Worldwide Healthcare rejigs portfolio, adds BMS, Vertex stakes

Worldwide Healthcare rejigs portfolio, adds BMS, Vertex stakes

OrbiMed-managed Worldwide Healthcare Trust (WWH) has added new large shareholdings in Bristol-Myers Squibb and Vertex to its portfolio, displacing holdings in Intuitive Surgical and Cigna from its top 10, according to the trust’s latest factsheet. The changes follow the addition of a holding in Merck & Co in January, and collectively represent the most significant changes in the portfolio composition over the past year.

The holding in BMS, which ranks in fifth place and accounts for 3.2% of NAV, boosts the trust’s  exposure to fast-growing and high-profile immuno-oncology or “I-O” sector. BMS is one of the leaders in this space with two approved agents; Opdivo and Yervoy; but notably these drug(s) competes fiercely with Merck’s Keytruda. WWH is the only one of the trusts specialising in big pharma companies to hold both BMS and Merck among their top 10 holdings.  Peers such as Tekla Healthcare Opportunities (THQ) and Tekla Worldwide Healthcare (THW) have Merck and AstraZeneca, another player in the I-O space, among their respective top 10 holdings. However, Polar Capital Global Healthcare (PCGH) has just sold its position in Merck.

BMS’s Opdivo and Merck’s Keytruda are both approved for a broadly similar array of solid tumour indications, including in particular non-small cell lung cancer (NSCLC), which is considered the most commercially important one. Currently, Merck is the leader in this indication, but this may change depending on the detailed results of a number of Phase III studies that are due to – or have already – read out this year.  Merck also has a key outcome in terms of the ECHO-301 study of Keytruda given with Incyte’s epacadostat for melanoma, which is due in the next few months. Meanwhile, BMS has just signed a huge collaboration deal with Nektar to gain access to NKTR-214 to combine with Opdivo.

Vertex is a leading US biotech specialising in cystic fibrosis (CF). It has just gained approval for Symdeko, a new combination containing tezacaftor/ivacaftor for CF in patients aged 12 and over who are homozygous (ie have two copies) for the F508del mutation. This product is expected to boost Vertex’s penetration of the homozygous CF population, already 65-75% based on its earlier doublet product, Orkambi (lumacaftor/ivacaftor), to ~90% based an improved safety/efficacy profile. Vertex’s guidance for CF product revenue is $2.65- 2.80bn in 2018. Investor attention is focused on the development of a triple combination with VX-659 with Symdeko. This is designed to treat 90% of CF patients, including the currently untreatable F508del/min population.

Aside from its portfolio changes, WWH reported a 1.7% fall in NAV in February, which matched the change in the MSCI World Health Care Index, against which it is benchmarked. The top 10 holdings, as of end February are shown in the table below, with the share price change of these stocks this month.

 Top 10 Holdings % NAV Feb % change 1/3-26/3
Merck & Co 4.0% -0.5%
Boston Scientific 3.9% -0.8%
Novo Nordisk 3.7% -3.4%
Alexion 3.4% -3.8%
Bristol Myers Squibb 3.2% -5.5%
Wright Medical 2.9% -1.6%
Vertex 2.9% -3.0%
Biogen 2.9% -7.9%
Regeneron 2.9% -0.2%
Celgene 2.6% -2.5%

WWH : Worldwide Healthcare rejigs portfolio, adds BMS, Vertex stakes

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