HBM Healthcare Investments Ltd - Unique Access to a Global and Diversified Healthcare Portfolio of Private and Public Companies September 2019
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HBM Healthcare Investments Ltd Unique Access to a Global and Diversified Healthcare Portfolio of Private and Public Companies September 2019
HBM Healthcare Investments Ltd About HBM Healthcare Investments Ltd Investment Strategy / Investment Process Healthcare Sector Portfolio Structure Investment Positions Outlook & Concluding Remarks Appendix: Organisation, Team
A Leading Investment Company in Healthcare 3
► Founded in 2001 and listed on SIX Swiss Exchange since The only listed private
2008 and public equity
investment company in
► A healthcare sector focused investment company holding healthcare
a global diversified portfolio with currently about CHF
1.4bn in net assets
► Portfolio of both promising private and small-cap public Mid to high teens
companies (generally companies with a market percentage increase in
capitalization below USD 2 bn) net asset value and
share price over the
► Dedicated Healthcare sector specialist with healthcare- last five years
relevant expertise and background as well as access to a
broad-based, worldwide network in science, industry and
finance
Attractive distribution
► International, stable ownership structure with significant policy (3-5% p.a.)
proportion owned by the HBM team and members of the
Board of DirectorsFacts & Figures 4
Registered Shares (CHF) Performance (CHF)
5Y 10Y
Total assets 1’548 million Net return
Return Return
(including
Net assets (NAV) 1’382 million distributions) 2019 2018 2017 2016 p.a p.a.
Market capitalisation 1’336 million Share price 23.6% 21.8% 40.5% 2.5% 20.3% 17.6%
Share price 192.00
NAV 16.1% 9.9% 25.8% -7.2% 13.4% 14.8%
NAV per share 198.59
Dividend CHF 7.50 7.00 5.80 5.50
Discount 3.3%
Dividend yield 4.4% 4.9% 5.2% 5.5%
Average daily liquidity (1 year) 7’013 shares
~ 1.4 million
5Y Volatility p.a. 1Y Volatility p.a.
Number of issued shares 6.96 million Share price 16.4% 18.4%
Number of shareholders 2’194
Data as of 31 August 2019Value Creation over 5 Years 5
CHF Performance USD Performance
220 400
200
350
180
300
160
140 250
120
200
100
80 150
60
100
40
50
20
0 0
Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19
NAV HBM Share price HBM MSCI World Health Care Index
Data as of 31 August 2019, indexed (12.7.2001 = 100)About 40 Trade Sales and IPOs during the past 10 Years 6
Trade
IPOs
sales
SpringWorks
Anthera (US)
(US)
Turning Point
Asthmatx (US)
(US)
ChemoCentryx
Micrus (US) Y-mAbs (US)
(US)
Sloning (DE) Vivacta (UK) Paratek (US) Obseva (CH) Principia (US)
Probiodrug
Nuokang (CN) Pacira (US) Eiger (US) AnaptysBio (US) Aptinyx (US)
(DE)
Interventional
Ziemer (CH) mtm (DE) Ophthotech (US) Kolltan (US) Homology (US)
Spine (US)
Skyepharma ARMO Bio
Brahms (DE) Mpex (US) PTC (US) Curetis (DE) True North (US)
(UK) (US)
PharmaSwiss TandemLife
Esbatech (CH) Enanta (US) Nabriva (US) Ellipse (US) AAAP (US)
(CH) (Cardiac) (US)
2009-10 2011-12 2013-14 2015 2016 2017 2018-2019
Data as of 31 August 2019HBM Healthcare Investments Ltd About HBM Healthcare Investments Ltd Investment Strategy / Investment Process Healthcare Sector Portfolio Structure Investment Positions Outlook & Concluding Remarks Appendix: Organisation, Team
Investment Focus in the Healthcare Sector 8
Bellwethers
Emerging Leaders
Investments in
Potential Gems
Listed
Companies Break even
Investments
in Private
Companies
Early Later / Growth IPO Large Caps
stage stage SMid caps
HBM Healthcare InvestmentsHBM Investment Focus along the Healthcare Value Chain 9
Suppliers Manufacturers Service Providers Payers
Life Sciences
Pharmaceuticals
Tools & Services
Distributors /
Patients
wholesalers
Contract
Insurers
research Biotechnology
(managed health)
Organizations
Services
Employers
(pharmacies)
Pharmacy
Chemicals Medical devices
benefit managers
Facilities
(hospitals / Government
clinics)
Diagnostics & Generics /
Genomics specialty pharma
Core
Opportunistic
Digital health Out of focusInvestment Strategy 10
► Focus on companies with substantial product pipelines and high value creation potential
► Portfolio of both private and small-cap public companies (generally companies with a
market capitalization below USD 2 bn)
► Investments typically first made in a venture round when target company is in clinical
developments and has “proof of concept”
► Subsequently, investment may be increased substantially in follow-on financings, provided
the value-creation potential is intact and HBM has a sufficient degree of influence on the
portfolio company
► Active participation with companies to build towards trade sale or IPO
► At or post IPO: the flexibility of HBM Healthcare Investments allows for further increasing
our investments in the most attractive investment casesPrivate Equity Investment Process 11
Personal contacts, Investment Other VCs Direct
industry network banks
Deal Sourcing
(>700 deals p.a., 45% USA/Canada, 40% Western Europe, 15% RoW)*
Initial Due Diligence
(~200 deals p.a.)
Comprehensive Due Diligence
(~25 deals p.a.)
