Editing HBM Healthcare Investments
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== Summary == | == Summary == | ||
HBM Healthcare Investments (HBMN) posted its first NAV loss in a decade for FY22 (ended 31 March), but, as shown in the chart below, its long-term performance record remains very impressive. The recent fall in the share price from a premium to a discount to NAV (10.0% at 20 May) could present an opportunity for long-term investors who, like HBMN’s management team, remain convinced of the long-term opportunities afforded by careful investment in the healthcare and biotechnology space. HBMN is unusual among its peers in offering a portfolio made up of private companies, listed equities and funds, broadly spread by geography and clinical focus, with a high distribution policy (current yield of 3.8%). | HBM Healthcare Investments (HBMN) posted its first NAV loss in a decade for FY22 (ended 31 March), but, as shown in the chart below, its long-term performance record remains very impressive. The recent fall in the share price from a premium to a discount to NAV (10.0% at 20 May) could present an opportunity for long-term investors who, like HBMN’s management team, remain convinced of the long-term opportunities afforded by careful investment in the healthcare and biotechnology space. HBMN is unusual among its peers in offering a portfolio made up of private companies, listed equities and funds, broadly spread by geography and clinical focus, with a high distribution policy (current yield of 3.8%). | ||
'''Why invest in healthcare and biotech now?''' | '''Why invest in healthcare and biotech now?''' | ||
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'''The analyst’s view''' | '''The analyst’s view''' | ||
HBMN’s strategy has evolved over two decades, but remains founded on identifying promising healthcare and biotech innovators while they are still small, and holding them for the very long term. With 70% of the listed portfolio (37% of the total portfolio) having begun in the private portfolio, it is clear that this is a fund with true private equity roots, although its ability to invest in listed companies as well means it is well placed to capitalise on value opportunities arising from the recent public market sell-off. Over the years | HBMN’s strategy has evolved over two decades, but remains founded on identifying promising healthcare and biotech innovators while they are still small, and holding them for the very long term. With 70% of the listed portfolio (37% of the total portfolio) having begun in the private portfolio, it is clear that this is a fund with true private equity roots, although its ability to invest in listed companies as well means it is well placed to capitalise on value opportunities arising from the recent public market sell-off. Over the years we have seen HBMN’s own valuation appreciate from a persistent double-digit discount to a sustained premium to NAV as investors have become more familiar with the fund’s approach and track record. In our opinion, the current 10% discount is unwarrantedly wide compared with a peer group average of 2.7%, particularly given HBMN’s superior performance record. | ||
== The fund manager: HBM Partners== | |||
== The fund manager: HBM Partners == | |||
'''The manager’s view: ‘Increasingly interesting’ opportunities''' | '''The manager’s view: ‘Increasingly interesting’ opportunities''' | ||
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With a variety of macroeconomic and geopolitical factors having weighed on sentiment towards growth stocks in general and biotechnology in particular so far in 2022, the HBMN team continues to rate the prospects for the healthcare investment universe as ‘good’, and says it intends to exploit (selectively) the ‘increasingly interesting’ investment opportunities arising in public markets in particular over the coming months. | With a variety of macroeconomic and geopolitical factors having weighed on sentiment towards growth stocks in general and biotechnology in particular so far in 2022, the HBMN team continues to rate the prospects for the healthcare investment universe as ‘good’, and says it intends to exploit (selectively) the ‘increasingly interesting’ investment opportunities arising in public markets in particular over the coming months. | ||
==Asset allocation == | == Asset allocation == | ||
'''Current portfolio positioning''' | '''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. | 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. | ||
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. | 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. | ||
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). | 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 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. | |||
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. | 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. | ||
==Performance: Stabilising after a more difficult year== | == Performance: Stabilising after a more difficult year == | ||
