Biotech Growth Trust has reported a strong year after its managers’ decision to keep backing smaller drug developers around the world delivered a clear benefit for shareholders.
The investment trust, managed by Geoffrey Hsu and Josh Golomb at OrbiMed, made a 73.4% investment return for the year to 31 March. The result followed a difficult period for biotechnology shares, particularly among smaller and mid-sized companies, where higher interest rates and weaker investor confidence had previously put pressure on valuations.
The trust’s managers stayed exposed to this part of the market rather than moving away from it. That decision has now been rewarded as conditions improved. Sentiment towards biotechnology recovered, the interest-rate backdrop became more supportive, and merger and acquisition activity increased.
Smaller biotech companies can carry higher risk because many are still developing treatments, may not yet be profitable and can depend on funding or partnership deals. However, they can also offer meaningful upside when clinical progress, sector sentiment or takeover interest improves.
Biotech Growth Trust’s performance over the year was closely linked to this higher-risk, higher-potential part of the healthcare market. The trust benefited from its exposure to small and mid-cap drug developers at a time when larger pharmaceutical companies were showing more interest in acquiring innovation.
Biotech Growth Trust plc (LON:BIOG) seeks capital appreciation through investment in the worldwide biotechnology industry. The Company and the Company’s Portfolio Manager believe that there is a high congruence between companies that seek to act responsibly and those that succeed in building long-term shareholder value.
