Replicon Biotech Model Portfolio Annual Return 78 per cent
29-01-2004,

Replicon Biotech Model Portfolio or Replicon Biotech Value (RBV) consists of listed Biotech companies from US markets. It is not an actively managed portfolio, but instead a Buy-and-Hold type of fund. When building RBV we screened the financial statements and R&D pipelines of some 100 publicly listed biotech companies. Eventually 21 companies that filled specified criteria were chosen into the portfolio.

There were some five selection variables or criteria that determined the acceptance or rejection of a potential company. From original variables we derived 'Product-Cash -index' that was the most influential factor affecting the suitability of the company into RBV. Companies that satisfied this criterion were de facto conducting sound financing strategy. Additional idea underlying RBV was to choose relatively small companies with good quality R&D pipeline, whose market value price development hadn't been superior to the Benchmark Index (Nasdaq Biotech).

A portfolio of these biotech companies should yield superior returns in the long run compared to the Benchmark. In a positive environment, as has been the case during last 12 months, this portfolio should yield high returns also in the short run.

For the year starting 28th of January 2003, value of RBV increased 78 percent. At the same time Nasdaq Biotech Index yielded 'only' 55 percent return.

We compared RBV also to a portfolio of heavy weight Biotech companies with market capitalization of $10bn or more. This 'Success Stories' portfolio included Amgen, Genetech, BiogenIdec, Gilead, Genzyme, and Chiron. 'Success Stories' portfolio return was very similar to the Index return, i.e. 53% during the period and hence RBV beat it also.

'Replicon Group is an independent corporate finance and consulting house. In this business it is absolutely vital to be able to identify value in our clients' business activities. That is why it is useful for us to test and develop our skills also by creating and following the performance of portfolios in real situations. Additionally it is important for us to follow closely what is going on in the market place.' says Petteri Hirvonen, CEO of Replicon Group.

For further information, please contact:

Petteri Hirvonen,
CEO, Replicon Group
+358-(0)9-4111 0347
petteri.hirvonen@replicon.fi