Investments
(8-12 deals p.a.) *
60% Biotech
30% Medtech & Diagnostics
10% OtherInvestment Approach 12
► Fundamental long with private and public healthcare investments
► Bottom-up selection of investments with solid long-term growth potential
► Diversified portfolio approach
► Sourcing of proprietary private deal flow
► Active lead/co-lead investor in private companies with board representation
► HBM takes an active role and assumes entrepreneurial responsibility together with the
management team
► Maximum single position limit at time of investment up to 10% of NAVPublic Equity Investment Process 13
Portfolio & Risk Idea Generation
Management Universe of 750+ companies
Evaluation of global Tracking of healthcare trends
markets and macro incl conference attendances
themes and close relationship to
Continuous Portfolio experts and executives
review and adjustment Company pre-selection
Comprehensive risk
management process
Stock Selection & Due Diligence
Portfolio Construction Fundamental qualitative
Determination of exposure and quantitative analysis
and position size Stakeholder assessment
Individual stock selection and intellectual property
review
Initiating new positions
Investment write-up and
conclusionInvestment Case Advanced Accelerator Applications 14
Investment rationale
► Combination of unique business proposition with strong growing medical
imaging business (profitable) and promising late-stage therapeutic (phase III)
First institutional investor in
Investment process (2014)
2014
► Growth capital and partial buyout of existing founders
► Founders wanted specialist (non-US) investor with know-how and good Sold in 2017 to Novartis for
industry network
approx USD 3.9 billion
Investment period (2014-2017)
► Board representation
► Strategy executed on three pillars: → Gain of over CHF 200
► Expanding its diagnostic business for PET/CT and SPECT organically million (IRR > 60%)
and through acquisitions
► Bringing first therapeutic to the market
► Broadening of pipeline through in-house development and in-licensing
► HBM backed pre-IPO financing round to strengthen investor syndicate
Exit (2016-2017)
► IPO and take over by NovartisInvestment Case Skyepharma 15
Investment rationale
► Uniquely positioned and patented drug delivery technology for oral and
inhalation products; significant recurring revenue streams through technology
outlicensing
Merger with Vectura in 2016
Investment period (2005-2016) created a global leader of
► Pacira was spun-out from Skyepharma formulation and inhalation
► The delayed approval of Flutiform® resulted in indebtedness and negative devices for respiratory
balance sheet diseases
► HBM led the turnaround financing round and participated in capital increase
and debt purchase at high discount Impressive rebound
between 2011 and 2016
► Positive pipeline development of Flutiform® led to continuous company
revaluation, Skyepharma turned into a highly profitable cash flow positive
company
► Debt to equity swap allowed share price moving back to fair value
Exit process (2015-2016)
► Further growth source was needed as revenue growth started to flatten out
and pipeline investments was very limited during the last years due to
restructuring and indebtedness that company went through
► Combination with Vectura resulted in highly attractive new platform of
complementary products and technologiesInvestment Case Ellipse Technologies 16
Business Medical devices for Products
spinal/orthopaedic ► MAGEC – To treat spine deformations
surgery
► PRECICE – Limb lengthening system
Platform technology for
non-invasive adjustable
implants Revenues
50
Stage of Company Substantial revenues
(sales growth 60%+ p.a.) 40
Products successfully 23.7
USD m
30
launched worldwide;
R&D focus on additional 20 13.4
indications 9.1
10 7.7
Return on Multiple of 7.5 – 8.1x 12.3 11.2
0 4.2
Investment IRR 66 – 68 % 2013 2014 2015 H1
Gain USD 104 – 114m
Magec Precice LLD 2015 H2 (P)
→ Sold in Jan. 2016 to NuVasive for $ 380m in cash plus $ 30m milestonesHBM Healthcare Investments Ltd About HBM Healthcare Investments Ltd Investment Strategy / Investment Process Healthcare Sector Portfolio Structure Investment Positions Outlook & Concluding Remarks Appendix: Organisation, Team
Investment Opportunities in Healthcare 18
Large and Growing Industry
▪ Revenues > $1.3 trillion p.a.*
▪ Resilient to economic cycles
▪ High profit margins, strong cash-flows
▪ Many small & innovative firms and
spin-offs
Investment Approach Compelling Exit Markets
▪ Proprietary global deal sourcing ▪ Attractive M&A environment
▪ Long-term investment expertise ▪ Cash-rich corporate buyers
▪ Active lead/co-lead investor ▪ Strategic premiums paid
▪ Exit-driven investments ▪ IPO as option for mature firms
* Worldwide sales (2015) for pharma, medtech and diagnostics onlyPublic Healthcare Generated Strong Returns 19
1600
MSCI World Health Care Index: +682% (8.7% p.a.)
MSCI World Index: +246% (5.2% p.a.)
800
436%
400
% log
200
100
50
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
Data as of 31 August 2019, in USDStill Significant Industry Growth 20
Global Pharma Drug Sales Global Biotech Drug Sales
$ bn CAGR (2018-2024): 5.1% $ bn CAGR (2018-2024): 8.1%
900 450
835
784
800 400 388
738
693 356
652 327
700 350
621 300
620
277
600 300
258
243
500 250
400 200
300 150
200 100
100 50
0 0
2009 2011 2013 2015 2017 2019 2021 2023 2009 2011 2013 2015 2017 2019 2021 2023
Source: Evaluate Pharma World Preview 2017, June 2017Significant Revenue Contribution from Biotech 21
Global Branded Pharmaceutical Revenues: 1997 – 2020 (in $ bn)
800 45%
Growth from 1997 to 2022E
700 40%
Pharmaceuticals: 4.5% p.a.
Biotech: 12.5% p.a.
