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If you have been invested in the Life Science sector in 2021 like me it has been a wild ride. Actually, investing, in general, has been a wild ride during my journey for the last 17 years. I am trying to write more and share my notes on this blog to keep me accountable and get back to them in a few years to understand what went well and wrong in my investment framework, try to improve, and always keep learning more along the way.
Orange Book 🍊📖@orangebook_
You don’t write because you want people to understand you, you write because you want to understand yourself.
5:32 PM · Dec 10, 2021
20 Reposts · 87 Likes
I am a generalist investor and not an expert in the Life Science sector but have always been dabbling in it. This article is an observation and research in the life science sector, how I use Twitter to source and explore information, trying to connect some dots and help me with my investment decisions.
Let’s zoom out a second here on a longer timeframe to see what happened in 2021:
Why look at $ARKG here?
I am bullish in terms of innovation that we will see a lot of new drugs and gene therapy commercialized in the life science sector in the next few years. This is the nature of human beings to seek progress, innovation, and improve our life quality. You can have whatever opinion you want about ARK Invest or the famous “Cathie D. Wood” but I do think they have a wonderful team of analysts and the research they put out there is very informational and a good place to dig on a subject or as a starting point. They are obviously very bullish in the sector.
ARK Invest Investment Focus: Gene Therapy
Source: ARK Big Ideas Report 2021
Brett Winton@wintonARK
How gene editing and gene therapy companies could exceed $1 trillion in market value over the next 5 years up from $160 billion today
7:24 PM · Dec 14, 2021
734 Reposts · 6.8K Likes
The tax-loss season is usually a prime time for investing in new ideas or increasing current positions in our highest convictions. I favorite of mine in my investment framework is to try to understand money flow and when things will revert either in a sector or stock itself. Note that this is very different than macro investing, I don’t do that. I don’t care what the FED does as long as a business has a competitive advantage and pricing power and can pass the increased costs to its customers. I go more thinking about stocks and sectors as a sailboat on waves that are going to its destination. As long as the underlying business or sector has potential and is currently depressed for many reasons, going through a challenge, sometimes for no obvious reasons just because of money flow in the market, it could be funds buying or selling, it sparks my interest.
Twitter is a fantastic tool. I use it for ideas, research, motivation, investment framework, networking/relationships, and collaboration with other investors. We can look at what analysts/investors and fund managers in the life science sector to understand a bit more about what happened in 2021:
ct@buysidebio
This is the ultimate tax loss selling period because ipo ownership among a handful of funds is at the highest percent ever in health care. There’s no one buying and no bids to get out. Reminds me of 2018 when $XBI bottomed week of Christmas. Low float, low volume, big positions
8:43 PM · Nov 18, 2021
10 Reposts · 59 Likes
max@LTbioinvestor
some updated data for #biotechs YTD 2021 ----> 507 stocks down 40% or more o/w 365 stocks down 50%+ o/w 178 stocks down 65%+ ----> 100 stocks trading below cash and other 210 with cash/MC below 2 ----> 447 stocks with RSI below 30 o/w $XBI nightmare 2021
10:18 AM · Dec 4, 2021
16 Reposts · 76 Likes
Eden@EdenRahim
We hit the 113 handle on $XBI to match prior 2 bear markets. Amplified by forced selling due to tax selling, redemptions & asset reallocation, we could be in the endgame for this 2021 Bear. Mkt is not distinguishing Value among Quality = Opportunity
Eden @EdenRahim
At 113 $XBI will match -35% Bears of Q4:2018 & Q1:2020. Lg Cap $IBB has held in better. Next the task is to figure out who will lead coming out of this. Last time was Covid bios. Grand daddy -58% bear in 2015-16 followed a +500% 6-yr bull. https://t.co/CYr6AFoxWg
4:15 PM · Nov 30, 2021
4 Reposts · 19 Likes
Here are the Next Edge Biotech and Life Sciences Opportunities Fund Monthly Commentary as of October 29, 2021
The S&P Biotech Index (^SPSIBI) peaked in February and has been mired in negative year-do-date since March, flooded by IPOs, Secondary financings, disappointing clinical trial outcomes and historically subdued M&A
This sector is a bedrock of mispriced opportunities and we will accept as much buying power at this time to take advantage of where such anomalies abound. If you understand the science and commercial opportunity, you can look through the valley of transitory bleak sentiment to what a company should be valued at in the future. The market is again not distinguishing between: a) scarcity value, b) long term viability, and c) probability of success vs risky small caps with substantial: i) clinical and ii) funding risk, ahead. They are being priced the same way.
