Process and portfolio
International Biotechnology Trust plc
Investment objective
The Trust's investment objective is to achieve long-term capital growth by investing in biotechnology and other life sciences companies addressing an unmet medical need.
Quoted and unquoted investments
The Trust's portfolio includes a quoted portfolio and an unquoted portfolio. The quoted portfolio makes up the majority of the Trust’s asset pool and comprises investments made into listed companies. The Board has indicated that the unquoted portfolio will account for 5-15% of NAV and may comprise investments made into unquoted companies and into funds not quoted on a stock exchange, including venture capital funds. The current venture funds in the portfolio are managed by a third party fund manager, SV Health Investors.
A diversified portfolio
The Trust will seek to achieve its objective by investing in a diversified portfolio of companies which may be quoted or unquoted and whose shares are considered to have good growth prospects, with experienced management and strong potential upside through the development and/or commercialisation of a pharmaceutical product, device or enabling technology. Investments may also be made in related sectors such as medical devices and healthcare services.
Our investment process
The Trust's Investment Managers apply a rigorous bottom up approach to the investment selection process, with a top down overlay to take account of the biotech valuation cycle and to ensure diversification. Investments are purchased with the intention of achieving long-term capital growth. However, portfolio composition is adjusted on a regular basis in line with the Trust's risk mitigation strategy.
Investments are selected after a thorough, multi-stage due diligence process which includes idea generation, valuation analysis, an assessment of financial stability and liquidity situation as well as a review of management's experience and expertise. The investment managers focus their efforts on attractively valued companies which have innovative treatments for unmet medical needs which command powerful competitive positions, have strong balance sheets, and have experienced management teams.
Investment restrictions
- Focus - The Trust will invest primarily in biotechnology and other life sciences companies that are either quoted or unquoted.
- 15% initial cap - The Trust will not invest more than 15% in aggregate, of the value of its gross assets in any one individual company at the time of acquisition.
- Majority quoted - The great majority of the Trust's assets will be invested in the quoted biotechnology sector with a global mandate across the entire spectrum of companies.
- 30% gearing - Gearing is restricted to 30% of the Trust's net asset value.
- 15% total cap - The Trust will not invest more than 15% in aggregate, of the value of its gross assets in other closed-ended investment companies quoted on any stock exchange.
Top 10 Quoted Investments
Below are the top 10 quoted investments held by the Trust with their contribution to the Trust's Net Asset Value as at 30 September 2023. For links directly to the companies' website, please click the logos.
For a full listing of the Trust's U.S. securities at each quarter end, please click the button below:
Venture Fund Investments
SV Fund VI - (5.2% NAV as at 31 August 2023)
An investment in a venture capital fund, SV Fund VI, which invests in unquoted portfolio companies across three sectors: biotechnology, healthcare & IT and medical devices. The Trust made a commitment of $30m to the fund on 19 October 2016, equivalent to 7.5% of the total commitments, of which 86% drawn down over the investment period.
SV Biotech Crossover Fund ("SV BCOF") - (1.9% of NAV as at 31 August 2023)
SV BCOF focuses on later stage and/or pre-IPO opportunities and invests in clinical and near clinical stage biotech companies in the UK, EU and US that have the potential to deliver excellent investor returns and address significant unmet medical needs in patients. The Trust's $30m commitment was only 28% drawn down at 31 August 2023.
Directly-held Unquoted Investments
Below are the directly-held unquoted investments held by the Trust with their contribution to the Trust's Net Asset Value as at 31 August 2023.
Exited with Contingent Milestones
Exited unquoted companies for which the Trust retains rights to receive future contingent performance-based payments are shown below, including their contribution to the Trust's Net Asset Value as at 31 August 2023.
Ikano Therapeutics | 1.7% NAV |
0.2% NAV | |
0.1% NAV | |
0.0% NAV | |
0.0% NAV |
As at 31 August 2023
International Biotechnology Trust plc - Risks
Capital risk / distribution policy: As the Company intends to pay dividends regardless of its performance, a dividend may represent a return of part of the amount you invested.
Concentration risk: The Company's investments may be concentrated in a limited number of geographical regions, industry sectors, markets and/or individual positions. This may result in large changes in the value of the Company, both up or down.
Currency risk: The Company may lose value as a result of movements in foreign exchange rates, otherwise known as currency rates.
Gearing risk: The Company may borrow money to make further investments, this is known as gearing. Gearing will increase returns if the value of the investments purchased increase by more than the cost of borrowing, or reduce returns if they fail to do so. In falling markets, the whole of the value in that such investments could be lost, which would result in losses to the Company.
IBOR risk: The transition of the financial markets away from the use of interbank offered rates (IBORs) to alternative reference interest rates may impact the valuation of certain holdings and disrupt liquidity in certain instruments. This may impact the investment performance of the Company.
Liquidity risk: The price of shares in the Company is determined by market supply and demand, and this may be different to the net asset value of the Company. In difficult market conditions, investors may not be able to find a buyer for their shares or may not get back the amount that they originally invested. Certain investments of the Company, in particular the unquoted investments, may be less liquid and more difficult to value. In difficult market conditions, the Company may not be able to sell an investment for full value or at all and this could affect performance of the Company.
Market risk: The value of investments can go up and down and an investor may not get back the amount initially invested.
Operational risk: Operational processes, including those related to the safekeeping of assets, may fail. This may result in losses to the Company.
Performance risk: Investment objectives express an intended result but there is no guarantee that such a result will be achieved. Depending on market conditions and the macro economic environment, investment objectives may become more difficult to achieve.
Share price risk: The price of shares in the Company is determined by market supply and demand, and this may be different to the net asset value of the Company. This means the price may be volatile, meaning the price may go up and down to a greater extent in response to changes in demand.
Smaller companies risk: Smaller companies generally carry greater liquidity risk than larger companies, meaning they are harder to buy and sell, and they may also fluctuate in value to a greater extent.
Valuation risk: The valuation of some investments held by the Company may be performed on a less frequent basis than the valuation of the Company itself. In addition, it may be difficult to find appropriate pricing references for these investments. This difficulty may have an impact on the valuation of the Company and could lead to more volatility in the share price of the Company, meaning the price may go up and down to a greater extent.