HBM Healthcare Investments benefits from takeover of True North Therapeutics
Blood disorder specialist Bioverativ to pay up to $825m including milestones
HBM Healthcare Investments (HBMN), a Swiss-listed public/private equity healthcare investment company, is set to benefit from the acquisition of privately held True North Therapeutics by NASDAQ-listed Bioverativ for up to US$825m (including contingent payments).
HBMN invested US$10m October 2016 to take a 3.1% stake in San Francisco-based True North Therapeutics, a clinical-stage biopharmaceutical company specialising in rare autoimmune disorders, particularly of the blood. Its holding was valued at CHF10.2m (US$10.0m) in the latest HBMN quarterly report (31 December 2016), implying a fair value of $322.6m at that date. The investment was relatively small in the context of the overall HBMN portfolio, accounting for 6.8% of direct private equity investments and 1.1% of total net assets (CHF924.8m) at 31 December 2016.
Bioverativ is a US$5.7bn independent company, formed as a spinout of biotech giant Biogen’s haemophilia business; it is also developing treatments for blood disorders such as sickle cell disease. It has agreed to acquire all the outstanding shares in True North Therapeutics for US$400m plus assumed cash. This should result in a payment of c $12.4m to HBMN, a 24.0% uplift on the 31 December carrying value of the True North stake and on the original investment. In addition, True North investors may receive up to US$425m in additional payments, contingent on development, regulatory and sales milestones being reached. This could result in further payments to HBMN of up to c $13.2m, giving a total return on the investment of up to c 156%.
HBMN reports its full-year results to 31 March 2017 in early June. It has delivered a total share price return of 17.5% and has pre-announced an increase in NAV of 15.2% for the year, and will increase its dividend (mainly funded out of capital) from CHF5.50 to CHF5.80.
Read the latest Edison research on HBM Healthcare Investments here.
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