HBM Healthcare Investments Ltd - Unique Access to a Global and Diversified Healthcare Portfolio of Private and Public Companies - February 2020
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HBM Healthcare Investments Ltd Unique Access to a Global and Diversified Healthcare Portfolio of Private and Public Companies February 2020
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
► Over $1.8bn assets under management, established 2001
► Dedicated private and public equity investment teams with The only listed
a global industry network and external business advisors healthcare-focused
company holding
► Mainly invested in later-stage product/drug development private and public
companies with market cap below USD 2 bn equity
Bellwethers
Emerging Leaders Mid to high teens
Investments percentage increase in
in Listed net asset value and
Potential Gems Companies
share price over the
Break last five years (p.a.)
Investments even
in Private
Companies
Attractive distribution
policy (3-5% p.a.)
Early Later / Growth IPO
stage stage SMid caps
Facts & Figures 4
Registered Shares (CHF) Performance (CHF)
5Y 10Y
Total assets 1’838 million Net return
(including Return Return
Net assets (NAV) 1’555 million distributions) 2020 2019 2018 2017 p.a. p.a.
Market capitalisation 1’558 million Share price 0.7% 48.0% 21.8% 40.5% 21.2% 17.9%
Share price 224.00
NAV 1.5% 33.0% 9.9% 25.8% 14.1% 14.6%
NAV per share 223.52
Dividend CHF 7.50 7.00 5.80
Premium 0.2%
Dividend yield 4.4% 4.9% 5.2%
Average daily liquidity (1 year) 6’744 shares
~ 1.5 million
5Y Volatility p.a. 1Y Volatility p.a.
Number of issued shares 6.96 million Share price 16.4% 16.9%
Number of shareholders ~ 2’400
Data as of 31 January 2020
Value Creation over 5 Years 5
CHF Performance USD Performance
260 450
240
400
220
200 350
180 300
160
140 250
120 200
100
150
80
60 100
40
50
20
0 0
Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20
NAV HBM Share price HBM MSCI World Health Care Index
Data as of 31 January 2020, indexed (12.7.2001 = 100)About 50 Trade Sales and IPOs during the past 10 Years 6
Trade Y-mAbs (US)
IPOs
sales
Principia (US)
Aptinyx (US)
Anthera (US) Homology (US)
Asthmatx (US) Obseva (CH)
ChemoCentryx
Micrus (US) Eiger (US) AnaptysBio (US)
(US)
ARMO Bio Arcutis
Sloning (DE) Vivacta (UK) Paratek (US) Kolltan (US)
(US) (US)
Probiodrug Skyepharma TandemLife Galera
Nuokang (CN) Pacira (US)
(DE) (UK) (Cardiac) (US) (US)
Interventional Viela Bio
Ziemer (CH) mtm (DE) Ophthotech (US) Ellipse (US)
Spine (US) (US)
SpringWorks
Brahms (DE) Mpex (US) PTC (US) Curetis (DE) True North (US) (US)
PharmaSwiss Turning Point
Esbatech (CH) Enanta (US) Nabriva (US) AAAP (US)
(CH) (US)
2009-10 2011-12 2013-14 2015-16 2017-18 2019-20
Data as of 31 Januar 2020Latest IPOs from Private Equity Portfolio 7
Invested US$m Post - IPO Performance
Company IPO Year
(private + at IPO) Until End of Period or Exit
Galera 2019 6.5 13.8%
Viela Bio 2019 29.5 91.2%
SpringWorks 2019 15.2 72.3%
Turning Point 2019 14.5 250.8%
Y-mAbs 2018 32.7 108.2%
Principia 2018 19.2 335.8%
Aptinyx 2018 8.5 -77.2%
Homology 2018 10.0 15.1%
ARMO * 2018 22.2 63.3%
ObsEva 2017 18.5 -75.9%
AnaptysBio 2017 9.3 260.3%
AAA ** 2016 48.5 412.5%
234.6
Data as of 31 January 2020, * acquired by Eli Lilly, ** acquired by NovartisHBM Healthcare Investments Ltd About HBM Healthcare Investments Ltd Investment Strategy / Investment Process Healthcare Sector Portfolio Structure Investment Positions Outlook & Concluding Remarks Appendix: Organisation, Team
HBM 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 promising 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 has product(s) in
clinical development and has achieved “proof of concept”
► Subsequently, investment may be increased substantially in follow-on financings, provided
the value-creation potential is intact
► Active participation with companies to develop towards trade sale or IPO
► At or post IPO: the flexibility of HBM Healthcare Investments allows for further increasing
its 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 30 23.7
USD m
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: +772% (9.0% p.a.)