For the financial year ended 31 March 2022, HBMN posted negative NAV and share price total returns of -3.6% and 13.2% respectively. Performance had been positive in the first three quarters of FY22 but was negatively affected in the last quarter (calendar Q1) as worries over inflation, recession, commodity prices, lockdowns in China and the Russian invasion of Ukraine caused a broad-based sell-off in ‘growth’ sectors such as technology. While the NAV has largely stabilised so far in FY23, HBMN’s share price continued to fall in April, leading to a 12-month share price total return of -26.5% versus -3.7% for the NAV (Exhibit 8). However, May has been more positive, with the share price up 7.4% and the NAV up c 1%. While focusing on one-month performance is entirely inappropriate from a long-term investment perspective, it may serve to illustrate the start of a pick-up in sentiment. On a long-term basis (Exhibit 9, right-hand chart), HBMN’s strong performance record remains very much intact, with annualised share price and NAV total returns (in Swiss francs) of c 17–23%, compared with c 11–14% pa for the MSCI World Health Care Index. | For the financial year ended 31 March 2022, HBMN posted negative NAV and share price total returns of -3.6% and 13.2% respectively. Performance had been positive in the first three quarters of FY22 but was negatively affected in the last quarter (calendar Q1) as worries over inflation, recession, commodity prices, lockdowns in China and the Russian invasion of Ukraine caused a broad-based sell-off in ‘growth’ sectors such as technology. While the NAV has largely stabilised so far in FY23, HBMN’s share price continued to fall in April, leading to a 12-month share price total return of -26.5% versus -3.7% for the NAV (Exhibit 8). However, May has been more positive, with the share price up 7.4% and the NAV up c 1%. While focusing on one-month performance is entirely inappropriate from a long-term investment perspective, it may serve to illustrate the start of a pick-up in sentiment. On a long-term basis (Exhibit 9, right-hand chart), HBMN’s strong performance record remains very much intact, with annualised share price and NAV total returns (in Swiss francs) of c 17–23%, compared with c 11–14% pa for the MSCI World Health Care Index. | ||
One of the benefits of holding unlisted investments is that they are not affected on a day-to-day basis by stock market gyrations. HBMN’s valuation methodology for private investments means that most are valued at book cost unless an external funding round establishes a new ‘price’. During FY22, two of the larger private investments, Swixx Biopharma and ConnectRN, saw their valuations increased by CHF75m and CHF38m, respectively, as the result of funding rounds, accounting for the majority of the CHF129m increase in the value of the private portfolio. | One of the benefits of holding unlisted investments is that they are not affected on a day-to-day basis by stock market gyrations. HBMN’s valuation methodology for private investments means that most are valued at book cost unless an external funding round establishes a new ‘price’. During FY22, two of the larger private investments, Swixx Biopharma and ConnectRN, saw their valuations increased by CHF75m and CHF38m, respectively, as the result of funding rounds, accounting for the majority of the CHF129m increase in the value of the private portfolio. | ||
The funds portfolio declined in value by CHF35m, mainly as a result of falls in the value of funds’ listed equity holdings, while the public portfolio saw broad based declines, although the two largest (ex-private) holdings – Cathay Biotech and Harmony Biosciences – both did well, adding an aggregate CHF186m and limiting the overall loss on public holdings to CHF82m (c 3.8% of opening NAV). The majority of the losses came from oncology companies with clinical development candidates, many of which were ex-private companies that had come to the public markets via IPO in the past two years. The managers note that in most cases these losses came after significant gains in previous years, and that clinical developments are largely proceeding according to plan. | The funds portfolio declined in value by CHF35m, mainly as a result of falls in the value of funds’ listed equity holdings, while the public portfolio saw broad based declines, although the two largest (ex-private) holdings – Cathay Biotech and Harmony Biosciences – both did well, adding an aggregate CHF186m and limiting the overall loss on public holdings to CHF82m (c 3.8% of opening NAV). The majority of the losses came from oncology companies with clinical development candidates, many of which were ex-private companies that had come to the public markets via IPO in the past two years. The managers note that in most cases these losses came after significant gains in previous years, and that clinical developments are largely proceeding according to plan. | ||
As shown in Exhibits 10 and 11, the past 12 months have been a more difficult period of relative performance versus the broad healthcare equity market and the MSCI World Index, although HBMN’s longer-term performance record versus all comparator indices remains compelling in both share price and NAV terms. | As shown in Exhibits 10 and 11, the past 12 months have been a more difficult period of relative performance versus the broad healthcare equity market and the MSCI World Index, although HBMN’s longer-term performance record versus all comparator indices remains compelling in both share price and NAV terms. | ||
==Peer group comparison== | == Peer group comparison == | ||
