HBM Healthcare reaps $28m profit on sale of TandemLife stake
Swiss-listed HBM Healthcare Investments (HBMN.S) should realise an profit of at least $27.6m on the sale of its holding in the med-tech company TandemLife, as a result of the company’s acquisition by Livanova. HBM Healthcare holds a 16.6% stake in TandemLife, which is carried on its books at CHF5.2m ($5.6m). |Thus HBM should receive ~$33m under the terms of the takeover deal, which has an upfront payment of $200m with up to a further $50m payable in regulatory milestones.
The news comes as HBM reported its January portfolio update, which saw a 2.4% fall in NAV, albeit contrasting 7.3% rise in its share price. These moves highlight a closing of its discount, which still remains larger than its peers. The fall in NAV in January presumably reflects the fund’s ~12% short position on the Nasdaq Biotechnology Index (the value of which rose by 4.3% in the month) combined with the contrasting performance of some of its top investments. Two of the top 10 holdings performed poorly in the month: the UK inhaled drug delivery specialist, Vectura and US pain management company Pacira, while three others showed strong price rises: Armo Sciences, Argenix and Galapagos.
However, as noted in another Quoteddata.com article, biotech stock valuations peaked in late January and have since declined amid the wider stockmarket sell-off. And as of last week, HBM had proven to be one of the most resilient in the sector specialist trusts monitored by Marten & Co. Currently, its stock trades at CHF133.8, while NAV is estimated at CHF159.5, suggesting a 16% discount.
Vectura’s share price has, however, continued to fall in February as a result of uncertainty over regulatory timelines for VR315, its US generic version of GlaxoSmithKline’s respiratory blockbuster Advair, developed in partnership with Hikma Pharmaceuticals. Furthermore, Vectura’s plan to evolve into more of a speciality pharma-type business, originally articulated at the time of its 2016 merger with SkyePharma, seem to have stalled and the company is cutting back ambitions to focus on the development of respiratory generics on behalf of partners. In contrast, Armo Biosciences, has continued to rise on the back of exciting over immuno-oncology, and is currently up almost 150% on its IPO at $17/share IPO price from mid January. Armo’s pivotal Phase III study of its lead product, AM0010, in pancreatic cancer is set to read out at the end of this year.
The table below shows HBM Healthcare’s top 10 holdings, expressed as a percentage of total assets (rather than NAV), and the share price change of each in January.
| % of total assets | Share price change to 31 January | |
| Vectura | 6.3 | -25.1% |
| Armo Biosciences | 3.7 | 80.0% |
| Cathay | 3.4 | n/a |
| Pacira Pharmaceuticals | 3.1 | -15.9% |
| Argenx | 3.0 | 14.8% |
| Esperion Therapeutics | 2.8 | 4.1% |
| Neurocrine Biosciences | 2.6 | 8.5% |
| Harmony Biosciences | 2.5 | n/a |
| Galapagos | 2.3 | 22.4% |
| ObsEva | 2.3 | n/a |
HBM Healthcare reaps $28m profit on sale of TandemLife stake