MSCI World Index: +279% (5.5% p.a.)
800
493%
400
% log
200
100
50
1995 2000 2005 2010 2015 2020
Data as of 31 January 2020, 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 ResearchNew Breakthrough Biotech Medicines 24
All this would have been unthinkable 10 years ago
We cure cancer We change cystic fibrosis We prevent Ebola
patients’ lives
We restore vision We cure hepatitis C
(Luxturna)Supportive Regulatory Climate 25
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 26
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 4 45
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 27
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 29
1’670
11%; 165
1’520 1%; 20
1’370 Others
CHF 2%
INR 3%
Cash
1’220 4%
54%; 838 Other Assets EUR
1’070 10%
Public Equity
920
CHF m
Private Equity Funds CNY 11%
770
Private Equity
620 10%; 154 USD 70%
Long-term liabilities
470 2021/23
Short-term liabilities
320
34%; 527
170
20
-6%; -101
-130 -4%; -48
*Around 16% of public exposure hedged
HBM Research, data as of 31 January 2020, in % of net assets in % of assetsPortfolio Breakdown by Market Cap and Geography 30
Market Capitalisation Geography
> CHF 10
billion 4%
Europe 16%
Asia 25%
CHF 2-10 billion 31%
Market Cap < CHF 2
billion 65% North and
South
America 59%
HBM Research, data as of 31 December 2019, in % of investmentsPortfolio Breakdown by Sector, Therapy and Stage 31
Sector Breakdown Therapeutic Area Development Stage
Medical Spec. Pharma 6% Pre-Clinical 1%
Phase I 1%
Devices &
Diagnostics
4%
Orphan
diseases
Phase II Profitable
13%
16% 19%
Others 27%
Health IT,
Services & Oncology
Supplies 20%
25% Infectious Market
Biotech diseases 2% 22%
65%
Phase III
Metabolic 41%
diseases 4%
Digital health 4%
Immunology /
Inflammation 13%
Medtech / Diagnostics
4% Central nervous
system disorders 13%
HBM Research, data as of 31 December 2019, in % of investmentsInvestment Portfolio 32
Harmony 3.4%
Shanghai Cathay
Swixx (Amicus) 2.0%
Biotech
11.2%
Neurelis 2.0%
Other Positions < 1%
16.9%
SAI Life Sciences 1.0%
Principia* 1.0%
Idorsia 1.0% 1mg 1.0%
Uniqure 1.2% Jianke 0.8%
Esperion 1.3% Westmed 0.7%
Immunomedics 1.4%
FarmaLatam 0.6%
Biohaven 1.5%
Sphingotec 0.5%
Galapagos 1.5%
Zogenix 1.6% Other Positions < 1%
6.0%
Private Equity
Turning Point* 1.7% Funds 8.0%
Arcutis* 2.0%
Private equity positions
Viela Bio* Y-mAbs
SpringWorks* 2.1%
3.6% Therapeutics* Public equity positions
Pacira* 2.2% 4.8%
Argenx 2.2% * ex private positions
HBM Research, data as of 31 January 2020, in % of assets, Top 10 positions (direct investments): 35.6%Asset Allocation over Time 33
1’440
5% 17%
6%
1’200 6%
8% 12%
5% 9%
960 32% 5%
10% 23% 26%
19% 16% 11%
8%
720 16% 14%
15%
CHF m
9%
36%
53% 8%
25%
480 30%
55%
67%
36% 62% 56% 25% 59%
37%
59% 44%
240 51%
26% 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 34
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% 37%
35%
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 35
Well balanced portfolio from a risk perspective
100
220
HBM book value About half of total assets is exposed to companies
in CHF m with lead phase II and phase III drugs
90
200
80
70
60
Blue: Public
Green: Private
50
40
30
20
10
0
Profitable Market Phase III Phase II Phase I / Preclinical
HBM Research, data as of 31 December 2019Private Portfolio Positioning 36
Company valuation (CHF m)
1’200
2800
Size corresponds to
HBM’s book value
1’000
2600
800
2400
Shanghai Cathay
Harmony Biotechnology
600
Jianke
Arcutis
400
Neurelis Sai Life Sciences
Shriji
200
Sublimity Valcare
Sphingotec Swixx
Vascular Nuance
Arrakis Adrenomed
Farmalatam
iTeos MicroOptx 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 31 December 2019Contribution to NAV 37
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 Portfolio 39
Sphingotec Adrenomed
Y-mabs Galapagos Swixx Biopharma
Cardialen
Esperion Biohaven Argenx
