURm) 788
Current N° of shares (m) 12
Free float 100%
Daily avg. no. trad. sh. 12 mth 23,282
Daily avg. trad. vol. 12 mth (m) 1
Price high 12 mth (EUR) 63.10
Price low 12 mth (EUR) 38.85
Abs. perf. 1 mth 5.28%
Abs. perf. 3 mth 4.77%
Abs. perf. 12 mth 21.60%
Estimated NAV breakdown (CHFm) 12/12e 12/12e
Actelion 169.0 14%
Celgene 168.1 14%
Vertex Pharmaceuticals 151.2 13%
Incyte 103.2 9%
Gilead 97.0 8%
Novo Nordisk 79.9 7%
Amylin Pharmaceuticals 53.7 4%
NAV others component 374.6 31%
Total Net Asset Value 1,196.6 100%
NAVPS (EUR) 82.317 nm
Share price*: EUR 63.10 63.10
Discount/(Premium) to NAV -23.4% -23.4%
65 vvdsvdvsdy
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Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12
Source: Factset
Shareholders:
Analyst(s):
BB BIOTECH Tec Dax (Rebased)
Edouard Aubery, Equinet Bank
edouard.aubery@equinet-ag.de
+49 69 5899 7439
Another major clinical success in portfolio
The facts: Yesterday, the share of Vertex, 4 th largest position in BBB‟s portfolio
surged by c. 47% on strong phase II data in Cystic Fibrosis.
Our analysis:
Vertex Pharmaceuticals: Vertex (VRTX) is a US company (mcap: USD7,900m)
with two recently approved drugs: Incivek (telaprevir / cleared by the FDA in May
2011) in the treatment of hepatitis C and Kalydeco (ivacaftor / cleared by the FDA
on Feb. 2012) for the treatment of Cystic fibrosis (CF). The company had been
mostly known for Incivek which brought a major breakthrough in the treatment of
hepatitis C. Launched at the end of May last year, Incivek generated close to
USD900m revenues in FY11. Kalydeco delivered solid data in a sub group of the
Cystic Fibrosis patient population, but the small size of the targeted patient
population (individuals with the G551D mutation) was limiting the potential of the
drug despite a price tag of USD294,000 a year per patient.
What happened yesterday? Vertex released interim data of a phase II trial
investigating the combination of Kalydeco and VX-809 in a broader sub group of
the CF population (individuals with the F508del mutation). The data showed a
statistically significant improvement in lung function (considered as the holy grail in
CF) across the combined treatment groups relative to baseline compared to
placebo (p=0.002).
First, the market had been sceptical on that trial as data from an earlier study
investigating VX-809 were not that compelling. Second, the drug has been
approved in Feb. this year for treating patients with a mutation that signifies about
4% of patients (at USD294,000 p.a. per patient, the commercial opportunity should
have been c. USD350m max.). The mutation which has been targeted by the
above mentioned trial (F508del homozygote) is seen in 46% of the population,
which obviously supports the most optimistic assumption of blockbuster potential
for Vertex Cystic Fibrosis franchise.
Another positive news which continue to illustrate the rational of investing in BBB:
Last week, Actelion, 2 nd largest holding in BBB‟s portfolio went up by 18% on solid
phase III data for Macitentan, addressing market fears on the long term
sustainability of Actelion‟s franchise in pulmonary arterial hypertension.
With yesterday‟s news, Vertex, 4 th largest holding in BBB‟s portfolio (9% of BBB‟s
equity) should have another potential blockbuster marketed on top of Incivek.
On the M&A front, 4 of BB BIOTECH companies (Pharmasset, Micromet, Amylin
and Human Genome Science) have been targeted by takeover bids. We see no
reason to expect a slowdown in deal activity in the Biotech Space.
Beside Actelion, Vertex, Amylin and Human Genome Science, BBB‟s portfolio
consist of 25 other biotech holdings, with upside potential, to which one could get
exposed at a c. 23.5% discount to market price via buying BBZA‟s shares.
Conclusion & Action: Just one week after Actelion, Vertex is the second core
holding of BB BIOTECH to announce a major clinical success. Clinical and
regulatory milestones continue to demonstrate the quality of BB BIOTECH‟s
portfolio assets. Intensifying M&A activities should continue to be supportive as
well. We confirmed our recommendation to gain exposure to the Biotech sector via
an investment into BBZA shares.
Page 45 of 80 European Securities Network
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