Firstly, any changes to the investment strategy or investment policy are agreed by the Board of the Company. Under the Listing Rules, the Company is required to seek the approval of shareholders for any material changes to the published investment policy and in such circumstances, an ordinary resolution would be proposed at a General Meeting.
Over the last decade the quoted biotechnology sector has matured, with risks substantially diminished, and it now contains a range of companies at all stages of development and profitability, from businesses that produce multi-million dollar profits to the very small, risky start-ups that were synonymous with the sector at its creation. The share prices of listed biotechnology stocks have risen significantly over the past 3 years, reflecting the maturation of the constituents of the index into more stable revenue-generating businesses. This reduction in the risk profile of the quoted portfolio provides a rationale for considering fresh investment opportunities in the unquoted area where the potential for substantial gains remains attractive. The Company will also continue to make additional follow on investments in its existing unquoted portfolio in line with those companies’ own development plans and where there is a strong investment case.
The investment objective of International Biotechnology Trust plc (the “Company”) is to achieve long-term capital growth by investing primarily in biotechnology and other life sciences companies that are either quoted or unquoted and possess the potential for high growth. The Company invests in companies whose shares are considered to have good prospects, with experienced management and strong potential upside through the development and/or commercialisation of a product, device or enabling technology.
The Company has delegated responsibility for day-to-day investment of its assets to the Investment Manager. Consistent with the Company’s investment objective, the Investment Manager makes the majority of its investments in biotechnology companies focused on drug discovery and development. A small number of investments is also made in related sectors such as medical devices or healthcare services.
The great majority of the Company’s assets is invested in the quoted biotechnology sector across the entire spectrum of listed companies. The Investment Manager is empowered to invest also in unquoted companies, whose weighting will vary according to the attractiveness of the opportunities identified. Currently, the Board expects investments in unquoted companies to represent between 10% and 15% of the portfolio.
Investments are made in quoted public companies with an expectation that these companies will benefit from a significant re-rating in valuation when they achieve clinical trial success, receive regulatory approvals for their products or execute M&A or licensing deals. For unquoted investments, the Investment Manager seeks to generate gains that represent multiples of invested cost primarily through the sale of these unquoted companies to strategic buyers including major pharmaceutical companies or, in some cases, through a flotation.
The Investment Manager has made the majority of its investments in the US, which is the most mature and established market for pharmaceutical drugs, and as a consequence has the most established commercial biotechnology industry with the broadest and deepest community of biotechnology companies. However, the best investments are sought worldwide, so the Company will usually have some investments in Western Europe and occasionally elsewhere, such as Australia or Asia.
The Board has negotiated an overdraft facility. Borrowings are made on a relatively short-term basis to exploit specific investment opportunities, rather than to apply long-term structural gearing to the Company’s portfolio of investments