- Joseph Edelman’s $4.8 billion Life Sciences fund, the flagship fund for the $6 billion Perceptive Advisors, returned 53.7% last year.
- The firm’s biggest fund lost more than 9% in August, but still rallied to beat the market and the average hedge fund, thanks to the performance of some of the biotech-focused fund’s biggest names, like Global Blood Therapeutics and Mirati Therapeutics.
- The firm announced at the end of last year the formation of a venture-capital fund of more than $200 million, increasing the firm’s involvement in the private markets.
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An August tumble and increasingly loud calls for US healthcare industry reform weren’t enough to slow billionaire Joseph Edelman’s Perceptive Advisors.
The firm’s $4.8 billion flagship fund, Life Sciences, scored a 53.7% return in 2019, even after losing 9% in August. In response to the fund’s drop in August, COO Jim Mannix told Business Insider in an email that “no material negative catalysts that contributed to our August performance,” and the year’s overall outperformance bears this out.
The firm’s head of investor relations and marketing, Patrick Murrow, told Business Insider that its biggest public positions drove performance — naming companies such as Global Blood Therapeutics, which had a drug for sickle-cell disease approved by the FDA in November, and Mirati Therapeutics, which saw its stock jump 28% in December thanks to a study on an ovarian cancer drug.
The firm, which also operates two credit-opportunity funds that control roughly $1 billion in combined assets, rolled out its first venture fund at the end of last year, with $210 million in assets. The venture fund will focus on healthcare and biotech companies looking for Series A funding, while the main fund will continue to invest in private companies from Series B and subsequent funding rounds, Murrow said; the goal is to be a “one-stop shop” for promising biotech companies.
“To be a good public investor, you have to be involved in the private markets,” he said.
The Life Sciences fund’s performance beat the average hedge fund and the overall stock market, something many big-name funds were unable to do last year.
The fund’s performance over its 21-year history has been a part of the draw for new managers and hedge fund investors getting into the healthcare and biotech space.
A Jefferies report from 2019 found healthcare to be the sector most equity hedge-fund investors were most interested in, and one of last year’s biggest launches was Woodline Partners, a healthcare and tech-focused fund from two former Citadel portfolio managers.
The increased competition and constant political chatter around healthcare and pharmaceuticals is not knocking Perceptive from its course, Murrow said. The firm plans to continue its bottom-up investing process — they meet with more than 500 companies a year — and hope any volatility from the US election can be used in their favor.
“We like our opportunity set when the volatility comes,” Murrow said.
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