In November, most biopharma and life sciences hedge funds were in the black, though not all have returned to their high-water marks. The funds were helped by the biopharma rebound that was mainly sustained in 2024 — after several years of sharp losses. Still, many funds are on pace to significantly lag the broader market for the year.
Biopharma stocks in general started rallying in the final nine weeks of 2023 along with the rest of the stock market — especially small-caps — when the Federal Reserve signaled a potential interest rate cut in 2024. The rally led to a surge of investors covering their shorts, putting upward pressure on the stocks.
Casdin Capital is by far the leader heading into the final month of 2024, with its public portfolio up about 40 percent through November. The hedge fund, however, is still below its high-water mark after losing about 63 percent in 2022 and 30 percent in 2021.
One fund class that includes an extremely lucrative private investment is up about 70 percent for the year, according to a Casdin investor, who stressed that not all investors opted into this class.
The two largest long positions, accounting for more than one-quarter of U.S. assets, posted double-digit gains last month. BioLife Solutions, Casdin’s largest long at the end of the third quarter — accounting for more than 14 percent of U.S. assets — jumped 17 percent after reporting strong third-quarter results. The company provides bioproduction tools and services to the life sciences and biopharma markets. No. 2 long position Revolution Medicines rose more than 14 percent. The clinical-stage oncology company accounted for about 12 percent of assets.
Elsewhere, Affinity Healthcare gained more than 4 percent last month and is now up 33.5 percent for the year, according to a hedge fund database. The fund, which specializes in therapeutics, manages about $450 million, per the database.
Most other biopharma and life sciences funds are lagging the broader market despite strong showings in November.
For example, Avoro Capital is up 20.8 percent for the year after climbing 5.7 percent in November, says someone who has seen the results. Its two largest long positions made up about one-quarter of the firm’s U.S. assets at the end of the third quarter: United Therapeutics, the largest, was down less than 1 percent last month and Ascendis Pharma was up nearly 11 percent.
RTW Investments gained about 4.8 percent in November and is up 18 percent for the year, according to a person who has seen the results. RA Capital rose 1.4 percent and is up 18.6 percent year-to-date, says someone who saw the results. Soleus Capital added 1.1 percent and has gained 15.1 percent for the year, per the source.
Several funds, however, lost money last month.
Perceptive Advisors declined by 3.3 percent, cutting its rise for the year to 7.9 percent, says a person who saw the results. Averill dropped 3.6 percent but remains up 13.5 percent for the year, according to the source. This is not surprising given that short-selling is an important part of its strategy. Cormorant Asset Management declined by about 90 basis points but is still up 14 percent, reports someone who saw the results.
One fund continues to be mired in the red despite an increase last month: EcoR1 Capital gained 2.4 percent, cutting its loss for the year to 12.7 percent, the source said.
