Investment trust Biotech Growth (LON:BIOG) scored yet another win as US pharma giant Eli Lilly (NYSE:LLY) snapped up portfolio company AtaiBeckley (NASDAQ:ATAI). The deal represents another success for the trust ‘and further validates our investment strategy’ said manager Geoff Hsu.
Eighth deal this year
Eli Lilly announced it would buy AtaiBeckley for around $2.8 billion or $6.75/share, a 26% premium to its market value. Furthermore, the deal includes $1 billion in contingent value rights payments, taking the total price to $3.8 billion or $9.25/share.
AtaiBeckley is a clinical-stage biotech company focused on the development of drugs for the treatment of psychiatric disorders. Its lead treatment was granted Breakthrough Therapy Designation by the US FDA and has already begun Phase 3 trials.
Biotech Growth’s holding in AtaiBeckley represented 1.1% of the trust’s NAV (net asset value) at the time of the announcement. The company is the eighth holding in the portfolio to be acquired this year.
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 BIOG, we recommended International Biotechnology Trust (LON:IBT) and RTW Biotech Opportunities (LON:RTW).
All three trusts have beaten the All-Share this year with BIOG out in front thanks to a 30% gain. That’s due in no small part to the managers’ ability to pick attractive small and mid-cap companies which catch the eye of bigger players.
The trust does invest in mainstream names, such as Biogen (NASDAQ:BIIB), but it also invests in pre-IPO businesses so it has a wide reach. 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/
