Shareholder letter
The year 2022 saw volatile market conditions for global equity and bond markets, with substantial stepwise increases in central bank rates, led by the US Federal Reserve Bank. Flight from growth into value sectors and into diversified, large, profitable companies was a major theme for 2022. In the heterogenous biotechnology sector, large cap companies gained value throughout 2022 whereas pipeline-dependent small and mid cap companies experienced significant corrections. While the COVID-19 pandemic has been declared less threatening in the US, booster vaccination initiatives have continued, while the world watches China’s about-face from restrictive isolation policies towards re-opening. The focus for the biotech sector is already shifting back to chronic diseases and seasonal vaccines.
Dear Shareholders
The Dow Jones (–6.9% in USD), the Dax (–12.4% in EUR), and the SPI (–16.5% in CHF) indices each declined in 2022, while the technology-heavy Nasdaq Composite (–32.5% in USD) declined even more. The Nasdaq Biotech Index (NBI) traded in line with the broader markets for the year (–10.1% in USD).
BB Biotech’s total share return of –24.3% in CHF and –19.0% in EUR in 2022 tracked European equity indices, performed worse than biotech indices and deviated from the underlying portfolio performance. Exchange rates fluctuated throughout the year but closed with a small gain for the USD relative to the CHF and the EUR which created some support for EUR-denominated performance. This meant that the BB Biotech portfolio Net Asset Value (NAV) declined 11.0% in CHF, 6.7% in EUR and 12.1% in USD for 2022. Consolidated full year 2022 data showed a net loss of CHF 358 mn compared to a net loss of CHF 405 mn for 2021.
During the last quarter of the year major global equity indices rebounded and recovered some of 2022’s earlier losses. Most equity and bond markets closed the year in negative territory associated with persistently high inflation and strong labor market data which surprised investors and central banks. Interest rate expectations for the US at the beginning of 2022 stayed below 1%, with the December 2022 rate hike pushing the Federal fund interest rate to 4.25% with more rate hikes to be expected in 2023.
For the fourth quarter of 2022, BB Biotech’s share price increased 4.7% in CHF and 4.4% in EUR. BB Biotech’s Net Asset Value (NAV) decreased 1.2% in CHF, 3.5% in EUR and gained 5.4% in USD, impacted by currency fluctuations and by the underperformance of small and mid cap companies in the portfolio, while the NBI index gained 12.0% in USD for the same period – driving a net loss of CHF 35 mn compared to the net loss of CHF 546 mn for the fourth quarter 2021.
Stability in the Board of Directors of BB Biotech
During 2022, BB Biotech expanded the Board of Directors. Dr. Pearl Huang, CEO of Dunad Therapeutics, and Laura Hamill, former Executive Vice President Worldwide Commercial Operations for Gilead joined the Board. All six current board members will stand for re-election by the shareholders at the Annual General Meeting (AGM) scheduled for March 23, 2023.
A proposed dividend of CHF 2.85 per share
Dividend 2023
CHF 2.85
(Proposed)
The Board of Directors will propose a regular dividend of CHF
Portfolio adjustments in the fourth quarter 2022
During the fourth quarter, the investment team made no new investments, but added to existing portfolio positions. The additions focused on oncology companies such as Revolution Medicines, Fate Therapeutics, Black Diamond Therapeutics and Essa Pharma – each of which suffered valuation dislocations. Additions in Macrogenics and Mersana followed important pipeline deals strengthening the companies’ balance sheet. Additions in Relay Therapeutics followed positive clinical data reports for the firm’s FGFR2 asset. BB Biotech also added shares of commercial stage Incyte and genetic medicines company Ionis. The investment management team took profits in Neurocrine following a rebound of Ingrezza growth, and from Alnylam and Vertex – each trading close to their all-time high share prices. Taken together, these additional investments increased the BB Biotech investment level by 2.4% compared to the third quarter, closing 2022 at 113.6%.
The additions focused on oncology companies such as Revolution Medicines, Fate Therapeutics, Black Diamond Therapeutics and Essa Pharma – each of which suffered valuation dislocations.
Fourth-quarter portfolio update
The fourth quarter 2022 provided multiple major milestones for our portfolio holdings such as clinical results, regulatory decisions, licensing deals and some takeovers. The clinical results for the biotechnology industry and our portfolio saw a more positive picture in the last quarter. The difficult capital market environment influenced industry behavior, resulting in more licensing deals as an alternative source of non-dilutive access to capital. Additionally, opportunistic takeover activity focused on commercial-stage companies and lifted the acquisition targets towards their all-time highs thanks to the premiums offered.
2023: Exciting sector fundamentals and anticipated licensing deals/M&A
During 2022, SARS-CoV-2 variant waves remained a focus for healthcare authorities. Yet the pandemic was said (more than once) to be over. Meanwhile, the US FDA tallied up 37 NDA (New Drug Application) approvals and 7 BLA (Biologics License Application) approvals (vaccines, blood and cell products) for the year.
BB Biotech believes that 2023 will include multiple catalysts for the sector and for its portfolio companies, including product launches, important clinical trial results, licensing deals and M&A activity.
Many clinical trial read-outs are eagerly anticipated from portfolio companies in 2023. The focus for mRNA vaccines shifts away from SARS-CoV-2 to seasonal respiratory viruses. Moderna is expected to report data from mRNA-1010, an influenza vaccine, and mRNA-1345, an RSV vaccine in 2023. Neurocrine will report Phase III data for Crinecerfont in congenital adrenal hyperplasia. Argenx, is expected to reveal Phase III data for chronic inflammatory demyelinating polyneuropathy (CIDP). Ionis plans to report late clinical data for Olezarsen, an ApoCIII antisense oligonucleotide for familial chylomicronemia syndrome. Esperion announced positive results for the CLEAR outcomes trial ofbempedoic acid in late 2022 and is scheduled to disclose details at a late breaker presentation during the annual American College of Cardiology meeting on March 4, 2023. We also look forward to important results from smaller platform companies including Generation Bio, Homology Medicines, Wave Life Sciences and Fate Therapeutics.