Vascular Dynamics Ultragenyx SpringWorks Everest Medicines
Turning Point Viela Bio Harmony Biosciences
Zogenix Arcutis Valcare
Neurelis Cathay
Pacira 1mg
Shriji Polymers Jianke
SAI Life Sciences
Farmalatam
Private companies
Public companies
HBM Research, data as of 31 January 2020 (Selection)Largest Investments (1/2) 40
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 2’616* 7.9 206.5 11.2
carbohydrates and special
enzymes
Developing novel antibody Phase III YMAB 1’262 7.0 88.6 4.8
therapeutics for oncology (ex private)
targets
Late-stage drug for treatment Phase III VIE 1’934 3.4 66.3 3.6
of severe inflammation and (ex private)
autoimmune diseases
Drug for the treatment of Phase III Private 789 8.0 62.8 3.4
narcolepsy (with and without
cataplexy)
Drugs for autoimmune and Phase II ARGX 5’959 0.8 41.7 2.2
cancer diseases
Injectable medicines with Market PCRX 1’735 2.3 39.6 2.2
(patented) controlled release (ex private)
of active drug
HBM Research, data as of 31 January 2020, * Implied company valuationLargest Investments (2/2) 41
Phase of Market Owner- Book % of
Lead Capitalisation ship Value Total
Company Core Business Product Ticker (CHF m) (%) (CHF m) Assets
Targeted oncology treatment Phase III SWTX 1’304 2.9 38.3 2.1
(ex private)
Fully representing biopharma Market Private 129 29.0 37.4 2.0
companies in the CEE
Specialty pharma company Phase III Private 255* 14.6 37.3 2.0
developing a treatment for
epileptic seizures
Developing treatments for Phase III ARQT 736 5.0 36.6 2.0
unmet needs in immune- (ex private)
mediated dermatological
diseases
Drugs for the treatment of Phase II TPTX 2’021 1.5 30.7 1.7
severe cancers (ex private)
Therapeutic solutions for CNS Phase III ZGNX 2’140 1.4 29.8 1.6
disorders and rare diseases
HBM Research, data as of 31 January 2020, * Implied company valuationDevelopment of Share Prices (1/2) 42
Market Cap: USD 1.3bn – (ex private) USD 2.0bn – (ex private) USD 6.2bn
40 50 160
30 40 120
20 30 80
10 20 40
0 10 0
2018 2019 2019 2020 2014 2015 2016 2017 2018 2019
USD 1.8bn USD 1.4bn – (ex private) USD 2.1bn – (ex private)
140 50 70
120 60
40
100 50
80 30 40
60 30
20
40 20
10
20 10
0 0 0
2014 2015 2016 2017 2018 2019 2020 2019 2019 2019 2020
HBM Research, data as of 31 January 2020Development of Share Prices (2/2) 43
USD 2.2bn USD 13.1bn USD 2.8bn
70 240 80
60 200
60
50
160
40
120 40
30
80
20
20
10 40
0 0 0
2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 2017 2018 2018 2019 2020
USD 3.9bn USD 1.5bn USD 2.5bn
30 120 90
25
90
20 60
15 60
10 30
30
5
0 0 0
2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 2018 2019 2020
HBM Research, data as of 31 January 2020Largest Private Investments over the last 5 Years 44
IPO or
trade sale
v
v
2014 / 2015 2016 2017 2018 2019
Year of initial investment, only investments > CHF 5 million
Data as of 31 January 2020Strategic Fund Investments 45
BioVeda WuXi 6- Dimensions Tata Capital Medfocus HBM
China (I / IV) Healthcare Capital Genomics
(I / II)
Invested: 2005 / 2018 2015 2018 2015 / 2019 2005 2015
Investment: 8.5 m / 5 m 20 m 25 m 10 m / 20 m 16 m 15 m
Investment multiple: 3.6x / n.a. 2.1x 1.2x 1.4x / n.a. 2.5x 0.9x
Ownership: 34% / n.a. 7% 5% 67% / n.a. 100% 100%
Healthcare Healthcare Healthcare Healthcare Medical devices Genomics
Fund strategy: Access to early Invest and build Growth and Incubator and Early and
Later and growth stage investment quality platform expansion accelerator development
stage opportunities with companies investments concept, selective stage
opportunities a focus on China currently missing later stage opportunities
in China investments
Investment thesis: Seasoned VC with Partnering with Access to Access to early
One of the first investment team, capabilities in one of the leading promising early stage investments
local investors former China and U.S. to on-shore private stage investments in later rounds;
