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HBM Healthcare Investments AG / Key word(s): Quarter Results
HBM Healthcare Investments achieved a net profit of CHF 52 million in the first quarter of the 2022/2023 financial year in an overall declining market environment. The net asset value per share rose by 2.6 percent, while the share price fell by 4 percent. The positive quarterly result is largely owed to three acquisitions from the portfolio of public companies. With an operationally successful portfolio and a high level of cash and cash equivalents, HBM Healthcare Investments is well positioned in an environment that continues to be characterised by volatility and uncertainty. The Company hedged one fifth of the US dollar Swiss franc currency risk.
HBM Healthcare Investments closed the first quarter of the 2022/2023 financial year as at 30 June 2022 with a net profit of CHF 52 million. The net asset value per share (NAV) increased by 2.6 percent, while the share price declined by 4 percent. Overall, the equity markets in the healthcare sector recorded declining valuations (MSCI World Health Care Index – 3.9 percent, Nasdaq Biotechnology Index – 6.6 percent, SPDR S&P Biotech – 14.6 percent).
Three acquisitions of portfolio companies led to quarterly profit
Three acquisitions from the portfolio of public companies dominated the reporting quarter and contributed a total of CHF 70 million to quarterly profits. All companies were acquired at significant premiums of between 40 and 120 percent over the prices traded on the stock exchange.
The other assets were CHF 10 million lower in value overall.
High level of cash and cash equivalents
As of the balance sheet date at the end of June 2022, the company reported cash and cash equivalents of CHF 167 million. This does not include the proceeds of approximately CHF 125 million from the acquisitions of Turning Point Therapeutics and Biohaven Pharmaceuticals, which are expected to close in the third quarter of 2022 and early 2023, respectively.
No new investments were made in private companies during the quarter under review. CHF 18 million went to existing private companies as follow-on financing. Mineralys Therapeutics accounted for just under half of this. The company closed a USD 118 million financing round at a higher company valuation. The funds will be used for further clinical development of MLS-101, a novel treatment approach for patients with hypertension.
In the public companies’ segment, new positions were selectively added to the portfolio and existing holdings were increased.
Overall, the composition of the portfolio changed little compared to the previous quarter. Due to the strong rise of the US dollar against the Swiss franc, about one fifth of the US dollar currency risk was hedged.
The market environment is likely to remain volatile over the summer months. However, thanks to its high level of cash and cash equivalents, HBM Healthcare Investments is well positioned for this.
For the second half of 2022, a number of relevant approval decisions are pending in the portfolio of public companies. For example, Arcutis Biotherapeutics expects to receive approval for the drug roflumilast, a PDE-4 inhibitor, for the topical treatment of psoriasis, in the third quarter. At the same time, Arcutis is conducting further phase III trials with the same compound for the treatment of other skin diseases.
At Y-mAbs Therapeutics, the US Food and Drug Administration (FDA) will decide in the fourth quarter whether to approve OMBLASTYS® (omburtamab) for the treatment of childhood cancer. With DANYELZA®, Y-mAbs already has a drug approved in the US for the treatment of neuroblastoma. The drug is currently also undergoing the approval process in China. In addition, Y-mAbs is conducting numerous other clinical trials for the treatment of various cancers.
Several other public companies are also due to report important study results, which, if successful, should have a positive impact on the value of these companies.
The portfolio remains well positioned. Operationally, many of the companies are developing successfully and – as demonstrated by the recent acquisitions – are attractive for strategic buyers.
The Quarterly Report June 2022 is available on the Company’s website www.hbmhealthcare.com/en/investors/financial-reports.
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HBM Healthcare Investments AG
SIX Swiss Exchange
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EQS News Service