International Biotechnology Trust outperforms index

LONDON - International Biotechnology Trust PLC (IBT) has reported a positive net asset value (NAV) total return of 2.9% for the half-year ending February 28, 2025, outperforming its reference index, the Nasdaq Biotechnology Index, which saw a 3.0% decline in the same period.

Under the leadership of co-managers Ailsa Craig and Marek Poszepczynski, who have been at the helm since March 2021, the trust achieved a 14.7% NAV total return to the period end, surpassing the reference index’s 2.9% return. The quoted portfolio, which constitutes 92.4% of total investments, saw an even more significant increase, rising by 4.3% during the half-year.

A key factor contributing to the trust’s performance was the successful identification of merger and acquisition (M&A) targets, notably the acquisition of IBT’s largest holding at the time, Intra-Cellular Therapies (NASDAQ:ITCI), by Johnson & Johnson (NYSE:JNJ).

Despite current uncertainties surrounding U.S. policy on tariffs and drug approvals affecting biotech stocks, the trust’s co-managers remain optimistic. They believe that the sector’s fundamental strength will continue to present opportunities, particularly among smaller companies.

Kepler Trust Intelligence, in their analysis, commends the resilience demonstrated by the trust’s managers, who have consistently outperformed in various market conditions. Their approach to diversifying across therapeutic areas and identifying potential M&A candidates has been highlighted as a strong strategy, especially in light of the sector’s upcoming patent expirations, which could heighten the demand for new revenue-generating ideas by large-cap pharma companies.

The report suggests that the current market dislocation may present a valuation opportunity in a growth market that is fundamentally attractive. The trust’s focus on smaller biotech companies is seen as a strategic advantage, potentially benefiting from the growth in M&A activity.

The trust’s shares are reportedly available at a discount of around 9% at the time of writing, providing an entry point into a market well-supported by sector fundamentals. This analysis is based on a press release statement from International Biotechnology Trust PLC.

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