Biotech Growth Trust (The) — Manager expects a reversal of recent results

The Biotech Growth Trust (LSE: BIOG)

Last close As at 22/06/2024

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−1.00 (−0.10%)

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Research: Investment Companies

Biotech Growth Trust (The) — Manager expects a reversal of recent results

The Biotech Growth Trust (BIOG) is managed by Geoff Hsu at healthcare specialist OrbiMed Capital, and benefits from OrbiMed’s presence in 11 offices across the globe. While the trust has had a weak period of absolute and relative performance over the last 12 months, the manager believes that the focus on emerging biotech (smaller-cap) and emerging market biotech stocks is the correct strategy; following this approach proved very successful for BIOG’s FY21 results. Investors are currently not focusing on the biotech sector’s strong fundamentals, and the sell-off since early-February 2021 may have created a very attractive entry point for those willing to look beyond the current cyclical/value stock market leadership.

Melanie Jenner

Written by

Mel Jenner

Director, Investment Trusts

Investment Companies

The Biotech Growth Trust

Manager expects a reversal of recent results

Investment trusts
Biotech equities

1 April 2022

Price

901.0p

Market cap

£371m

AUM

£426m

NAV*

964.7p

Discount to NAV

6.6%

*Including income. As at 30 March 2022.

Yield

0.0%

Ordinary shares in issue

41.2m

Code/ISIN

BIOG/GB0000385517

Primary exchange

LSE

AIC sector

Biotechnology & Healthcare

52-week high/low

1,465.0p

876.0p

NAV* high/low

1,454.6p

897.8p

*Including income

Net gearing*

8.2%

*As at 28 February 2022

Fund objective

The Biotech Growth Trust seeks capital appreciation through investing in the worldwide biotechnology industry. Performance is measured against its benchmark index, the NASDAQ Biotechnology Index (sterling adjusted).

Bull points

The biotech sector has delivered above-average returns for shareholders over the long term.

Industry fundamentals and valuations are favourable but are currently being overlooked by investors.

OrbiMed is a global leader in healthcare research and investment.

Bear points

Very tough absolute and relative performance so far in FY22.

The biotech sector can be volatile.

Periodic political pressure

Analysts

Mel Jenner

+44 (0)20 3077 5700

Sarah Godfrey

+44 (0)20 3077 5700

The Biotech Growth Trust is a research client of Edison Investment Research Limited

The Biotech Growth Trust (BIOG) is managed by Geoff Hsu at healthcare specialist OrbiMed Capital, and benefits from OrbiMed’s presence in 11 offices across the globe. While the trust has had a weak period of absolute and relative performance over the last 12 months, the manager believes that the focus on emerging biotech (smaller-cap) and emerging market biotech stocks is the correct strategy; following this approach proved very successful for BIOG’s FY21 results. Investors are currently not focusing on the biotech sector’s strong fundamentals, and the sell-off since early-February 2021 may have created a very attractive entry point for those willing to look beyond the current cyclical/value stock market leadership.

Major drawdown in biotech stocks since early-February 2021

Source: Refinitiv, Edison Investment Research. Note: Indices shown in US$. SPDR S&P Biotech ETF represents smaller-cap and NASDAQ Biotechnology larger-cap biotech stocks.

The analyst’s view

The duration and magnitude of the current drawdown in biotech indices is unprecedented, which suggests now may be a good time to revisit a sector that continues to benefit from very favourable fundamentals. There is a high level of industry innovation and 2021 was another near-record year for US approvals of new molecular entities. BIOG offers investors a diverse exposure to the global biotech sector and the manager believes that the best growth opportunities are available in emerging and emerging market stocks (which are unrepresented in the benchmark), although these have been particularly out of favour with investors over the last year. The majority of the trust’s portfolio is made up of listed North American equities (c 75%) reflecting the region’s global dominance, but up to 10% of the fund may be invested in unlisted companies, typically via crossover deals, which are the last round of financing before a firm’s initial public offering (IPO). Hsu remains confident that BIOG’s performance record can be restored, driven by diligent bottom-up stock selection.