Multiple product approvals and important label expansions are expected to drive future revenue and profit opportunities:
- Two antisense oligonucleotide drug candidates from Ionis: Eplontersen for TTR-polyneuropathy and Tofersen for SOD1 amyotrophic lateral sclerosis
- The first gene editing candidates from Crispr Therapeutics and Vertex: CTX001 for sickle cell disease and beta thalassemia
- A subcutaneous formulation of efgartigimod gMG from Argenx
- A second indication for Valbenazine for chorea in Huntington’s disease from Neurocrine
- A Patisiran sNDA for TTR-CM from Alnylam
- Two mRNA vaccines, mRNA1010 for seasonal influenza, and mRNA1345 for seasonal RSV from Moderna
- Zuranolone for major depressive disorder and postpartum depresseion (PPD) from Sage/Biogen
- A bempedoic acid sNDA including cardiovascular outcomes data from Esperion
The challenging capital markets environment placed even greater investor focus on new product launch metrics including markers of sustainable profitability. Neurocrine Biosciences, Intra-Cellular Therapeutics, Incyte and Argenx will be in focus. The launch of Orgovyx and Myfembree by Myovant is less noteworthy since the firm has been acquired by Sumitomo Pharma.
Companies with earlier clinical programs and technology platforms may be challenged to raise capital. Consequently, some have fallen back on licensing deals with larger companies to avoid dilutive equity funding. Those needing immediate funding were obliged to raise money at unattractive valuations. BB Biotech sees compelling opportunities under these circumstances and also expects more M&A activity, with large companies constantly seeking pipeline opportunities.
A focus on big data and artificial intelligence
BB Biotech is focusing more and more on large healthcare data sets which provide insights into R&D and commercial opportunities. BB Biotech has expanded the data science team recently – adding experts to the investment management team to strengthen the investment process. The investment management team continues to build and balance a portfolio of established mid capitalization companies and exciting earlier stage companies, as defined and outlined in its investment guidelines. BB Biotech’s structure as an investment company enables and demands a long-term view which will continue to generate leading returns in our sector. In BB Biotech’s view, the growth case for biotechnology and the value which the sector will create are compelling.
We thank you for the trust you have placed in the Company.
The Board of Directors of BB Biotech AG
Dr. Erich Hunziker
Chairman
Dr. Clive Meanwell
Vice Chairman
Laura Hamill
Member
Dr. Pearl Huang
Member
Prof. Dr. Mads Krogsgaard Thomsen
Member
Dr. Thomas von Planta
Member
Consolidated balance sheet as at December 31
| in CHF 1 000 | Notes | 2022 | 2021 | |||
| Current assets | ||||||
| Cash and cash equivalents |
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| Securities | 4 |
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| Other assets |
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| Total assets |
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| Current liabilities | ||||||
| Short-term borrowings from banks | 5 |
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| Other short-term liabilities | 6 |
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| Tax liabilities |
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| Total liabilities |
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| Shareholders' equity | ||||||
| Share capital | 7 |
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| Treasury shares | 7 | ( |
( |
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| Retained earnings | 7 |
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| Total liabilities and shareholders' equity |
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| Net asset value per share in CHF |
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The notes are an integral part of the consolidated financial statements.
The consolidated financial statements were approved by the Board of Directors of BB Biotech AG on February 14, 2023.
Consolidated statement of comprehensive income for the year ended December 31
| in CHF 1 000 | Notes | 2022 | 2021 | |||||
| Operating income | ||||||||
| Interest income |
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| Foreign exchange gains |
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| Other income |
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| Operating expenses | ||||||||
| Net losses from securities | 4 | ( |
( |
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| Finance expenses | ( |
( |
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| Foreign exchange losses |
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( |
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| Administrative expenses | 8 | ( |
( |
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| Other expenses | 9 | ( |
( |
|||||
| ( |
( |
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| Profit/(loss) before tax | 12 | ( |
( |
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| Income taxes | 10 | ( |
( |
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| Profit/(loss) for the period | ( |
( |
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| Total comprehensive profit/(loss) for the period | ( |
( |
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| Income per share in CHF | 11 | ( |
( |
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| Diluted income per share in CHF | 11 | ( |
( |
The notes are an integral part of the consolidated financial statements.
Consolidated statement of changes in equity for the year ended December 31
| in CHF 1 000 | Share capital | Treasury shares | Retained earnings | Total | ||||
| Balances at January 1, 2021 |
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( |
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| Dividend (CHF 3.60 per share) |
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( |
( |
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| Trade with treasury shares |
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( |
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| Total comprehensive income for the period |
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( |
( |
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| Balances at December 31, 2021 |
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( |
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| Balances at January 1, 2022 |
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( |
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| Dividend (CHF 3.85 per share) |
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( |
( |
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| Trade with treasury shares |
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( |
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( |
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| Total comprehensive income for the period |
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( |
( |
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| Balances at December 31, 2022 |
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( |
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The notes are an integral part of the consolidated financial statements.
Consolidated statement of cash flow for the year ended December 31
| in CHF 1 000 | Notes | 2022 | 2021 | |||
| Cash flows from operating activities | ||||||
| Proceeds from sales of securities | 4 |
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| Purchase of securities | 4 | ( |
( |
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| Interest receipts |
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| Payments for services | ( |
( |
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| Income taxes paid | ( |
( |
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| Total cash flows from operating activities |
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( |
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| Cash flows from financing activities | ||||||
| Dividend | ( |
( |
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| Proceeds from sales of treasury shares | 7 |
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| Purchase of treasury shares | 7 | ( |
( |
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| Borrowing of bank loans | 5 |
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| Interest payments | ( |
( |
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| Total cash flows from financing activities | ( |
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| Foreign exchange difference |
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( |
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| Change in cash and cash equivalents | ( |
( |
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| Cash and cash equivalents at the beginning of the period |
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| Cash and cash equivalents at the end of the period |
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The notes are an integral part of the consolidated financial statements.
Notes to the consolidated financial statements
1. The Company and its principal activity
|
Company |
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Capital in CHF 1 000 |
|
Capital and voting interest in % |
|
Biotech Focus N.V., Curaçao |
|
11 |
|
100 |
|
Biotech Growth N.V., Curaçao |
|
11 |
|
100 |
|
Biotech Invest N.V., Curaçao |
|
11 |
|
100 |
|
Biotech Target N.V., Curaçao |
|
11 |
|
100 |
2. Accounting policies
General
The consolidated financial statements of the Company and its subsidiary companies (the Group) have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB, as well as the provisions of the rules of the SIX Swiss Exchange for Investment Companies for the period January 1, 2022, until December 31, 2022. The consolidation is prepared from the financial statements of the Group companies using uniform accounting principles.
The following amended standards, valid since January 1, 2022, have been applied in these consolidated financial statements.
The Group assessed the impact of the above-mentioned amended standards. Based on the analysis, the Group concluded that these amended standards have no material impact on the Group’s accounting policies and overall results and financial position.
The following amended standards were approved, but will only be applicable for the Group prospectively and were not early adopted in these annual consolidated financial statements.
The Group assessed the potential impact of the above-mentioned amended standards. Based on the analysis, the Group concludes that these amended standards have no material impact on the Group’s accounting policies and overall results and financial position.