In Exhibit 12 | In Exhibit 12 we show HBMN alongside its Swiss counterpart BB Biotech and the UK-listed members of the AIC Biotechnology & Healthcare sector (all data in Swiss franc terms). With the broad healthcare equity market having markedly outperformed the biotechnology space (see Exhibit 8) in the past year, those funds less specifically focused on biotech have also performed better, with Polar Capital Global Healthcare the only fund in the peer group to have posted a positive return in the 12 months to 19 May 2022. HBMN’s NAV total return ranks second, with a small loss of 1.2%, but is comfortably in first place over three, five and 10 years. In spite of this – and an above-average dividend yield – the fund’s shares currently trade on the second widest discount to NAV in the group. | ||
== Dividends: Consistent growth record maintained == | |||
In an environment of persistently low yields on cash and bonds, HBMN has long recognised the attractiveness to its shareholders of a regular income, even though companies in the earlier-stage healthcare and biotech space tend to be more focused on R&D spending than paying dividends to investors. As a result, since 2013 the fund has followed a policy of paying out 3–5% of NAV each year as a cash distribution, with the ambition of providing a stable to rising payout each year (CAGR of 10.8% a year from FY17 to FY22, setting aside the one-off ‘anniversary payment’ of CHF3.00 paid in respect of FY21). The CHF9.70 per share payout proposed for FY22 equates to 3.4% of NAV and is a 3.8% yield on the current share price. As in recent years, the distribution will be paid in September and treated as a reduction in the par value of the shares, which is more tax efficient for HBMN than transferring part of the par value into capital reserves and then paying it out. | In an environment of persistently low yields on cash and bonds, HBMN has long recognised the attractiveness to its shareholders of a regular income, even though companies in the earlier-stage healthcare and biotech space tend to be more focused on R&D spending than paying dividends to investors. As a result, since 2013 the fund has followed a policy of paying out 3–5% of NAV each year as a cash distribution, with the ambition of providing a stable to rising payout each year (CAGR of 10.8% a year from FY17 to FY22, setting aside the one-off ‘anniversary payment’ of CHF3.00 paid in respect of FY21). The CHF9.70 per share payout proposed for FY22 equates to 3.4% of NAV and is a 3.8% yield on the current share price. As in recent years, the distribution will be paid in September and treated as a reduction in the par value of the shares, which is more tax efficient for HBMN than transferring part of the par value into capital reserves and then paying it out. | ||
==Discount: Potential to narrow after difficult spell== | == Discount: Potential to narrow after difficult spell == | ||
Since the bounce back from the global market sell-off in March/April 2020 in response to the emerging COVID-19 pandemic, HBMN’s shares have broadly traded at a premium to NAV, averaging 2.9% over the two years to 20 May 2022. However, the recent declines in growth stocks generally and biotech in particular have seen the share price drift to a discount, standing at 10.0% on 20 May 2022, on the back of relatively muted falls in the NAV per share. Given its substantial holdings in unlisted companies, coupled with a conservative valuation approach, HBMN’s NAV tends to be less volatile in down markets than is the case for funds invested only in listed equities. However, despite the fund’s superior performance record, the current discount is the second widest in the peer group (see Exhibit 12), suggesting scope for a re-rating should market sentiment improve. In the past 12 months HBMN’s shares have traded in a range from a 19.0% premium to a 19.2% discount to NAV, although in aggregate the discount/premium has been relatively narrow, averaging a 1.9% premium over one year and discounts of 0.2% and 6.2%, respectively, over three and five years. As such it has not been necessary for the board to take any action to manage the discount or premium, although | Since the bounce back from the global market sell-off in March/April 2020 in response to the emerging COVID-19 pandemic, HBMN’s shares have broadly traded at a premium to NAV, averaging 2.9% over the two years to 20 May 2022. However, the recent declines in growth stocks generally and biotech in particular have seen the share price drift to a discount, standing at 10.0% on 20 May 2022, on the back of relatively muted falls in the NAV per share. Given its substantial holdings in unlisted companies, coupled with a conservative valuation approach, HBMN’s NAV tends to be less volatile in down markets than is the case for funds invested only in listed equities. However, despite the fund’s superior performance record, the current discount is the second widest in the peer group (see Exhibit 12), suggesting scope for a re-rating should market sentiment improve. In the past 12 months HBMN’s shares have traded in a range from a 19.0% premium to a 19.2% discount to NAV, although in aggregate the discount/premium has been relatively narrow, averaging a 1.9% premium over one year and discounts of 0.2% and 6.2%, respectively, over three and five years. As such it has not been necessary for the board to take any action to manage the discount or premium, although we note that a new share buyback facility will be proposed at the shareholders’ meeting on 10 June 2022, replacing the current programme, which has been in place (although unused) since June 2019. | ||
