This article is part of a series that provides an ongoing analysis of the changes made to Baker Brothers’ 13F stock portfolio on a quarterly basis. It is based on Baker Brothers’ regulatory 13F Form filed on 5/15/2024. The 13F portfolio value decreased from $8.79B to $7.97B. Although there are ~120 positions in the 13F portfolio, the holdings are concentrated among a few large stakes. There are 22 positions that are significantly large (more than 0.5% of the portfolio each) and they are the focus of this article. The largest five stakes are Incyte, BeiGene, ACADIA Pharma, Madrigal Pharma, and Rhythm Pharma. They add up to ~66% of the portfolio. Please visit our Tracking Baker Brothers Portfolio series to get an idea of their investment philosophy and our previous update for the fund’s moves during Q4 2023.
Baker Brothers, a biotech investment firm, was founded by Julian & Felix Baker in 2000. Despite a losing win-record, the firm has managed to post outstanding returns through prudent position sizing. As a percentage of AUM, allocation to the highest conviction picks can be very high at over 30%. Over the years, the firm had a number of home runs as the invested firms got acquired at huge premiums. Recent M&A winners include Pharmacyclics (acquired by AbbVie), Synageva (acquired by Alexion), Salix (acquired by Valeant), Alexion (acquired by AstraZeneca), Global Blood Therapeutics (acquired by Pfizer), ChemoCentryx (acquired by Amgen), Seagen (acquired by Pfizer), and Mirati Therapeutics (acquired by Bristol Myers Squibb).
Stake Disposals:
Mirati Therapeutics (MRTX): The MRTX stake saw a ~190% stake increase in the last quarter. Last October, Bristol Myers Squibb (BMY) agreed to acquire Mirati for $58 per share cash and a CVR worth up to $12 per share. That transaction closed in January thereby eliminating this position.
Stake Increases:
Incyte Corporation (INCY): INCY was already a 1.67M share stake in their first 13F filing in Q2 2003. The stake had roughly doubled by 2006. The 2007-2008 timeframe saw the position increased from ~3.2M shares to ~11.1M shares at prices in the high single digits. Major activity in the last decade follows. Q3 2015 saw a ~30% stake increase at prices between ~$105 and ~$130. Q1 2016 saw another ~20% stake increase at prices between ~$65 and ~$100. That was followed with a ~45% stake increase in Q1 2017 at prices between ~$100 and ~$150. There was a ~13% stake increase over the two quarters through Q1 2022 at prices between ~$63 and ~$80. The stock currently trades at $59.40, and it is now the top stake at ~26% of the portfolio. There was a marginal increase in the last four quarters.
Note: Baker Brothers controls ~16% of the business.
Revolutoin Medicines (RVMD): The ~3% RVMD stake was primarily built over the last two quarters at prices between ~$18 and ~$34 and the stock currently trades well above that range at $39.86.
Note: They have a ~4.5% ownership stake in the business.
AbCellera Biologics (ABCL): ABCL had an IPO in December 2020. Shares started trading at ~$49 and currently go for $3.51. Baker Brothers’ stake goes back to funding rounds prior to the IPO. There was a ~60% stake increase during Q2 2023 at prices between $5.66 and $7.60. That was followed by a ~25% increase in the next quarter at prices between $4.60 and $7.95. The position was increased by 20% this quarter at prices between $4.29 and $5.97.
Note: they have a ~9.5% ownership stake in ABCL.
Bicycle Therapeutics (BCYC): The 1.54% of the portfolio position was increased by 176% this quarter at prices between $16.75 and $26.10. The stock currently trades at $23.16.
Note: Regulatory filings since the quarter ended show them owning ~9.4M shares (19.9% of business). This is compared to ~4.9M shares in the 13F Report.
Edgewise Therapeutics (EWTX): EWTX is a 1.34% of the portfolio stake that was increased by 88% this quarter at prices between $9.25 and $19.97. The stock is now at $17.13. They have a ~6.3% ownership stake in the business.
Akero Therapeutics (AKRO): AKRO is a 0.86% of the portfolio stake built during Q3 2022 at prices between ~$10 and ~$34. The stock currently trades at ~$23. There was a ~15% stake increase this quarter.
Note: They have a ~5% ownership stake in the business.
Denali Therapeutics (DNLI) and Immatics N.V. (IMTX): These small (less than ~1% of the portfolio each) stakes were increased during the quarter.
Stake Decreases:
Immunocore Holdings plc (IMCR): IMCR is a 1.24% of the portfolio position that was decreased by 40% this quarter at prices between $60.14 and $75.36. The stock currently trades at $40.44.
Note: they have a ~6% ownership stake in the business.
Roivant Sciences (ROIV): The small ~1% of the portfolio ROIV stake was built during the two quarters through Q3 2023 at prices between ~$7 and ~$13. The last quarter saw a ~36% selling at prices between ~$8.50 and ~$12. The stock currently trades at $10.58. There was a ~2% trimming this quarter.