35%
600
$268
30%
500
25%
400
20%
300
15%
$415
200
10%
100 5%
0 0%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019E
2020E
Small molecules Biologics % from Biotech
Source: Evercore Gene Therapy Outlook 2019Biotech as the Innovation Powerhouse 22
R&D Spend (USDbn, 2017) Pipeline (number of clinical programs, 2017)
120 5000
100 x 2.6 4000 x 0.4
80
3000
60
2000
40
20 1000
0 0
Biotech Pharma Biotech Pharma
Source: EY Biotechnology Report 2017, Evaluate Pharma World Preview 2018 Source: Biotechnology Innovation Organization Report, 2018
Market Cap (USDm, 2018) Approvals by origin (count, over last 10yrs)
2’500 250
2’000 x 3.1 200 x 0.5
1’500 150
1’000 100
500 50
0 0
Biotech Pharma Biotech Pharma
Source: MSCI World Healthcare Index, Bloomberg 2018 Source: HBM Biopharma Drug Approval Report, 2018It’s all about Innovation 23
Past and current holdings
▪ In last 1-2 years, multiple "targeted cancer"
Immuno- and companies (drugs for mutations or sub-groups of
targeted oncology broader population) have been acquired
▪ Administered via the bloodstream, in principle RNAi
therapeutics permit any gene that is responsible for
Gene Silencing causing illness to be silenced
▪ Gene editing is the process of changing, replacing,
or removing genes with precision of a single base
Gene editing / pair change if desired
therapy
▪ Antibodies have had a terrific run, but small molecules
Immunology and are making a comeback for I&I, promising oral dosing,
Inflammation ease of travel, transport and safety of dose withdrawal
▪ Dementia psychosis, agitation, behavioral market have
blockbuster potential
Neurology
▪ The complement system helps prevent infection and
Complement fight off invading pathogens like bacteria. But
disorders hyperactivation of the complement system can lead to
autoimmunity and inflammatory diseases
Source: HBM ResearchSupportive Regulatory Climate 24
Number of New Drug Approvals and Applications at the US FDA
60 57
50
50
45
43 43 43
41 41 41 41
40 38
36 35 36 36 35
34
32
30
30 28
26 26 26 26
55
Average: 31
53 23
22
45 46
20 39 39 41
35 36
29 30 30
25 27 26 27
24 22 24 22
10 21 21 20 21
17 18
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
New Drug Approvals New Drug Applications
Source: FDA, CDER (2017)Steady Flow of New Investment Opportunities 25
Global venture investments into biotech Biotech IPOs on western exchanges
16 600 97
8 100
512 514
457 500 79
450 442 80
12 6 68
393
400
54 60
8 16.8 300 45
4
50 7.2
6.5 6.3 40
12.2
11.1 200 5.2
9.7
4 2 4.1
7.2 3.3 20
5.1 100
0 0 0 0
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
VC Investments ($bn) Number of Investments Total amount raised ($bn) IPO count
Source: Evaluate Pharma, January 2019Ongoing Pharma and Biotech M&A Activity 26
50% premium over stock price before acquisition
Deal-Volume in $ bn ▪ Allergan / Actavis
▪ Forest / Actavis
▪ Cubist / Merck & Co
▪ Intermune / Roche ▪ Celgene / Bristol Myers
250 ▪ Idenix / Merck & Co ▪ Allergan / AbbVie
▪ Pharmacyclics /
▪ Viropharma / Shire AbbVie ▪ Array / Pfizer
▪ Hospira / Pfizer ▪ Loxo / Eli Lilly
▪ Synageva / Alexion ▪ Spark / Roche
▪ Receptos / Celgene
200 ▪ ZS Pharma / Astra ▪ Shire / Takeda
▪ Bioverativ / Sanofi
▪ Juno / Celgene
▪ Avexis / Novartis
▪ Impact Biomedicines
▪ Baxalta / Shire / Celgene
150 ▪ Medivation / Pfizer
▪ Onyx / Amgen
▪ Meda / Mylan
▪ ViroPharma / Shire ▪ Actelion / J&J
▪ Stemcentrx / AbbVie
▪ Algeta / Bayer ▪ Kite / Gilead
▪ Anacor / Pfizer
▪ Santarus / Salix ▪ Ariad / Takeda
▪ Map / Allergan 219 ▪ Akorn / Fresenius
100 ▪ Pharmasset / ▪ Ignyta / Roche
Gilead 185
▪ Actavis / Watson 173
▪ Amylin / BMS
▪ Inhibitex / BMS 144
▪ Ardea / Astra
50 109 107
79 79
57 48
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1/2 2019
Source: Evaluate Pharma (2019)HBM Healthcare Investments Ltd About HBM Healthcare Investments Ltd Investment Strategy / Investment Process Healthcare Sector Portfolio Structure Investment Positions Outlook & Concluding Remarks Appendix: Organisation, Team
Balance Sheet and Currency Allocation 28
1’520
8%; 114
1’370 3%; 42
1’220 Others
INR 4%
Cash 4%
CHF
1’070 7%
49%; 679 Other Assets
920
Public Equity
EUR
770 9%
CHF m
Private Equity Funds
USD 64%
620 Private Equity
10%; 145 CNY 12%
470 Short-term liabilities
320 Long-term liabilities
37%; 506 2021/23
170
20
-7%; -100
-130 0%; -4
*Around 8% of public exposure hedged
HBM Research, data as of 31 August 2019, in % of net assets in % of assetsPortfolio Breakdown by Market Cap and Geography 29
Market Capitalisation Geography
> CHF 10
billion; 0%
Europe; 20%
Asia; 26%
CHF 2-10 billion; 36%
Market Cap < CHF 2
billion; 64%
North and
South
America;
54%
HBM Research, data as of 30 June 2019, in % of investmentsPortfolio Breakdown by Sector, Therapy and Stage 30
Sector Breakdown Therapeutic Area Development Stage
Spec. Phase I 4% Pre-Clinical 1%
Medical Pharma 8%
Devices &
Diagnostics
6%
Orphan
diseases 15% Profitable
Phase II 19%
18%
Others 32% Oncology
Health IT,
Services & 15%
Supplies Biotech
21% 65% Market
20%
Phase III
Infectious 38%
diseases 2%
Immunology /
Metabolic
Inflammation 12%
diseases 4%
Central nervous
Digital health 4% system disorders 11%
Medtech / Diagnostics
5%
HBM Research, data as of 30 June 2019, in % of investmentsInvestment Portfolio 31
Shanghai Cathay
