Most life sciences– and biopharma-focused hedge funds posted solid gains in October in what was otherwise a flat month for the broader market. Even so, most of the funds continue to lag the market.
The group was led by Casdin Capital, which surged 16 percent last month, according to an investor. This puts its share class that invests only in public securities up more than 40 percent for the year. However, the share class remains below its high-water mark.
According to a regulatory filing, three names combined accounted for nearly 40 percent of the firm’s U.S. stock portfolio at the end of the second quarter: BioLife Solutions, Revolution Medicines, and Sarepta Therapeutics. In October, BioLife was down a bit, Sarepta was up slightly, and Revolution jumped 18 percent, driving overall returns. (Third-quarter holdings reports are due later this week.)
RTW Investments rose 13 percent last month, bringing its gain for the year to 13 percent, according to an investor. But it remains solidly behind the overall market’s returns. RTW is more diversified than Casdin, as two stocks each accounted for roughly 8 percent of assets at the end of June: Madrigal Pharmaceuticals and Avidity Biosciences.
Shares of Madrigal had a 22 percent surge in October, most of the increase coming on the final day of the month when the company reported a much smaller third-quarter loss than analysts were expecting. The stock is up an additional 30 percent already this month.
The Janus Henderson Biotech Innovation Fund climbed more than 2 percent, less than many of its peers. But it continues to lead the strategy, up 42.2 percent for the year, according to a hedge fund database.
Elsewhere, RA Capital Management gained 2 percent last month and is up 16.7 percent for the year, an investor says. October’s increase was notable given that shares of Ascendis Pharma, the largest long position and responsible for more than 16 percent of capital, fell about 18 percent.
Avoro Capital Advisors was up 1.6 percent for the month, boosting its gain for the year to 14.3 percent, according to an investor. Soleus Capital added 2.1 percent, expanding its 2024 rise to 13.9 percent, said the investor.
Not all biopharma funds made money last month.
Averill Partners lost 2.8 percent but is still up 14 percent for the year, according to an investor.
EcoR1 Capital dropped 3.4 percent in October last month, says someone who has seen the results. The decline extended its loss for the year to 14.4 percent. The hedge fund continues to be hurt by Apellis Pharmaceuticals, its largest position, accounting for 13 percent of capital at the end of June. The stock dropped about 5.5 percent last month and is down approximately 29 percent since early September.