March proved to be yet another lucrative period for hedge funds specializing in life sciences and biopharma.
The majority of these funds recorded modest gains during the month, marking their fifth consecutive month of positive performance following a prolonged period of losses or significant declines. Consequently, many life sciences funds saw double-digit increases in the first quarter, surpassing the overall stock market performance.
The industry’s success can be attributed in part to the limited number of new offerings in the past couple of years, following a period of oversaturation with newly listed companies. Simultaneously, numerous life sciences and biopharma companies boasting promising drug pipelines remain attractive targets for major pharmaceutical corporations seeking to bolster their portfolios post-patent expiration, as well as for medical device firms.
Leading the charge this year is Affinity Asset Advisors, which saw a remarkable 30% surge in the first quarter, including a 7% increase in March, as reported by a hedge fund database.
ImmunoGen, a biotech enterprise focused on developing antibody-drug conjugates for cancer treatment, emerged as the firm’s largest long-term investment by the end of the year, constituting 7.6% of its U.S.-listed long assets, according to the latest 13F filing.
In a notable development, AbbVie finalized its acquisition of ImmunoGen in mid-February, following reports of the deal in November. Additionally, AbbVie announced its acquisition of Cerevel Therapeutics, Affinity’s second-largest long position, in December. However, the completion of this deal faced delays after the Federal Trade Commission sought additional information.
Elsewhere, Casdin Capital reported a 5.6% increase in March and a year-to-date gain of approximately 17-18%. By the year’s end, two stocks—Standard BioTools, specializing in analytical mass cytometry systems, and Revolution Medicines, focused on innovative cancer therapies—comprised around 30% of the firm’s assets. Casdin Capital holds over a quarter of Standard BioTools and significantly increased its stake in Revolution Medicines during the fourth quarter.
Despite a marginal setback of 10 basis points in March, Cormorant Asset Management maintained its strong performance, boasting a 24% increase for the year.
Numerous other funds also demonstrated robust growth rates. Perceptive Advisors reported an 11.3% uptick for the quarter, with Cerevel Therapeutics as its primary long position, representing approximately 9% of its U.S. assets. Another key holding, Amicus Therapeutics, experienced a decline of around 17% in the first quarter, with continued negative performance in subsequent months.
RA Capital Management achieved a 3% rise in March and a 14% increase year-to-date. RTW Investments saw a 10.5% surge after a 0.73% uptick last month. Soleus Capital maintained a flat position in March but remains up by 14% for the year. Despite a 40 basis point drop in March, Avoro Capital Advisors reported a 14.4% increase. Averill Partners, under Suvretta Capital Management, secured a 12% gain, with a noteworthy strategy of aggressive shorting amidst an industry-wide upward trend.
In contrast, EcoR1 Capital experienced a more modest performance within the sector, with a 2% rise in the first quarter following a 3% decline in March.