Current valuation is higher than historical averages

Perhaps reflecting weakness in the biotech sector, BIOG’s valuation has been volatile since the middle of 2021. Its current 6.6% discount to cum-income NAV compares with a range of a 3.3% premium to an 11.5% discount over the last 12 months. Over the last one, three, five and 10 years the trust’s average discounts are 2.5%, 4.3%, 5.0% and 4.6%, respectively.

Market outlook: Valuations looking very interesting

Shown in Exhibit 1 (left-hand side), long-term investors have benefited from an allocation to biotech stocks, although the sector is not for the faint of heart given periodic meaningful drawdowns. Valuation compression within the biotech sector has provided an opportunity to revisit this part of the market, which has high long-term growth potential; however, growth stocks have come under pressure with the prospects of higher interest rates. Factors for the biotech sector’s growth potential include high levels of innovation, a supportive regulatory environment and positive demographic trends. A pick-up in merger and acquisition (M&A) activity could provide a catalyst for an end to the current biotech bear market, as it could put a floor under company valuations. Major pharma companies are looking to acquire or partner with biotech companies as they have capital available and are looking to bolster their product pipelines.

Exhibit 1 (right-hand side) shows the valuation of the Datastream World Biotech Index; it is currently trading at a forward P/E multiple of 26.7x, which is a 14.6% discount to its five-year average. On a relative basis the index is trading at a 30.7% premium to the Datastream US Index, which is much lower than the 62.8% and 73.3% premiums over the last five and 10 years, respectively.

Exhibit 1: Biotech index performance and valuation

NASDAQ biotechnology and MSCI world indices (10 years, £-based)

DS World Biotech Index P/E and relative to DS US Index (past five years)

Source: Refinitiv, Edison Investment Research. Note: Valuation data at 30 March 2022.

The fund manager: Geoff Hsu

The manager’s view: The biotech sector is very oversold

Hsu explains that there has been a significant reversal in BIOG’s fortunes. Having generated a +30pp excess return in its NAV versus its benchmark in FY21 (ending 31 March), in the 11 months to end-February 2022, BIOG’s excess return was -22.1pp. There has been a major turnaround within the biotech sector as what worked in FY21 has not done so in FY22. The manager comments that fundamentals have not mattered, there has been a large rotation from growth to value stocks, small caps have underperformed large caps and there has been a pullback in emerging markets especially in China; emerging and Chinese biotech stocks are areas favoured in the trust’s investment strategy. Hsu notes that the biotech sector has experienced the longest and largest drawdown in its history; data from OrbiMed show that between 8 February 2021 and 2 February 2022, the SPDR S&P Biotech ETF underperformed the US S&P 500 Index by 64.4%. According to the manager, between summer 2015 and now, emerging biotech stocks are flat, while the S&P 500 Index has more than doubled. Also, from 30 June 2021 to 29 December 2021, the Hang Seng Healthcare Index underperformed the MSCI World Healthcare Index by 53.8%. He says that high levels of innovation within the biotech industry are not reflected in biotech stock prices.

Investors have concerns about healthcare stocks in general; the S&P 500 healthcare sector is trading at a c 20% discount to the S&P 500 Index, which is similar to during the global financial crisis and concerns about the introduction of Obamacare. Hsu believes that such a discount indicates a favourable point to invest in healthcare stocks given their positive innovation and growth trends. While he acknowledges that FY22 has been challenging, he has confidence that BIOG’s performance can improve. The manager highlights that in the United States, a permanent Food and Drug Administration commissioner has been appointed, so the high level of approvals of new molecular entities is expected to continue, US drug price reform is off the table as President Biden has higher priorities and there are upcoming mid-term elections, and he expects an uptick in M&A activity; in the Q421 reporting period, pharma companies indicated that acquiring assets is a high priority for them. Hsu is confident that he is employing the right strategy by focusing on emerging and emerging market biotech stocks (for more colour, please see the Current portfolio positioning section below).

