The recent US biotech sell-off has hit London-listed funds Biotech Growth Trust (BIOG) and Worldwide Healthcare Trust (WWHS). The NASDAQ Biotechnology Index fell 5.6% yesterday (10 Apr) over fears that, like the technology industry, valuations in biotech are too high.
Investors have started moving their cash into safer stocks with regulators across the Atlantic joining those in Europe by questioning the prices some companies are asking for their drugs. Indeed, this has led to Oxfordshire-based Lombard Medical Technology (LMT:AIM) postponing its secondary listing on NASDAQ.
The biotech sector had previously enjoyed a strong rally amid several technology companies listing in New York this year to cash in on high market sentiment in order to raise development capital.
Biotech Growth Trust plummets 6.2% to 401.3p and Worldwide Healthcare Trust drops 7.6% to 535p on their exposure to the troubled US biotech market.
Worldwide Healthcare has 72% of its £668.1 million portfolio in North America, while 89.4% of Biotech Growth Trust’s £385.3 million assets are invested in the region’s drug companies.
Indeed, two of the largest fallers in the industry are Biogen Idec (BIIB:NASDAQ) and Gilead Sciences (GILD:NASDAQ), which yesterday fell 4.4% and 7.3% respectively. These stocks account for more than a fifth of Biotech Growth’s holdings and 7.2% of Worldwide Healthcare’s business.
Biotech Growth and Worldwide Healthcare are both run by life sciences-focused fund manager OrbiMed.