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==Asset allocation == '''Current portfolio positioning''' HBMN’s portfolio concentration has increased over the past financial year, with the top 10 holdings now accounting for 52.7% of the total (end-FY21: 43.3%). However, the portfolio remains broadly diversified, with over 90 named holdings across the private, funds, ex-private and public portfolios, plus other small unnamed investments amounting to c CHF62.5m (c 3% of NAV at end-FY22). By far the largest holding currently is Cathay Biotech, a synthetic biology company based in the Shanghai region, which HBMN held for many years prior to its IPO in 2020. There is a three-year post-IPO lock-up prohibiting HBMN from selling its shares in the company, so it is likely to remain a substantial holding for some time to come, although it is worth noting that the increase in weighting during FY22 from 14.1% to 22.4% is the twin outcome of strong performance from Cathay itself (share price +36.4% in HBMN’s FY22) and declines elsewhere in the listed portfolio. {| class="wikitable" |+Exhibit 1: Top 10 holdings (at 31 March 2022)<ref>Source: HBM Healthcare Investments, Edison Investment Research. Note: *Originally held in private portfolio. **Private company.</ref> ! rowspan="2" |Company ! rowspan="2" |Country ! rowspan="2" |Clinical focus ! colspan="2" |Portfolio weight % |- !31 March 2022 !31 March 2021 |- |Cathay Biotech* |China |Synthetic biology |22.4 |14.1 |- |Harmony Biosciences* | US |Narcolepsy/cataplexy |8.6 |7.0 |- |Swixx Biopharma** |Switzerland |Distribution |7.5 |2.8 |- |Neurelis** |US |Epilepsy |2.7 |2.6 |- |ConnectRN** |US |Digital health |2.5 |0.1 |- |Biohaven Pharmaceuticals |US |Neurological disorders |1.4 |1.6 |- |Y-mAbs* |Denmark |Cancer immunotherapy |2.1 |2.7 |- |HBM Genomics |N/A |Genomics fund |1.8 |2.2 |- |Pacira Pharmaceuticals* |US | Pain management |2.4 |1.4 |- |NiKang Therapeutics** |US | Oncology |1.2 | 0.2 |- |Top 10 (% of holdings) | | |52.7 |43.3 |} Cathay also makes up the lion’s share of the fund’s holdings in public companies originating in the private portfolio (see Exhibit 2), the largest segment of the portfolio, at 37% (in aggregate, public companies of any origin make up 52%). However, private companies remain an important part of the whole, with 11 new companies added during FY22 at a cost of CHF93m, more than offsetting the CHF55.9m value of private companies moving to the public portfolios via IPO. The largest new private investment was a $20m commitment to Upstream Bio, a US company developing an antibody to treat severe asthma. There were also significant investments in two antibody/oncology companies, CHF17m in Swiss firm Numab Therapeutics and $10m in Odyssey Therapeutics. '''Exhibit 2: Asset allocation at 31 March 2022'''<ref name=":0">Source: HBM Healthcare Investments, Edison Investment Research.</ref> [[File:Asset allocation at 31 March 2022.png|400px]] '''Exhibit 3: Asset allocation at 31 March 2021'''<ref name=":0" /> [[File:Asset allocation at 31 March 2021.png|400px]] As shown in Exhibits 4 and 5, HBMN is well spread geographically, with less than half of its underlying holdings based in the Americas (the higher US dollar weighting can be attributed to the base currency of funds investing internationally). In particular there is a high weighting to Asia (35%), principally in China through holdings such as Cathay Biotech, Fangzhou (formerly Jianke), the WuXi Healthcare Ventures II fund and a new investment in Hong Kong based Hutchmed China, but also in India via names including Tata 1mg and SAI Life Sciences. Europe is also well represented, with a variety of Swiss and Nordic companies among others, including the largest private holding Swixx BioPharma (7.5% of NAV), which distributes medicines in Central and Eastern Europe. The level of geographical diversification sets HBMN apart from many of its peers, which tend to have a much greater focus on the US (an average of 72.3% for the AIC Biotechnology & Healthcare peer group). '''Exhibit 4: Portfolio breakdown by geography'''<ref name=":1">Source: HBM Healthcare Investments, Edison Investment Research. Note: Data at 31 March 2022.</ref> [[File:Portfolio breakdown by geography.png|400px]] '''Exhibit 5: Portfolio breakdown by currency'''<ref name=":1" /> [[File:Portfolio breakdown by currency.png|400px]] Exhibit 6 shows the development of HBMN’s sector allocation over FY22, with the biggest rise (+7.9pp in synthetic biology via Cathay Biotech) and the biggest fall (-11.0% in oncology) both largely attributable to the market performance of listed holdings. The second largest increase, in digital health, comes after an external financing round substantially increased the valuation of unlisted US nurse-sourcing platform ConnectRN, now a top 10 holding. {| class="wikitable" |+Exhibit 6: Portfolio exposure by clinical focus (% unless stated)<ref>Source: HBM Healthcare Investments, Edison Investment Research.</ref> ! !Portfolio end-March 2022 !Portfolio end-March 2021 !Change (pp) |- |Synthetic biology |22.0 |14.1 | 7.9 |- |Oncology |17.0 |28.0 |(11.0) |- |CNS disorders |17.0 |17.0 |0.0 |- |Digital health |7.0 |4.0 |3.0 |- |Immunology/inflammation |6.0 |8.0 |(2.0) |- |Orphan diseases |5.0 | 6.0 | (1.0) |- | Medtech/diagnostics |4.0 |5.0 |(1.0) |- |Infectious diseases |2.0 |2.0 |0.0 |- | Others |20.0 |15.9 |4.1 |- | |100.0 | 100.0 | |} It is worth noting that while the proportion of profitable companies in HBMN’s portfolio has jumped from 21% to 47% during the year, this represents the most advanced stage of development in any company’s product portfolio, and should not be taken to indicate a lack of innovation in the remaining holdings. Indeed, HBMN’s portfolio companies are expected to have a busy year of trial readouts (Phases I, II and III) and product approvals during the remainder of 2022. {| class="wikitable" |+Exhibit 7: Portfolio exposure by clinical development stage (% unless stated)<ref>Source: HBM Healthcare Investments, Edison Investment Research. Note: *Classified by most advanced development stage.</ref> ! !Portfolio end-March 2022 !Portfolio end-March 2021 !Change (pp) |- |Profitable |47.0 |21.0 |26.0 |- |Market |23.0 |29.0 |<nowiki>-6.0</nowiki> |- |Phase III |7.0 |12.0 |<nowiki>-5.0</nowiki> |- |Phase II |11.0 | 18.0 |<nowiki>-7.0</nowiki> |- |Phase I |5.0 |16.0 |<nowiki>-11.0</nowiki> |- |Pre-clinical |7.0 |4.0 |3.0 |- | | 100.0 | 100.0 | |} {| class="wikitable" |+Exhibit 8: Five-year discrete performance data<ref>Source: Refinitiv, HBM Healthcare Investments. Note: All % on a total return basis in Swiss francs.</ref> !12 months ending !Share price (%) !NAV (%) !MSCI World Health Care (%) !NASDAQ Biotech (%) !MSCI World (%) |- |30/04/18 |39.4 |17.0 |8.1 |4.4 |14.4 |- |30/04/19 |11.6 |15.7 |12.1 |6.3 |(0.2) |- |30/04/20 |35.3 |23.1 |10.1 |11.2 |(24.1) |- |30/04/21 | 59.9 | 37.2 |14.1 |18.5 |30.0 |- | 30/04/22 |(26.5) |(3.7) |12.9 |(17.1) |5.3 |}
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