Other Positions Biotechnology R&D Neurelis 2.4%
(< 1%) 16.3% Center
12.1%
Immunomedics 1.0% Harmony Biosciences 2.8%
Idorsia 1.1% Swixx Biopharma 1.4%
RA Pharmaceuticals 1mg 1.3%
1.2%
Viela Bio 1.3%
Acadia Pharmaceuticals
1.2% SAI Life Sciences 1.2%
Esperion 1.3% Jianke 1.0%
Alnylam 1.3%
Westmed 0.8%
Galapagos 1.4%
Ultragenyx 1.4% SpringWorks Therapeutics
0.8%
Vectura 1.6%
Zogenix 1.6%
Other Positions 8.3%
Principia* 1.8%
Turning Y-mAbs Private Equity
Pacira* 2.3% Point* Therapeutics* Private equity positions
Funds 9.0%
Argenx 2.5% 3.0% 4.9% Public equity positions
* ex private positions
HBM Research, data as of 31 August 2019, in % of assets, Top 10 positions (direct investments): 33.7%Asset Allocation over Time 32
1’440
5% 11%
6%
1’200 6%
8% 12%
5% 9%
960 5%
10% 23% 26%
19% 16% 11%
8%
720 16% 14%
15%
CHF m
32% 9%
36%
53% 8%
25%
480 30%
67%
36% 62% 56% 25% 59%
37%
55% 59% 44%
240 51%
46% 43% 46% 68% 63%
32% 27%
36%
17% 13% 13%
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-5% -9% -11% -10%
-14%
-240 -12% -16% -23%
Public companies Private companies Private Funds Other assets Cash Liabilities
HBM Research, data as of the end of each financial year (31 March), in % of assetsDevelopment Stage of Lead Product of Portfolio Companies 33
100%
4%
11% 10%
11%
17% 15%
16% 21% 26%
80% 11% 12% 19% 27%
21%
46% 30% 30%
20%
17%
23% 25% 11% 35%
10% 26%
60% 30% 50%
22% 23%
34%
40%
36%
32% 58% 59% 57% 59% 57% 57%
51% 49% 48%
45% 46% 45%
20%
35% 37%
14% 16%
0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Product(s) on the market and/or profitable Phase III Phase II Phase I Preclinical
HBM Research, data as of the end of each financial year (31 March), in % of investmentsHBM Portfolio by Development Stage of Lead Asset 34
Well balanced portfolio from a risk perspective
100
200
HBM book value
in CHF m Blue: Public
Green: Private
80
180 About half of total assets is exposed to companies
with lead phase II and phase III drugs
60
40
20
0
Profitable Market Phase III Phase II Phase I / Preclinical
HBM Research, data as of 30 June 2019Private Portfolio Positioning 35
Company valuation (CHF m)
1’200
2600
Size corresponds to
HBM’s book value
1’000
2400
2200
800
Shanghai Cathay Biotechnology
R&D
600
Viela Bio Harmony
Jianke
SpringWorks
400 Sai Life Sciences
Neurelis
Valcare
200 Sphingotec
Shriji
Adrenomed Vascular Dynamics Farmalatam
Nuance
Arrakis
Sublimity Shape Memory
0
Preclinical Phase I Phase II Phase III Products on Profitable
Market
Development Stage of Lead Asset
-200
HBM Research, data as of 30 June 2019Contribution to NAV 36
Private and Ex Private Equity Positions Account for 65 Percent of Contribution
NAV impact per share (in CHF)
10.04
0.59
0.25 12.25
0.46
12.52
0.54
1.63
5.54
17.45
7.61
29.99 32.20
24.11
9.82
18.75
5.12
-0.02 -1.97 -0.99
-1.22 -7.40 -5.40
-7.41
-4.88 -5.48
-5.20
-2.43
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
Private and ex private positions Funds Public positions Other gains/losses (e.g. milestones) Fees Share buy-back
Note: IPO allocations in previously private companies are attributed to P&L from private positionsHBM Healthcare Investments Ltd About HBM Healthcare Investments Ltd Investment Strategy / Investment Process Healthcare Sector Portfolio Structure Investment Positions Outlook & Concluding Remarks Appendix: Organisation, Team
Global Reach 38
Sphingotec Adrenomed
Alnylam Y-mabs Galapagos Swixx Biopharma
Cardialen
Principia Esperion Immunomedics Vectura Argenx
Vascular Dynamics Ultragenyx SpringWorks Everest Medicines
Turning Point Viela Bio Harmony Biosciences
Zogenix Valcare
Neurelis Cathay
1mg
Pacira Shriji Polymers Jianke
SAI Life Sciences
Farmalatam
Private companies
Public companies
HBM Research, data as of 31 August 2019 (Selection)Largest Investments (1/2) 39
Phase of Market Owner- Book % of
Lead Capitalisation ship Value Total
Company Core Business Product Ticker (CHF m) (%) (CHF m) Assets
Long chain diacids, Market Private 2’261* 8.3 187.5 12.1
carbohydrates and special
enzymes
Developing novel antibody Phase III YMAB 900 8.4 75.8 4.9
therapeutics for oncology (ex private)
targets
Drugs for the treatment of Phase II TPTX 1’695 2.7 46.1 3.0
severe cancers (ex private)
Drugs for autoimmune and Phase II ARGX 4’882 0.8 38.8 2.5
cancer diseases
Drug for the treatment of Phase III Private 508* 7.6 38.6 2.5
narcolepsy (with and without
cataplexy)
Late-stage drug for the Phase III Private 249 15.0 37.3 2.4
treatment of acute
breakthrough seizures in
epilepsy patients
HBM Research, data as of 31 August 2019, * Implied company valuationLargest Investments (2/2) 40
Phase of Market Owner- Book % of
Lead Capitalisation ship Value Total
Company Core Business Product Ticker (CHF m) (%) (CHF m) Assets
Injectable medicines with Market PCRX 1’537 2.3 35.1 2.3
(patented) controlled release (ex private)
of active drug
Proprietary platform with Phase II PRNB 942 3.0 27.9 1.8
drugs in clinical stage for (ex private)
autoimmune diseases
Therapeutic solutions for CNS Phase III ZGNX 1’796 1.4 25.5 1.6
disorders and rare diseases
Formulation and inhalation Market VEC 617 4.0 24.8 1.6
devices for the treatment of
respiratory diseases
Drugs for rare genetic Market RARE 3’121 0.7 21.9 1.4
disorders
Fully representing biopharma Market Private 75 29.0 21.8 1.4
companies in the CEE.
