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The Platinum International Healthcare Fund advanced 1.1% forthe quarter, with the MSCI World Healthcare Index increasing2.2%. For the year, the Fund was up 4.7%, lagging the Indexwhich advanced 9.8%.
The Fund has been lagging the Index mostly due to the highcash position. In hindsight, we should have added moreweight to our core biotech holdings as the sector is benefitingfrom merger and acquisition fever. However, in the long-termthe fever will subside and we would prefer to invest in compa- Bianca Ogden Portfolio Manager
Disposition of Assets
REGIoN
Value of $20,000 Invested Over Five Years
Source: Platinum and MSCI. Refer to Note 2, page 4.
Almost all of our biotech holdings added significantly to the Commentary
performance. BioMarin, the US orphan drug biotech is gradu-ally executing on its pipeline, as is swiss biotech Actelion. This Every November there is someone in our office who decides to quarter, Actelion was a strong performer having reported suc- follow the ‘Movember’ movement and for one month this per- cess with its new drug, Macitentan and is now well-placed to son will look a little bit out of place with their moustache! It is reshape the treatment of pulmonary hypertension. Incyte, our all in the spirit of raising awareness (and funds) for prostate longstanding US biotech holding has transformed into a com- cancer, a disease where early detection is absolutely crucial.
mercial company with sales and a promising pipeline. Im- Prostate cancer primarily develops in later stages of life and munoGen is also getting very close to having a drug approved.
progresses slowly without many noticeable symptoms.
The company’s first drug-carrying antibody T-DM has seen sig- Prostate-specific antigen (PSA) detection is fairly well-known nificant progress in managing Her2 positive breast cancer.
and elevated levels of PSA suggest a more detailed prostate Roche has licenced the drug and is positioning T-DM1 as the Herceptin successor. The strategy is looking to pay-off and Treatment of prostate depends on the stage of the disease and Roche itself was also successful in gaining approval of another ranges from a ‘wait and see’ approach, surgery and radiation new breast cancer drug this quarter.
to pharmacological castration. once the tumour is ‘castration Not everything went well this year; Teva has been a disap- resistant or hormone resistant’, heavy chemotherapy has to be pointment. While the Multiple Sclerosis (MS) drug Copaxone will not see generic branding until 2014, the commercial via- It is this later disease stage, when the tumour circumvents cas- bility of the follow-on MS drug is unlikely. Essentially, Teva tration and starts to grow and spread again, that has attracted has to continue to look for additional sources of growth. In re- most drug development efforts, as disease progress can be cent years, the company has done exactly that but as always rapid. In reality these ‘hormone resistant patients’ are not so progress is slow. A new CEo has been recruited who brings resistant after all, there are alternative androgen1 pathways at the right credentials having been instrumental in the transfor- play that trigger a growth signal and there are also receptors mation of Bristol Myer Squibb’s pipeline. Teva’s valuation is that decide to start sending signals without any ligand.
cheap and we see value in the European and Japanese genericsdivision, the pipeline, as well as Teva’s biosimilar joint venture Zytiga, a Johnson & Johnson (JNJ) drug, is a new treatment2 that specifically targets the androgen pathway via the inhibi-tion of 17 α-hydroxylase/C17,20 lyase (CyP17A1), an enzyme This quarter we have been more active than usual, adding five that is involved in the synthesis of testosterones. Testosterone new companies to the portfolio. We added German conglom- levels are dramatically reduced when taking Zytiga and results erate, Bayer. At Bayer, many structural as well as manage- have shown that patients with late stage disease live longer.
ment changes have occurred that should put the company on JNJ gained access to this drug via the acquisition of Cougar a better footing. We like the potential of the pipeline, the Pharmaceuticals and is hoping to treat earlier stage patients.
depth of the consumer business and the stability of theveterinarian business.
Japanese Pharma company Astellas is also aiming at prostatecancer. The company has good expertise in urology and in We are slowly trimming some of our US winners and reinvest- 2009 licenced another new anti-androgen MDV3100 drug ing the proceeds into European biotechs that we have held for from US biotech, Medivation. This drug does not target the the past 12 months (like Actelion and Thrombogenics). We synthesis of androgens, it targets the androgen receptor which also added to our European pharma and diagnostic holdings.
transmits growth signals to the tumour. Results for MDV3100are looking good and approval is anticipated next year. Astel-las will share commercialisation in the US with Medivation,while outside the US, Astellas will work alone and pay royal-ties to Medivation.
Androgen: male hormones such as testosterone.
Approved June 2012 in Australia; EU approval in September 2011; US approval in April 2011 .
