HBM Healthcare to benefit from Homology Medicines IPO
Swiss-listed HBM Healthcare (HBMN) is set to receive a modest boost to its NAV following the US initial public offering last week of Homology Medicines (Nasdaq: FIXX), a US gene editing/gene therapy company developing treatments for rare disease. Homology raised a total of $165.6m from an offering of 10.35m shares at $16.00 per share. The company’s share price opened at $22 per share but has since fallen back to c$17.6/share. HBM took an initial $4m stake in Homology in July 2017 and purchased an additional $6m in the IPO.
Homology has developed a proprietary multidimensional gene correction platform and hopes to be able to overcome current limitations of gene therapy and gene editing approaches. The company has IP on gene editing and gene therapy using vectors derived from naturally occurring human adeno-associated viruses (AAVs).
HBM was one of only two healthcare specialist trusts to have seen a share price rise – 6% – in the first quarter, which was characterised by substanital share price declines across biotech and the wider healthcare sector. The trust is unusual among its 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 having a long/short approach, which should ameliorate the effect of a down market such as has been seen in the first quarter. The approach differentiates HBM it from fellow Swiss sector specialist BB Biotech (BION.S), as well as other peers like 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’s stock currently trades at CHF145, and it reported an NAV of CHF166.43, suggesting a 12.9% discount.
Separately, HBM has reported a 11% increase in NAV for the financial year ending 31 March, beating the MSCI World Health Care and Nasdaq Biotechnology Indices, which both rose by around 5% over the period. Around 52% of NAV is held in public companies (net of hedging of c20%), with the remaining 38% in private companies (including fund investments).
HBM’s top 10 holdings as of the end of December, January and February are shown in the table below, with the share price change of these investments in March.
| Top Holdings | Dec-17 | Jan-18 | Feb-18 | % change 28/2-29/3 |
| Armo Biosciences | 3.7 | 3.7 | 5.5 | -17.7% |
| Vectura | 6.3 | 6.3 | 4.5 | 6.8% |
| Cathay | 3.4 | 3.4 | 3.4 | n/a |
| Argenx | 3.0 | 3.0 | 3.0 | 2.0% |
| Pacira Pharmaceuticals | 3.1 | 3.1 | 2.6 | -0.5% |
| ObsEva | 2.3 | 2.3 | 2.5 | -5.1% |
| Cardiac Assist | n/a | n/a | 2.5 | n/a |
| Harmony Biosciences | 2.5 | 2.5 | 2.5 | n/a |
| Esperion Therapeutics | 2.8 | 2.8 | 2.5 | -10.0% |
| Genmab | n/a | 23.5 | 2.3 | 2.6% |
HBM Healthcare to benefit from Homology Medicines IPO