Frequently Asked Questions

HBM Healthcare Investments invests in the healthcare sector. The Company holds and manages an international portfolio of some twenty five promising companies in the biotechnology/ human medicine, medical technology and diagnostics sectors. Many of these companies have their lead products already available on the market, or at an advanced stage of development. The focus of investment is on follow-on financing for existing portfolio companies. These 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).

HBM Healthcare Investments is a leading venture capital company with a carefully selected, diversified portfolio of some 25 investments in private and public enterprises in the biotechnology/human medicine, diagnostics and medical technology sectors.
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.

HBM Healthcare Investments has started sales negotiations for several portfolio companies and investment holdings and is participating actively in the selling process. As demand from major pharma and biotech companies for new products continues to rise, and with many mature portfolio companies, HBM Healthcare Investments is well positioned for successful divestments.

HBM Healthcare Investments' investment activity is focused at present on follow-on financing for existing portfolio companies. Each individual financing round is analysed in detail from the scientific, technical, business, financial, legal and patent persepctives. Investments are made only if the company has attractive value-creation potential. HBM Healthcare Investments takes an active role and entrepreneurial responsibility in all its major portfolio companies.

HBM Healthcare Investments will not make any further investments in private companies (except follow-on financings) until the average discount of the share price compared with the average net asset value (NAV) per share is less than 15% for a continuous three-month period. Until then, any disposable liquid funds shall be used to repurchase own shares.

HBM Healthcare Investments is a Swiss holding company based in Zug, Switzerland. Its Board of Directors consists of five 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.

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.

HBM Healthcare Investments does not simply invest money in its portfolio companies. The HBM Partners advisory team actively collaborates 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 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.

The private portfolio has some 20 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.

In strict compliance with the IFRS accounting standards and the valuation guidelines of the EVCA (European Venture Capital Association), 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). These valuation guidelines lead to undervaluations and thus hidden reserves in mature portfolios of private companies.

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 intact.

Holdings in listed shares are valued at their market prices.

HBM Healthcare Investments invests globally. See also portfolio structure.

What are the details on the share buyback programme?
Up to 20% of the company's own shares will be repurchased via a second trading line on the SIX Swiss Exchange. The Board of Directors intends to recommend the cancellation of the repurchased share to future Annual General Meetings. The share buyback began on 7 September 2009 and lasts until 31 August 2012 at the latest.

HBM Healthcare Investments will not make any further investments in private companies (except follow-on financings) until the average discount of the share price compared with the average net asset value (NAV) per share is less than 15% for a continuous three-month period. Until then, any disposable liquid funds shall be used to repurchase own shares.

Go to the website – www.hbmhealthcare.com – for comprehensive information on the company, and to register  to be sent information by e-mail.

HBM Healthcare Investments has a broad shareholder base. About 1,000 shareholders are registered, some of them large institutions. Private investors range from large to small. Regarding the reporting of shareholders' holdings, refer to the information of SIX Swiss Exchange.

HBM Healthcare Investments invests exclusively in the human medicine sector, with the main focus on biotechnology. Its performance must therefore be compared with indices or investment products that also represent or invest in these same fields. Indices that reflect the price of biotechnology shares are relevant for comparative purposes – like the Nasdaq Biotechnology Index (NBI), which includes all the biotech companies listed on NASDAQ. HBM Healthcare Investments' performance must also be able to stand comparison with indices of pharmaceutical shares (see also performance).

The minimum investment is the price of one share. The shares are listed on the SIX Swiss Exchange.

As of 1 April 2011 the fixed management fee is 1.2% of the Company assets and 0.3% of the market capitalisation of the Company.

No issue or redemption commission is charged on the purchase or sale of HBM Healthcare Investments shares.

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.

HBM Healthcare Investments divides the human medicine sector into three parts: biotechnology, medical technology and diagnostics, the company’s three main investment segments.

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.

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.

Diagnostics denotes the various methods of medical and therapeutic diagnosis. Companies that are active in diagnostics develop new diagnostic techniques or improve existing ones.

“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.