Hedge Funds Slow Down on Life Science Deals

The quarter was quiet for hedgies focused on biopharma, but the year is still on pace to be one of the busiest.

Close-up of holding a test tube

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Hedge fund activity in the venture capital business for biopharma and life sciences companies slowed down in the third quarter. Even so, many of the hedge fund firms — most of which have dedicated VC funds — remain on pace to complete their largest number of deals for a full year since 2021 or 2022, the peak of the market.

RA Capital Management continues to lead. It made nine new investments in the third quarter — just two in September — more than other life sciences hedge fund firms traditionally involved in venture capital, according to Crunchbase. However, this was down significantly from the firm’s 22 investments in the second quarter and 27 in the first quarter, according to the website.

In 2024 so far, RA Capital has completed 58 deals, already exceeding the 46 private investments it made in 2023 and the 44 in 2022. It remains short of the 82 deals completed in 2021, Crunchbase notes. Most of the private investments have been in early-stage deals, especially when RA Capital was the lead investor.

Most recently, the firm led an upsized $175 million Series B financing for Aktis Oncology, a clinical-stage biotechnology company, according to a press release. The financing was co-led by RTW Investments and Janus Henderson Investors.

And RA Capital recently led the $120 million Series A round of Superluminal Medicines, which is focused on improving the speed and accuracy of drug discovery. RA Capital managing director Andrew Levin serves on the company’s board of directors.

Perceptive Advisors also sharply scaled back its activity in the third quarter, when it made just five new investments, compared with 16 in the second quarter and 15 in the first, according to Crunchbase. The 36 total deals so far this year, however, exceed the 19 it made in 2023 and the 21 in 2022. It made 50 private investments at the peak in 2021, per Crunchbase.

RTW Investment completed three private deals in the third quarter, down from six and ten in the second and first quarters, respectively. It made at least ten investments in 2023, 13 in 2022, and 27 in 2021, per Crunchbase.

EcoR1 Capital has made 14 investments this year, but just three in the third quarter. Even so, the full-year total already exceeds the 11 the firm made in 2023 and equals the number in 2022.

At least one firm boosted its activity in the third quarter. Cormorant Asset Management made seven new investments in the period after doing five in the second quarter. Altogether, it has made 20 new investments this year, compared with 23 in 2023 and 20 in 2022, Crunchbase says. Most recently, Cormorant led a $65 million Series A financing of GC Therapeutics, which is working on the next generation of cell therapy medicines.