specialised in the WuXiAppTec, with access innovation equity investors in in later rounds; Network of top
Chinese vast network and build category Indian life “raised” by Silicon Valley
healthcare market facilitating / leaders in sciences successful investors and
offering deal flow healthcare sectors entrepreneurs companies with a
possibilities focus on
genomics
Currently no co-
investment
Data as of 31 January 2020, in CHFPrivate Companies with significant Value-Increasing Potential 46
Diazepam (Valtoco) nasal spray for use in
207 Long-chain dicarboxylic acids / bio-based diamine 5 37 breakthrough epilepsy seizures
Profitable with revenues at US$ 230m for 9M 2019 US market approval with orphan status
Potentially first company with a commercial scale Major unmet need in epilepsy patients, where no
production of bio-based diamine 5 drug is approved for controlling break through
seizures
Narcolepsy (with and without cataplexy) 18
63 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
37
Full representation service in CEE markets
Profitable company with net sales exceeding
14 For the first time in Sepsis, there is a defined
diagnostic test (by Sphingotec) coupled with
EUR 130 million in 2019; high double-digit sales
growth Adrenomed’s therapeutic drug, which can identify
Signed agreements with 17 multinationals patients at high risk of septic shock and mortality
across 17 countries The company is conducting a Phase 2 study in
Europe with top-line data expected to be available
in early 2020
Size corresponds to
HBM’s book value (in
Data as of 31 January 2020 Mio. CHF)Promising Public Company Holdings 47
Pediatric oncology (neuroblastoma), radio- Focus on novel approaches to address treatment-
89 immunotherapy 31 resistant, oncogenic driven tumors
US approval expected in 2020 TPTX’s lead candidate, repotrectinib, is currently in
phase II for ROS1+ NSCLC and NTRK+ solid
tumors. Topline phase II data is expected H2 2020
Lead asset is an anti-CD19 antibody (Inebilizumab
monotherapy) – potentially first-in-class – in an Migraine treatment (acute / prevention)
66 orphan CNS autoimmune indication known as 27 Lead asset rimegepant is an oral, CGRP antagonist
Neuromyelitis optica spectrum disorder (NMOSD) currently under review by the FDA
Limited competition, patients often receive off-label Phase III for prevention in Q4 2019; approval for
immunosuppressants or steroids acute in Q1 2020 (expected)
Antibody drug conjugate, solid tumors
Severe autoimmune diseases (MG, ITP, PV)
42 Novel antibody-based therapies, combining the 27 Impressive data in 3rd-line, triple negative breast
cancer, which led to breakthrough designation from
diversity of the llama immune system with antibody
FDA
engineering
Approval application for IMMU-132 (in mTNBC), US
Phase III in MG in H2 2020 expected
approval expected in 2020
Topical formulation of PDE4 inhibitor, Roflumilast Cholesterol-lowering drugs, alternative to statins
37 studied in mid-stage clinical trials for the treatment of 24 Bempedoic Acid (BA) is an orally available drug that
plaque psoriasis and atopic dermatitis lowers LDL (“bad” cholesterol)
Roflumilast potentially used as an alternative to First FDA approval expected in Q1 2020
steroids
Data as of 31 January 2019Flurry of Catalysts in 2020 48
Important Clinical Results
Phase II Phase III
Adrenomed* Adrecizumab, early septic shock Argenx Efgartigimod, generalized myasthenia gravis
Turning Point* Repotrectinib, non-small cell lung cancer/solid tumors Biohaven Rimegepant; preventive migraine prevention
Argenx Efgartigimod, Pemphigus vulgaris Retrophin Sparsentan, FSGS
Galapagos GLPG1972, osteoarthrtis Zogenix Fintepla, lennox-gastaut syndrome
Albireo Elobixibat, adult liver NASH Albireo Odevixibat, PFIC pediatric liver
Ultragenyx DTX-301, cohort 4 data in OTC deficiency Idorsia Daridorexant, insomnia treatment
