27 Oct 2008

Biotech - attractive valuations, more acquisitions

During the third quarter 2008, BB BIOTECH's portfolio companies continued to hold up in a turbulent environment. BB BIOTECH's share price closed the quarter at CHF 83.50, flat compared to the second quarter 2008. In Germany it closed at EUR 53.20, up 3% compared to the previous quarter. The Net Asset Value of BB BIOTECH increased by 5% during the quarter. As a result, the difference between the share price and the Net Asset Value of BB BIOTECH increased to 16%, despite the fact that BB BIOTECH continued its share buyback program aggressively, purchasing 782 400 shares worth CHF 68 mn. We will continue our measures to decrease the difference between share price and Net Asset Value.

During the quarter, numerous acquisitions of biotech companies took place. Most importantly, in July, Roche announced its intention to acquire the 44% of Genentech shares that it does not own for USD 47.3 bn. Following the announcement, Genentech's share price appreciated significantly. We took advantage of the price appreciation and reduced our holding in Genentech significantly. Although the offer was subsequently rejected by the independent directors of Genentech, for being too low, we expect the transaction to be consummated.

The number of acquisitions of European biotech companies is increasing as well, indicating the progress that European biotech companies are making. Our Germany-based holding Jerini was acquired by Shire at a premium of 199% to the preceding three months average share price. Previously, Jerini had received an approval from the European Regulatory Agency EMEA for its product Firazyr for treatment of hereditary angioedema.

Our UK-based holding Acambis was acquired by Sanofi at a premium of 65% to the preceding two months average share price. Acambis is developing innovative vaccines for the prevention of serious infectious diseases.

On the negative side, our holding Elan presented ambiguous results from a Phase II trial of its antibody Bapineuzumab for treatment of Alzheimer's disease. Although the results of that particular trial disappointed the high expectations which had been built up in front of the data, we are confident that medical breakthroughs for treatment of Alzheimer's disease will be
achieved in the coming years.

Biogen Idec and Elan announced two more cases of progressive multifocal leukoencephalophathy (PML) associated with treatment of multiple sclerosis with its drug Tysabri. Although both patients are recovering, the share prices of both companies declined significantly following the news. We continue to believe in the superior clinical profile of Tysabri and we continue to expect that Tysabri will become a substantial commercial success. Following the news, we increased our holding in Biogen Idec substantially.

As a result of the turmoil in the financial markets, biotech companies are now trading at very low valuations, despite strong growth and strong fundamentals. The business models of the vast majority of our companies are hardly affected by the current squeeze on the credit markets because they are well financed and generate substantial cash-flows. In addition, biotech assets become increasingly attractive for pharmaceutical companies, as most of the pharmaceutical companies are under increasing pressure to acquire or in-licence new products. Although we aren't able to forecast how long the current financial crisis will last, we are very confident that biotech will be among the winners in the coming years.

This is the composition of BB BIOTECH's Portfolio as at September 30, 2008 (in % of securities):
CORE HOLDINGS Actelion 28.8% Celgene 17.5% Gilead 17.3% Vertex Pharmaceuticals 10.5% Genentech 10.5% Biogen Idec 5.4%

SMALL PARTICIPATIONS Zymogenetics 1.7% Roche Holding GS 1.5% Elan 1.0% Affymetrix 1.0% The Medicines Company 0.9% NicOx 0.7% Rigel Pharmaceuticals 0.5% Basilea Pharmaceutica 0.5% Optimer Pharmaceuticals 0.5% Incyte 0.5% Arena Pharmaceuticals 0.3% BioXell 0.3% Epigenomics 0.2% Keryx Biopharmaceuticals <0.1%
Genentech call option (long) 0.1% Celgene call option (short) <(0.1%) SWAP agreement on treasury shares 0.4%

Total securities CHF 1 775.8 mn

Liquid funds (net) CHF (33.3) mn Other assets CHF 19.8 mn Other payables CHF (112.9) mn
Total shareholder's equity CHF 1 649.3 mn Treasury shares (in % of company) 18.2%
The Quarterly Report is available on www.bbbiotech.com.

For further information please contact: Bellevue Asset Management AG, Seestrasse 16, CH-8700 Kusnacht, Switzerland Nafida Bendali or Maria-Grazia Alderuccio, Tel. +41 44 267 67 00

BB Biotech AG Vordergasse 3 Schaffhausen Switzerland
WKN: 888509; ISIN: CH0001441580 ; Index: Prime All Share, MIDCAP, TECH All Share, TecDAX, HDAX; Listed: Geregelter Markt in Frankfurter Wertpapierborse;

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