Comparing the performance of the modified equally weighted SPDR S&P Biotech ETF to the market-cap weighted S&P 500 Index since 2006, the manager highlights that biotech stocks have outperformed significantly, so he believes that the sector is a good longer-term investment, despite periods of relative underperformance. Looking at three previous drawdowns, data from OrbiMed show that biotech stocks subsequently experienced very strong recoveries. In 2014 to 2016 there were two periods where biotech stocks fell due to concerns about drug pricing; the first was a 31.2% drawdown followed by a 109.0% recovery, while the second was a 43.8% drawdown followed by a 68.0% recovery. In 2018–19, investor focus on the risk of the US Federal Reserve tightening monetary policy led to a 30.0% drawdown in biotech stocks, which was followed by an 83.3% recovery.

Hsu remains positive on the outlook for biotech stocks, noting that in calendar years when the SPDR S&P Biotech ETF declines, it tends to rally in the following one. He says that in aggregate, the valuations of biotech stocks are at a 20-year low, while 16% of biotech companies, with market caps greater than $10m, have net cash on their balance sheets (c 90 companies, which is around one-sixth of the universe). The manager notes that there has been a strong biotech IPO market in recent years, and he believes that there is a compelling valuation case for emerging biotech stocks. While the Federal Reserve has started to raise interest rates, the manager says that there is a low correlation between the performance of biotech stocks and the level of interest rates.

Current portfolio positioning

At end-February 2022, BIOG’s top 10 holdings made up 37.0% of the fund, which was a higher concentration compared with 30.3% a year before; just two names were common to both periods. There were 79 companies in the fund, which was lower than 83 at end-February 2021.

Exhibit 2: Top 10 holdings (as at 28 February 2022)

Company

Country

Sector

Portfolio weight %

28 February 2022

28 February 2021*

Seagen

US

Emerging biotech

5.0

N/A

BioMarin Pharmaceutical

US

Emerging biotech

4.4

N/A

Keros Therapeutics

US

Emerging biotech

3.9

2.8

GH Research

Ireland

Emerging biotech

3.7

N/A

Horizon Therapeutics

US

Emerging biotech

3.6

4.5

Xenon Pharmaceuticals

Canada

Emerging biotech

3.5

N/A

Yisheng Biopharma**

China

Emerging biotech

3.3

N/A

Aclaris Therapeutics

US

Emerging biotech

3.3

N/A

Syndax Pharmaceuticals

US

Emerging biotech

3.2

N/A

Gilead Sciences

US

Major biotech

3.1

N/A

Top 10 (% of portfolio)

37.0

30.3

Source: BIOG, Edison Investment Research. Note *N/A where not in end-February 2021 top 10. **Unquoted.

BIOG’s strategy of focusing on emerging rather than major biotech stocks is highlighted in Exhibit 3. The benchmark does not include any emerging market biotech stocks, which made up around 15% of the portfolio at the end of February 2022.

Exhibit 3: Portfolio market cap breakdown at end-FY21 (%)

Market

BIOG

NASDAQ Biotechnology Index

Delta (pp)

Large cap (> $10bn)

26

59

(33)

Mid cap ($2–10bn)

22

29

(7)

Small cap (< $2bn)

51

13

38

Total

100.0

100.0

Source: BIOG, Edison Investment Research. Note: Subject to rounding.

Over the 12 months to the end of February 2022, the largest changes in BIOG’s geographic exposure were a lower weighting to quoted Chinese stocks (-5.9pp) and a higher weighting to unquoted companies (+4.8pp).

Exhibit 4: Portfolio geographic breakdown (%)

Sector

End-February 2022

End-February 2021

Change (pp)

North America

74.3

75.2

(0.9)

Continental Europe

9.2

7.9

1.3

Unquoted*

8.1

3.3

4.8

China (quoted)

6.6

12.5

(5.9)

South Korea

0.8

0.0

0.8

UK

0.7

1.1

(0.4)

Singapore

0.3

0.0

0.3

Total

100.0

100.0

Source: BIOG, Edison Investment Research. Note: Adjusted for gearing. *Of the 8.1% unquoted investments, 7.6% was in China, 0.4% was in Asia, and 0.1% was in Canada.

