The biotech-focused New York-based investment firm, Baker Brothers Advisors filed it first quarter investment update with the Securities and Exchange Commission last week, revealing several new positions as well as further investment into high conviction investments.

Julian and Felix Baker, the formidable duo behind the privately owned hedge fund, have emerged as influential players on the financial scene. Their disciplined approach and keen eye for promising biotechnology ventures have yielded extraordinary results, earning them the admiration and respect of both Wall Street insiders and industry experts alike. Bloomberg reported that the Chicago-born duo have built one of the largest biotech investment firms after they made a reported $1.4 billion over a two-week period on sector purchases.

The brothers saw their portfolio’s value grow 10.4% during the quarter, to $18.38 billion, as they captured the broader recovery of equity markets during the period. During the same period, the total number of portfolio holdings was reduced from 113 to 105 positions.

The rise in the funds’ value has snapped the downward trend of losses since peaking during the pandemic in 2020.

The top five positions in the fund currently by size are Seagen Inc (US:GEN), Incyte Corp. (US:INCY), BeiGene Ltd – ADR (US:BGNE), Acadia Pharmaceuticals Inc (US:ACAD) and Madrigal Pharmaceuticals Inc (US:MDGL).

Biggest Buys

The hedge fund made several noteworthy trades during the quarter, with changes in portfolio allocation serving as a meaningful metric to gauge their investment decisions.

The fund’s most significant exposure in Seagen was concentrated further as the stock rallied more than 40% during the quarter on a takeover deal from pharma giant Pfizer (US:PFE). The portfolio allocation increased by 15.47% to 51.68% of the fund, with the stake worth $9.5 billion by the close of March.

Another noteworthy addition was Acadia Pharmaceuticals, which saw a marginal increase in portfolio allocation of 0.29%, driven mainly by share price gains. Despite a comparatively smaller market value of $789.28 million, ACAD stock accounted for 4.2943% of the portfolio, showcasing the fund’s diversification strategy.

Revolution Medicines Inc (US:RVMD), with a market value of $58.30 million, witnessed a modest boost in portfolio allocation by 0.29% to 0.32% of the fund. The position was small at the beginning of the quarter and increased significantly in weight as the Baker brothers bought more than 2 million shares.

A relatively small position in Biomea Fusion Inc (US:BMEA) made the top five net increases as BMEA stock’s share price more than doubled during the quarter. The position size grew to $65.4 million, equating to 0.36% of the portfolio from the minisule starting position. Since the quarter ended, the stock has continued its rally with the year-to-date gain approaching 300%.

Holdings of Roivant Sciences Ltd (US:ROIV) ended the quarter with a market value of $35.26 million as the fund purchased more than 4 million shares. Despite its relatively smaller presence, the ROIV stock position grew by 0.16% of the portfolio, ending with an allocation of 0.19%.

Other meaningful allocation increases during the quarter included: SpringWorks Therapeutics (US:SWTX), FibroGen Inc (US:FGEN), Blueprint Medicines (US:BPMC) and Allogene Therapeutics (US:ALLO).

Significant Sales

The Baker Brothers completely cut stakes in Ascendis Pharma (US:ASND) and Horizon Therapeutics (US:HZNP) during the quarter, selling ~5 million and ~1 million shares. respectively. Although Horizon is currently undergoing a takeover offer from Amgen (US:AMGN), the deal is currently under threat with the Federal Trade Commission suing to block the transaction.

There was a sizeable reduction in exposure to the Incyte Corp (US:INCY), with the total allocation declining by 3.22% to 14.22% of the fund, worth $2.61 billion. This was driven by share price weakness.

The fund sold half of its position in Biomarin Pharmaceutical (US:BMRN), keeping 3.81 million shares worth $370.51 million or 2% of the fund.

BeiGene (US:BGNE) made the list with a 1.73% allocation decrease to 13.68% of the fund. The significant decrease was driven by a large exposure to the stock, coupled with share price weakness as the fund kept hold of all of its shares.

Other notable allocation decreases during the quarter included stocks: Madrigal Pharmaceuticals, Rhythm Pharmaceuticals (US:RYTM), Replimune Group (US:REPL) and Biocryst Pharmaceuticals (US:BCRX).

Lastly, newly added positions in the fund included: Blueprint Medicines Corp (US:BPMC), Prime Medicine Inc (US:PRME), Allogene Therapeutics Inc (US:ALLO), Mersana Therapeutics Inc (US:MRSN) and Sana Biotechnology Inc (US:SANA).

This article originally appeared on Fintel

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