NEXT EDGE BIO-TECH PLUS FUND€¦ · anaan utes ash %61 oren utes 29% 10% for existing investors...

FOR EXISTING INVESTORS AND INVESTMENT PROFESSIONAL USE ONLY. PLEASE SEE ACCOMPANYING IMPORTANT DISCLOSURES. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

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The Biotech sector turned in a mixed performance in January, opening the month with a strong gain before fading over the final two weeks. Nevertheless, the Next Edge Bio-Tech Plus Fund (the “Fund”) continued its strong performance with its 6th advance in the past 7 months.

For January, the Next Edge Bio-Tech Plus Fund Class A Units & Class F Units appreciated +4.70% and +4.85% respectively, versus +2.68% for the Benchmark. For the past 12 months, the Fund’s Class A Units and Class F Units appreciated +18.00% and +19.13% respectively versus a decline of –13.18% for the Fund’s Benchmark.

As in prior months, a handful of companies appreciated sharply for varying binary reasons. It is the idiosyncratic nature of biotech companies to deliver outsized returns in a short period of time, regardless of market conditions, due to any of several potential catalysts. In January, our holding in Forward Pharma (FWP) surged +100% on a $1.25 billion settlement with Biogen, to secure rights to FWP’s IP on 480 mg DMF in Multiple Sclerosis. That was our reason for owning FWP, and we will now reallocate the proceeds in other investments.

Investing in companies of the future.A unique, well defined process of investing in North American small and mid-capitalization Biotechnology companies.

NEXT EDGE BIO-TECH PLUS FUNDMonthly Report as of January 31st, 2017

FUND COMMENTARY

NEXT EDGE BIO-TECH PLUS FUND CLASS A1 & F VS. BENCHMARKJan 29th, 2016 to Jan 31st, 2017

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17

NEXTEDGEBIO-TECHPLUSFUNDCLASSA1&Fvs.BENCHMARKJan29th,2016toJan31st,2017

Benchmark(60%NBI40%TSXCHC NextEdgeBioCLA1 NextEdgeBioCLF



The percent of the 190 companies in the Nasdaq Bio-tech Index (NBI) that are trading ABOVE their 200-day Moving Average continues to make higher lows since February 2016 when it achieved a reading that matched the bear market lows in 2002 and 2008. The recovery continues to track the pattern seen for new bull markets. A leg up in biotech would see this reading rise from 47% to 80% before a pause.

The Next Edge Bio-Tech Plus Fund was provided a booth and also hosted a panel discussion to a packed room on the undervalued and emerging Canadian biotech sector. It was a spirited and illuminating discussion with executives from ProMIS Neuroscience, Replicel and Critical Outcome. These companies were invited for having achieved ‘more-with-less’, but also had developed a companion technology to improve their clinical development of their therapeutic. It represents a new model of resourcefulness with limited resources.

INAUGURAL ‘BIOTECH ALLEY’ & PANEL AT THE CANTECH CONFERENCE 2017

IN THE MEDIA

On January 31st, our Portfolio Manager, Eden Rahim, participated in a phone interview with BNN’s Jon Erhlichmann regarding President Trump’s meeting with BioPharma CEOs discussing lightening-rod issues such as drug prices. The outcome was surprisingly conciliatory and sympathetic to the arduous, capital intensive, lengthy process to developing and commercializing a therapeutic. He may have been made aware that this sector spends more on R&D than any other sector, saves or improves the quality of lives, and employs millions of Americans in quality jobs. He clearly understood that another way to reduce drug prices is to reduce the cost and risk of developing drugs by reducing the

time to development and thus increasing the chance of FDA approval. The sector reversed from -1% to advance +3% on this outcome.

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

PERC

ENTOFBIOTECH

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NASD

AQBIOTECH

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XNASDAQ BIOTECH INDEX 2016-2017

PERCENT OF BIOTECH STOCKS ABOVE 200-DAY MOVING AVERAGE

NasdaqBiotechIndex(NBI) PercentofNBIStocksABOVE200-DMA

1 23

4

NBI BASING FOR 12 MONTHSBETWEEN 2500-3100 WHILEUNDERLYING 'BREADTH' GETSSTRONGER WITH EACH PULLBACK

5

Canadian Equities

Cash

%61US & Foreign

Equities

29%

10%



COMPOSITION OF HOLDINGS FOR JANUARY 31st, 2017

At the end of January, the Fund held US and Foreign investments amounting to 54% of the Fund’s assets, down from 57% due to liquidating the Forward Pharma (FWP) position which appreciated +107%. That cash will be reallocated to financing two Canadian positions, one initiating new a position, and the other funding ongoing clinical trials for an existing holding. Cash at 11% is expected to decline by 4% over the next week.

