In July, the NAV per share total return was -3.6%, the share price total return was -2.8% and the return of the MSCI World Health Care Index on a net total return, sterling adjusted basis (Company's Benchmark) was -0.2%. Broad market action in July gyrated between geopolitical tensions with U.S. and Iran and the on-again, off-again AI tech trade. Healthcare stocks were more volatile in the period and the divergence between sub-sectors was stark (e.g. emerging biotechnology (XBI -8.6% sterling) and life science tools (S&P 500 Life Sciences Tools & Services Index +6.5% sterling)). Overall, the largest detractor from performance on a sector basis – both absolute and relative – in July was the Trust's overweight exposure to biotechnology, particular small/mid-cap stocks. Inflationary concerns and potential rate hikes fostered a profit-taking sell-off following the sector's strong June rally. The largest biotechnology detractor in the month, Structure Therapeutics, was a victim of this profit taking, falling over 10% (local currency) despite no fundamental news. The largest absolute detractor on a stock basis in July was Eli Lilly, which sold off late in the month as investors re-risked ahead of the company's 2Q earnings report in August. Another detractor of import was AstraZeneca. The company announced negative clinical data for Wainua (eplontersen), a medicine used to treat a genetic form of amyloidosis, a group of diseases that causes your body to produce abnormal proteins that misfold (called amyloids). The stock fell over 10% (local currency) and did not recover into month end. We reduced our position on the surprising development, acknowledging some additional downside risk on further imminent pipeline catalysts. Total losses in pharmaceuticals were partially offset by gains from two other pharmaceutical company investments, Bristol-Myers Squibb and Roche. The former rose nearly 15% (local currency) in July and closed the month on a 52 week high after enthusiasm for the company's key pipeline assets inflected, whilst the latter rose after reporting better-than-expected 2Q results. Other positive contributors of note included Thermo Fisher Scientific (after a "beat and raise" quarter) and Boston Scientific (finally lifting off the bottom after 10 months of declines). Looking ahead, the looming autumn brings several healthcare specific broker conferences that will be heavily scrutinized by investors. Of interest: commentary on the potential for further M&A, continued changes at the FDA, pipeline developments (including obesity, oncology, and cardiovascular), and the latest innovation and deal flow coming out of China.
