investment case - atonra.fra1.digitaloceanspaces.com · solution to a global social issue - the...

2

Investment Case

➢ On the therapeutic front, we believe that genes therapies and personalized medicine will be on

investors’ agenda as we move into 2019 as newer technologies (including mobile wearables) are

now able to capture, analyze, and share clinical data in a very short timeframe.

➢ 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

➢ We see M&A as a very powerful catalyst to support sector's undemanding valuations. A huge

consolidation will take place in the healthcare sector.

➢ 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.

➢ Against this backdrop, we favor Biotech companies exposed to cell and gene therapies, antibodies

and rare diseases over the larger market cap names which benefited more from rising drug prices

than from volume growth

Biotechnology Certificate details

✓ Issuing bank: UBS AG Zurich, Calculation agent: UBS AG, London Branch

✓ ISIN: CH0275762380

✓ Currency: USD

✓ Fees: 1.6% management fee

Biotechnology Certificate

3Biotechnology Certificate

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

➢ Modern biotechnology involves the use of living 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

4

Smaller sizeR&D intensive

Entrepreneurial

High risk, high reward profile

What Is Biotechnology?


Solution To A Global Social Issue - The "Hope Offering"

5

Entrepreneurial, knowledge intensive

High risk, high reward profile, strictly regulated

Computing power is an underlying fundamental of the industry

Reimbursement and pricing – important success factors

R&D dependent, high capital requirements

Constant business model evolution


6

Global Biotechnology Market Expected To Grow By 8% CAGR Through 2020


$ 358 bn$ 383 bn

$ 416 bn

$ 452 bn

$ 491 bn$ 533 bn

0

100

200

300

400

500

600

2015 2016 2017 2018 2019 2020

$ b

illio

n

7

Communicable, maternal, neonatal,

and nutritional 6%

Chronic liver 2%

Digestive 2%

Neurological and mental

4%

Diabetes, urogenital, blood, and endocrine

6%

Other1%

Injuries8%

Cardiovascular

32%

Cancer

16%

Infections

16%

Chronic respiratory

7%

Global Mortality Causes In 2015 (nb. of cases)


8

Oncology; 16.30%

Anti-diabetics

Anti-rheumatics

Anti-viralsVaccines

Bronchodilators

Sensory Organs

Anti-hypertensives

Dermatologicals

MS therapies0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

-4% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16%

WW

Mark

et

Sh

are

(%

), 2

022

Top 10 Therapeutic Areas By 2022 - Market Share & Sales Growth

Oncology treatment

sales are expected to

reach $190bn by 2022

market share

Source: EvaluatePharma 2016% sales growth 2015-2022

Oncology Has The Largest Market Potential

➢ Emerging markets will lead “Anti-diabetics” growth


➢ Oncology: a 232 bn market by 2025 (CAGR 8%)

➢ Cancers together with heart diseases are responsible for two thirds of all deaths worldwide

➢ New cases have increased by 17% worldwide during the last 10 years

✓ The accumulation of mutations on the DNA lead to the development of a tumor, the biggest

factor risk: aging

✓ Increased DNA damage and replication error can also be due to environmental carcinogens

(UV, Smoking…)

➢ Targeted therapy and immunotherapy are taking their place alongside conventional treatments

➢ Immunotherapy is the use of medicines to stimulate a patient’s own immune system to recognize

and destroy cancer cells more effectively.

➢ Combination between several kind of therapies as immuno-chemotherapy agents will be the key

as chemotherapy stimulates the immune system

➢ The industry consolidation is a key driver of growth (several big M&A deals in this sector since

January 2019: GSK, Bristol Myers, Ely Lilli)

9

New Challenges For A New World (I)


➢ Diabetes and chronic kidney diseases increased worldwide by 30% from 2005

✓ due to: Obesity, High Blood Pressure, Smoking, Environmental, Inactivity

10

New Challenges For A New World (II)

IMPACT OF DIABETES


➢ Infection cases have decreased by 10% during the last 10 years led primarily by decreases in

HIV/AIDS and tuberculosis cases

➢ Cheaper gene sequencing trigger the development of personalized medicine notably in oncology

➢ Rare diseases are more and more “attractive” due to governmental support and high profit margins

11

Orphan drug sales could

reach $178 bn by 2020

(2015-20 CAGR 12%)

In the last 5 years

of all new drug approvals

were for rare diseases

Rare diseases affect

That’s 1 in 10!

New Challenges For A New World (III)

30 millions

AMERICANS


12

➢ The innovation in the development of new kind of drugs was supported by the FDA. 2018, as last year,

was again a record year for FDA approvals!

