Life Sciences Funds’ Improving Health

Most were up by double-digit rates in the first quarter.


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March was another profitable month for life sciences and biopharma hedge funds.

Most of them posted single-digit gains for the month, extending their winning streak to five months after several years of losses or, in some cases, devastating declines. As a result, most of the life sciences funds were up by double digits in the first quarter, easily outpacing the broader stock market.

The sector continues to benefit from the dearth of new issues over the past two years after the market was flooded with newly public companies for several years. At the same time, many life sciences and biopharma firms with attractive drug pipelines continue to be acquisition targets for big pharma looking to replenish their stables after drugs come off patent, as well as for medical device companies.

Affinity Asset Advisors is leading the pack so far this year. It was up 30 percent in the first quarter after gaining 7 percent in March, according to a hedge fund database.

ImmunoGen, a biotechnology company working to develop antibody-drug conjugates to treat cancer, became the hedge fund firm’s largest long at year-end, accounting for 7.6 percent of U.S.-listed long assets, per the most recent 13F filing.

In mid-February, pharmaceuticals company AbbVie completed its acquisition of the company. The deal had been reported at the end of November. In December, AbbVie announced the acquisition of Cerevel Therapeutics, Affinity’s second-largest long. However, that deal’s closing was apparently delayed after the Federal Trade Commission requested additional information.

Elsewhere, Casdin Capital gained about 5.6 percent in March and is up between 17 and 18 percent for the year, according to an investor. At year-end, two stocks accounted for approximately 30 percent of the firm’s assets: Standard BioTools, which provides analytical mass cytometry systems, and Revolution Medicines, which is developing therapies for tough cancers. Casdin owns more than 25 percent of Standard BioTools and in the fourth quarter more than tripled its stake in Revolution Medicines, according to a filing.

Cormorant Asset Management remains one of the top performers for the year, with a 24 percent gain despite losing about 10 basis points in March.

Many other funds have jumped by double digits as well.

For example, Perceptive Advisors is up 11.3 percent for the quarter after rising 2.1 percent in March. Cerevel Therapeutics is Perceptive’s largest long position, accounting for about 9 percent of U.S. assets. The second-largest long is biopharma Amicus Therapeutics, which sank by about 17 percent in the first quarter and has continued to decline this month.

RA Capital Management, with a 3 percent increase in March, has climbed 14 percent so far this year. RTW Investments is up 10.5 percent after rising 0.73 percent last month. Soleus Capital was flat in March but remains up 14 percent for the year. And Avoro Capital Advisors is up 14.4 percent even after dropping 40 basis points in March. Averill Partners, part of Suvretta Capital Management, has gained 12 percent after adding 90 basis points last month. This is especially impressive given that the fund aggressively shorts amid a sectorwide uptrend.

EcoR1 Capital, on the other hand, is a sector outlier. It rose just 2 percent in the first quarter after dropping 3 percent in March.