Basis of consolidation
The consolidated financial statements include the Company and the subsidiary companies which are controlled by it. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are fully consolidated from the date on which control is transferred to the Company and are deconsolidated from the date that control ceases. The consolidation is performed using the acquisition method. All intercompany transactions and balances with companies included in the consolidation are eliminated. All Group companies have a December 31 year-end.
Foreign currency translation
Based on the economic environment (primary listing, investors, costs and performance measurement) in which the Company and its subsidiaries operate, the consolidated financial statements of the Group are presented in Swiss francs, which is the Company’s and its subsidiaries functional currency. Transactions in foreign currencies are converted at exchange rates as at transaction dates. Assets and liabilities in foreign currencies at year-end are translated at rates of exchange prevailing as at the balance sheet date. Exchange differences are reflected in the statement of income.
The following exchange rates have been used for the preparation of these consolidated financial statements:
|
Currency |
|
31.12.2022 |
|
31.12.2021 |
|
USD |
|
0.92450 |
|
0.91290 |
|
ANG |
|
0.51938 |
|
0.51287 |
|
EUR |
|
0.98956 |
|
1.03740 |
|
GBP |
|
1.11870 |
|
1.23390 |
Financial assets
The Group classifies its financial assets in the following categories:
Financial assets at amortized cost
Financial assets at amortized cost are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Cash and cash equivalents
Cash and cash equivalents comprise current accounts and call money at banks which have a maturity of three months or less.
Receivables from brokers
Receivables from brokers result from security transactions and do not bear any interest.
These amounts are recognized initially at fair value and subsequently measured at amortized cost. At each reporting date, the Group shall measure the loss allowance on amounts due from broker at an amount equal to the Lifetime Expected Credit Loss («ECL») if the credit risk has increased significantly since initial recognition. If, at the reporting date, the credit risk has not increased significantly since initial recognition, the Group shall measure the loss allowance at an amount equal to 12-month ECLs. A significant increase in credit risk is defined as any contractual payment which is more than 30 days past due. Any contractual payment which is more than 90 days past due is considered credit impaired. For receivables from brokers which settle within 10 business days the ECL estimate is nil.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss comprise marketable and non-marketable securities which are classified as current assets.
Initially, securities and derivatives are measured at fair value and are subsequently remeasured at market values based on stock exchange prices or generally accepted valuation models that are based on market conditions existing at each balance sheet date, such as Black- Scholes, earnings multiple and discounted cash flow model. Purchases and sales of securities are accounted for at trade date.
Transaction costs are costs to acquire financial assets at fair value through profit or loss. They include transfer taxes and duties as well as fees and commissions paid to agents, advisers, brokers and dealers. Transaction costs, when incurred, are immediately recognized as an expense.
Financial liabilities
Financial liabilities are generally classified and subsequently measured at amortized cost using the effective interest method, except for financial liabilities held for trading and derivatives.
Payables to brokers
Payables to brokers result from security transactions and do not bear any interest.
Short-term borrowings from banks
Short-term borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.
Income taxes
Current income taxes are calculated on the basis of the applicable tax laws in individual countries and recognized as an expense in the period in which the related profits are made.
Assets or liabilities related to current income taxes are reported in the balance sheet in the items «Current tax assets» or «Current tax liabilities». Tax effects arising from temporary differences between the carrying amounts of assets and liabilities in the Group’s balance sheet and their corresponding tax values are recognized, respectively, as «Deferred tax assets» and «Deferred tax liabilities». Deferred tax assets arising from temporary differences and from loss carry-forwards eligible for offset are capitalized if it is likely that sufficient taxable profits will be available against which those temporary differences or loss carry-forwards can be offset. Deferred tax assets and deferred tax liabilities are calculated at the tax rates expected to apply in the period in which the tax assets will be realized, or the tax liabilities settled.
Earnings per share
Basic earnings per share are calculated by dividing the net profit/loss attributable to shareholders by the weighted average number of registered shares in issue during the year, less treasury shares. For the diluted earnings per share, the weighted average number of registered shares in issue and the net profit is adjusted to assume conversion of all dilution potential registered shares.
Treasury shares
The company can buy and sell treasury shares in accordance with the Company’s article of association, Swiss company law and in compliance with the listing rules of SIX Swiss Exchange.
Treasury shares are recorded as a deduction from the shareholders’ equity at the amount of considerations paid («Total cost»). All gains and losses arising from trading in treasury shares are directly credited/debited to retained earnings. The FIFO (first in/first out) method is used for derecognition. The purchase price is booked gross with transaction costs. Treasury shares may be acquired and held by the Company or by other members of the consolidated Group.
Net asset value per share
The net asset value per share is calculated by dividing the shareholders’ equity by the number of shares outstanding less treasury shares held at year end.
Dividend income
Dividends on securities are recognized in the income statement when the Group’s right to receive payment is established.
Leasing contracts
The Group has two rental contracts for office space in Schaffhausen and Curacao. Due to the immateriality of a right-of-use-asset and a lease liability, no disclosure according to IFRS 16 are made within these consolidated financial statements.
Pension liability
BB Biotech AG maintains for its employee a defined benefit plan. There is no pension plan for employees of Group companies. Due to the immateriality of any potential pension liability or potential pension asset, no disclosures according to IAS 19 are made within these consolidated financial statements.
Segment reporting
IFRS 8 requires entities to define operating segments and segment performance in the financial statements based on information used by the chief operating decision-maker. The investment manager is considered to be the chief operating decision-maker. An operating segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other operating segments. The sole operating segment of the Group is investing in companies active in the biotechnology industry. The investment manager works as a team for the entire portfolio, asset allocation is based on a single, integrated investment strategy and the Group’s performance is evaluated on an overall basis. Thus the results published in this report correspond to the sole operating segment of investing in companies active in the biotechnology industry.
Related party
Related parties are individuals and companies where the individual or company has the ability, directly or indirectly, to control the other party or to exercise significant influence over the other party in making financial and operating decisions.
Commitments, contingencies and other off-balance sheet transactions
The operations of the Group are affected by legislative, fiscal and regulatory developments for which provisions are made where a legal or constructive obligation has been incurred which will probably lead to an outflow of resources that can be reasonably estimated.
Critical accounting estimates and judgments
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group makes estimates and assumptions that are mainly based on market conditions to value these financial instruments. Since these financial instruments are not traded in an active market, inherent difficulties exist to value these financial instruments. These difficulties cannot be eliminated. The difference between the proceeds from sale of these financial instruments and the carrying amount may be material. Note 4 discloses further details on fair values of financial instruments not traded in active markets.
