Investment trust Biotech Growth (LON:BIOG) received another boost after Forte Biosciences (NASDAQ:FBRX) agreed a $2.2 billion takeover by Argenx (EBR:ARGX), a Belgian-Dutch pharmaceutical company.
The Forte holding represents 3.03% of Biotech Growth’s net asset value (NAV). And the acquisition is the second takeover of one of the trust’s portfolio companies in a month as biotech’s M&A bonanza continues.
Earlier this month, Biotech Growth scored yet another win as US pharma giant Eli Lilly (NYSE:LLY) snapped up portfolio company AtaiBeckley (NASDAQ:ATAI).
The Forte takeover is the ninth merger or acquisition (M&A) in a year to benefit Biotech Growth Trust. Shares in the OrbiMed-managed fund have more than doubled in the past year.
Another healthy premium
Argenx is buying Forte for roughly $2.2 billion, or $77 a share, in cash. That represents a healthy 40.5% premium to Forte’s closing share price as at 24 July.
Forte is a clinical-stage biotechnology company focused on the development of drugs to treat immunological disorders. FB102 is Forte’s lead drug candidate. It recently demonstrated strong proof-of-concept data in clinical trials for the treatment of vitiligo and coeliac disease.
Winning run continues
Manager Geoff Hsu said the Forte transaction is ‘the latest in a series of M&A outcomes across the portfolio’.
He insisted the deal ‘further demonstrates how our focus on identifying and investing in innovative small and mid-cap biotechnology companies developing differentiated, best-in-class therapies can deliver substantial long-term returns for shareholders.’
Hsu added: ‘Today’s acquisition represents another successful outcome for Biotech Growth Trust and highlights how OrbiMed’s world-class team of scientific, medical and investment professionals enables us to identify and gain access to innovative biotechnology companies at an early stage of their development, often before their full potential is recognised by the broader market.’
We flagged the attractions of biotech trusts back in March, saying it was a great time to buy into the sector’s recovery story. Alongside Biotech Growth, we recommended International Biotechnology Trust (LON:IBT) and RTW Biotech Opportunities (LON:RTW). Argenx is actually a holding for RTW Biotech.
Biotech Growth Trust is the best one-year share price total return performer in the Association of Investment Companies’ Healthcare & Biotechnology sector.
That’s due in no small part to the managers’ ability to pick attractive small and mid-cap biotech firms which catch the eye of bigger players. We think the rally in biotech stocks and trusts has further to run, with M&A providing a tailwind.
Read the press release here: https://www.biotechgt.com/
