Sparks - The Biotech Growth Trust

BIOG delivered encouraging performance during the six months to 30 September 2025, with a 36.9% NAV per share total return, outpacing its benchmark’s (the NASDAQ Biotechnology Index) 10.6% total return. This strong result was driven by notable contributions from holdings such as Mineralys Therapeutics, Alnylam Pharmaceuticals, and Avidity Biosciences. More than 4m shares were repurchased as part of the active discount management programme, although the discount widened from 7.6% at the end of March to 10.0% at end of September 2025 leading to a 33.3% share price total return. The trust deployed gearing, ending the period at 9.3% compared with a net cash position at the end of FY25.

Investor sentiment towards the biotech sector has improved, supported by dissipating political headwinds, Federal Reserve interest rate cuts, and renewed M&A activity. However, BIOG’s managers believe there is much more upside potential given the prior extended period of sector weakness. Also, they consider that biotech valuations remain compelling, product pipelines are robust, and the funding environment is improving, which may also contribute to a sustained recovery. The trust has maintained a meaningful exposure to Chinese biotech ending H126 at 15.7% of the portfolio, having tactically adjusted positions during the period to reflect evolving market dynamics.

Despite the more positive recent results, BIOG’s board recognises that a period of weak performance, combined with an active discount management policy, has led to a material reduction in the size of the trust. In response to this, the board has committed to holding a one-off continuation vote in 2028 (two years ahead of the next scheduled vote in 2030).