International Biotechnology Trust plc delivers 39% return, driven by M&A and innovation

International Biotechnology Trust plc has put out a very strong half-year report. The headline number is a 39% share price total return for the six months to 28 February 2026, comfortably ahead of the Nasdaq Biotechnology Index at 29.5%.

For retail investors, the message is pretty simple: this trust has benefited from a rebound in biotech, but it has also done more than just ride the market. Stock picking, takeover activity and a narrowing discount all helped shareholders do better than the benchmark.

International Biotechnology Trust half-year results: 39% share price return beats the biotech benchmark

This was a big six months. Net asset value, or NAV – the value of the trust’s underlying assets minus liabilities – rose by 35.7% per share, while the share price total return came in even higher at 39%.

That extra boost came from the discount narrowing. In plain English, the shares moved closer to the value of the underlying portfolio, with the discount to NAV improving from 8.9% at 31 August 2025 to 6.7% at 28 February 2026.

Key number	Six months to 28 February 2026
Share price total return	39%
NAV total return per share	35.7%
Reference Index return	29.5%
NAV per share	988.50 pence
Net assets	£315.361 million
First interim dividend	15.64 pence per share
Dividend yield at period end	3.2%
Shares bought back	1,824,657

Financially, the jump was substantial. The trust reported gains on investments of £87.639 million and a total net return after taxation of £85.433 million, compared with £7.034 million in the equivalent period last year.

That said, it is worth remembering this is an unaudited half-year report. It has not been reviewed or audited by the company’s auditors.

Why International Biotechnology Trust outperformed: biotech M&A and clinical wins did the heavy lifting

The strongest theme in this update is mergers and acquisitions, or M&A. Big pharmaceutical companies are hunting for new medicines to replace older products facing patent expiry, and that is exactly where International Biotechnology Trust wants to be – invested in innovative, later-stage biotech firms that are more likely to get bought.

That strategy worked nicely in this period. Five portfolio holdings received takeover offers, taking the total number of portfolio companies acquired since 2020 to 35.

• 89bio agreed to be acquired by Roche in a deal valued at up to $3.5 billion.
• Metsera agreed to be acquired by Pfizer, with an offer of $47.50 per share in cash plus up to $22.50 per share in milestones.
• Merus agreed to be acquired by Genmab in a transaction valued at approximately $8 billion.
• Akero Therapeutics agreed to be acquired by Novo Nordisk in a deal valued at up to $5.2 billion.
• Avidity Biosciences agreed to be acquired by Novartis in a transaction valued at approximately $12 billion.

That matters because takeovers can crystallise value very quickly. They also act as outside validation that the portfolio managers are finding companies with assets larger buyers genuinely want.

There were also some strong organic winners. The biggest contributor was uniQure, whose shares surged after an FDA accelerated approval pathway for its Huntington’s disease gene therapy, before the managers sensibly took profits. Vera Therapeutics rallied on positive Phase 3 results in kidney disease, while Terns Pharmaceuticals jumped on encouraging cancer trial data.

My read is that this is the sort of performance you want from a specialist biotech trust. It was not driven by one lucky bet. It came from a mix of clinical progress, deal activity and active portfolio management.

International Biotechnology Trust portfolio strategy: late-stage biotech focus looks sensible

The managers continue to focus on late-stage, high-growth biotechnology companies. Late-stage usually means therapies are further along in clinical development, or already close to commercial launch, which can reduce some of the all-or-nothing risk biotech is famous for.

That feels sensible in the current market. The company says larger, profitable biotech names have started to return to favour in early 2026, but it still believes the most attractive valuations sit in late-stage development and recently commercialised businesses.

I think that is a fair stance. If markets stay jumpy, investors may hide in larger names for a while, but the best takeover targets and biggest rerating opportunities often sit lower down the size scale.

Unquoted biotech investments: exciting upside, but these assets are riskier and harder to value

The unquoted portfolio represented 7.3% of total investments at the period end. That sits within the board’s target range of 5% to 15%, and gives shareholders access to private biotech opportunities they would struggle to buy directly.

There is good news here, but also the usual health warning. Private investments can produce excellent returns, though they are less liquid and valuations are less transparent than listed shares.

• SV Fund VI represented 2.5% of total investments and had delivered a net internal rate of return, or IRR, of 13.7% as at 31 December 2025.
• SV BCOF represented 3.2% of total investments and had delivered a net IRR of 79.9% since inception in 2022, though the company rightly notes it is still early in the fund’s life.
• Schroders Capital partnership had a £10 million commitment, with 20% drawn by the end of February 2026, and a net IRR of 5.3% as at 31 December 2025.

That 79.9% IRR from SV BCOF jumps off the page, but I would not get carried away. Early-stage venture returns can move around sharply, and one or two exits can make the numbers look spectacular. Encouraging, yes. Bankable, not yet.

Dividend, discount and buybacks: shareholder-friendly moves are helping the story

The dividend policy remains straightforward. The trust aims to pay out 4% of NAV each year, based on the previous 31 August year end, through two semi-annual dividends.

The first interim dividend of 15.64 pence per share was paid on 23 January 2026, and the board intends to declare the second dividend in July 2026 for payment in August 2026. For income-focused investors, that 3.2% yield at 28 February 2026 adds a useful extra layer to the growth story.

Buybacks also played a useful role. The board bought back 1,824,657 shares into treasury during the period, which helped narrow the discount and should be accretive to NAV when shares are repurchased below asset value.

That is good capital discipline. In investment trusts, buybacks are not just housekeeping – they can directly improve returns for ongoing shareholders.

What could go wrong in the second half: geopolitics, fees and balance sheet risks

Not everything in this report is rosy. The board says market volatility has increased since the period end because of war in the Middle East, rising energy prices and concerns over inflation and interest rates.

That matters because biotech is still a risk asset, especially smaller companies that may need external funding. The managers think later-stage holdings should prove more resilient, and that sounds reasonable, but this sector does not move in straight lines.

Costs also rose with performance. A performance fee of £1.452 million accrued for the half year, including £1.406 million for the quoted portfolio manager and £46,000 for SV Health on the unquoted side. That is the downside of doing well – shareholders keep the gains, but the fee meter runs faster too.

The trust also had a bank loan of £29.752 million at the period end, against cash and cash equivalents of £2.968 million. That is not unusual for an investment trust, but it does add balance sheet risk if markets turn sharply lower.

One other thing to watch is the planned combination of Schroders and Nuveen, announced on 12 February 2026 and not expected to complete until the fourth quarter of 2026. The board says it will monitor the impact. At this stage, there is no disclosed change to the trust’s strategy or management.

My verdict on International Biotechnology Trust’s half-year 2026 results

This is a strong and credible half-year report. The trust beat its benchmark, the portfolio benefited from exactly the kind of M&A activity its strategy is built around, and shareholders got support from dividends and buybacks too.

The main caveat is that biotech remains volatile, and the macro backdrop has become less friendly since the period end. Even so, International Biotechnology Trust looks to have come through the rebound with momentum, a sensible portfolio bias and a board that is actively managing the discount.

For investors who want specialist exposure to biotechnology through a diversified London-listed trust, this update reads positively. Just do not forget that in biotech, brilliant six months can be followed by a much choppier six months. That is the nature of the sector.