➢ The next 5 years outlook will also be promising as:

✓ Many important drugs in the last stages of development are awaiting approval.

✓ The FDA is providing scientific and regulatory advice needed to bring new type of treatments into

the market. The FDA is reshaping current regulations to speed up approvals of new drugs.

✓ The FDA and the Center for Biologics Evaluation and Research expect more than 200

Investigational New Drug applications per year by 2020 for cell and gene therapeutic candidates.

They predict 10 to 20 approvals each year by 2025 for these kind of treatments.

Source: AtonRâ Partners, FDA.gov

32

26

3538

28

29

26

3134

26

35

43

35

4145

22

46

59

15

20

25

30

35

40

45

50

55

60

65

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Number of new drugs approved by FDA


➢ Food and Drug Administration → The first level of decision-making before commercialization

✓ consistent legal and political framework across states

✓ the FDA has the most demanding approval standards in the world

➢ The FDA does not decide on a drug’s reimbursement policy:

✓ insurance companies have the right to decide individually

✓ biotech companies start reimbursement discussions at the earliest stages of research

13

9%

91%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Uninsured

With Health Insurance

7%

49%

56%

Direct purchase

Employment based

Private insurance

2%

14%

20%

36%

Military Health Care

Medicare

Medicaid

Government plan

Source: Census Bureau's March 2014, March 2015, and March 2016 Current

Population Survey (CPS: Annual Social and Economic Supplements).

Percentage of People by Type of Health Insurance Coverage in US


14

Growth

Aging population

Chronic diseases

Emerging countries

Nutrition habits

Government support

Orphan drugs

M&A potential

Personalized Medicine

Upcoming Catalysts


➢ Treatments targeted to the needs of individual patients

➢ Technological breakthroughs and computer power are giving a boost to this field

➢ Strong government support: 16 new personalized medicine therapies approved in 2017

for target cancer, orphan diseases, infectious disease, two CAR-T gene therapies.

15

Source: 2018 Progress Report: Personalized Medicine at FDA

Personalized Medicine: The Future Of Medicine?


30%Of 2017 FDA

approvals were

personalized

medicine

A Real Opportunity For Biotech and Pharma due to:

➢ huge populations

➢ increasing prosperity and standards

of living (growing middle class)

➢ aging population

➢ The two countries showing the highest growth in obesity are China and India (15% of the worldwide

obese population) leading to:

16

A Fast Changing World: Emerging Markets


Source: McKinsey & Company

Pharma emerging-market revenues projections ($bn)

Strong pipeline in

high growth therapeutics

Novel technologies

platform

Cheap Valuations

High returns potential

17

2019 Is Expected To Be A Very Strong Year In M&A

Biopharma sector M&A

upturn in 2018 after a quiet

year in 2017.

External growth through M&A

represents an attractive

opportunity


An estimated value of $265 bn

in M&A activity in 2018, +26%

compared to 2017 (source:

Informa Pharma)

Pharma and Biotech

companies in order to stay

competitive are becoming

bigger and bigger

Pharma and Biotech

companies to get highly

specialized on big markets or

highly diversified to create

synergies

This report has been produced by the organizational unit responsible for investment research (Research

unit) of AtonRâ Partners and sent to you by the company sales representatives.

As an internationally active company, AtonRâ Partners SA may be subject to a number of provisions in

drawing up and distributing its investment research documents. These regulations include the Directives

on the Independence of Financial Research issued by the Swiss Bankers Association.

Although AtonRâ Partners SA believes that the information provided in this document is based onreliable sources, it cannot assume responsibility for the quality, correctness, timeliness or completenessof the information contained in this report.

The information contained in these publications is exclusively intended for a client base consisting ofprofessionals or qualified investors. It is sent to you by way of information and cannot be divulged to athird party without the prior consent of AtonRâ Partners.

While all reasonable effort has been made to ensure that the information contained is not untrue ormisleading at the time of publication, no representation is made as to its accuracy or completeness and itshould not be relied upon as such.

Past performance is not indicative or a guarantee of future results. Investment losses may occur, andinvestors could lose some or all of their investment.

Any indices cited herein are provided only as examples of general market performance and no index isdirectly comparable to the past or future performance of the Certificate.

It should not be assumed that the Certificate will invest in any specific securities that comprise any index,nor should it be understood to mean that there is a correlation between the Certificate’s returns and anyindex returns.

Any material provided to you is intended only for discussion purposes and is not intended as an offer orsolicitation with respect to the purchase or sale of any security and should not be relied upon by you inevaluating the merits of investing in any securities.

18Disclaimer

investment case - atonra.fra1.digitaloceanspaces.com · solution to a global social issue - the...

Documents