Replicon Portfolio Outperforms Benchmark Third Year in a Row
29-01-2006,

Replicon Medical Development Fund (MDF earlier name RBV) beats Nasdaq Biotech Index return for the third year in a row. During the year ending on 28th of January return of the MDF portfolio was 38.6 per cent compared to Nasdaq Biotech Index return of 14.7 per cent. We are very happy that our carefully chosen pharma development portfolio was able to outperform benchmark index also after significant changes made to its content a year ago. Third year performance confirms that conducted fixed investment strategy can create abnormal returns even with fully updated portfolio , says Petteri Hirvonen, CEO of Replicon Group.

Medical Development Fund (MDF) consists of listed shares chosen from global pharmaceutical development sector (total investment universe some 500 companies). In practice most of the selected companies are listed on Nasdaq Stock Exchange, New York, due mainly to selected benchmark and leading biotech market place status. Currently there are some 160 biotech companies in Nasdaq Biotech Index (NBI). Among those we have chosen some 20-30 companies in to MDF that fill specified criteria.

Our strict selection process means that only those pharma development companies that conduct very sound financing strategy and possess good quality R&D pipeline have a possibility of being accepted to MDF. On top of these relatively obvious selection criteria there are some other undisclosed selection criteria that facilitate the out performance of MDF as a whole. All in all a portfolio of selected drug development companies should yield superior returns in the long run compared to the Benchmark as has been the case during last 36 months (see previous articles on MDF (or RBV) published on 29th of Jan, 2004 and on 29th of Jan, 2005). See also Performance report ( in Finnish).

During first three years since inception the beta multiple of MDF has been approximately +1.4 and abnormal return (alfa) some +8 per cent p.a., i.e. return and volatility of the portfolio have been high. During last 13 years average annual return on biotech investments (return of NBI) has been some 13 percent p.a. If we assume 13 per cent as the expected future biotech market return, we can calculate that the expected annual return of MDF is some 26 per cent!

Importantly the return of our updated portfolio clearly over performed the return on our original portfolio during last year (38.6% vs. 18.6%). This confirms that updating the portfolio structure with predetermined investment policy created value.

Replicon plans to commercialize MDF during the first half of 2006. We have identified needed partners for this project, but we are still looking for additional investments into the fund and possibly also investors of risk capital for the business concept.

For further information, please contact: Petteri Hirvonen, CEO, Replicon Group +358-(0)50-552 96 33 petteri.hirvonen@replicon.fi

Replicon Group is an independent corporate finance, strategic consulting and asset management advisory house based in Helsinki. Replicon provides strategic and financial solutions that facilitate business activities, efficiency, and increase profitability of corporations and other organizations. Our core competence is in the corporate solutions that facilitate and govern growth of businesses based on innovation. An important part of our activities is continuous learning. We want to find and develop most suitable solutions to our customer needs. Replicon Group’s special focus areas are and ICT/Mobile and Life-Science sectors. The main shareholders in Replicon Group are its key management, holding majority of the company’s shares. Replicon’s homepage is www.replicon.fi