Hsu says that a high level of innovation is reflected in BIOG’s portfolio, with c 45% of the portfolio held in companies with novel drug development technologies: antibody-drug conjugates (12.9% of NAV at end-January 2022); gene therapy/gene editing (9.8%); cell therapy (6.4%); multi-specific antibodies/T-cell engagers (5.9%); oligonucleotide therapeutics (5.6%); and liquid biopsy (4.2%). The manager believes that these businesses are at a very early stage of their value potential.

Performance: Major change in BIOG’s fortune

Exhibit 5: Five-year discrete performance data

12 months ending

Share price
(%)

NAV
(%)

NASDAQ Biotech (%)

World-DS Pharm & Bio (%)

MSCI World
(%)

28/02/18

(2.0)

(5.2)

(0.8)

0.5

6.6

28/02/19

(2.2)

0.5

8.6

10.8

4.6

29/02/20

23.8

29.7

6.0

9.2

9.6

28/02/21

69.2

52.8

26.6

11.3

18.8

28/02/22

(38.6)

(38.9)

(15.0)

7.4

15.9

Source: Refinitiv. Note: All % on a total return basis in pounds sterling.

Exhibit 5 illustrates that the biotech sector and BIOG’s relative performance can be very volatile. The trust’s weak performance over the last year due it its relatively high exposure to smaller-cap and emerging market biotech stocks has negatively affected its long-term record, although its NAV remains ahead of the benchmark over the last three years. However, the manager is confident that the trust’s positioning will lead to future strong results, pointing to BIOG’s notable outperformance in FY21 when its NAV outpaced the performance of the NASDAQ Biotech Index by 30.0pp. He believes that the biotech sector is experiencing a ‘golden era’ of innovation and notes that the number of first-in-class approvals is increasing, while there have been several important innovation milestones. Hsu expects a rebound in Chinese biotech stocks as companies there are closing the innovation gap with businesses in the United States and Europe. The number of novel drug approvals in China has increased in recent years, while western companies in-licensing Chinese innovation is a validation of these companies’ success, and the Chinese authorities have a stated priority to develop a domestic biotech industry. Anticipating a rebound, the manager has been taking advantage of share price weakness to add to some of BIOG’s emerging biotech stocks.

Exhibit 6: Investment trust performance to 28 February 2022

Price, NAV and benchmark total return performance, one-year rebased

Price, NAV and benchmark total return performance (%)

Source: Refinitiv, Edison Investment Research. Note: Three-, five- and 10-year performance figures annualised.

Exhibit 7: Share price and NAV total return performance, relative to indices (%)

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to NASDAQ Biotechnology

4.3

(2.6)

(4.0)

(27.7)

12.8

0.4

0.3

NAV relative to NASDAQ Biotechnology

1.1

(4.8)

(8.2)

(28.1)

6.2

(6.1)

(2.6)

Price relative to World-DS Pharm & Bio

1.3

(16.2)

(20.2)

(42.8)

(1.5)

(15.2)

12.1

NAV relative to World-DS Pharm & Bio

(1.8)

(18.1)

(23.7)

(43.2)

(7.3)

(20.8)

8.9

Price relative to MSCI World

2.8

(15.5)

(24.6)

(47.0)

(14.7)

(26.7)

15.8

NAV relative to MSCI World

(0.4)

(17.4)

(27.9)

(47.3)

(19.7)

(31.5)

12.4

Price relative to CBOE UK All Companies

0.3

(23.1)

(28.2)

(47.4)

9.5

(1.0)

106.8

NAV relative to CBOE UK All Companies

(2.8)

(24.8)

(31.3)

(47.7)

3.1

(7.5)

100.8

Source: Refinitiv, Edison Investment Research. Note: Data to end-February 2022. Geometric calculation.

