RA Capital Management, like most hedge funds, doesn’t make much noise publicly about its investment activities outside of its regulatory filings. But the word among insiders in the biotech industry is that the Boston hedge fund is piling up more wins than losses with its portfolio of life sciences stocks.
As of late last month, RA Capital had about $240 million under management, and its lead portfolio manager Peter Kolchinsky revealed to me that the fund was still up for the year despite taking a hit in October from the financial meltdown. And he noted that he had already set a strategy to, among other things, take advantage of abnormally low prices on certain biotech stocks.
For one, Kolchinsky says he likes the growth potential of shares in San Diego-based Sequenom, and regulatory filings show that RA Capital has been buying up large blocks of Sequenom stock lately. Sequenom is developing a well-chronicled molecular diagnostic to for prenatal screening of Down’s syndrome. (Luke wrote about how Sequenom wants to become the Google of molecular diagnostics last month.)
Kolchinsky himself appears to be the first successful gamble of RA Capital. He traveled a unique path to become a hedge fund manager, earning a Ph.D. in virology from Harvard University, where he co-founded the Harvard Biotech Club for students in order to interact with industry executives.
While attending an investors’ conference as a Harvard student, Kolchinsky introduced himself to Rich Aldrich, a co-founder and then-chief business officer of Cambridge, MA-based drug developer Vertex Pharmaceuticals (NASDAQ:VRTX). Kolchinsky had read about Aldrich in The Billion-Dollar Molecule, a popular book in the biotech arena about the launch and growth of Vertex.
After finishing his Ph.D. in 2001, Kolchinsky wanted to work in the deal-making side of the biotech industry. He says he contacted Aldrich to see whether there was an opportunity to work for him in the business-development group at Vertex. Aldrich told Kolchinsky he had recently left Vertex, was thinking about starting … Next Page »