HBM Research, data as of 31 August 2019, * Implied company valuationDevelopment of Share Prices (1/2) 41
Market Cap: USD 908m – (ex private) USD 1.7bn – (ex private) USD 4.9bn – (ex private)
40 60 150
50 120
30
40
90
20 30
60
20
10 30
10
0 0 0
2018 2019 2019 2014 2015 2016 2017 2018 2019
USD 1.6bn USD 951m – (ex private) USD 1.8bn
150 45 70
40 60
120
50
35
90
40
30
60 30
25
20
30
20 10
0 15 0
2014 2015 2016 2017 2018 2019 2018 2019 2014 2015 2016 2017 2018 2019
HBM Research, data as of 31 August 2019Development of Share Prices (2/2) 42
USD 623m USD 3.2bn USD 9.1bn
180 140 180
160 120 150
140 100 120
120 80 90
100 60 60
80 40 30
60 20 0
2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
USD 9.0bn USD 996m USD 4.0bn
160 120 60
50
120 90
40
80 60 30
20
40 30
10
0 0 0
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
HBM Research, data as of 31 August 2019Largest Private Investments over the last 5 Years 43
IPO or
trade sale
2014 2015 2016 2017 2018 / 2019
Year of initial investment, only investments > CHF 5 million
Data as of 31 August 2019Strategic Fund Investments 44
BioVeda WuXi 6- Dimensions HBM
China Healthcare Capital Tata Capital Medfocus Genomics
Invested: 2005 2015 2018 2015 2005 2015
Investment: 8.5 m 20 m 14 m 10 m 16 m 15 m
Investment multiple: 3.7x 2.4x 0.9x 1.4x 2.1x 0.9x
Ownership: 34% 7% 5% 67% 100% 100%
Healthcare Healthcare Healthcare Healthcare Medical devices Genomics
Fund strategy: Later Access to early stage Invest and build Growth and expansion Incubator and Early and
and growth stage investment quality platform phase accelerator concept, development stage
opportunities opportunities with a companies currently selective later stage opportunities
focus on China missing in China investments
Investment thesis: Seasoned investment VC with capabilities in Partnering with one of Access to promising Access to early stage
One of the first local team, former China and U.S. to the leading on-shore early stage investments in later
investors specialised WuXiAppTec, with access innovation and private equity investments in later rounds; Network of top
in the Chinese vast network build category leaders investors in Indian life rounds; “raised” by Silicon Valley
healthcare market facilitating / offering in healthcare sectors sciences successful investors and
deal flow possibilities entrepreneurs companies with a
focus on genomics
Currently no co-
investment
Data as of 31 August 2019, in CHFPrivate Companies with significant Value-Increasing Potential 45
▪ Full representation service in CEE markets
188 ▪ Long-chain dicarboxylic acids / bio-based diamine 5 22 ▪ Profitable company with net sales exceeding
▪ Strong revenue growth and profitable EUR 70 million in 2018; high double-digit sales
▪ Potentially first company with a commercial scale growth for 2019
production of bio-based diamine 5 ▪ Signed agreements with 17 multinationals
across 17 countries
39 ▪ Narcolepsy (with and without cataplexy) 20
▪ Wakix (Pitolisant) now market approved in the US
▪ India’s leading online pharmacy, medicines app
and in the EU for narcolepsy (with or without
and health platform
cataplexy); unlike other wake-promoting agents,
▪ Strong sales growth
Wakix is not scheduled as a DEA controlled
▪ Highest ranked medical app on the Indian
substance
Google play-store
▪ First-in-class, selective, histamine H3 inverse agonist
which promotes wakefulness, and reduces the
frequency of cataplectic episodes, limited abuse
potential
20 ▪ Lead asset is an anti-CD19 antibody (Inebilizumab
monotherapy) – filed for market approval with the
US FDA (approx 10 months review expected) –
37 ▪ Diazepam (Valtoco) nasal spray for use in potentially first-in-class – in an orphan CNS
breakthrough epilepsy seizures autoimmune indication nown as Neuromyelitis
▪ NDA filed, orphan designation in the US and EU optica spectrum disorder (NMOSD)
▪ Major unmet need in epilepsy patients, where no ▪ Limited competition, patients often receive off-label
drug is approved for controlling break through immunosuppressants or steroids
seizures Size corresponds to
HBM’s book value (in
Data as of 31 August 2019 Mio. CHF)Promising Public Company Holdings 46
21 ▪ RNAi targeting therapies
▪ Pediatric oncology (neuroblastoma), radio- ▪ Patisiran which targets TTR amyloidosis was the
76 immunotherapy first approved product in 2018
▪ Filing for both lead compounds with the FDA ▪ Pivotal data for givosiran (porphyria), lumasiran
expected in 2019 and fitusiran expected over the course of 2019
▪ Severe autoimmune diseases (MG, ITP, PV) 20 ▪ Complement-mediated diseases (aHUS, MG)
39 ▪ Novel antibody-based therapies, combining the
▪ Potential competitive threat to Alexion’s Soliris due to
diversity of the llama immune system with antibody
convenience of SC dosing and planned discounted
engineering
pricing strategy
▪ Positive proof-of-concept clinical data for lead
antibody ARGX-113, in the treatment of myasthenia
gravis (MG)
19 ▪ Cholesterol-lowering drugs, alternative to statins
▪ Bempedoic Acid (BA) is an orally available drug that
▪ Autoimmune / inflammatory diseases and oncology lowers LDL (“bad” cholesterol)
▪ PRN1008, a reversible covalent BTK inhibitor ▪ Phase III results showed sizable and consistent LDL
