International Biotechnology (IBT) is a beneficiary of the ‘frenetic’ dealmaking in the sector as its largest holding inks a takeover deal.

Soleno Therapeutics, which is IBT’s top holding making up almost 6% of the £367m portfolio, has entered into an agreement to be acquired by Nasdaq-listed Neurocrine Biosciences for $2.9bn (£2.1bn).

Soleno develops and commercialises therapies for rare diseases, with a specialist focus on Prader-Willi Syndrome, with its Vykat XR treatment lessening the excessive hunger caused by the illness.

The drug was launched last year and generated $190m of revenues, including $92m in the fourth quarter.

Shareholders in Soleno will receive $53 per share in cash, a premium of 34% to the closing price on 2 April. Shares in IBT have jumped nearly 10% since 1 April.

Schroder’s Ailsa Craig and Marek Poszepczynski, who manage the trust, said they are seeing ‘frenetic dealmaking activity’ within the biotech sector as it moves into the second quarter.

Pharmaceutical giants are snapping up smaller innovative biotech firms to both ‘add new therapies to their pipelines and replace lost revenues from patent expiries in the coming years’.  

Soleno is part of a ‘growing cohort of mature, clinically de-risked companies that we refer to as Biotech 2.0’, said the manager.

They said these companies are both acquisition targets but also able to deliver significant revenues as standalone companies.

The takeover of Soleno is the fourth acquisition in the IBT portfolio this year alone, with the other three deals happening last month.

Craig and Poszepczynski said: ‘We expect this wave of M&A activity to continue and have positioned our portfolio to take advantage, with the drivers of elevated deal-flow activity likely to remain firmly in place for the foreseeable future.’

IBT has been a standout winner from the biotech revival that started last year, with shares in the trust having risen 97.2% over the past 12 months and the net asset value (NAV) soaring 93.3%, beating the average return from peers in the Bitotechnology & Healthcare AIC sector of 37% and 25.1% respectively.