Exhibit 8: NAV performance versus benchmark over 10 years

Source: Refinitiv, Edison Investment Research

Peer group comparison

BIOG is one of a seven funds in AIC Biotechnology & Healthcare sector. To provide a broader comparison, in Exhibit 9 we also include two Switzerland-listed funds: BB Biotech and HBM Healthcare Investments. BIOG’s underperformance over the last year due to its overweight exposure to smaller-cap and emerging market biotech stocks means that its NAV total return ranks ninth over the last 12 months. Over the last three and five years, the trust ranks fifth and seventh out of eight funds respectively, while it ranks fifth out of six funds over the last decade. BIOG has a modestly lower valuation than the selected peer group average, a competitive ongoing charge, although a performance fee may be payable, and a level of gearing that is above the mean. The trust is one of three funds in the selected peer group that does not pay a dividend.

Exhibit 9: Biotech and healthcare investment companies, as at 30 March 2022*

% unless stated

Market cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount (ex-par)

Ongoing charge

Perf.
fee

Net gearing

Dividend yield

Biotech Growth Trust

370.8

(30.3)

24.3

20.8

289.2

(6.6)

1.1

Yes

108

0.0

BB Biotech

3,023.0

(13.2)

2.3

20.1

393.9

28.2

1.5

No

103

5.9

Bellvue Healthcare

1,063.3

6.1

51.0

98.2

(2.1)

1.1

No

107

3.3

HBM Healthcare Investments

1,608.9

0.9

74.6

107.7

553.1

(10.8)

1.3

Yes

100

3.4

International Biotechnology Trust

261.9

0.7

23.9

32.4

309.9

(8.6)

1.2

Yes

116

4.7

Polar Capital Global Healthcare

357.7

22.7

47.2

63.8

252.1

(12.2)

0.9

Yes

105

0.7

RTW Venture Fund

216.0

(27.4)

(6.9)

2.1

Yes

100

0.0

Syncona

1,048.1

(2.0)

(7.1)

57.9

(21.1)

1.6

No

100

0.0

Worldwide Healthcare Trust

2,124.1

(1.6)

33.3

53.9

360.7

(7.4)

0.9

Yes

102

0.7

Average

1,119.3

(4.9)

31.2

56.8

359.8

(5.3)

1.3

105

2.1

Trust rank in sector (9 funds)

6

9

5

7

5

3

4

2

7

Source: Morningstar, Edison Investment Research. Note: *Sterling performance to 29 March 2022 based on ex-par NAV. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

Dividends

BIOG aims to generate long-term capital growth rather than income and a large proportion of the fund is invested in early-stage companies that invest for future growth rather than returning cash to shareholders. In FY21, the trust’s revenue return was -0.2p per share, compared with 1.0p per share in FY20. No dividend has been paid since 2001 (0.2p per share).

Discount: Volatile since mid-2021

BIOG’s shares are currently trading at a 6.6% discount to cum-income NAV, which compares with a range of a 3.3% premium to an 11.5% discount over the last 12 months. Over the last one, three, five and 10 years the trust has traded in a 2.5% to 5.0% range of average discounts. Renewed annually, BIOG has authority to purchase up to 14.99% and allot up to 10% of issued share capital. The board remains committed to limiting the discount to 6% in normal market conditions. So far in FY22, a modest c 0.2m shares were issued raising c £2.1m, while c 0.6m were bought back at a cost of c £6.9m.

Exhibit 10: Discount over three years (%)

Exhibit 11: Buybacks and issuance

Source: Refinitiv, Edison Investment Research

Source: Morningstar, Edison Investment Research

Exhibit 10: Discount over three years (%)

Source: Refinitiv, Edison Investment Research

Exhibit 11: Buybacks and issuance

Source: Morningstar, Edison Investment Research

Fund profile: All-cap, global biotech exposure

BIOG was launched in June 1997 and is listed on the Main Market of the London Stock Exchange. The trust is managed by Geoff Hsu at OrbiMed Capital, which is a global healthcare specialist investor with c $17bn of assets under management. OrbiMed operates from 11 offices around the globe and has a team of around 100 investment professionals, of whom more than 30 hold PhD or MD qualifications and around 15 are former CEOs or company founders.