==Fund profile: Public/private healthcare investor== | == Fund profile: Public/private healthcare investor == | ||
HBMN is a Switzerland-based healthcare investment company that has been listed on the SIX Swiss Exchange since 2008. It began life in 2001 as HBM BioVentures, and has since evolved from a pure private equity investor focused on the biopharmaceutical sector, into a globally diversified portfolio of listed and private healthcare companies and private equity funds. Many of the listed holdings were originally private investments that HBMN’s management has continued to back following their stock market debuts. While its main aim is to achieve long-term capital growth for its investors, the fund also offers a high distribution policy, paying out c 3–5% of NAV each year. | HBMN is a Switzerland-based healthcare investment company that has been listed on the SIX Swiss Exchange since 2008. It began life in 2001 as HBM BioVentures, and has since evolved from a pure private equity investor focused on the biopharmaceutical sector, into a globally diversified portfolio of listed and private healthcare companies and private equity funds. Many of the listed holdings were originally private investments that HBMN’s management has continued to back following their stock market debuts. While its main aim is to achieve long-term capital growth for its investors, the fund also offers a high distribution policy, paying out c 3–5% of NAV each year. | ||
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The fund publishes fortnightly NAVs, monthly summary factsheets and full portfolio valuations are available quarterly. It is overseen by a non-executive board (mainly made up of pharmaceutical industry specialists), with the fund management team being led by Chief Executive Officer Andreas Wicki and Chief Financial Officer Erwin Troxler. | The fund publishes fortnightly NAVs, monthly summary factsheets and full portfolio valuations are available quarterly. It is overseen by a non-executive board (mainly made up of pharmaceutical industry specialists), with the fund management team being led by Chief Executive Officer Andreas Wicki and Chief Financial Officer Erwin Troxler. | ||
==Investment process: Seeking opportunities far and wide== | == Investment process: Seeking opportunities far and wide == | ||
While it has its roots in private equity investment, HBMN now invests across the spectrum of smaller listed (usually sub-$2bn market cap) and unlisted companies in the healthcare and biotechnology sectors, as well as in private equity funds. The team focuses on companies with innovative platforms and drug candidates. With a significant proportion of the listed companies (70.2% at 31 March 2022) having started out in the unlisted portfolio, the fund manager now reports its listed investments in two segments (those originating as private holdings, and those bought as public companies). HBM Partners has teams specialising in private and listed equity and the teams meet with each other weekly to discuss clinical and market developments. Most of the investment team members have a life sciences background. | While it has its roots in private equity investment, HBMN now invests across the spectrum of smaller listed (usually sub-$2bn market cap) and unlisted companies in the healthcare and biotechnology sectors, as well as in private equity funds. The team focuses on companies with innovative platforms and drug candidates. With a significant proportion of the listed companies (70.2% at 31 March 2022) having started out in the unlisted portfolio, the fund manager now reports its listed investments in two segments (those originating as private holdings, and those bought as public companies). HBM Partners has teams specialising in private and listed equity and the teams meet with each other weekly to discuss clinical and market developments. Most of the investment team members have a life sciences background. | ||
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On the governance side, a thorough assessment of the quality of management is fundamental to HBM Partners’ investment process, and as an active investor in earlier-stage and private companies, HBMN helps contribute to the performance of its holdings through board representation by its investment consultants at numerous portfolio companies. | On the governance side, a thorough assessment of the quality of management is fundamental to HBM Partners’ investment process, and as an active investor in earlier-stage and private companies, HBMN helps contribute to the performance of its holdings through board representation by its investment consultants at numerous portfolio companies. | ||
==Gearing: New lower-cost CHF100m bond tranche== | == Gearing: New lower-cost CHF100m bond tranche == | ||