The Company has assessed whether it is appropriate under IFRS 10 to consolidate the Subsidiaries. IFRS 10 states that an investor controls the investee if, and only if, the investor has all of the following:
The Company owns 100% of the capital and voting interest in all four subsidiaries as disclosed in note 1. Therefore the Company has power over the organization and directs the investment activities and dividend policy of its subsidiaries. The scope of the investment management and administration agreement with the investment manager also includes all subsidiaries.
Further, IFRS 10 requires that a subsidiary that provides services related to the parent’s investment activities should not be consolidated if the subsidiary itself is an investment entity. The Company also made an assessment as to whether the Company’s Subsidiaries meet the definition of an investment entity. IFRS 10 provides that an investment entity should have the following typical characteristics:
An investment entity is still required to consolidate its subsidiaries if the subsidiary provides services that relate to the investment entity’s investment activities.
The Company concluded that the Subsidiaries do not qualify as investment entities, but are effectively operating subsidiaries as they act as an extension of the Company. They provide requisite investment-related services to the Company and incur costs in doing so, thus the Company consolidates its subsidiaries. Fair value accounting would not have a material impact on the net income and equity of the Group.
3. Financial risk management
Within the framework of the law, articles of incorporation and regulations, the investment manager carries out currency and security forward transactions, buys, sells and makes use of options as well as fulfills all necessary obligations that result from these businesses.
Credit risk
The Group is exposed to credit risk, which is the risk that a counterparty will be unable to pay amount in full when due. The Group measures credit risk and expected credit losses using probability of default, exposure at default and loss given default. The Group considers both historical analysis and forward looking information in determining any expected credit loss.
The Group manages and controls its credit risk by maintaining business relations only with counterparties with an acceptable credit rating. All transactions in securities are settled/paid for upon delivery using approved brokers. The risk of default is considered minimal, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation. The Group’s credit positions, if any, are monitored on a daily basis by the investment manager and are reviewed on a regular basis by the Board of Directors.
As at December 31, 2022 and 2021, the ECL-impairment model did not have a material impact as (i) the majority of the financial assets are measured at fair value through profit or loss and the impairment requirements do not apply to such instruments; and (ii) the financial assets at amortized cost are short-term (no longer than 10 days). As a result, no loss allowance has been recognized.
Market risks
Risk associated with changing market prices
Due to its business activity and the resulting high portion of securities in relation to total assets, the Group is exposed to market price risk arising from uncertainties and fluctuations on the financial and foreign exchange markets.
The Group participates occassionaly, but to a substantial extent, in the capital of its investments. In the case of sales of large parts of these investments, it may be able to influence the market price. The Group’s securities positions are monitored on a daily basis by the investment manager and are reviewed on a regular basis by the Board of Directors.
The Group’s business is to invest in biotechnology companies with the aim of asset growth. Consequently, it is exposed to market risks of this industry. The individual securities are disclosed in note 4 and the valuation is made at fair value. Consequently, any price changes are reflected accordingly by the changes in fair value in the context of the subsequent valuation.
The annual volatility of registered shares BB Biotech AG (reference volatility for the marketable securities) for 2022 is 32.64% (2021: 22.73%). At December 31, 2022, had the value of listed securities increased or decreased by 32.64% (2021: 22.73%) with all other variables held constant, the increase or decrease respectively in net income/loss as well as shareholders’ equity would amount to CHF 990.7 mn (2021: CHF 827.1 mn).
At December 31, 2022 the Company holds one investment in unlisted shares (2021: none).
Interest risk
Interest rates on liquid funds are based on market rates. The funds are due on demand.
Short-term borrowings from banks are on current and short-term loan accounts with interest, based at market rates. Due to the high level of own funds, the effect of interest payable on the statement of income is insignificant. The majority of the Group’s securities are non-interest bearing; as a result, the Group is not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates.
The Group’s interest sensitivity is monitored on a daily basis by the investment manager and reviewed on a regular basis by the Board of Directors.
Currency risk
The Group hold assets denominated in currencies other than the Swiss franc, the functional currency. They are therefore exposed to currency risk, as the value of the securities denominated in other currencies will fluctuate due to changes in exchange rates. Depending on the market situation the Group could use foreign currency options and/or forward contracts to reduce the currency risk.
The following table summarizes the Group’s exposure to currency risks:
|
2022 |
|
Net exposure 31.12. (in CHF 1 000) |
|
Annual volatility (in %) |
|
Potential impact (in CHF 1 000) 1) |
|
USD |
|
3 051 509 |
|
9.37 |
|
285 804 |
|
ANG |
|
12 |
|
9.37 |
|
1 |
|
|
|
|
|
|
|
|
|
2021 |
|
|
|
|
|
|
|
USD |
|
3 642 324 |
|
6.46 |
|
235 185 |
|
ANG |
|
128 |
|
6.46 |
|
8 |
1 Potential impact on total comprehensive income as well as shareholders' equity with all other variables held constant
The Group’s currency position is monitored on a daily basis by the investment manager and is reviewed on a regular basis by the Board of Directors.
Liquidity risk
The Group invests the majority of its assets in investments that are traded in an active market and can be readily disposed of. The Group’s treasury shares, with the exception of shares purchased under a share buy-back program, are considered readily realizable as they are listed on three stock exchanges. The Group can invest a minor part of its portfolio in securities, which are not traded on a stock exchange and may be illiquid. As a result, the Group may not be able to liquidate its investments in these instruments on short notice. In addition, the Group has access to a credit line (notes 5 and 13).
The tables below analyze the Group’s financial liabilities into relevant maturity groupings based on the period between the balance sheet date and the contractual maturity date (in CHF 1 000):
|
At December 31, 2022 |
|
Less than 1 month |
|
1–3 months |
|
More than 3 months / no stated maturity |
|
Short-term borrowings from banks |
|
363 000 |
|
– |
|
– |
|
Other short-term liabilities |
|
3 439 |
|
704 |
|
– |
|
Total liabilities |
|
366 439 |
|
704 |
|
– |
|
|
|
|
|
|
|
|
|
At December 31, 2021 |
|
|
|
|
|
|
|
Short-term borrowings from banks |
|
355 000 |
|
– |
|
– |
|
Other short-term liabilities |
|
4 737 |
|
694 |
|
– |
|
Total liabilities |
|
359 737 |
|
694 |
|
– |
The Group’s liquidity position is monitored on a daily basis by the investment manager and is reviewed on a regular basis by the Board of Directors.
Diversification
The investment portfolio usually consists of 20 to 35 investments. This includes five to eight large core investments, defined as positions > 5%. These investments together will account for up to two-thirds of the portfolio. Companies without a stock market listing shall not exceed 10% of the portfolio.
