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HBM investee ObsEva reports successful trail of IVF drug

HBM boosts dividend by 20% after stellar year

HBM investee ObsEva reports successful trail of IVF drug

HBM Healthcare Investments (HBMN.S) investee ObsEva (Nasdaq: OBSV) has reported positive results in the Implant2 phase III trial of  nolasiban, an oxytocin receptor antagonist, for improving pregnancy rates associated with in-vitro fertilisation (IVF). ObsEva is currently HMB Healthcare’s tenth largest holding, accounting for 2.3% of its  NAV as of the end of January.

The Implant2 study enrolled women who were undergoing IVF with intracytoplasmic sperm injection. Participants were randonomised to either 900mg of nolasiban or placebo on the day of embryo transfer (ET), with patients receiving a single, fresh ET on day 3 (D3) or on day 5 (D5) after oocyte retrieval. The primary endpoint of the trial was the ongoing pregnancy as determined by ultrasound at 10 weeks following ET. Detailed results of the trial are shown in the table below.

Group nolasiban placebo p value absolute increase relative  increase
Pooled D3/D5 (n=778) 35.6% 28.5% p=0.031 7.1% 25%
D5 subgroup (n=390) 45.6% 34.7% p=0.034 11.2% 32%
D3 subgroup (n=388) 25.3% 22.5% p>0.05 3.1% 11.5%

The immediate market reaction to the data has been tempered by concerns at the differing success rates in the D3 and D5 sub-groups, although the field is increasingly moving towards the latter schedule where the results were best. There is also uncertainty remaining over whether the increased pregnancy rate at 10 weeks will translate into a rise in the live birth rate, data which should become available later in the year. ObsEva is a a Swiss-based but US listed biotech that specialises on women’s heath and reproduction. The company has an R&D portfolio with three agents in trials: the others being OBE2109, which is in phase III for uterine fibroids and phase II for endometriosis and OBE022, which is in phase II for pre-term labour.

ObsEva’s shares have risen by c 25% since 1 February, which should help HBM’s performance this month. The trust has so far seen a mixture of contrasting movements among its top 10 holdings with the UK inhaled drug delivery specialist Vectura and US pain management company Pacira declining, while strong rises have been recorded for Armo Sciences and Argenix. Furthermore, the fund has a short position on the Nasdaq Biotechnology Index, which will have increased in value as the index has declined.

HBM is unusual among its direct peers for selecting individual biotech stocks that are largely, if not exclusively, outside of the leading components of the Nasdaq Biotechnology index, as well as its long/short approach. This differentiates from it from fellow Swiss sector specialist BB Biotech (BION.S), as well as the UK’s International Biotech Trust (IBT) and Biotech Growth Trust (BIOG) and Tekla Life Sciences (HQL) and Tekla Healthcare Investors (HQL)  in the US. HBM also trades at a wider discount that other biotech sector specialist trusts. Currently, its stock trades at CHF136, while NAV (at the end of January) was estimated at CHF159.5, suggesting a 15% discount.

HBM investee ObsEva reports successful trail of IVF drug

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