Kept Steady:
BeiGene Limited (BGNE): The large (top three) ~21% BGNE stake has been in the portfolio since their US listing in Q1 2016. Shares started trading at ~$24 and currently goes for ~$156. Q4 2016 saw a stake doubling at prices between ~$28 and ~$36. H1 2018 saw the stake built from ~3.8M shares to ~12M shares at prices between ~$100 and ~$215. Since then, the activity has been minor. There was a ~9% trimming in the last quarter.
Note: Baker Brothers controls ~10.2% of the business.
ACADIA Pharmaceuticals (ACAD): The ~10% ACAD stake was established in the 2012-2013 timeframe at very low prices. The last major activity was in Q4 2018 when there was a ~40% stake increase at prices between ~$14 and ~$22. The stock currently trades near the bottom of that range at $14.88.
Note: They have a ~26% ownership stake in the business.
Madrigal Pharmaceuticals (MDGL): The last major activity in MDGL was a ~30% stake increase in Q1 2020 at prices between ~$65 and ~$90. The last quarter saw a similar increase at prices between ~$120 and ~$237. The stock is now at ~$255.
Note: They have a ~10% ownership stake in the business.
Rhythm Pharma (RYTM): The 3.48% of the portfolio stake in RYTM saw a ~47% stake increase during Q2 2022 at prices between $4.30 and $30.85. The stock is now well above that range at ~$41. The three quarters through Q3 2023 saw minor increases while in the last quarter there was a ~5% trimming.
Note: They have a ~11% ownership stake in Rhythm Pharma.
Kymera Therapeutics (KYMR): The ~3% KYMR stake was built during H1 2023 at prices between ~$14 and ~$35. The last quarter saw a ~26% stake increase at prices between ~$11 and ~$27. The stock currently trades at $34.26.
Note: They have a ~9.8% ownership stake in the business.
Kodiak Sciences (KOD): KOD is now a small 1.14% of the portfolio position. The original stake goes back to funding rounds prior to its Q4 2018 IPO. Shares started trading at ~$10 and currently goes for $2.78. The last significant activity was in Q4 2019 which saw a ~20% stake increase at prices between ~$14.50 and ~$76. They have a ~30% ownership stake in the business. Q2 2022 saw a ~9% stake increase.
Note: In December 2019, Baker Brothers struck a deal for a capped 4.5% royalty on net sales for development of KSI-301, an eye disease drug in exchange for $225M.
Replimune Group (REPL): The ~1% REPL stake saw a ~18% increase during Q4 2022 at prices between ~$17 and ~$28. The last quarter saw the position doubled at prices between ~$7 and ~$17. The stock is now at ~$9.
Note: they have a ~10% ownership stake in the business.
Cerevel Therapeutics (CERE): CERE is a small 0.85% of the portfolio merger-arbitrage stake purchased in the last quarter at prices between ~$20.25 and ~$42.50 and the stock currently trades at $40.27. AbbVie (ABBV) is acquiring Cerevel Therapeutics in a $45 per share cash transaction announced in December.
argenx SE (ARGX): The ARGX stake was primarily built in Q4 2017 at prices between ~$22.50 and ~$63. There was a ~10% stake increase in Q1 2021 at prices between ~$268 and ~$380. Q3 2022 saw a ~75% reduction at prices between ~$343 and ~$396. That was followed by a ~45% selling during Q3 2023 at prices between ~$369 and ~$548. The stock currently trades at ~$379 and the stake is at 0.75% of the portfolio.
BioCryst Pharmaceuticals (BCRX): BCRX is a very long-term stake that has been in the portfolio since 2004. It is still a small position at 0.65% of the portfolio. Q2 to Q4 2019 saw a one-third selling at prices between ~$1.60 and ~$8.70. That was followed by a ~20% selling in the last quarter at prices between ~$5 and ~$7. The stock currently trades at $6.52.
Note: Baker Brothers controls ~5% of BioCryst Pharmaceuticals.
Entrada Therapeutics (TRDA) and Ultragenyx Pharma (RARE): These small (less than ~1% of the portfolio each) stakes were kept steady this quarter.
Note: Baker Brothers has significant ownership stakes in the following businesses – 2seventy Bio (TSVT), Adaptimmune (ADAP), Achilles Therapeutics (ACHL), Athira Pharma (ATHA), Aerovate (AVTE), Aligos (ALGS), Biomea Fusion (BMEA), Cabaletta Bio (CABA), Cerus Pharma (CERS), HOOKIPA Pharma (HOOK), IGM Biosciences (IGMS), Kala Bio (KALA), Monte Rosa (GLUE), Nurix Therapeutics (NRIX), Opthea Ltd. (OPT), Sagimet Bio (SGMT), TScan Therapeutics (TCRX), and vTv Therapeutics (VTVT).
The spreadsheet below highlights changes to Baker Brothers’ 13F holdings in Q1 2024:
Source: John Vincent. Data constructed from Baker Brothers’ 13F filings for Q4 2023 and Q1 2024.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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