As at December 31, 2022, the Group held eight core investments, representing 66% (2021: seven core investments, 50%) of the portfolio. The portfolio is – in line with the strategy – concentrated on a limited number of investments. Risk diversification is therefore limited.
4. Financial assets
Fair values
The following table presents the Group’s assets that are measured at fair value through profit and loss at December 31 (in CHF 1 000):
|
2022 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
|
Assets |
|
|
|
|
|
|
|
|
|
Securities |
|
|
|
|
|
|
|
|
|
– Shares |
|
3 035 170 |
|
– |
|
16 179 |
|
3 051 349 |
|
– Derivative instruments |
|
– |
|
– |
|
– |
|
– |
|
Total assets |
|
3 035 170 |
|
– |
|
16 179 |
|
3 051 349 |
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Securities |
|
|
|
|
|
|
|
|
|
– Shares |
|
3 638 890 |
|
– |
|
– |
|
3 638 890 |
|
– Derivative instruments |
|
– |
|
– |
|
2 222 |
|
2 222 |
|
Total assets |
|
3 638 890 |
|
– |
|
2 222 |
|
3 641 112 |
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the closing price. These instruments are included in level 1.
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available. The options are valued on the basis of the Black-Scholes model which is based on market conditions existing at each balance sheet date. These instruments are included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. The valuation of level 3 instruments is quarterly reviewed. As soon as new or adjusted parameters are available the valuation model (e.g. earnings multiple model) of unlisted shares is adjusted accordingly. As of December 31, 2022, the Company holds one level 3 instrument (December 31, 2021: one).
The table below summarizes the transactions in level 3 instruments (in CHF 1 000):
|
|
|
2022 |
|
2021 |
|
Opening balance |
|
2 222 |
|
2 155 |
|
Purchases |
|
16 875 |
|
– |
|
Sales |
|
(5 071) |
|
– |
|
Realized gains/(losses) included in net gain/loss from securities |
|
2 849 |
|
– |
|
Unrealized gains/(losses) included in net gain/loss from securities |
|
(697) |
|
67 |
|
Closing balance |
|
16 179 |
|
2 222 |
|
Gains/(losses) on level 3 instruments included in net gain/loss from securities |
|
2 152 |
|
67 |
There have been no transfers between level 1, 2 and 3 during the reporting period. No sensitivity analysis has been disclosed due to the immaterial amount of level 3 instruments.
The level 3 instrument as at December 31, 2021, (Valuation: TCHF 2 222) was allocated as part of a corporate action in 2019 and sold at a value of TCHF 5 071 in March 2022.
The fair value of the level 3 instrument at initial recognition represents the transaction price (purchase of Series B-1 Preferred Stock of Rivus Pharmaceuticals in August 2022 for TCHF 16 875), which was paid in a financing round together with other investors. For the valuation as at December 31, 2022, it is deemed to be appropriate to use the transaction price in USD, as it is a reasonable approximation of fair value at the valuation date given the fact that no events occurred which significantly impact the fair value.
In August 2022, 8 733 538 Contingent Value Rights were allocated from a corporate action. The valuation as of December 31, 2022, is CHF 0.
For assets and liabilities carried at amortized cost, their carrying values are a reasonable approximation of fair value.
Securities
The changes in value of securities by investment category are as follows (in CHF 1 000):
|
|
|
Listed shares |
|
Unlisted shares |
|
Derivative instruments |
|
Total |
|
Opening balance as at 01.01.2021 at fair values |
|
3 952 504 |
|
– |
|
2 155 |
|
3 954 659 |
|
Purchases |
|
955 515 |
|
– |
|
– |
|
955 515 |
|
Sales |
|
(925 467) |
|
– |
|
– |
|
(925 467) |
|
Net gains/(losses) from securities |
|
(343 662) |
|
– |
|
67 |
|
(343 595) |
|
Realized gains |
|
312 779 |
|
– |
|
– |
|
312 779 |
|
Realized losses |
|
(1 831) |
|
– |
|
(2 330) |
|
(4 161) |
|
Unrealized gains |
|
437 584 |
|
– |
|
67 |
|
437 651 |
|
Unrealized losses |
|
(1 092 194) |
|
– |
|
2 330 |
|
(1 089 864) |
|
Closing balance as at 31.12.2021 at fair values |
|
3 638 890 |
|
– |
|
2 222 |
|
3 641 112 |
|
|
|
|
|
|
|
|
|
|
|
Opening balance as at 01.01.2022 at fair values |
|
3 638 890 |
|
– |
|
2 222 |
|
3 641 112 |
|
Purchases |
|
183 812 |
|
16 875 |
|
– |
|
200 687 |
|
Sales |
|
(471 115) |
|
– |
|
(5 071) |
|
(476 186) |
|
Net gains/(losses) from securities |
|
(316 417) |
|
(697) |
|
2 849 |
|
(314 265) |
|
Realized gains |
|
47 563 |
|
– |
|
2 849 |
|
50 412 |
|
Realized losses |
|
(79 326) |
|
– |
|
– |
|
(79 326) |
|
Unrealized gains |
|
437 200 |
|
– |
|
– |
|
437 200 |