28 ▪ Highly differentiated and potentially best-in-class small reduction (by BA) on top of standard of care
molecule drug platform ▪ First FDA approval expected in H2 2019
▪ Phase II top-line results in ITP expected in Q4 2019
17
▪ Antibody drug conjugate, solid tumors
26 ▪ Rare neurological disorders (Dravet Syndrome and ▪ Sacituzumab govitecan targeting Trop-2
Lennox Gastaut Syndrome) ▪ Impressive data in 3rd-line, triple negative breast
▪ ZX008 is a low dose formulation of fenfluramine for cancer, which led to breakthrough designation from
the treatment of uncontrolled seizures FDA
▪ US approval decision in 2020 (based on re-
submission in Sept 2019)
Data as of 31 August 20192019 Busy Event Calendar of Main Positions 47
2019 2020
Q3 Q4 H1 H2
Omburtamab B7-H3: Nuplazid
Valtoco: ETC-1002 bempedoic US NDA Filing (pimavanserin): Phase Naxitamab GD2:
PFIC (Odevixibat):
US approval (Epilepsy acid: Phase II top-line (CNS/LM from III (HARMONY) final Approval (R/R high-
Phase III top-line data
cluster seizures) results (type 2 neuroblastoma) data (DRP) risk neuroblastoma)
(pediatric liver)
diabetes)
Etrasimod (APD334): OBE2109 (Linzagolix): Omburtamab B7-H3:
Naxitamab GD2: US Fintepla (fenflur-
DTX401: Phase I/II Phase IIa data primary endpoint data Approval (CNS/LM
NDA Filing (R/R high- amine): EMA Decision
cohort 2 results (primary biliary PRIMROSE 1 and 2 from neuroblastoma)
risk neuroblastoma) (pre-market) (dravet
(GSDIa) cholangitis) (uterine fibroids)
syndrome)
IMMU-132 (sacituzumab
Fintepla (fenflur- Sparsentan: Phase III
DTX301: Phase I/II govitecan): Phase II Elobixibat: Phase II
PRN1008: Phase II amine): Phase III data (DUPLEX) top-line
cohort 3 results (OTC BLA re-submission top-line data (adult
data (ITP) (lennox-gastaut data (FSGS)
deficiency) (mTNBC) liver NASH)
syndrome)
Nuplazid Nuplazid Repotrectinib: Phase II
(pimavanserin): Phase Lumasiran: Phase III Filgotinib: Phase IIb/III
(pimavanserin): Phase PRN1008: Phase II (TRIDENT-1) interim
III (HARMONY) interim (Illuminate-B) results (SELECTIVITY) results
III (ENHANCE) top-line extension top-line data data (non small cell
data (DRP) (hyperoxaluria) (Ulcerative colitis)
data (schizophrenia) (pemphigus vulgaris) lung cancer)
Pitolisant:
US approval Lumasiran: Phase III ALN-AS1 (Givosiran): ARGX-113
CLN6: Phase I/II - 2 Filgotinib: US approval
(Narcolepsy (Illuminate-A) results US Approval (acute (Efgartigimod): Phase
year data (batten (rheumatoid arthritis)
with/without cataplexy) (hyperoxaluria) hepatic porphyrias) II results (Pemphigus
disease)
vulgaris)
RE-024 ARGX-113
Inclisiran: Phase III Exparel: Phase III Fitusiran: Phase III ETC-1002 bempedoic
(Fosmetpantotenate): (Efgartigimod): Phase
(ORION) results (PLAY) top-line results (ATLAS) topline results acid: US & EU
Phase III (FORT) top- III results (ADAPT)
(hypercholesterolemia) (post-operative pain) (haemophilia) approval (hyper-
line data (PKAN) (gMG) lipidemia)
HBM ResearchHBM Healthcare Investments Ltd – Attractions for Investors 48
Growing Industry Value Creation
Equity investment into promising Portfolio with significant value-
private and public companies increasing potential
Expertise Commitment
Expertise of the HBM Partners Transparent valuation and
team in selecting investments with reporting, annual cash distribution
attractive risk and reward and share buy-back programReasons to invest in HBM 49
► Access to a well-diversified portfolio of private and listed companies – with daily liquidity
► Portfolio with attractive value-increasing potential, companies with significant growth or IPO
plans, plus potential M&A candidates
► Unlimited duration of the structure allows optimum exploitation of the value-added potential
of healthcare companies
► Clear competitive edge over other investment companies and investment funds with
exclusively listed investments
► Majority of investment professionals have been with HBM for more than 12 years
► Because of its “entrepreneurial” investment philosophy, its size and its long track record,
HBM is a preferred investment partner, even for larger transactions
► Overall, lower correlation to a “pure” stock market investment thanks to the substantial
allocation in the private market
► Quarterly reporting with high levels of transparency and uncomplicated access to the HBM
portfolio management teamHBM Healthcare Investments Ltd About HBM Healthcare Investments Ltd Investment Strategy Healthcare Sector Portfolio Structure Investment Positions Outlook & Concluding Remarks Appendix: Organisation, Team
Timely & Transparent Investment Valuations 51
► Positions in listed companies are valued at market prices
► Positions in private companies are valued at acquisition cost in the investment currency,
except when:
− Portfolio company is valued higher or lower in connection with a new round of financing with a third
party lead investor (not strategic investors)
− Portfolio company is performing below expectations, leading to a write down in steps
of 25, 50, 75 or 100%
− Portfolio company has significant revenues and profits, in which case an appropriate price/sales or
price/earnings multiple is applied (“sales and earnings multiple method”)
Negative events are reflected in the valuations as they occur. Positive developments (i.e.