Ultragenyx DTX-401, expansion cohort 2 data in GSDIa Idorsia Lucerastat, Fabry disease
ChemoCentryx Avacopan, C3 glomerulopathy C3G Uniqure AMT-061, hemophilia B
ChemoCentryx Avacopan, Hidradenitis suppurativa
ChemoCentryx CCX140, Focal segmental glomerulosclerosis FSGS
Zymeworks ZW49 phase I, HER2-expressing cancers
US Approvals IPOs (only announced)
Biohaven Rimegepant (acute migraine prevention) Shanghai Cathay Biotechnology*
Esperion Bempedoic acid (high-cholesterol levels, statin-resistent/intolerant) In Dec 2019 the company has filed for an IPO on
Galapagos Filgotinib (rheumatoid arthritis) Shanghai’s Star Market
Immunomedics Sacituzumab govitecan (hard-to-treat breast cancer)
Neurelis* () Diazepam nasal spray NRL-1 (epilepsy cluster seizures) Arcutis Biotherapeutics*
Ultragenyx UX007 (rare condition preventing the body from breaking down fats into energy) In Jan 2020 the company has filed for an IPO on US
NASDAQ Market
Viela Bio* Inebilizumab (severe inflammatory disorder of the central nervous system)
Y-mAbs* Naxitamab GD2 / Omburtamab B7-H3 (pediatric cancer of the CNS)
Zogenix Fintepla (rare, severe type of childhood epilepsy)
Note: expected catalysts and IPOs, () milestone reached, * private / ex private companyHBM Healthcare Investments Ltd – Attractions for Investors 49
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 50
► 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
► Closed-end structure allows optimum exploitation of the value-increasing potential of
healthcare companies
► Competitive edge over other investment companies and investment funds with exclusively
listed investments
► Stable team: Majority of investment professionals have been with HBM for more than 12
years
► 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 level of transparency and direct 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 52
► 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 53
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 54
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 55
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 56
Dr Matthias Fehr, CFA Dr Alexander Asam, MBA Dr Ulrich Geilinger Dr Chandra P. Leo, MBA
(2002) (2007) (2001) (2007)
Head Private Equity Investment Advisor Senior Investment Advisor Investment Advisor
Over twenty years of experience in private and More than twenty years of experience in the More than 25 years of experience in the Over fifteen years of experience in private
public equity investment management and life sciences and private equity businesses Venture Capital Industry equity, clinical practice and biomedical
research MBA degree from ASTON Business School, PhD ETH Zurich in Natural Sciences and research
MSc and PhD in chemistry from ETH, Zurich Birmingham and a MSc and PhD in chemistry Industrial Engineering Completed medical studies in Berlin and
Former senior sell-side analyst at Lombard from University of Heidelberg Previously in management functions at London, doctoral degree from Freie Universität
Odier for biotech and medical technology Former managing director and partner of Innoventure, Credit Suisse, Apax and Berlin, MBA degree from INSEAD
industries; former scientist at the Swiss Deutsche Venture Capital / Deutsche Bank. Vontobel. Former postdoctoral scientist at Stanford
Federal Institute of Technology Various positions at Hoechst, Aventis and University, physician at University Hospital
LION Bioscience Leipzig and principal at Wellington Partners
Dr Priyanka Belawat Dr Emil Bujak, CFA Dr Michael Buschle Dr Thomas Thaler
(2007) (2015) (2017) (2006)
Investment Advisor Investment Advisor Investment Advisor Investment Advisor
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 25 years of experience in the investment management,
