Biotech Growth Trust on Thursday said its net asset value per share declined during financial 2023 and produced a negative return, with its chair saying the performance was ‘disappointing’ though added that various ‘potential catalysts’ could spark the sector’s recovery.

The London-based firm which invests in global biotechnology companies said its NAV at March 31 was 852.6 pence per share, down 11% from 957.8p at the same time one year prior.

Shares in Biotech Growth Trust were down 1.5% at 866.44p in London on Thursday.

The company’s NAV total return for the year ended March 31 was negative 11.0%, compared with negative 33.8% for the previous year. This underperformed against the positive 5.4% return for the Nasdaq Biotechnology Index, the trust’s sterling-adjusted benchmark.

Biotech Growth Trust declared no dividend for financial 2023, unchanged from the prior year.

Chair Roger Yates said financial 2023 was ‘another difficult year for the company’, as the previous year’s ‘challenging economic conditions’ carried over and provoked ‘disappointing absolute and relative performance’.

Yates said these problems did not reflect a dearth of innovation in the biotechnology sector, but that investors were currently risk-averse and favouring larger, well-established companies over fast-growing and ‘potentially more exciting’ smaller ones. Exposure to Chinese biotech companies also acted as a headwind.

Biotech Growth Trust said the wider economic climate remains challenging thanks to slowing global growth, the increasing cost of capital, geopolitical instability and ongoing disruptions to supply chains.

Yates predicted that ‘the challenges facing the sector will persist, including regulatory hurdles and uncertainty around funding. Drug development will remain a long-term and costly pursuit.’

However, Biotech Growth Trust’s portfolio manager ‘remains confident that there are a number of potential catalysts that could elicit a recovery in the biotechnology sector’, including a possible pause in interest rate hikes later this year and possible clinical developments.

Moreover, Biotech Growth Trust expects continued consolidation in the sector as larger companies seek acquisitions.

‘This consolidation is likely to create both opportunities and challenges for small biotechnology companies, as they navigate the changing landscape of the industry. Above all, if breakthroughs can be made in the next generation technologies in which the company is invested, this will be transformational for the sector and, we hope, for the company’s performance,’ Yates concluded.

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