International Biotechnology Trust plc (LON:IBT) was established in 1994 to provide institutional and retail investors with the opportunity to participate in global biotechnology and life science companies, from venture-stage (via a venture capital fund run by SV Health Investors) through to global, multinational biotechnology companies. The main aim of the trust is to generate capital growth, while minimising risk, through a diversified portfolio and with an experienced investment management team. Over the last five years, IBT’s NAV per share has increased 64%, while the share price has increased 79% over the same period – the superior returns generally reflected by a share price premium.
- Strategy: International Biotechnology Trust’s investment objective is to achieve long-term capital growth by investing in biotechnology companies that address unmet medical needs. The trust offers a diversified portfolio of listed and private companies on a global basis, although the vast majority (92%) of investments are currently in the US.
- Market updates: With 95% of the investment portfolio currently in listed companies, the NAV changes on a daily basis, which is updated on its website. IBT also produces informative monthly factsheets (https://ibtplc.com/investor#
factsheets), shows the full portfolio of listed investments quarterly in SEC filings (https://ibtplc.com/portfolio) and the managers publish a topical blog each month (https://ibtplc.com/investor#investment-blog).
- Portfolio management: The experienced team at SV Health Investors was appointed investment manager of the trust in November 2000. Over the past year, in response to a sharp correction in the small- to mid-cap space, the investment team has actively shifted the portfolio from large- to mega-cap companies (55% down to 33%) to the more entrepreneurial small-to mid-cap companies (34% to 58%), although this has subsequently risen slightly again.
- Risks: Risk is minimised through portfolio diversification, geographical spread and active specialist investment management. In addition, many valuation inflection points in the drug industry are around the time of binary outcomes (e.g. clinical trial results) – so the trust aims to reduce the fund’s exposure to such events that it considers binary.
- Investment summary: International Biotechnology Trust provides investors with the opportunity to participate in the drug industry, from early-stage development through to full commercialisation of regulatory approved drugs. The focus is on companies that address unmet medical needs. The five-year CAGR in NAV has been 10.3%, compared with a share price increase of 12.3%, and the trust pays an annual dividend of 4% of NAV at the preceding financial year-end.