Covid impact on Phase 2/Phase 3 readouts:
Covid halted a lot of stuff in the world including clinical trials. Could this bode well for 2022 and beyond?
What is even crazier is most approved drugs in 2019-2021 went through $CRL Charles River.
Logos LP@Logos_LP
$CRL praising the $CLPT platform is nothing to scoff at. 80% of FDA approved drugs in 2019-2021 went through $CRL.
Mike @hiddensmallcaps
Charles River $CRL, a partner of CLPT that is utilizing their platform for pre-clinical animal studies, had an excellent article talking about the promise of the ClearPoint platform here: https://t.co/e3RZZDh2XG
9:23 PM · Dec 7, 2021
6 Reposts · 49 Likes
From a Morningstar Equity Analyst Report | Report as of 5 Nov 2021
The company has worked on more than 80% of all FDA-approved drugs since 2018, which further demonstrates its expansive reach across the industry. Due to these factors, we believe Charles River will maintain its leading position in both research models and preclinical services.
An amazing Twitter thread worth reading from an investor friend of mine who is a General Partner at Logos LP:
Logos LP@Logos_LP
Some of this might be intuitive but wanted to address the biotech/pharma/life science sector at a high level post-Covid. Here are some important tailwinds to consider when looking at the entire space:
8:45 PM · Nov 6, 2021
6 Reposts · 46 Likes
US / EU Balance sheet of biopharma company could have well in excess of $500B available for R&D, M&A in the sector, etc…
ct@buysidebio
This is why $XBI will bottom. The current downtrend will end next few weeks is my guess. Eventually late stage bolt ons will occur. BD teams can justify acquisitions much easier when valuations on many names are off more than -40%. NPVs & ROI numbers look significantly better https://t.co/TGBtEtRbYD
Professor Oak @Prof_Oak_
US / EU biopharma YE22 cash reserves could exceed $500B, with total dry powder capacity (3.5x net debt / EBITDA) exceeding $1.6T, per Leerink $XBI https://t.co/QKJtYGaZJA
12:27 PM · Dec 1, 2021
3 Reposts · 35 Likes
Insider buying
You have heard it many times, insider sells for multiple reasons but they buy for one reason when they think their business is undervalued. They know more about their business than most investors out there.
Eden@EdenRahim
Heavy insider buying in #biotech over the past week. Pages of Bloomberg listings. In contrast, in Feb there were a few days of zero buying for entire sector. $XBI $IBB
1:48 PM · Dec 6, 2021
4 Reposts · 10 Likes
A great video worth your time to understand the private equity landscape for the life science sector: Atlas Venture Year In Review 2021
I won’t go into all details but zooming out again here to get an overview of the funding flowing in the VC sector since 2012:
One thing that stood out for me is not the actual funding, the money so to speak it is the “Talent is the key constraint, not capital or ideas”
Talent is the lifeblood of biopharma.
What is happening right now has really no effect on my decision and changing my strategy of holding companies that I think have a bright future.
I like ideas from a business perspective in the Life Science sector where my risk is minimized on the science of things, with a talented team in their field, that has a good balance sheet and that I think are undervalued. I will continue to concentrate my efforts on finding and holding businesses that I think have the most potential. I couldn’t care less what the market is doing right now and have always been trying to develop and nurture long-term thinking. Easier said than done. Tax loss is there every year and take this as an opportunity.
Eventually, I believe the money flow will find its way back into the quality business in the life science sector or the new innovations. Looking forward to the end of the tax-loss selling season and the new year 2022!
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