good clinical data, partnering deals, etc.) will only be reflected in the valuations if there is a
„liquidity event“ (financing round with third party investor, IPO or trade sale).Investor Information 52
Share Information Largest shareholders
Latest
% Shareholder Notification
Swiss security number 1.262.725 15-20 Nogra SA, Luxemburg 9.11.2016
German security number 984345
ISIN CH 0012627250 Distribution policy
CUSIP H 3553X112
Withholding tax-exempt distribution yield of 3-5% p.a.
Telekurs 126,126272 from par value repayment
SIX Swiss Exchange Ticker HBMN
Fees
0.75% of company assets plus
Annual Management fees (paid quarterly)
0.75% of the company's market capitalisation
Performance fee (paid annually) 15% on increase in value above the high water mark
High water mark (per share for all outstanding shares) NAV of CHF 186.86Board of Directors 53
Hans Peter Hasler Prof Dr Dr h.c. mult. Heinz Riesenhuber Mario G. Giuliani
Chairman and Member of the Compensation Vice Chairman and Member of the Audit Member of the Compensation Committee
Committee Committee
Member of the Board of Directors Jukka LLC since
Chairman of the Board of Directors MIAC AG since Chairman of the Advisory Board Rock Tech Lithium
2015, NGR (MONACO) SAM since 2015, Giuliani
2012. Member of the Board of Directors Minerva Inc. since 2018; Member of the Investors’
Group SpA since 2010, and Giuliani SpA since
Neurosciences since 2017, member of the Board Committee Heidelberg Innovation BioScience
1999; Member of the Investment Committee
of Directors Shield Therapeutics plc since 2018 Venture II GmbH since 2001
Royalty Pharma since 2001, and Mosaix Ventures
Since 2017 CEO of Vicarius Pharma. Prior to this, Member of the German Parliament 1976 to 2017; LLP since 2000 as well as various other
international management positions at Wyeth German Federal Minister of Research 1982 to directorships within the Nogra Group
Pharmaceuticals, Biogen and Biogen Idec, as well 1993; Chairman of German Parliamentary Society
Previously executive positions and directorships at
as Elan Corporation 2006 to 2018; numerous directorships
Giuliani SpA, Recordati SpA, and Nogra Group SA
Dr Eduard Holdener Robert A. Ingram Dr Rudolf Lanz
Board Member Member of the Compensation and Nominating Member of the Audit and Nominating
Committee Committee
Chairman of the Board of Directors NovImmune Chairman of the Board of Directors Viamet Chairman of the Board of Directors Dr. Rudolf Lanz
S.A. since 2008, CEO since 2016 Pharmaceuticals Inc. since 2015, BioCryst AG since 2009; Member of the Board of Directors
Medical doctor. Prior to this, specialist in internal Pharmaceuticals Inc. since 2015, Novan Inc. since MIAC AG since 2015, and Pearls Fashion Holding
medicine and oncology; various international 2011, and Cree Inc. since 2008 AG since 2009
executive positions at F. Hoffmann-La Roche Ltd General Partner of Hatteras Venture Partners USA Previously Partner of The Corporate Finance
Group and head of M&A & Corporate Finance of
Ernst & Young SwitzerlandManagement HBM Healthcare Investments Zug / Cayman 54
Dr Andreas Wicki Erwin Troxler Jean Marc Lesieur
(2001) (2005) (2001)
Chief Executive Officer Chief Financial Officer Managing Director and Member of the Board of Directors
HBM Healthcare Investments (Cayman) Ltd
Doctorate in chemistry and biochemistry; since Economist and Swiss Certified Public Accountant; More than twenty years of experience in trust and corporate
2001 Chief Executive Officer HBM Healthcare since 2005 HBM Healthcare Investments Ltd and management and administration. Before joining HBM
Investments Ltd and HBM Partners Ltd. Prior to HBM Partners Ltd, since 2011 Chief Financial Healthcare Investments, he was with Vontobel Private Equity
this, chief executive of several pharmaceutical Officer. Prior to this, auditor Management Ltd, acting as an executive director with
companies (1988 to 2001), investment and venture PricewaterhouseCoopers Ltd (1996 to 2002) and responsibilities for personnel and all corporate and company
capital advisor (1993 to 2001) Julius Baer Family Office (2002 to 2005) management matters of the private equity business in the
Cayman Islands
Member of the Board of Directors Harmony Chairman of the Swiss Association of Investment
Biosciences since 2017, Vitaeris Inc. since 2016, Companies (SAIC) since 2014 Associate of the Chartered Institute of Bankers, ACIB
Pacira Pharmaceuticals Inc. since 2007, HBM (Trustee), a member of the Society of Trust and Estate
Healthcare Investments (Cayman) Ltd since 2001, Practitioners (STEP) and a Notary Public in the Cayman
and Buchler GmbH since 2000 Islands. He was educated in the Cayman Islands and
EnglandPrivate Equity Team 55
Dr Ulrich Geilinger Dr Alexander Asam, MBA Dr Matthias Fehr, CFA Dr Chandra P. Leo, MBA
(2001) (2007) (2002) (2007)
Head Private Equity Investment Advisor Investment Advisor Investment Advisor
More than 25 years of experience in the More than twenty years of experience in the Over twenty years of experience in private and Over fifteen years of experience in private
Venture Capital Industry life sciences and private equity businesses public equity investment management and equity, clinical practice and biomedical
PhD ETH Zurich in Natural Sciences and MBA degree from ASTON Business School, research research
Industrial Engineering Birmingham and a MSc and PhD in chemistry MSc and PhD in chemistry from ETH, Zurich Completed medical studies in Berlin and
Previously in management functions at from University of Heidelberg Former senior sell-side analyst at Lombard London, doctoral degree from Freie Universität
Innoventure, Credit Suisse, Apax and Former managing director and partner of Odier for biotech and medical technology Berlin, MBA degree from INSEAD