2015 -- -- -- -6.01%* 4.76% 3.25% 0.81% -2.52% -6.94% -1.44% 7.15% 0.57% -1.25%3

HISTORICAL PERFORMANCE1 Class A

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec AnnualDec


HISTORICAL PERFORMANCE1 Class A1

2015 -- 0.24% -4.26% 4.88% 3.58% 1.33% -2.41% -6.76% -1.32% 7.27% 0.69% 4.44%31.93%**


HISTORICAL PERFORMANCE1 Class F

2015 -- 0.22% -4.29% 4.86% 3.56% 1.31% -2.43% -6.79% -1.35% 7.21% 0.67% 4.15%31.93%**


HISTORICAL PERFORMANCE1 Class F1

2015 -- 0.34% -4.18% 4.98% 3.69% 1.43% -2.31% -6.66% -1.22% 7.38% 0.80% 5.52%31.97%**


HISTORICAL PERFORMANCE2 Benchmark

2015 -- 4.05% -1.68% 6.76% 0.87% 6.40% -8.95% -14.52% 0.70% 9.67% 0.48% 5.84%34.53%**

2017

-9.11%

2016 -19.27% -6.24% 2.34% 5.04% 0.78% -7.92% 14.12% 2.09% 5.00% -8.01%-9.31% 2.95% 6.69%

2016 -19.29% -6.36% 2.40% 5.01% 0.76% -7.94% 14.09% 2.06% 4.97% -8.30%-9.33% 2.92% 6.65%

2016 -19.21% -6.16% 2.43% 5.12% 0.88% -7.85% 14.21% 2.19% 5.09% -7.12%-9.23% 3.01% 6.72%

2016 -18.33% -5.30% -3.07% 3.79% 2.03% -9.03% 8.51% -2.57% 0.78% -30.94%-10.37% 2.81% -2.62%

2016 -19.36% -6.35% 2.23% 4.93% 0.73% -8.01% 14.00% 1.96% 5.06%

-1.25%3

-9.56% 2.73% 6.71%-- -- -- -- -- -- -- -- -- -- --

2017 -- -- -- -- -- -- -- -- -- -- --

2017 -- -- -- -- -- -- -- -- -- -- --

2017

2017

-- -- -- -- -- -- -- -- -- -- --

-- -- -- -- -- -- -- -- -- -- --

4.70%

4.74%

4.85%

4.32%

2.68%

4.74%3

4.85%3

4.32%3

2.68%3

4.70%3

1. Next Edge Bio-Tech Plus Fund returns are net of all fees and expenses associated with Class A Units charged from May 1st, 2015. Returns for 2017 are unaudited and subject to final confirmation. The historical annualized rates of return for January 31st, 2017 for Class A are 1 yr 18.00%, 3 yr - N/A, 5 yr - N/A, 10 yr - N/A; for Class A1 are 1 yr 19.36%, 3 yr - N/A, 5 yr - N/A, 10 yr - N/A; for Class F are 1 yr 19.13%, 3 yr - N/A, 5 yr - N/A, 10 yr - N/A; for Class F1 are 1 yr 19.93%, 3 yr - N/A, 5 yr - N/A, 10 yr - N/A. 2. The Benchmark for the Next Edge Bio-Tech Plus Fund is: (i) 40% of the percentage gain or loss of the S&P/TSX Capped Health Care Index; plus (ii) 60% of the percentage gain or loss of the NASDAQ Biotechnology IndexThe Benchmark returns are unaudited and subject to final confirmation. The historical annualized rates of retun for the Benchmark for January 31st, 2017 are 1 yr -13.18%, 3 yr - N/A, 5 yr - N/A, 10 yr - N/A3. Part Year* Part Month start date April 13th, 2015 to April 30th, 2015** Part Month start date: February 17th, 2015 to Feb 27th, 2015There are inherent limitations in any comparison between a managed portfolio and a passive index. Each index is unmanaged and does not incur management fees, transaction costs or other expenses associated with a private fund. There are risks inherent in hedge fund investing programs. Note to Investment Professionals: The information in the Monthly Report is being provided to current investors in the Fund and is being provided to their registered dealers for informational purposes only.This is not a sales literature and cannot be used as such. The Fund is not a trust company and does not carry on business as a trust company and, accordingly, the Fund is not registered under the trust company legislation of any jurisdiction. Units of the Fund are not ‘deposits’ within the meaning of the Canada Deposit Insurance Corporation Act (Canada) are not insured under provisions of that Act or any other legislation. No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. These securities have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States or to U.S. persons except pursuant to an exemption from the registration requirements of those laws. The information provided herein is for information purposes only and does not constitute a solicitation, public offering, advice or recommendations to buy or sell interests in the Fund, the Portfolio, Units or any other Next Edge Product. Please refer to the Fund’s prospectus for more information on the Fund as any information in this Report is qualified in its entirety by the disclosure therein. Opin ions expressed are those of the author as of the date of the i r publ icat ion, are subject to change and may not re f lect the opin ion of a l l members of the Company. Some statements contained in this material concerning goals, strategies, outlook or other non-historical matters may be “forward-looking statements” and are based on current indicators and expectations at the date of their publication. We undertake no obligation to update or revise them. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those implied in the statements.

NEXT EDGE BIO-TECH PLUS FUND€¦ · anaan utes ash %61 oren utes 29% 10% for existing investors...

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