BIOTECHNOLOGY

New Technologies for Health

INVESTMENT CASE
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BIOTECHNOLOGY

 

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After two very tough years marked notably by political rhetoric on drug pricing and a very low level of drug approvals by the FDA in 2016, we believe the current Biotechnology rerating is likely to keep going as some important drug approvals might change the perception around the sector and valuations are undemanding, a catalyst for M&A
 

Specifically, the first drug to be potentially approved using genes as medicines (Spark Therapeutics) and the first potential approval for the CAR-T drug (Kite Pharmaceuticals) could support sentiment as we move towards end-2017 and 2018
 

We also believe that personalized medicine is not far away from becoming ubiquitous as prices for new testing (including DNA analysis) and analysis are coming down sharply
 

Against this backdrop, we favor Biotech companies exposed to gene therapies, antibodies and rare diseases over the larger market cap names which benefited more from rising drug prices than from volume growth

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WHAT IS IT ABOUT?
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BIOTECHNOLOGY
NEW TECHNOLOGIES FOR HEALTH

 

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  • The term has appeared for the first time
    with the discovery of DNA

     
  • Modern biotechnology involves the use of live organisms or their products (bacteria or enzymes) to manufacture drugs
     
  • Biotechnology products have wider applications
    than classic pharma
  • A completely different business model than pharma
     
  • Today lines are blurred between pure biotech and pharmaceutical companies as these industries are partially consolidating

Solution to a global social issue - The Hope Offering

 

 

WHAT IS HAPPENING NOW?

 

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UPCOMING CATALYSTS

 

 

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2017 IS EXPECTED TO BE A RECORD YEAR FOR FDA APPROVALS

 

Food and Drug Administration - the first level of decision-making before commercialization: 

 

  • Consistent legal and political framework across states
  • FDA has the most demanding approval standards in the world

 

The FDA does not make decision on drug reimbursement:

 

  • Insurance companies have the right to take this decision individually
  • Biotech companies start reimbursement discussions at the earliest stages of research

 

 

A record year for FDA approvals in 2015, followed by un unprecedented low number in 2016

Fewer applications were submitted and complete response letters (CRLs) were sent due to manufacturing practice deficiencies (GMP)

 

2017 is expected to be much more promising as:

 

  • Many important drugs on the last stages of development are waiting for an approval
     
  • The 21st Century Cure Bill is aimed at getting new drugs and devices approved faster
     
  • Trump is to overhaul and streamline the FDA → Accelerate the approval process for new drugs

 

 

 

 

 

PERCENTAGE OF PEOPLE BY TYPE OF
HEALTH INSURANCE COVERAGE IN US

 

 Source: Census Bureau's March 2014, March 2015, and March 2016
Current Population Survey (CPS: Annual Social and Economic Supplements)

 

 

NUMBER OF DRUGS APPROVED BY FDA

 


Source: AtonRâ Partners, EvaluatePharma 2016

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PERSONALIZED MEDICINE: 
THE FUTURE OF MEDICINE?

 

  • Treatments targeted to the needs of individual patients
     
  • Technological breakthroughs and computer power are accelerating the field
     
  • Strong government support

 

 

 

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CHANGING NUTRITION HABITS:

WHAT ARE THE OUTCOMES?

 

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Obesity is one of the biggest health concerns. Obesity levels are rising. Across the United States, more than one in three adults and one in six children are obese (13% of worldwide obese population comes from the U.S.)

The two countries showing the highest growth in obesity level are China and India (15% of the worldwide obese population) leading to:

  • Cardiovascular diseases
  • Diabetes
  • Musculoskeletal disorders
  • Cancers

 

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EMERGING MARKETS: 
A REAL OPPORTUNITY FOR BIOTECH

 

  • Huge populations
     
  • Increasing prosperity and standards of living
    (growing middle class)
     
  • Aging population


Emerging markets will lead the diabetics industry growth. Global executives are expecting 30% of their biopharmaceutical sales to come from emerging markets by 2018

2017 IS EXPECTED TO BE

A VERY STRONG YEAR IN M&A

 

 

 

PERSPECTIVES
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GLOBAL PERSPECTIVES IN THE LONG-RUN

 

Global biotechnology market expected
to grow by 8% CAGR through 2020

 

 

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Source: MarketLine Industry Profile

 

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Top 10 therapeutics areas by 2022
MARKET SHARE & SALES GROWTH 

 

 

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Source: EvaluatePharma 2016

 

THERAPEUTIC AREAS
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GLOBAL MORTALITY CASES IN 2015 

(by number of cases)

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Source: AtonRâ Partners, The Lancet

 

 

 

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NEW CHALLENGES FOR A NEW WORLD
 

 

Oncology cases have increased by 17% worldwide during the last 10 years due to aging population (probability increases with age)
 
Neurological Diseases are affecting more and more people (+35.2% growth from 2005) due to: aging population, obesity, smoking and genetic predisposition
 
Infection cases have decreased by 10% during the last 10 years led primarily by decreases in HIV/AIDS and tuberculosis cases

Diabetes and chronic kidney diseases increased by 30% from 2005 worldwide due to: obesity, high blood pressure, smoking, environmental, inactivity

Cheaper gene sequencing triggers the development of personalized medicine notably in oncology

IMPACT OF DIABETES

 

 

 

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RARE DISEASES AFFECT
 

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Rare diseases are more and more attractive due to governmental support and higher profit margins