HBM Healthcare Investments : Half-Year Report September 2022

Half-Year Report 2022

September

At a Glance

Profile and Portfolio

HBM Healthcare Investments invests in the human medicine, biotechnology, medical technology and diagnostics sectors and related areas. The company holds and actively manages an international portfolio of 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 Health- care Investments has an international shareholder base and is listed on SIX Swiss Exchange (ticker: HBMN).

HBM Healthcare Investments Ltd / Half-Year Report September 2022

2

Currency allocation of assets 1)

Emphasis on US dollar investments.

64% US dollar (USD) 2)

16% Renminbi (CNY)

10% Euro (EUR)

4% Indian rupee (INR)

4% Other currencies

(CAD, DKK, GBP, HKD, SEK)

2% Swiss franc (CHF) 2)

Allocation of assets 1)

Mainly invested in private companies or in companies originating from the private companies portfolio.

		32%	Private companies
		30%	Public (from private)
				companies
	20%	Public companies
		8%	Funds
		8%	Cash and cash equivalents
	2%	Other assets

Development phase of portfolio companies 3)

Mainly invested in revenue generating companies or in ­companies with products at an advanced stage of ­development.

Investments by continents 3)

Global portfolio.

Western Europe 17%

North and South America 52%

Asia 31%

	40%	Profitable
	29%	Products on the market
	6%	Phase III
	11%	Phase II
	7%	Phase I
	7%	Preclinical

Therapeutic area of the lead product of portfolio companies 3)

Broadly diversified areas of activity.

	22%	Others
		17%	Synthetic Biology
		17%	Central Nervous System
		15%	Oncology
		8%	Immunology / Inflammation
		8%	Digital Health

1. Total consolidated assets as at 30.9.2022: CHF 2 067 million.
2. Net of foreign currency hedge (USD/CHF): about USD 55 percent and CHF 11 percent respectively.
3. Total investments as at 30.9.2022: CHF 1 868 million.

7%	Orphan diseases
6%	Medical technology /
	diagnostics

At a Glance	HBM Healthcare Investments Ltd / Half-Year Report September 2022	3
Key Figures and Performance

Key Figures		30.9.2022
Net assets	CHF million	1 884.8
Investments in private companies and funds		838.5
Investments in public companies		1 029.7
Cash and cash equivalents
(net of liability from market hedging)		159.7
Net result for the period	CHF million	- 34.2
Basic earnings per share	CHF	- 4.92
Net asset value (NAV) per share	CHF	270.92
Share price	CHF	221.50
Premium (+) / discount (-)	%	- 18.2
Distribution per share	CHF
Distribution yield	%
Shares issued	Registered shares (m)	7.0
Shares outstanding	Registered shares (m)	7.0

31.3.2022	31.3.2021	31.3.2020	31.3.2019
1 986.5	2 151.5	1 448.8	1 318.3
790.3	662.8	706.4	542.1
1 130.2	1 404.2	629.9	688.2
223.7	327.0	224.2	176.2
- 78.0	756.3	182.7	209.1
- 11.22	108.71	26.26	30.05
285.53	309.25	208.25	189.48
276.00	332.50	190.00	168.80
- 3.3	+7.5	- 8.8	- 10.9
9.70	12.50 1)	7.70	7.50
3.5	3.8	4.1	4.4
7.0	7.0	7.0	7.0
7.0	7.0	7.0	7.0

1. Thereof CHF 9.50 as ordinary distribution and CHF 3.00 as a special distribution to mark the 20th anniversary of the Company.