|
Unrealized losses |
|
(721 854) |
|
(697) |
|
– |
|
(722 551) |
|
Closing balance as at 31.12.2022 at fair values |
|
3 035 170 |
|
16 179 |
|
– |
|
3 051 349 |
Securities comprise the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
Number 31.12.2021 |
|
Change |
|
Number 31.12.2022 |
|
Market price in original currency 31.12.2022 |
|
Valuation CHF mn 31.12.2022 |
|
Valuation CHF mn 31.12.2021 |
||
|
Ionis Pharmaceuticals |
|
10 232 973 |
|
(597 973) |
|
9 635 000 |
|
USD |
|
37.77 |
|
336.4 |
|
284.3 |
|
Argenx SE |
|
970 538 |
|
(78 035) |
|
892 503 |
|
USD |
|
378.83 |
|
312.6 |
|
310.3 |
|
Neurocrine Biosciences |
|
3 015 400 |
|
(285 400) |
|
2 730 000 |
|
USD |
|
119.44 |
|
301.5 |
|
234.5 |
|
Moderna |
|
1 663 349 |
|
(161 398) |
|
1 501 951 |
|
USD |
|
179.62 |
|
249.4 |
|
385.7 |
|
Vertex Pharmaceuticals |
|
1 030 000 |
|
(99 477) |
|
930 523 |
|
USD |
|
288.78 |
|
248.4 |
|
206.5 |
|
Incyte |
|
2 897 000 |
|
(5 923) |
|
2 891 077 |
|
USD |
|
80.32 |
|
214.7 |
|
194.1 |
|
Alnylam Pharmaceuticals |
|
1 110 000 |
|
(220 000) |
|
890 000 |
|
USD |
|
237.65 |
|
195.5 |
|
171.8 |
|
Intra-Cellular Therapies |
|
3 538 419 |
|
(246 940) |
|
3 291 479 |
|
USD |
|
52.92 |
|
161.0 |
|
169.1 |
|
Myovant Sciences |
|
6 122 039 |
|
(249 400) |
|
5 872 639 |
|
USD |
|
26.96 |
|
146.4 |
|
87.0 |
|
Revolution Medicines |
|
3 421 462 |
|
1 356 100 |
|
4 777 562 |
|
USD |
|
23.82 |
|
105.2 |
|
78.6 |
|
Agios Pharmaceuticals |
|
4 312 292 |
|
(281 500) |
|
4 030 792 |
|
USD |
|
28.08 |
|
104.6 |
|
129.4 |
|
Sage Therapeutics |
|
3 170 104 |
|
(219 826) |
|
2 950 278 |
|
USD |
|
38.14 |
|
104.0 |
|
123.1 |
|
Celldex Therapeutics |
|
– |
|
1 800 000 |
|
1 800 000 |
|
USD |
|
44.57 |
|
74.2 |
|
- |
|
Arvinas |
|
2 176 903 |
|
(40 491) |
|
2 136 412 |
|
USD |
|
34.21 |
|
67.6 |
|
163.2 |
|
Relay Therapeutics |
|
4 085 962 |
|
34 758 |
|
4 120 720 |
|
USD |
|
14.94 |
|
56.9 |
|
114.6 |
|
Macrogenics |
|
7 275 564 |
|
1 654 399 |
|
8 929 963 |
|
USD |
|
6.71 |
|
55.4 |
|
106.6 |
|
Fate Therapeutics |
|
3 701 336 |
|
1 138 443 |
|
4 839 779 |
|
USD |
|
10.09 |
|
45.1 |
|
197.7 |
|
Exelixis |
|
2 835 000 |
|
(180 500) |
|
2 654 500 |
|
USD |
|
16.04 |
|
39.4 |
|
47.3 |
|
Crispr Therapeutics |
|
949 584 |
|
(60 979) |
|
888 605 |
|
USD |
|
40.65 |
|
33.4 |
|
65.7 |
|
Wave Life Sciences |
|
4 602 858 |
|
(108 400) |
|
4 494 458 |
|
USD |
|
7.00 |
|
29.1 |
|
13.2 |
|
Beam Therapeutics |
|
606 821 |
|
86 300 |
|
693 121 |
|
USD |
|
39.11 |
|
25.1 |
|
44.1 |
|
Esperion Therapeutics |
|
4 477 964 |
|
(283 900) |
|
4 194 064 |
|
USD |
|
6.23 |
|
24.2 |
|
20.4 |
|
Mersana Therapeutics |
|
4 135 000 |
|
(68 800) |
|
4 066 200 |
|
USD |
|
5.86 |
|
22.0 |
|
23.5 |
|
Kezar Life Sciences |
|
4 918 148 |
|
(1 918 148) |
|
3 000 000 |
|
USD |
|
7.04 |
|
19.5 |
|
75.1 |
|
Essa Pharma |
|
5 015 814 |
|
2 863 769 |
|
7 879 583 |
|
USD |
|
2.52 |
|
18.4 |
|
65.0 |
|
Scholar Rock Holding |
|
2 275 125 |
|
(142 400) |
|
2 132 725 |
|
USD |
|
9.05 |
|
17.8 |
|
51.6 |
|
Generation Bio Co. |
|
3 853 180 |
|
(244 900) |
|
3 608 280 |
|
USD |
|
3.93 |
|
13.1 |
|
24.9 |
|
Black Diamond Therapeutics |
|
3 440 000 |
|
1 937 839 |
|
5 377 839 |
|
USD |
|
1.80 |
|
8.9 |
|
16.7 |
|
Molecular Templates |
|
10 792 003 |
|
400 000 |
|
11 192 003 |
|
USD |
|
0.33 |
|
3.4 |
|
38.6 |
|
Homology Medicines |
|
1 737 122 |
|
(114 600) |
|
1 622 522 |
|
USD |
|
1.26 |
|
1.9 |
|
5.8 |
|
Biogen |
|
500 000 |
|
(500 000) |
|
– |
|
USD |
|
n.a. |
|
– |
|
109.5 |
|
Radius Health |
|
7 705 714 |
|
(7 705 714) |
|
– |
|
USD |
|
n.a. |
|
– |
|
48.7 |
|
Nektar Therapeutics |
|
2 620 676 |
|
(2 620 676) |
|
– |
|
USD |
|
n.a. |
|
– |
|
32.3 |
|
Listed shares |
|
|
|
|
|
|
|
|
|
|
|
3 035.2 |
|
3 638.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rivus Pharmaceuticals |
|
|
|
|
|
|
|
USD |
|
|
|
16.2 |
|
– |
|
Unlisted shares |
|
|
|
|
|
|
|
|
|
|
|
16.2 |
|
– |
|
Total shares |
|
|
|
|
|
|
|
|
|
|
|
3 051.3 |
|
3 638.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radius Health – Contingent Value Right |
|
– |
|
8 733 538 |
|
8 733 538 |
|
USD |
|
0.00 |
|
– |
|
– |
|
Alder Biopharmaceuticals – Contingent Value Right |
|
2 766 008 |
|
(2 766 008) |
|
– |
|
USD |
|
n.a. |
|
– |
|
2.2 |
|
Total derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
– |
|
2.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities |
|
|
|
|
|
|
|
|
|
|
|
3 051.3 |
|
3 641.1 |
Securities are deposited with Bank Julius Baer & Co. Ltd., Zurich.
5. Short-term borrowings from banks
At December 31, 2022, a CHF 363 mn short-term loan is outstanding, with interest payable at 1.36% p.a. (2021: CHF 355 mn at 0.40% p.a.).
