HBM Healthcare Investments Quarterly Report December 2021 - Seite 2

Furthermore, BioShin, a Chinese subsidiary of listed Biohaven Pharmaceuticals, will be fully acquired by Biohaven as part of Biohaven's announced strategic partnership with Pfizer. Upon completion of the transaction, HBM Healthcare Investments will receive Biohaven shares equivalent to approximately USD 23 million in exchange for its USD 8 million investment in BioShin.

Valo Health announced that the merger agreement signed in June with Khosla Ventures Acquisition Co. has been terminated by mutual consent. Accordingly, the value of the investment was reduced back to the original cost value.

Cathay Biotech defies declining stock market

Among the public companies originating from the private companies' portfolio, the pleasing share price performance of the Chinese company Cathay Biotech stood out in particular. The market capitalisation of this leader in synthetic biology rose by almost a fifth to over CHF 11 billion in the quarter under review, thereby compensating for the considerable market-related decline in the share prices of the other public holdings originating from the portfolio of private companies.

A detailed analyst report highlighted the potential of Cathay Biotech's technology to use straw instead of corn starch as the renewable resource to manufacture its products in the future. Thereby, Cathay wants to avoid bottlenecks in the procurement of raw materials which are expected for the growing biomass industry. According to OECD estimates, at least 20 percent of the world's chemical products will be replaced by biomass products by 2030. This corresponds to a market volume of USD 800 billion, and synthetic biology is said to play a central role in this replacement process.

With a share of 27 percent, Cathay Biotech is by far the largest holding in HBM Healthcare's portfolio. As Cathay's shares will remain subject to a lock-up period for the next 20 months, they are valued at a discount of 9.75 percent to the current market price, in the amount of CHF 76 million. The percentage of the lock-up discount will be reduced on a straight-line basis over the remaining term of the lock-up period.