Performance (including distributions)		2022/2023
	(6 months)	2021/2022	2020/2021	2019/2020	2018/2019
Net asset value (NAV)	%	- 1.7	- 3.6	52.2	13.9	18.1
Registered share HBMN	%	- 16.2	- 13.2	79.1	17.0	22.1

Indexed performance since launch in CHF (12.7.2001 = 100), dividends reinvested

560

500

HBM Healthcare Investments Share

440

380

320

HBM Healthcare Investments NAV

NASDAQ Biotechnology Index

260

200

140	MSCI World Health Care Index

80

20
1.10.2012	30.9.2013	30.9.2014	30.9.2015	30.9.2016	30.9.2017	30.9.2018	30.9.2019	30.9.2020	30.9.2021	30.9.2022

Management Report	HBM Healthcare Investments Ltd / Half-Year Report September 2022	4
1 April to 30 September 2022

HBM Healthcare Investments reported a decrease in value of CHF 86 million and a 4.2 percent decline in net asset value per share in the second quarter of the 2022/2023 financial year. This translated into a loss of CHF 34 million for the first half-year ended 30 September. In a declining market, the portfolio heavyweight Cathay Biotech in particular, posted a negative share price development. Four acquisitions and a strong US dollar supported the result. From an operational perspective, the portfolio's large holdings continued to be very successful. Moreover, the healthcare sector's fundamental factors also remained positive. Due to continuing market uncertainties, HBM Healthcare nevertheless acted cautiously and limited its investment activities to follow-on financing of private companies as well as selective profit-taking or additions in the portfolio of public companies. The hedging of one fifth of the US dollar currency risk remained in place. Thanks to a high level of cash and cash equivalents and a well-balanced portfolio, HBM Healthcare is well positioned for the current market environment.

Dear Shareholders

HBM Healthcare Investments recorded a decrease in value of CHF 86 million in the second quarter of the 2022/2023 financial year ended 30 September. The net asset value per share (NAV) declined by 4.2 percent.

For the first half of the financial year, the loss thus amounts to CHF 34 million, with a decline in NAV of 1.7 percent. The share price fell more sharply, by 16.2 percent, due to the negative market sentiment, and is currently trading at a significant discount to the net asset value.

Management Report	HBM Healthcare Investments Ltd / Half-Year Report September 2022	5
1 April to 30 September 2022

In comparison, the Nasdaq Biotech Index traded 3.1 percent lower and the MSCI World Health Care Index was down 7.7 percent.

Acquisitions support results, decline in Cathay Biotech share price weighs on results The half-yearresult was significantly influenced by the holding in Cathay Biotech. The company's market capitalisation on the Shanghai Stock Exchange fell by slightly more than one fifth in line with the market trend. Due to the substantial weight of the investment in the portfolio, this burdened our result by CHF 91 million. However, the company, which is a leader in the growth market of synthetic biology, is debt-free,operates profitably and shows continuously increasing sales and profits. Our investment in Cathay Biotech is subject to a lock-upperiod until mid-August2023.

The other assets in the portfolio showed positive value growth of CHF 74 million in total. This was partly favoured by the strength of the US dollar against the Swiss franc, but also thanks to four acquisitions from the portfolio of public companies: Sierra Oncology, Biohaven Pharmaceuticals, Turning Point Therapeutics, and most recently ChemoCentryx.

ChemoCentryx received a USD 3.7 billion takeover offer from Amgen in August 2022. HBM Healthcare Investments had invested a total of CHF 28 million in ChemoCentryx since November 2019, gene­ rating a profit of CHF 26 million. CHF 21 million of this is attributable to the current financial year.

The other changes in value in the private companies' portfolio were roughly balanced in the first six months of the financial year. Mineralys Therapeutics closed a financing round at a higher valuation based on positive phase II trial results, which led to an appreciation of our investment of CHF 9 million. Value adjustments totalling CHF 11 million were necessary for various smaller investments.

High level of cash and cash equivalents

HBM Healthcare Investments made no new investments in private companies during the quarter under review. CHF 16 million was provided as follow-on financing to existing portfolio companies. Including the acquisition of Biohaven, which was completed after the balance sheet date at the beginning of October, HBM Healthcare Investments has cash and cash equivalents of CHF 227 million. The closing of the ChemoCentryx acquisition, also expected in the fourth calendar quarter, will increase cash and cash equivalents by a further CHF 38 million. HBM Healthcare Investments is thus well positioned for the current market environment.

In the portfolio of public companies, there were selective additions or profit-taking respectively on individual investments.