Hsu aims to generate long-term capital growth from a diversified portfolio of global biotech equities and related securities. BIOG’s performance is measured against the NASDAQ Biotechnology Index (sterling-adjusted), and its currency exposure is unhedged. The trust’s investment guidelines state that at the time of investment, a maximum of 15% of gross assets may be held in a single stock; up to 10% may be in unquoted securities (excluding a maximum $15m in private equity funds managed by OrbiMed and its affiliates); and swaps exposure is permitted up to 5% of gross assets. Hsu may employ gearing up to 20% of net assets; net gearing was 8.2% at end-February 2022.

Investment process: Bottom-up stock selection

Hsu aims to generate long-term capital growth from a globally diversified portfolio of biotech companies across the market cap spectrum. He is able to draw on the broad resources of OrbiMed’s experienced investment team; their scientific expertise is deemed critical in terms of evaluating potential investments. Stocks are selected on a bottom-up basis following thorough in-depth fundamental research, which includes financial modelling, an assessment of research pipelines and identification of potential catalysts; company meetings are a very important element of the research process. Reasons to initiate a new position include whether an early-stage company is approaching profitability, ahead of anticipated positive clinical data, or if a business is considered a potential takeover target.

While the manager seeks out the best potential opportunities across the globe, the majority of the portfolio is held in US companies, reflecting its current dominance in the biotech industry, although BIOG has a notable exposure to China. The trust’s holdings are regularly reviewed to ensure the original investment theses are still valid and positions are sized correctly. Hsu notes that BIOG’s portfolio turnover is relatively high as a result of its emerging biotech exposure, where stocks can be volatile around news about clinical results. The manager continues to invest in unquoted companies (8.1% of the fund at end-February 2022).

BIOG’s approach to ESG

OrbiMed believes that there is a high congruence between companies seeking to act responsibly and those that succeed in building long-term shareholder value. To the extent that it is practicable and reasonable, OrbiMed takes into account applicable environmental, social and corporate governance factors when evaluating a prospective or existing investment via a five-step process:

Negative screening – OrbiMed does not invest in businesses that lead to negative effects on public health or wellbeing, such as banned or illegally marketed pharmaceuticals or tobacco.

Due diligence – fundamental analysis to review material ESG factors.

Monitoring – performance of portfolio companies is regularly monitored on multiple factors.

Engagement – occurs with portfolio companies on a regular basis including meetings with management, proxy voting and ESG conferences.

Reporting – OrbiMed is introducing a quarterly ESG update covering sector and portfolio highlights, along with engagements on material issues.

OrbiMed may seek to engage with portfolio companies to promote changes in their conduct or policies and could ultimately decide to sell the investment in these firms. In some cases, it may adopt an ‘activist’ approach to encourage change at investee companies, which may include a proxy campaign or seeking representation on their boards of directors. OrbiMed is leading the charge with ESG initiatives in the healthcare sector. As an example, in March 2022 it brought together ESG leaders from select pharma companies and healthcare sector analysts, along with Alliance Bernstein’s healthcare and ESG analysts.

The manager seeks to invest in reputable management teams and is especially cognisant of corporate governance in emerging markets, as company credentials in these regions may not be as high as those of firms in developed regions.

Gearing

Gearing of up to 20% of NAV is permitted and is employed via a loan facility with JP Morgan Securities, priced at 45bp above the US Federal Funds rate. At the end of February 2022, the trust’s net gearing was 8.2%, which compares with the typical range of 5–10%.

Fees and charges

OrbiMed is paid an annual management fee of 0.65% of BIOG’s NAV. It is also entitled to a performance fee of 15.0% of outperformance versus the benchmark if the cumulative outperformance since the commencement of the arrangement on 30 June 2005 gives rise to a total fee greater than the total of all performance fees paid to date.

Frostrow Capital is the trust’s alternative investment fund manager, providing company management, secretarial, administrative and marketing services. From 1 April 2021, it receives a tiered annual fee of 0.3% of BIOG’s market cap up to £500m, 0.2% between £500m and £1bn and 0.1% above £1bn. Previously Frostrow received 0.3% of the trust’s market cap, plus a fixed fee of £60k pa and a performance fee was payable (1.5% of outperformance versus the benchmark).

