HBM sees best share price performance in YTD period
London-listed HBM Healthcare (HBMN) recorded the best share price price performance so far this year of the 14 biotech specialist investment trusts monitored by Marten & Co, with a 25% rise in the seven months to end July. HBM’s share price outstripped growth in NAV, which has shown a more modest 12% rise in the period, suggesting there has been a significant closing of its discount to NAV. HBM currently trades on a 6.4% discount.
HBM’s investment performance in the YTD period was broadly in line with the sterling-value of the Nasdaq biotechnology index, despite the fact that it invests in a mixed portfolio of private and public biotech companies, with the latter largely selected from outside the main index constituents. It also has a short position on the biotech index, which will increase in value if biotech stocks in general decline, as has been the case. This strategy is a marked contrast to the stock selection strategy employed by most of its peers. As of 30 June, private companies accounted for 39% of NAV, while public companies accounted for 57% (45% excluding the derivative positions).
The strong performance reflects a number of acquisitions, some IPOs and other financial transactions involving portfolio companies. In the second quarter, Lilly completed the acquisition of Armo BioSciences, Novartis acquired Avexis and LipaNova acquired TandemLife (Cardiac Assist). Meanwhile, Aptinyx completed an IPO on Nasdaq and, as a result of the acquisition of a significant state in the Indian company, Sai Life Sciences, HBM could revalue its stake. The 3.8% appreciation in the US dollar against the Swiss franc also had a positive effect in the second quarter.
During this period, HBM made a $10m capital commitment to C-Bridge Capital, a private equity investor in the Chinese healthcare sector. In partnership with C-Bridge, HBM has made an initial direct investment of $3m in Everest Medicines, a company that licences compounds for sale in the Chinese market.
Four new private company investments were made in the second quarter:
- €3.5m as the first tranche of an €8m commitment to Sublimity Therapeutics, an Ireland-based company that is conducting clinical trials of a compound for ulcerative colitis;
- $4m in Corvidia Therapeutics, a US-based spin-off from AstraZeneca, that has an antibody to treat chronic kidney disease in phase II trials;
- €1.6m as the first tranche of a €5m commitment to iTeos Therapeutics, a Belgian company in the immuno-oncology sector;
- $3m of a $5m commitment in Cure Everlife, a Singapore-based company selling medical devices in south-east Asia.
HBM Healthcare’s top holdings, as of 30 June, are shown in the table below:
| Investment | % of NAV |
| Cathay | 7.00% |
| Vectura | 4.20% |
| Argenx | 2.90% |
| Ultragenyx | 2.80% |
| Pacira Pharmaceuticals | 2.70% |
| Immunomedics | 2.50% |
| Harmony Biosciences | 2.50% |
| ObsEva | 2.50% |
| Galapagos | 2.10% |
| Genmab | 1.90% |
| Ascendis | 1.80% |
| Esperion Therapeutics | 1.70% |
| Aptynx | 1.70% |
| Anaptys Bio | 1.40% |
| Celgene | 1.40% |
| Incyte | 1.30% |