- Perceptive Advisors’ Ellen Hukkelhoven broke down why the $8.8 billion manager is a fan of BridgeBio.
- The manager believes they have optimized the drug testing process.
- The firm’s flagship has struggled this year though, down more than 18% through the end of April.
- See more stories on Insider’s business page.
A Perceptive Advisors up-and-comer has keyed in on a rising star in the biotech world.
Ellen Hukkelhoven, an analyst at $8.8 billion Perceptive, presented at Wednesday’s Sohn Conference about BridgeBio, the firm’s flagship hedge fund’s third biggest position, revealing how the company matched up “perfectly” with what Perceptive looks for in a biotech investment.
Hukkelhoven, who has a doctorate in molecular biology, explained that the firm looks for companies where the science drives decisions, not the money. While it might seem intuitive that biotech companies are led by the scientists in the lab, Hukkelhoven explained that the capital-intensive process of creating a new drug can force companies to focus on a single drug because that’s what has the most backing.
While this can be good for short-term survival, companies that rely on a single drug often run into problems. Hukkelhoven said only 10% of Phase 1 drugs succeed.
BridgeBio, which Perceptive has a stake worth more than $470 million in, has optimized the process by learning how to “fail fast,” she said. The company is constantly testing different types of drugs for genetic-linked diseases and deformations, and then a small team of executives determines which should get more funding and which should be scrapped.
Instead of relying on a single drug to become a hit, BridgeBio has several shots at profits, and the company can be “a nimble organization of truthseekers” instead of hypemen for a single drug to get more funding.
“It lets the science drive the financing, not the other way around,” she said.
Perceptive, founded by billionaire Joseph Edelman, is known as one of the top healthcare and biotech investors in the world. It has launched four SPACs and raised several venture funds to find investments in the private markets. Wednesday morning, the firm announced a second venture fundraise of $515 million, and medtech company Juno Diagnostics said Perceptive led its $25 million Series A raise.
The firm’s flagship hedge fund though has struggled this year, losing more than 18% through the end of April, according to HSBC’s Hedge Weekly report. The $3 billion fund returned more than 29% and 52% in 2020 and 2019, respectively.
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