Both Zytiga and MDV3100 have great potential for prostate cancer. For JNJ it is a significant addition to their portfolio,while for Astellas it is a much more significant product as it al- Macroeconomical woes are not able to dent the excitement of lows the company to expand its ex-Japan oncology franchise.
new product cycles in the healthcare sector. Now that it isclear that the US healthcare reform is here to stay, European We recently added Astellas to the portfolio after having moni- austerity measures are no longer a surprise and patent cliffs tored the company for some years. Astellas is the second do not mean companies will expire; drug developers, pharma biggest pharma company in Japan and stands out as it has and biotech included, are enjoying a renaissance. We see this been quite successful with its acquisitions and licencing deals, while at the same time the balance sheet is in pristine condi-tion. Furthermore, the pipeline is progressing well and the In medtech, however, we remain very selective and are still patent expiration of Prograf, one of their key drugs, has been looking for a renaissance among the big companies.
oncology is not new to Astellas, about two years ago the ac-quisition of oSI Pharma (we previously owned oSI) providedAstellas with a great oncology foundation. Valuation of Astel-las is reasonable at an enterprise value of $16.2 billion, sales of$12.2 billion and about 15x earnings (~11x excluding cash, wealso get a 4% dividend). MDV3100 will be a nice addition toAstellas who can leverage its urology franchise. For compari-son, Medivation is valued at $3.5 billion with MDV3100 theonly commercial product in the near future. To us, Astellas of-fers better value.
The investment returns are calculated using the Fund’s unit price and represent the combined income and capital return for the specific period. They are net offees and costs (excluding the buy-sell spread and any investment performance fee payable), are pre-tax, and assume the reinvestment of distributions. The in-vestment returns shown are historical and no warranty can be given for future performance. you should be aware that historical performance is not a reliableindicator of future performance. Due to the volatility of underlying assets of the Funds and other risk factors associated with investing, investment returns canbe negative (particularly in the short-term).
The inception dates for each Fund are as follows: Platinum International Fund: 30 April 1995 Platinum International Brands Fund: 18 May 2000 Platinum International Health Care Fund: 10 November 2003 Platinum International Technology Fund: 18 May 2000 The investment returns depicted in this graph are cumulative on A$20,000 invested in the relevant Fund over five years from 30 June 2007 to 30 June 2012 rel-ative to their Index (in A$) as per below: Platinum International Fund - MSCI All Country World Net Index Platinum Unhedged Fund - MSCI All Country World Net Index Platinum Asia Fund - MSCI All Country Asia ex Japan Net Index Platinum European Fund - MSCI All Country Europe Net Index Platinum Japan Fund - MSCI Japan Net Index Platinum International Brands Fund - MSCI All Country World Net Index Platinum International Health Care Fund - MSCI All Country World Health Care Net Index Platinum International Technology Fund - MSCI All Country World Information Technology Net Index (nb. the gross MSCI Index was used prior to 31 December 1998 as the net MSCI Index did not exist).
The investment returns are calculated using the Fund’s unit price. They are net of fees and costs (excluding the buy-sell spread and any investment perform-ance fee payable), pre-tax and assume the reinvestment of distributions. It should be noted that Platinum does not invest by reference to the weightings of theIndex. Underlying assets are chosen through Platinum’s individual stock selection process and as a result holdings will vary considerably to the make-up of theIndex. The Index is provided as a reference only.
Disclaimer
This publication has been prepared by Platinum Investment Management limited ABN 25 063 565 006 AFSl 221935 trading as Platinum Asset Management (Plat-inum®). It contains general information only and is not intended to provide any person with financial advice or take into account any person’s (or class of persons’)investment objectives, financial situation or needs. Before making any investment decision you need to consider (with your financial adviser) whether the informa-tion is suitable in the circumstances.
Platinum is the responsible entity and issuer of units in the Platinum Trust Funds® (the Funds). you should consider the PDS and Supplementary PDS in decidingwhether to acquire, or continue to hold, units in the Funds. you can obtain a copy from Platinum’s website, www.platinum.com.au, or by phoning 1300 726 700(within Australia), 02 9255 7500, or 0800 700 726 (within New Zealand), or by emailing to [email protected].
No company in the Platinum Group® guarantees the performance of any of the Funds, the repayment of capital, or the payment of income. The Platinum Groupmeans Platinum Asset Management limited ABN 13 050 064 287 and all of its subsidiaries and associated entities (including Platinum).
Platinum Asset Management 2012. All Rights Reserved.
MSCI Inc Disclaimer
Neither MSCI Inc nor any other party involved in or related to compiling, computing or creating the Index data (contained in this Quarterly Report) makes any ex-press or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly dis-claim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting anyof the foregoing, in no event shall MSCI Inc, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liabil-ity for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No fur-ther distribution or dissemination of the Index data is permitted without express written consent of MSCI Inc.

Source: https://www.platinum.com.au/Documents/Funds/PIHF/Quarterly_Reports/pihfqtr_0612.pdf