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Funds in focus: Ivo Staijen's HBM Global Biotechnology fund

Citywire Switzerland takes a look at what has helped A-rated manager to outperform.

Biotech has long been a darling of Swiss investors, with some of the sector's biggest companies rooted in the country.

However, the sector has experienced headwinds as a result of the US presidential campaign and the absence of guaranteed approval of innovative drugs.

Citywire A-rated Ivo Staijen is a specialist in his narrow field. He took on responsibility for the HBM Global Biotechnology Fund in January 2012 shortly after the official launch of the fund.

He has over more than four years' experience in the pharma industry and 14 years of portfolio management and investment analysis experience in the healthcare sector.

The fund manager is a former senior biotechnology analyst at Bank Sarasin and also used to be department head at MDS Pharma Services.

Over the coming slides we will dive into fund's performance, sector allocation and the fund manager's outlook.

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AUM: $28 million

Launch date: 30 December 2011

Fund manager: Ivo Staijen

Performance over the last three years: 53.3%

Benchmark: NASDAQ Biotechnology TR

The biotechnology universe ranked by Citywire is very concentrated, with 12 fund managers in the league table.

Over the past three years A-rated Staijen has returned 53.3% in Swiss franc terms to the end of December 2016 against the average fund manager, who returned 35.7% over the same period.

He had a AA rating in November-December 2016 and held an A rating for eight months in a row. He was first rated by Citywire in April 2015.

The fund currently outperforms the MSCI World/Biotechnology TR, which returned 42.39% over the three years to the end of December.

Meanwhile the fund manager is far ahead of NASDAQ Biotechnology TR, which returned only 35.02% over the same timeframe.

Staijen takes the number two place in terms of performance over the past three years in the sector and is number one over the past five years.

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Top positions

Amgen 8.9%

Celgen 8.3%

Gilead 7.2%

Biogen 6.9%

Regeneron 6.4%

The second biggest position in the fund is Celgen, accounting for 8.3% of the fund. The fund manager the company has a very stable main business that is growing, including such drugs like Revlimid and Otezla and up to 50 collaborations in the pipeline.

'We expect late-stage data from novel drug candidates such as Ozanimod in Multiple Sclerosis and Ulcerative Colitis, and Mongersen in Crohn’s Disease, in 2017 or early 2018.’

American pharmaceutical company Gilead is an underweight despite being among top five positions of the fund.

‘Gilead is a market leader in HIV treatment, which was its first claim to fame. Ten years later they became the leading force in the space of Hepatitis C after buying Pharmasset in 2001. That franchise is shrinking and now the question is of course where do they go from here.’

The fund manager keeps a close eye on biosimilars space, where he recently increased exposure to an American biotech company Coherus.

‘Coherus is one of the only few niche players – in addition to large players – which managed to advance three potential biosimilars for multi-billion dollar markets. Coherus’s first biosimilar for Neulasta could be launched in the second half of 2017.’

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Portfolio structure

Biotechnology: speciality pharma, generics and suppliers

Geography: North America 90%, Europe 10%

Stajen said one thing that distinguishes his fund from competitors is expertise in biotech names based in Europe.

‘You can find good investments in Europe. What European companies lack in comparison with the US peers is connecting scientific data, clinical development and commercialisation of the product.’

One example of a successful European story in his view is Danish company Genmab, which is an overweight in the fund.

'Genmab discovered a completely new antibody for treatment of multiple myeloma, for which it then struck a development-and-commercialization partnership with Johnson and Johnson. The product, Darzalex, has been on the market for less than two years, and is well on its way to blockbuster status.’

In general the fund manager prefers mid-sized companies that operate in niche areas and target particular therapies so-called pure plays.

‘These companies will be partners or acquisition targets of choice for big corporates as biotech is now the innovation backbone of pharma.’

He added that mid-caps offer attractive risk and reward as they have in general a more diversified and mature product pipeline than typical one-product biotech companies.

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Staijen said immuno-oncology is the most promising area in cancer treatment. This new approach uses the human body’s own immune system to target cancer cells.

The fund manager primarily focuses on large biotech companies active in the field such as Celgene and Incyte, but he also selectively invests in companies specialized in the area.

He added that gene therapy is another area that is coming of age. One interesting name in this area is Spark Therapeutics, which has the first gene therapy for an inherited disease. The treatment could get US FDA approval this year.

The fund manager sees multiple catalysts on the horizon for rare disease medications. One example of a company that fares well in this area is Biomarin (BMRN), which has an established and growing commercial portfolio, driven by drugs like Vimizim and Kuvan.

‘The company’s five marketed drugs are expected to surpass $1 billion in revenue for the first time in 2016. We also expect longer term top-line growth to be driven by new drugs launches.’

He added that early data from gene therapy in haemophilia showed promising potential and provides additional upside potential.

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Related Fund Managers

Ivo Staijen
Ivo Staijen
3/9 in Equity - Biotechnology (Performance over 3 years) Average Total Return: -2.13%