Frequently Asked Questions
Overview HBM Healthcare Investments
HBM Healthcare Investments actively invests in the human medicine, biotechnology, medical technology and diagnostics sectors and related areas. The company holds and manages an international portfolio of some twenty five promising companies. Many of these companies have their lead products already available on the market or at an advanced stage of development. The portfolio companies are closely tracked and actively guided on their strategic directions. This is what makes HBM Healthcare Investments an interesting alternative to investing in big pharma and biotech companies. HBM Healthcare Investments has an international shareholder base and is listed on SIX Swiss Exchange (ticker: HBMN).
Who we are
HBM Healthcare Investments is a leading healthcare investor with a carefully selected, diversified portfolio of some 25 investments in private and public enterprises in the human medicine, biotechnology, medical technology and diagnostics sectors and related areas.
HBM Healthcare Investments takes an active long-term role in its portfolio companies in order to support their value creation over an investment holding period of several years. HBM Healthcare Investments is neither a passive investment fund nor a stock trader, but takes an entrepreneurial stance towards its portfolio companies.
The investment process rigorously follows three key steps:
HBM Healthcare Investments selects quality
HBM Healthcare Investments’ investment advisors and external experts perform thorough due diligence on scientific, business/financial/patent and tax/legal issues surrounding attractive potential portfolio companies.
HBM Healthcare Investments supports winners
Once an investment has been made, HBM Healthcare Investments provides strategic advice to its portfolio companies on clinical development and commercialisation. HBM Healthcare Investments takes an active role in all its major portfolio companies.
HBM Healthcare Investments exits successfully
HBM Healthcare Investments uses its global industry and financial network to help portfolio companies achieve an IPO or trade sale at attractive valuations. HBM Healthcare Investments has a proven track record of successful exit transactions.
Within its target sector, HBM Healthcare Investments invests predominantly in later-stage private companies which are attractively valued and have a convincing business model, including their product pipeline, technology and management:
> The initial investment is typically made in the later stages of clinical development, and where profitable or cash flow-neutral companies require financing for their expansion. There must be an attractive ratio between value-creation potential and the risk of the investment. HBM Healthcare Investments must also be able to influence the portfolio company, particularly with regard to its exit from the investment.
> HBM Healthcare Investments may acquire majority participations in portfolio companies.
> The amount of the investment may be increased in follow-on financing rounds provided the value-creation potential remains intact.
> HBM Healthcare Investments has the flexibility to increase ist Investment further at the time of or after the portfolio company’s IPO.
Investments are made worldwide – primarily in Europe, Asia and North America.
Availability of funds HBM Healthcare Investments maintains adequate short-term funds
to ensure that it is able to satisfy all of its commitments, including follow-on financing for portfolio companies. Cash and cash equivalents are held with a variety of top-rated banks.
With the approval of the Board of Directors, HBM Healthcare Investments Ltd may obtain debt financing totalling no more than 20 percent of net assets at any time. Where possible, the repayment Dates for this borrowed capital will be staggered over time.
HBM Healthcare Investments may hedge all or part of its Investment risks using derivatives or other appropriate financial instruments. Such transactions must be aimed at reducing overall portfolio risk.
HBM Healthcare Investments' investments are made primarily in equities. HBM Healthcare Investments may also invest in other instruments including, but not limited to, convertible bonds and, exceptionally, debt securities and derivatives.
How is HBM Healthcare Investments organised?
HBM Healthcare Investments is a Swiss holding company based in Zug, Switzerland. Its Board of Directors consists of six members with extensive experience in various relevant disciplines. HBM Healthcare Investments is advised by HBM Partners, one of the leading investment-advisory companies in the field of human medicine. It has about 15 investment experts, all of them with operational experience in pharmaceutical or biotech companies, the venture-capital field or finance. For its advisory services HBM Partners receives a management fee from HBM Healthcare Investments, plus a performance-related fee if applicable.
What is HBM Healthcare Investments' corporate form?
HBM Healthcare Investments is a Swiss joint-stock company domiciled in Zug, Switzerland. Its shareholders, which number over 800, enjoy the same codetermination and information rights as shareholders in any other Swiss joint-stock company.
To what extent is HBM Healthcare Investments an active investor?
HBM Healthcare Investments does not simply invest capital in its portfolio companies. The HBM Partners advisory team actively collaborates also with company managements – putting them in touch with their comprehensive network of sector experts, for example. To this end, a representative of HBM Partners usually takes a seat on the portfolio company’s Board of Directors and becomes actively involved in its work. Given this active level of involvement, each of the HBM Partners investment experts is actively involved with an average of no more than 3-5 portfolio companies.
HBM Healthcare Investments portfolio
What is the composition of the portfolio?
HBM Healthcare Investments concentrates most of its investment in private companies. Most portfolio companies are active in the field of pharmaceutical development. The medical technology and diagnostics sectors are also strongly represented. Some companies are operating profitably, while others are already selling their products on the market.
How is the portfolio of private companies structured?