6. Other short-term liabilities
Other short-term liabilities comprise the following:
|
in CHF 1 000 |
|
31.12.2022 |
|
31.12.2021 |
|
Payables to investment manager |
|
2 978 |
|
3 966 |
|
Other liabilities |
|
1 165 |
|
1 465 |
|
Total liabilities to third parties |
|
4 143 |
|
5 431 |
7. Shareholders’ equity
The share capital of the Company consists of 55.4 mn fully paid registered shares (2021: 55.4 mn registered shares) with a par value of CHF 0.20 each (2021: CHF 0.20). CHF 2.2 mn of the retained earnings (2021: CHF 2.2 mn) are undistributable.
| in CHF 1 000 | Share capital | Treasury shares | Retained earnings | Total | ||||
| Balances at January 1, 2021 |
|
( |
|
|
||||
| Dividend (CHF 3.60 per share) |
|
|
( |
( |
||||
| Trade with treasury shares |
|
( |
|
|
||||
| Total comprehensive income for the period |
|
|
( |
( |
||||
| Balances at December 31, 2021 |
|
( |
|
|
||||
| Balances at January 1, 2022 |
|
( |
|
|
||||
| Dividend (CHF |
|
|
( |
( |
||||
| Trade with treasury shares |
|
( |
|
( |
||||
| Total comprehensive income for the period |
|
|
( |
( |
||||
| Balances at December 31, 2022 |
|
( |
|
|
At December 31, 2022 and 2021, the Company has neither authorized nor conditional capital.
Treasury shares
The Company can buy and sell treasury shares in accordance with the Company’s articles of association and Swiss company law and in compliance with the listing rules of the SIX Swiss Exchange. During the period from January 1, 2022, to December 31, 2022, the Company has purchased 446 574 treasury shares at an average price of CHF 61.14 to the amount of TCHF 27 303 and the Company has not sold any treasury shares (01.01.–31.12.2021: Purchase of 110 336 treasury shares to the amount of TCHF 9 459; sales of 117 572 treasury shares to the amount of TCHF 9 653). As at December 31, 2022, the Company holds 554 000 treasury shares (December 31, 2021: 107 426 shares). The treasury shares as at December 31, 2022, were treated as a deduction from the consolidated shareholders’ equity using cost values of TCHF 36 508 (December 31, 2021: TCHF 9 205).
Share buyback 2nd line (bought for cancellation)
In April 2019, the Board of Directors approved the repurchase of a maximum of 5 540 000 own registered shares with a nominal value of CHF 0.20 each. Until the end of the program, at April 11, 2022, no shares had been repurchased under this share buy-back program.
The Board of Directors has approved the repurchase of a maximum of 5 540 000 own registered shares with a nominal value of CHF 0.20 each. The share buy-back program will run from April 13, 2022 until April 11, 2025 at the latest. Until December 31, 2022, no shares had been repurchased under this share buy-back program. The repurchase will take place via second trading line for the purpose of a subsequent capital reduction.
8. Administrative expenses
Administrative expenses comprise the following:
|
in CHF 1 000 |
|
2022 |
|
2021 |
|
Investment manager |
|
|
|
|
|
– Management fees (incl. VAT) |
|
36 497 |
|
50 681 |
|
Personnel |
|
|
|
|
|
– Board of Directors remuneration |
|
1 550 |
|
1 288 |
|
– Wages and salaries |
|
578 |
|
525 |
|
– Social insurance contributions and duties |
|
122 |
|
101 |
|
|
|
38 747 |
|
52 595 |
The remuneration model of BB Biotech AG is determined by the Board of Directors.
Since 2014, the remuneration paid to the investment manager is based upon a 1.1% p.a. all-in fee on the average market capitalization without any additional fixed or performance-based elements of compensation, which is paid on a monthly basis. The compensation of the Board of Directors consists since 2014 of a fixed compensation.
9. Other expenses
Other expenses comprise the following:
|
in CHF 1 000 |
|
2022 |
|
2021 |
|
Bank charges |
|
516 |
|
644 |
|
Marketing and financial reporting |
|
1 171 |
|
1 293 |
|
Legal and consulting expenses |
|
288 |
|
524 |
|
Transaction costs |
|
985 |
|
2 772 |
|
Other expenses |
|
1 314 |
|
1 374 |
|
|
|
4 274 |
|
6 607 |
10. Income taxes
|
in CHF 1 000 |
|
2022 |
|
2021 |
|
Operating income before tax |
|
(357 751) |
|
(404 741) |
|
Expected tax rate (Direct federal, cantonal and communal tax) |
|
14.2% |
|
14.3% |
|
Expected income tax |
|
(50 729) |
|
(57 878) |
|
Difference between effective local tax rates and the expected Swiss tax rate |
|
(50 790) |
|
(57 945) |
|
Total income tax |
|
61 |
|
67 |
In the current year, the average effective income tax rate on a consolidated basis was less than 1% (2021: <1%). This low rate is mainly attributable to the fact that a large proportion of operating income was generated by companies located in Curaçao. As at December 31, 2022, there is no nettable loss carry forward (2021: none).
11. Earnings per share
|
|
|
2022 |
|
2021 |
|
Total comprehensive profit/(loss) for the period (in CHF 1 000) |
|
(357 812) |
|
(404 808) |
|
Weighted average number of shares in issue |
|
55 011 338 |
|
55 363 670 |
|
Income per share in CHF |
|
(6.50) |
|
(7.31) |
|
|
|
|
|
|
|
Income used to determine diluted income per share (in CHF 1 000) |
|
(357 812) |
|
(404 808) |
|
Weighted average number of shares in issue following the dilution |
|
55 011 338 |
|
55 363 670 |
|
Diluted income per share in CHF |
|
(6.50) |
|
(7.31) |
12. Segment reporting
The sole operating segment of the Group reflects the internal management structure and is evaluated on an overall basis. Revenue is derived by investing in a portfolio of companies active in the biotechnology industry for the purpose of capital appreciation. The following results correspond to the sole operating segment of investing in companies active in the biotechnology industry.
The geographical analysis of the profit/(loss) before tax is as follows – all income from financial assets are attributed to a country based on the domiciliation of the issuer of the instrument:
|
Profit/(loss) before tax in CHF 1 000 |
|
2022 |
|
2021 |
|
Great Britain |
|
62 370 |
|
(54 533) |
|
Netherlands |
|
23 715 |
|
60 946 |
|
Singapore |
|
15 976 |
|
(13 003) |
|
Switzerland |
|
(32 542) |
|
(61 874) |
|
Curaçao |
|
(39 717) |
|
(54 726) |
|
Canada |
|
(57 337) |
|
(29 966) |
|
USA |
|
(330 216) |
|
(251 585) |
|
|
|
(357 751) |
|
(404 741) |
13. Assets pledged
At December 31, 2022, the securities in the amount of CHF 3 051.3 mn (2021: CHF 3 641.1 mn) are a collateral for a credit line of CHF 700 mn (2021: CHF 700 mn). At December 31, 2022, a CHF 363 mn short-term loan is outstanding (2021: CHF 355 mn).
14. Commitments, contingencies and other off-balance sheet transactions
The Group had no commitments or other off-balance sheet transactions open at December 31, 2022 (2021: none).