private equity investing in the healthcare space including one year in investment analysis and and pharma financial research and in the biotechnology and medical
in the US, Europe and selected emerging industry report preparation PhD from the University of London. Research technology industry
markets Holds a PhD in Pharmaceutical Sciences and at St. Jude’s Children’s Research Hospital, PhD in life sciences and MSc in biochemistry and a master’s
Holds a doctorate in molecular biology and an MSc in Medicinal and Industrial Boehringer Ingelheim-owned Institute of degree in business administration from ETH Zurich
genetics from the University of Zurich and a Pharmaceutical Sciences from ETH Zurich Molecular Pathology, Vienna Previously senior equity analyst at Bank Julius Baer and in
post-doc at HKUST Prior experience as registered pharmacist Co-founder of Intercell with successful IPO, senior management positions with Sulzer Medica, Schneider
CSO of Glenmark Pharma and Boston ScientificPublic Equity Team 57
Dr Ivo Staijen, CFA Gavin MacGregor Mirjam Heeb Michael Jasulavic
(2003) (2017) (2019) (2012)
Head Public Equity Investment Advisor Investment Advisor Investment Advisor to HBM Partners
Over 20 years experience in the pharma Over 13 years’ experience in the pharma Over 15 years experience in the pharma Over ten years of experience in healthcare
industry and in investment analysis and industry and in global healthcare investment industry and global healthcare investment investment research, strategy and trade
portfolio management analysis analysis and portfolio management execution
PhD in biotechnology from ETH Zurich and 1st Class BSc in Biomedical Sciences from the MSc in Molecular Biology from the University MS in Medical Science from MCP/Hahnemann
MSc in chemistry from the University of University of Manchester and a Chartered of Basel and McGill University, Montreal University
Groningen Management Accountant (CIMA) Previously senior portfolio manager of GAM Previously biotechnology analyst at Traxis
Previously senior biotechnology analyst at Previously senior global healthcare analyst at Health Innovation Fund, senior manager with Partners, Sivik Global Healthcare and Jefferies
Bank Sarasin and department head at MDS Martin Currie Investment Management, Vifor Pharma, sell-side and buy-side analyst, Asset Management
Pharma Services European pharmaceuticals analyst at Credit portfolio manager at Bellevue Group.
Suisse and Lehman Brothers
Steve Chen, CFA Miles Schofield Ny Ken Thomas Heimann
(2019) (2007) (2004) (2010)
Investment Advisor (Hong Kong) Trading & Execution Investment Control Risk Manager and Analyst
Over 15 years of investing experience with focus Over 15 years experience in trading & More than 10 years experience in trading & Over eight years of experience in Investment
on China and global healthcare execution execution and administration Research, Analysis, FINMA Risk Management
and client services
MBA from Wharton Business School, MSc in Bachelors of Science (Hons) degree from the Bachelor in business administration from
Biochemistry and Molecular Biology from Open University UK Zurich University of Applied Sciences MSc and BSc in Banking & Finance from the
Georgetown and BSc from Nankai University Lucerne University of Applied Sciences
k
Previously in US Equities Middle Office Previously in administrative functions at HBM
Previously managed trading portfolio for Barclays activities at Salomon Smith Barney and Partners AG Previously in investment analysis and valuation
(NY) and Huatais’ HK subsidiary and was PM for Citigroup and in client advisory at a Swiss bank
a large closed-end listed fund in ChinaDisclaimer 58 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 59 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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