HBMN is modestly geared via two tranches of straight (ie not convertible) bonds amounting to CHF150m (equating to c 7.7% of net assets at 16 May 2022), maturing in July 2023 and July 2027. A previous CHF50m bond tranche matured in July 2021 and was replaced with a new CHF100m issue (maturing in 2027) with an effective interest rate of 1.32% (versus 2.67% for the CHF50m tranche). However, at 31 March 2022, the gearing was more than offset by cash and equivalents and HBMN had a net cash position of 3.4% (CHF74.8m). | HBMN is modestly geared via two tranches of straight (ie not convertible) bonds amounting to CHF150m (equating to c 7.7% of net assets at 16 May 2022), maturing in July 2023 and July 2027. A previous CHF50m bond tranche matured in July 2021 and was replaced with a new CHF100m issue (maturing in 2027) with an effective interest rate of 1.32% (versus 2.67% for the CHF50m tranche). However, at 31 March 2022, the gearing was more than offset by cash and equivalents and HBMN had a net cash position of 3.4% (CHF74.8m). | ||
==Fees & charges: No performance fee earned in FY22== | == Fees & charges: No performance fee earned in FY22 == | ||
HBM Partners is paid an annual management fee of 0.75% of HBMN’s NAV plus 0.75% of its market cap, calculated and paid quarterly. Based on four quarter-ends of FY22 (to 31 March 2022), | HBM Partners is paid an annual management fee of 0.75% of HBMN’s NAV plus 0.75% of its market cap, calculated and paid quarterly. Based on four quarter-ends of FY22 (to 31 March 2022), we calculate ongoing charges to be 1.78% at the year-end (FY21: 1.29%), reflecting declining capital values in the second half of the year. A performance fee, equal to 15% of the excess performance above the hurdle, may also be paid if the year-end NAV per share (before accounting for any performance fee) is more than 5% above the high-water mark (the year-end NAV at which a performance fee was last paid). After a particularly strong performance from the portfolio in FY21 (with the year-end NAV standing at CHF309.25, or 45.9% above the previous high-water mark), the performance fee earned by HBM Partners was substantial at CHF120.7m (5.6% of net assets), with a further CHF8.0m in variable compensation paid to the board. However, more challenging conditions in FY22 meant the NAV ended the year some 9.5% below the current high-water mark of CHF315.27, so no performance fee has been earned in respect of the year just ended. | ||
== Capital structure: Diverse base but thinner volumes == | |||
HBMN is structured as a closed-ended investment company with one class of share, listed on the SIX Swiss Exchange. It has 7.0m ordinary shares in issue, unchanged since the start of FY19. As shown in Exhibit 16, the fund is owned by a diverse range of shareholder types, with only one entity (Nogra Pharma Invest, which holds c 16% of the shares) having an interest of more than 3%. Exhibit 17 shows an average daily traded volume of 4,500 shares (0.06% of the share base) over the 12 months to 16 May 2022; this is down markedly from c 7,100 shares (c 0.10% of the share base) in the previous 12 months, reflecting a generally more difficult demand environment for healthcare investments, also shown in HBMN’s wider discount to NAV (see Exhibit 15). | HBMN is structured as a closed-ended investment company with one class of share, listed on the SIX Swiss Exchange. It has 7.0m ordinary shares in issue, unchanged since the start of FY19. As shown in Exhibit 16, the fund is owned by a diverse range of shareholder types, with only one entity (Nogra Pharma Invest, which holds c 16% of the shares) having an interest of more than 3%. Exhibit 17 shows an average daily traded volume of 4,500 shares (0.06% of the share base) over the 12 months to 16 May 2022; this is down markedly from c 7,100 shares (c 0.10% of the share base) in the previous 12 months, reflecting a generally more difficult demand environment for healthcare investments, also shown in HBMN’s wider discount to NAV (see Exhibit 15). | ||
==The board == | == The board == | ||
Following the retirement of three long-serving board members, Prof Dr Heinz E Riesenhuber, Dr Eduard E Holdener and Robert A Ingram, at the June 2021 AGM, HBMN now has five directors – three men and two women – with an average tenure of nine years. All of the board members have relevant scientific and/or business expertise, and each director has specific responsibilities regarding the monitoring of HBMN’s portfolio and the wider market environment. The chairman, Hans Peter Hasler, covers regulatory (FDA) approval and sector and marketing strategies; Mr Giuliani monitors management, production and audit; Dr Lanz (a lawyer and corporate financier) also covers audit, as well as finance and M&A transactions; Dr Xu assesses research and development; and Dr Jones brings sector and venture capital expertise. | Following the retirement of three long-serving board members, Prof Dr Heinz E Riesenhuber, Dr Eduard E Holdener and Robert A Ingram, at the June 2021 AGM, HBMN now has five directors – three men and two women – with an average tenure of nine years. All of the board members have relevant scientific and/or business expertise, and each director has specific responsibilities regarding the monitoring of HBMN’s portfolio and the wider market environment. The chairman, Hans Peter Hasler, covers regulatory (FDA) approval and sector and marketing strategies; Mr Giuliani monitors management, production and audit; Dr Lanz (a lawyer and corporate financier) also covers audit, as well as finance and M&A transactions; Dr Xu assesses research and development; and Dr Jones brings sector and venture capital expertise. | ||