The operations of the Group are affected by legislative, fiscal and regulatory developments for which provisions are made where deemed necessary. The Board of Directors concludes that as at December 31, 2022, no proceedings existed which could have any material effect on the financial position of the Group (2021: none).
15. Financial instruments by category
Financial assets and liabilities are allocated to categories as follows (in CHF 1 000):
|
At December 31, 2022 |
|
Financial assets at amortized cost |
|
Financial assets at fair value through profit or loss |
|
Total |
|
Assets as per balance sheet |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
1 948 |
|
– |
|
1 948 |
|
Securities |
|
– |
|
3 051 349 |
|
3 051 349 |
|
|
|
1 948 |
|
3 051 349 |
|
3 053 297 |
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at amortized cost |
|
Financial liabilities at fair value through profit or loss |
|
Total |
|
Liabilities as per balance sheet |
|
|
|
|
|
|
|
Short-term borrowings from banks |
|
363 000 |
|
– |
|
363 000 |
|
Other short-term liabilities |
|
4 143 |
|
– |
|
4 143 |
|
|
|
367 143 |
|
– |
|
367 143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2021 |
|
Financial assets at amortized cost |
|
Financial assets at fair value through profit or loss |
|
Total |
|
Assets as per balance sheet |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
2 835 |
|
– |
|
2 835 |
|
Securities |
|
– |
|
3 641 112 |
|
3 641 112 |
|
|
|
2 835 |
|
3 641 112 |
|
3 643 947 |
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at amortized cost |
|
Financial liabilities at fair value through profit or loss |
|
Total |
|
Liabilities as per balance sheet |
|
|
|
|
|
|
|
Short-term borrowings from banks |
|
355 000 |
|
– |
|
355 000 |
|
Other short-term liabilities |
|
5 431 |
|
– |
|
5 431 |
|
|
|
360 431 |
|
– |
|
360 431 |
Profit and loss from financial assets and liabilities are allocated to categories as follows (in CHF 1 000):
|
2022 |
|
Financial assets at amortized cost |
|
Financial instruments at fair value through profit or loss |
|
Financial liabilities at amortized cost |
|
Total |
|
Profit and loss from financial instruments |
|
|
|
|
|
|
|
|
|
Interest income |
|
4 |
|
– |
|
– |
|
4 |
|
Net losses from securities |
|
– |
|
(314 265) |
|
– |
|
(314 265) |
|
Foreign exchange gains |
|
1 253 |
|
– |
|
– |
|
1 253 |
|
Finance expenses |
|
– |
|
– |
|
(1 726) |
|
(1 726) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Profit and loss from financial instruments |
|
|
|
|
|
|
|
|
|
Foreign exchange gains net |
|
– |
|
(343 595) |
|
– |
|
(343 595) |
|
Finance expenses |
|
– |
|
– |
|
(986) |
|
(986) |
|
Foreign exchange losses |
|
(962) |
|
– |
|
– |
|
(962) |
16. Transactions with the Investment Manager and related party transactions
The investment management and administration of the Company has been delegated to Bellevue Asset Management AG. Based on the 1.1% p.a. all-in fee model, no additional costs incurred at Bellevue Asset Management AG were charged to the BB Biotech Group (2021: none). The amounts outstanding at the balance sheet date are disclosed in note 6, «Other short-term liabilities».
17. Significant shareholders
The Board of Directors is not aware of any major shareholder with a holding exceeding 3% of all votes as at December 31, 2022 and 2021.
18. Subsequent events
There have been no events subsequent to December 31, 2022, which would affect the 2022 consolidated financial statements.
Report on the Audit of the Consolidated Financial Statement
To the General Meeting of BB Biotech AG
Opinion
We have audited the consolidated financial statements of BB Biotech AG (the Company) and its subsidiaries (the Group), which comprise the consolidated balance sheet as at December 31, 2022 and the consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2022 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.
Basis for Opinion
We conducted our audit in accordance with Swiss law, the International Standards on Auditing (ISA) and Swiss Standards on Auditing (SA-CH). Our responsibilities under those provisions and standards are further described in the «Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements» section of our report. We are independent of the Group in accordance with the provisions of Swiss law, together with the requirements of the Swiss audit profession, as well as those of the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Valuation of investment securities
The investment portfolio as of December 31, 2022 comprises investments in marketable and non-marketable securities.
We consider this area to be a key audit matter because of the significant value of the securities in the consolidated financial statements.
As set out in note 4 (Schedule of securities) securities amount to CHF 3 051 million or 99.9% of total assets (previous year CHF 3 641 million or 99.9% of total assets).
The valuation of the securities is prepared by the Investment Manager using the valuation methods disclosed in note 2 (Accounting policies). The board of Directors approves the valuation of the investment portfolio.
How our audit addressed the key audit matter
We gained an understanding of the controls in place related to the valuation of securities in order to determine whether the Investment Manager has appropriate controls in place. Further, we verified the adequacy of the applied valuation methods as well as the appropriateness of the resulting valuations.
To audit the valuation of the investment securities we performed the following procedures:
- We compared the valuation methods applied by the Investment Manager with generally accepted valuation methods. Further, we verified the quoted prices of marketable securities by comparing them with those from an independent source different from that used by the Investment Manager. Additionally, we verified that the valuation of the non-marketable securities is in line with the valuation policies of the Group testing the most important input factors applied in the valuation;
- We obtained sufficient audit evidence to adress the risk that the valuation methods were both appropriate and consistently applied by the Investment Manager.
Key audit matter
Ownership of securities
The securities are safeguarded by an independent custodian.
There is a risk that the Group may not have sufficient legal entitlement to the securities.
We consider this area to be a key audit matter because of the significant value of the securities in the consolidated financial statements.
How our audit addressed the key audit matter
We examined the ownership of the securities by requesting a confirmation of the securities directly from the custodian.
We obtained sufficient audit evidence to address the risk of insufficient legal entitlement to the securities portfolio.
Other Matter
The consolidated financial statements of the Group for the year ended December 31, 2021, were audited by another auditor whose report, dated February 16, 2022, expressed an unqualified opinion on those consolidated financial statements.
Other Information
The Board of Directors is responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements, the remuneration report and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Board of Directors’ Responsibilities for the Consolidated Financial Statements
The Board of Directors is responsible for preparing the consolidated financial statements, which give a true and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Swiss law, the ISA and SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Swiss law, ISA and SA-CH, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made.
- Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have com-plied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Board of Directors or its relevant committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report, unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
In accordance with Art. 728a para. 1 item 3 CO and PS-CH 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
Deloitte AG
Marcel Meyer
Licensed Audit Expert
Auditor in Charge
Alexander Kosovan
Licensed Audit Expert
Zurich, February 17, 2023