BB Biotech returned to profit in 2nd-qtr 2016

The biotech sector stabilized during the second quarter. Switzerland-based investment company BB Biotech's Net Asset Value (NAV) increased by +1.4% in Swiss francs and +2.3% in euro terms, resulting in a net profit of 36 million francs ($36.4 million).

Despite the positive trend witnessed during the past few months, BB Biotech's net result for the first half was a negative 1.17 billion francs due to the loss reported for the first quarter. BB Biotech shares closed the second quarter slightly lower, down -2.7% in francs and -1.2% in euros. An increasing disconnect has been observed between the share prices of companies in BB Biotech's portfolio and their positive operational performance. Valuations of biotech blue chips have dropped to levels last seen in 2010/11. Meanwhile, company fundamentals remain positive, notwithstanding the increasing attention that drug-pricing practices have received. From an operating standpoint, the companies are performing well and setting new milestones.

The global equity markets showed continued volatility in second-quarter 2016. The US Federal Reserve Bank's decision to defer again interest rate increases and the UK referendum to leave the European Union were notable. Overall market performance for second-quarter 2016 was mixed. Positive total returns were recorded for the S&P 500 of 2.5% in US dollars, European indices such as the DAX showed negative 2.9% performance in euros, the SMI was positive 4.7% in francs, and the Nasdaq Biotechnology Index (NBI) more or less stable with negative 1.1% in US$.