BIOTECHNOLOGY

New Technologies for Health

INVESTMENT CASE
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BIOTECHNOLOGY

 

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After a very tough 2016 marked notably by political rhetoric on drug pricing and a very low level of drug approvals by the FDA, and a sharp recovery that followed in 2017, we believe the current rerating of the Biotechnology sector is likely to gain steam as we move into 2018. We see M&A as a very powerful catalyst to support sector's undemanding valuations.

 

On the therapeutic front, we believe that genes therapies and personalized medicine will be on investors’ agenda as we move into 2018 as newer technologies (including mobile wearables) are now able to capture, analyze, and share clinical data in a very short timeframe. With the new US tax-code and the huge incentive it has on investments (expense of amortizations), Capex is likely to get a boost and is likely to benefit the "hardware" players.

 

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.

 

 

 FACTSHEET

 PRESENTATION

TERMSHEET

                                                                                                                                

KIDs (Biotechnology)    

PRICE
135.2 19.06.2018
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WHAT IS IT ABOUT?
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BIOTECHNOLOGY
NEW TECHNOLOGIES FOR HEALTH

 

 

  • 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 an unprecedented low number in 2016 as fewer applications were submitted and complete response letters (CRLs) were sent due to manufacturing practice deficiencies (GMP), again followed by a new record year in 2017 as:

 

  • Many important drugs in the last stages of development were (and are still) waiting for an approval.
     
  • The 21st Century Cure Bill gets new drugs and devices approved faster.
     
  • A streamlined FDA → Accelerate the approval process for new drugs (including generics).

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, FDA

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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.