The private portfolio has some 25 holdings. In general the more mature the company, the larger the holding. In line with the HBM Healthcare Investments investment strategy, a carefully considered initial investment is built up over several years – as long as the profit potential of the company concerned is intact. Experience has shown that this development and investment cycle takes an average of five to seven years, from the initial investment to the harvest phase.
How are investments in private companies valued?
In strict compliance with the IFRS accounting standards and the valuation guidelines of the International "Private Equity and Venture Capital Valuation Guidelines", investments in private companies are valued at acquisition cost unless (i) the company has been valued differently in a more recent financing round, or (ii) the company is evidently performing less well than expected, or (iii) the company is generating sustained profits (see also more detailed information on the valuation guidelines).
How is the portfolio of public companies structured?
Most holdings in listed companies were originally in the HBM Healthcare Investments portfolio of private companies. These investments are very closely monitored. They are only retained in the portfolio as long as their growth potential is high.
How are investments in public companies valued?
Holdings in listed shares are valued at their market prices.
How is HBM Healthcare Investments positioned geographically? In which currencies is the portfolio invested?
HBM Healthcare Investments invests globally. See also portfolio structure.
The investor viewpoint
Share buy-back programme
Detailed information on the current share buy-back programme are to be found here
Where can I find information about HBM Healthcare Investments?
Go to the website – www.hbmhealthcare.com – for comprehensive information on the company, and to register to be sent information by e-mail.
Who are the investors in HBM Healthcare Investments?
HBM Healthcare Investments has a broad shareholder base. About 1000 shareholders are registered, some of them large institutions. Private investors range from large to small. Regarding the reporting of significant shareholders' holdings, refer to the information of SIX Swiss Exchange.
With which indices and investment products should HBM Healthcare Investments be compared?
HBM Healthcare Investments actively invests in the human medicine, biotechnology, medical technology and diagnostics sectors and related areas. The company holds and manages an international portfolio of some twenty five promising companies. Many of these companies have their lead products already available on the market or at an advanced stage of development. The portfolio companies are closely tracked and actively guided on their strategic directions. This is what makes HBM Healthcare Investments an interesting alternative to investing in big pharma and biotech companies.
Its performance can therefore be compared with indices or investment products that represent the global healthcare sector, such as the MSCI World Healthcare Index (see also performance).
What is the minimum capital investment in HBM Healthcare Investments?
The minimum investment is the price of one share. The shares are listed on the SIX Swiss Exchange.
How is the fee structure?
Management fees (paid quarterly):
0.75% of the Company assets
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 147.20
Do I have to pay issue commission when I buy HBM Healthcare Investments shares? Will I be charged redemption commission when I sell the shares?
No issue or redemption commission is charged on the purchase or sale of HBM Healthcare Investments shares.
The investment sector
How did HBM Healthcare Investments' investment sector fare during the financial crisis?
HBM Healthcare Investments holds participations in several smaller companies that are suitable candidates for acquisition by major pharma and biotech firms. The investment sector in which HBM Healthcare Investments operates enjoys a healthy level of activity and is largely non-cyclical in nature. Many major pharma and biotech companies are being forced to expand their product pipelines by buying in additional compounds or acquiring other companies. This keeps the number of acquisitions and cooperation agreements at a consistently high level. Ample liquidity means that financing these transactions poses no problem. Despite the crisis, there has been little change so far in the terms on which these deals are done and the long-term trend has been upward.
How is the human medicine sector defined?
HBM Healthcare Investments divides the human medicine sector into three parts: biotechnology, medical technology and diagnostics, the company’s three main investment segments.
What is biotechnology?
Biotechnology refers to the use of knowledge gained in the fields of biology and chemistry to devise technical processes or products. Biotechnology is principally concerned with the development and manufacture of enzymes, proteins, antibodies and other biological agents for medical and other purposes. Biopharmaceutical products, which are usually manufactured in a bioreactor with the help of micro-organisms, today make a vital contribution to the treatment of many different diseases.
What is medical technology?
Medical technology applies the principles and rules of engineering science in the field of medicine. It combines expertise in the field of technology with specialist medical knowledge in order to identify, prevent, monitor, treat or relieve wounds and disabilities.
What is diagnostics?
Diagnostics denotes the various methods of medical and therapeutic diagnosis. Companies that are active in diagnostics develop new diagnostic techniques or improve existing ones.
What is the "clinical development" of products? How are phases I, II and III defined?
“Clinical development” is an important, capital-intensive stage in the development of new drugs. It follows the stage known as pre-clinical development, i.e. the search for a suitable active compound. Once an compound has successfully completed a series of comprehensive pre-clinical tests, it generally embarks on the clinical research stage. Phase I studies investigate how the compound functions in the human organism, using volunteers, and whether it has any side effects. The most suitable form of administration is developed on the basis of these results. In phase II of clinical development the compound is used on patients as a drug for the first time. This phase concentrates mainly on investigating the nature and gravity of any side effects and on establishing the dose. Phase III consists of final studies to generate information on the mechanism of action of the compound. This is crucial for its approval by the authorities. Randomised double-blind studies are conducted to establish whether the compound is superior to a placebo, and whether it has effects comparable with those of other drugs. Once the first three phases of clinical development have been completed, the drug generally embarks on the process of obtaining official approval.