When you think of hedge fund firms that invest in private companies, technology-oriented firms like Tiger Global Management and Coatue Management come to mind, right? And when it comes to biopharmaceutical companies, Perceptive Advisors and Deerfield Management are known investors.
Meanwhile, hedge fund titan Ken Griffin’s Citadel has stayed below the radar in private investing. The firm quietly has been making very late-stage investments in biopharma companies, mostly through its Surveyor Capital equity group.
This month, two of Citadel’s holdings filed plans to go public: Satsuma Pharmaceuticals and SpringWorks Therapeutics. And since last September, at least six of its holdings have filed plans for an initial public offering or have gone public, with the stocks seeing mixed success in their market debut.
That’s typical of developmental-stage biopharma companies, which are risky and tend to be volatile.
Satsuma Pharmaceuticals, which filed its IPO plans on August 16, recently announced the dosing of the first patient in its Phase 3 trial of a nasal powder treatment for migraines. Citadel is one of four hedge funds controlling nearly half of the company’s shares, including Citadel Multi-Strategy Equities Master Fund with a 5 percent stake, the filing shows.
Griffin’s hedge fund firm invested in Satsuma for the first time in April, when Surveyor participated in its $62 million series B preferred stock financing, according to a statement from the biopharma company at the time.
Surveyor is also an investor in SpringWorks, which is developing drugs to treat rare diseases and cancer. The company also filed a preliminary IPO document on August 16, but because Surveyor owns less than a 5 percent stake, the Citadel group did not appear in the S-1 filing’s list of investors.
Four of Citadel’s private holdings have already gone public since last September, including Prevail Therapeutics, NextCure, Allogene Therapeutics, and Sutro Biopharma.
Prevail Therapeutics, a gene therapy company developing treatments for patients with devastating neurodegenerative diseases, went public in June at $17 a share. The stock closed August 29 at $11.88, down about 30 percent from the IPO pricing.
Surveyor participated in Prevail’s $50 million series B financing this year, according to a March statement from the company. Surveyor was not one of the 5 percent owners when the stock began trading.
Citadel’s Surveyor was also a small investor in NextCure, a clinical-stage biopharmaceutical company aiming to treat cancer and other immune-related diseases. The company, which went public in May at $15 a share, has been a huge home run for Citadel. The price of NextCure’s shares have more than doubled since the IPO, closing at $34.01 on August 29.
Allogene Therapeutics, which is trying to cure cancer, went public in October, at $18 a share. Trading of the company’s stock closed August 29 at $27.17, up 51 percent from its IPO price.
Surveyor had participated in the company’s $120 million private financing of convertible notes about a month before the IPO, according to an Allogene statement at the time.
Last September, Sutro Biopharma, a clinical-stage company working on protein therapeutics for oncology and autoimmune disorders, went public at $15 a share. Surveyor had co-led the company’s $85.4 million series E financing in July 2018. The stock closed August 29 at $7.91 down about 47 percent from the IPO price.
Citadel declined to comment on its private investments in biopharma.