Vontobel. Deutsche Venture Capital / Deutsche Bank. industries; former scientist at the Swiss Former postdoctoral scientist at Stanford
Various positions at Hoechst, Aventis and Federal Institute of Technology University, physician at University Hospital
LION Bioscience Leipzig and principal at Wellington Partners
Dr Priyanka Belawat Dr Emil Bujak Dr Michael Buschle Axel Bolte
(2007) (2015) (2017) (2003)
Investment Advisor Investment Advisor Investment advisor Venture Partner
Over ten years of experience in venture and Over six years of experience in life sciences, More than 25 years of experience in biotech Over fifteen years of experience in the life
private equity investing in the healthcare space including one year in investment analysis and and pharma sciences and private equity businesses
in the US, Europe and selected emerging industry report preparation PhD from the University of London. Research Graduated in biochemistry at ETH and the
markets Holds a PhD in Pharmaceutical Sciences and at St. Jude’s Children’s Research Hospital, University of Cambridge. MBA from the
Holds a doctorate in molecular biology and an MSc in Medicinal and Industrial Boehringer Ingelheim-owned Institute of University of St. Gallen
genetics from the University of Zurich and a Pharmaceutical Sciences from ETH Zurich Molecular Pathology, Vienna Former investment manager and partner at
post-doc at HKUST Prior experience as registered pharmacist Co-founder of Intercell with successful IPO, New Medical Technologies. Position in R&D
CSO of Glenmark Pharma management at Serono SAPublic Equity Team 56
Dr Ivo Staijen, CFA Dr Thomas Thaler Gavin MacGregor Mirjam Heeb
(2003) (2006) (2017) (2019)
Head Public Equity Investment Advisor Investment Advisor Investment Advisor
Over 20 years experience in the pharma Over 25 years of experience in the investment Over 13 years’ experience in the pharma Over 15 years experience in the pharma industry and
industry and in investment analysis and management, financial research and in the industry and in global healthcare investment global healthcare investment analysis and portfolio
portfolio management biotechnology and medical technology industry analysis management
PhD in biotechnology from ETH Zurich and PhD in life sciences and MSc in biochemistry 1st Class BSc in Biomedical Sciences from the MSc in Molecular Biology from the University of Basel
MSc in chemistry from the University of and a master’s degree in business University of Manchester and a Chartered and McGill University, Montreal
Groningen administration from ETH Zurich Management Accountant (CIMA) Previously senior portfolio manager of GAM Health
Previously senior biotechnology analyst at Previously senior equity analyst at Bank Julius Previously senior global healthcare analyst at Innovation Fund, senior manager with Vifor Pharma,
Bank Sarasin and department head at MDS Baer and in senior management positions with Martin Currie Investment Management, sell-side and buy-side analyst, portfolio manager at
Pharma Services Sulzer Medica, Schneider and Boston European pharmaceuticals analyst at Credit Bellevue Group.
Scientific Suisse and Lehman Brothers
Michael Jasulavic Miles Schofield Ny Ken Thomas Heimann
(2012) (2007) (2004) (2010)
Investment Advisor to HBM Partners Trading & Execution Investment Control Risk Manager and Analyst
Over ten years of experience in healthcare Over 15 years experience in trading & More than 10 years experience in trading & Over eight years of experience in Investment
investment research, strategy and trade execution execution and administration Research, Analysis, FINMA Risk Management
execution and client services
Bachelors of Science (Hons) degree from the Bachelor in business administration from
MS in Medical Science from MCP/Hahnemann Open University UK Zurich University of Applied Sciences MSc and BSc in Banking & Finance from the
University Lucerne University of Applied Sciences
Previously in US Equities Middle Office Previously in administrative functions at HBM
Previously biotechnology analyst at Traxis activities at Salomon Smith Barney and Partners AG Previously in investment analysis and valuation
Partners, Sivik Global Healthcare and Jefferies Citigroup and in client advisory at a Swiss bank
Asset ManagementDisclaimer 57 This document is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument and should therefore not be relied on for accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but HBM does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions. HBM has expressed its own views in this document and these may change. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested. All investments involve risk including the risk of possible loss of the invested amount. Investors should consider all potential risks and further disclosure information associated with the investment disclosed in the fund documents and the appropriateness with their financial profile and objectives. Changes in foreign-exchange rates may also cause the value of investments to fall as well as rise. Some information quoted was obtained from external sources HBM considers to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. Third party data is owned or licensed by the data provider and may not be reproduced or extracted and used for any other purpose without the data provider's consent. Third party data is provided without any warranties of any kind. The data provider and HBM shall have no liability in connection with third party data. Issued by HBM Healthcare Investments AG, Bundesplatz 1, 6300 Zug, Switzerland.
Your Contact 58 HBM Healthcare Investments Ltd Bundesplatz 1 6301 Zug Switzerland Phone +41 41 710 75 77 Fax +41 41 710 75 78 investor.relations@hbmhealthcare.com www.hbmhealthcare.com
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