In H122, BIOG’s ongoing charges were 1.0%, which was 10bp lower than 1.1% in FY21. At the end of FY21, there was a c £17.7m provision for performance fees; c £7.0m crystalised in H122 and became payable on 30 June 2021, while the balance of c £10.7m was reversed due to underperformance in H122. At the end of the period there was no performance fee provision.

Capital structure

BIOG is a conventional investment trust with one class of share. There are currently 41.2m ordinary shares in issue and the average daily trading volume over the last 12 months is c 94k shares. At the end of FY21, BIOG’s shareholder base was split as follows: 71.4% retail investors (an increase from 64.4% at the end of FY20); 11.0% pension funds; 9.1% mutual funds; and 8.5% other.

The trust has a five-year continuation vote; the last was held at the July 2020 AGM when the resolution was passed by a significant majority (99.9% of votes were in favour).

Exhibit 12: Major shareholders

Exhibit 13: Average daily volume

Source: BIOG, as at 28 February 2022

Source: Refinitiv. Note: 12 months to 30 March 2022.

Exhibit 12: Major shareholders

Source: BIOG, as at 28 February 2022

Exhibit 13: Average daily volume

Source: Refinitiv. Note: 12 months to 30 March 2022.

The board

Exhibit 14: BIOG’s board of directors at end-FY21

Board member

Date of appointment

Remuneration in FY21

Shareholdings at end-FY21

Andrew Joy (chairman since 2016)

15 March 2012

£37,000

55,000

Professor Dame Kay Davies*

15 March 2012

£28,500

3,500

Steve Bates

8 July 2015

£28,500

10,000

Rt Hon Lord Willetts

11 November 2015

£26,000

Nil

Julia le Blan

12 July 2016

£28,500

7,000

Geoff Hsu

16 May 2018

Nil

Nil

Dr Nicola Shepherd

18 January 2021

£5,333

Nil

Source: BIOG. Note: *Professor Dame Kay Davies retired from the board at the conclusion of the 14 July 2021 AGM; Steve Bates succeeded her as the senior independent director.

As Geoff Hsu is a partner at OrbiMed, he is considered to be a non-independent director. On 16 November 2021, the board announced the appointment of a new non-executive director, Roger Yates, effective from 1 December 2021. He joined the board as BIOG’s chairman-designate and is expected to succeed Andrew Joy, after he retires at the trust’s next AGM in July 2022. Yates is a non-executive, senior independent director and remuneration committee chairman at St James’s Place and Jupiter Fund Management. He is also a non-executive, senior independent director at Mitie Group. Yates started his career in investment management at GT Management in 1981 and subsequently held positions at Morgan Grenfell and Invesco as CIO. He was appointed CEO of Henderson Group in 1999 and led the company for a decade. More recently, Yates was the senior independent director and remuneration committee chairman at IG Group Holdings, chairman of Electra Private Equity and chairman of Pioneer Global Asset Management. He was also a non-executive director of JPMorgan Elect from 2008 until 2018.

General disclaimer and copyright

This report has been commissioned by The Biotech Growth Trust and prepared and issued by Edison, in consideration of a fee payable by The Biotech Growth Trust. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by The Biotech Growth Trust and prepared and issued by Edison, in consideration of a fee payable by The Biotech Growth Trust. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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Ebiquity’s FY21 results showed good growth in revenue, up 13%, and a strong recovery in operating margin to 7.5% (operating loss in FY20). The figures were accompanied by two acquisitions, Media Management (MMi) in the US and MediaPath, a Sweden-based global media consultancy. Ebiquity is paying initial consideration of £6.1m for MMi and £15.5m for MediaPath, funded from cash and proceeds of an intended £15.0m placing at 53p. Management anticipates the acquisitions will be earnings enhancing in FY22, with group prospects boosted by the scaling up in the US and the wider use across the group of MediaPath’s proprietary technology platform. Our forecasts are under review.

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