February was a disaster for many biopharma, life sciences, and other health care hedge funds. Most lost money, several by double-digit rates, and as a result were in the red heading into March.
As Institutional Investor previously reported, investors are jittery about the sector over concerns the new U.S. administration may slow down or pause the approval process for drugs currently in development. In addition, the stock market’s general volatility and sell-off have been especially rough on fledgling companies with little or no revenue and earnings — including this sector — exacerbating investor concerns.
Cormorant Asset Management suffered perhaps the biggest loss, dropping 18 percent in February alone. It is now down 26 percent for the year, according to someone who has seen the results. The hedge fund headed by Bihua Chen was hurt by an outsize 26 percent stake in MoonLake Immunotherapeutics, which fell 9 percent last month. The stock also declined more than 8 percent last year.
MoonLake, a clinical-stage biopharma company developing immunology therapeutics, was created by an April 2022 merger with Helix Acquisition, a blank-check company formed by Cormorant. The hedge fund firm currently owns more than 70 percent of the stock.
Elsewhere, Affinity Healthcare Fund dropped 8 percent in February and is down 13.4 percent for the year, according to a hedge fund database. Apogee Therapeutics, Affinity’s second-largest U.S.-listed common stock long at year-end, fell 24 percent in February. The clinical-stage biotech company says it is advancing novel biologics for the inflammatory and immunology markets. Xenon Pharmaceuticals, Affinity’s largest U.S. common stock long at year-end, lost 7.5 percent last month. The company addresses areas of high unmet medical need.
The firm’s losses were somewhat offset by a large position in put options on the SPDR Biotech exchange-traded fund, which dropped more than 4 percent in February.
EcoR1 Capital sank a further 3 percent last month and has declined 8.5 percent for the year, says someone who has seen the results. Last year, the fund headed by Oleg Nodelman, a one-time II Hedge Fund Rising Star, lost nearly 20 percent.
The hedge fund continued to be badly hurt by Apellis Pharmaceuticals, its largest long, accounting for more than 14 percent of U.S. common stock assets at year-end. In February alone, the stock was down more than 13 percent. It has lost more than 70 percent since its May 2023 peak.
RA Capital Management declined by 3 percent and is now off by 5.6 percent for the year, according to an investor. The hedge fund lost money despite the strong performance of its largest long, Ascendis Pharma, which surged nearly 20 percent last month after reporting better-than-expected quarterly results.
The stock accounts for more than 18 percent of U.S.-listed common stock assets. Ascendis is known for Skytrofa, which treats children with growth hormone deficiency. However, No. 2 long Vaxcyte dropped 17 percent last month.
Elsewhere, Avoro Capital Advisors fell nearly 3 percent last month, putting it in the red, albeit by less than 1 percent. And Casdin Capital lost 1.63 percent last month and is down 3.5 percent for 2025.
Several funds that lost money last month remain in the black for the year.
For example, RTW Investments declined by just 64 basis points — 0.64 percent — in February but is up 2.83 percent for the year. Averill lost 50 basis points but has gained 2.2 percent for the year through February. Averill Madison, a long-bias fund emphasizing larger-cap stocks than the flagship, dropped 1 percent last month but is up 3.4 percent through February. Soleus Capital was the only fund that appears to have made money last month, gaining 90 basis points. However, it is still down 2.3 percent for the year.
U.S. Avoro Capital Advisors MoonLake Immunotherapeutics Apogee Therapeutics Xenon Pharmaceuticals
