The Biotech Growth Trust in 60 seconds

Edison’s investment companies team recently published a review of The Biotech Growth Trust (BIOG). The trust’s managers Geoff Hsu and Josh Golomb at leading global healthcare specialist OrbiMed are positive on the outlook for biotech stocks. Higher interest rates have pressured the sector’s valuation despite a favourable fundamental industry backdrop, which includes a high level of innovation, elevated new drug approvals and robust merger and acquisition activity ahead of a major patent cliff. BIOG has a structural bias towards smaller-cap biotech companies, which has been beneficial over the long term but detrimental during the recent industry sell off. The managers are expecting history to repeat, with small-cap biotech stocks leading an industry recovery, which may be amplified by a reduction in US interest rates.

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