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April 6, 2020 BARRON’S 19EliCasdin’s
Picks
Casdinfavors
well-capitalized
companieswith
targetedpatient
populations.
Herearesomeof
hisfavorite
names.
Blueprint
Medicines
BPMC
$60.3 9
WuXiBiologics
2269 .HongKong
HK$1 10 .3 0
WuXiAppTec
2359 .HongKong
HK$97. 30
Invitae
NVTA
$12.6 5
bluebirdbio
BLUE
$42. 61
B
iotechstocks werestarved
forlove onWallStreetin
recentyears,notwithstand-
ingrevolutionaryresearch
andthelaunchofnovel
therapiesforonceincurable
diseases.
Notanymore: Thecatastrophic
outbreakof Covid-19has led to are-
appraisalof the sector,evenifviable
treatments and vaccines seem faroff.
Sure,biotechstocks tanked this past
month, but the iShares NasdaqBio-
technology exchange-tradedfund
(IBB) and other industrybenchmarks
have been outperformingthe broader
market.
Theindustry’sreversal of fortune
is no surprise to Eli Casdin,founder
and chief investmentofficer of Casdin
Capital, aNew York-basedhedge
fund specializingin life-sciencesin-
vestments. Casdin,apaneliston Bar-
ron’ s2019biotechRoundtable,c on-
siders life sciences,including biotech,
the biggest growth storyofthe next
decade.“Alot of valuehas been taken
out of the sector,” he says.“Investors
should recognizethatanindustry
with alot of growth aheadisn’t going
to sustain disruption in the same way
thatmuchofthe legacy economywill.
And companieswith strong balance
sheets and managementteams will
carrythe day.”
In the edited interview below, he
highlights some of these companies,
and the outlookfor biotech investing.
Barron’s :How is Covid-19affect-
ingthe life-sciencesindustry?
Eli Casdin: Many peoplein the in-
dustry are on the frontlines and car-
ing for patients. Also,likethe restof
the economy, the industryisexperi-
encingsevere disruptions. As hospi-
tals focus on the emergent sick, non-
essential treatments are put on hold.
People sellingnewmedicines,medi-
cal devices, and diagnostics can’t visit
customers,and clinical-trialrecruit-
ments are being delayed or halted
because hospitals are overwhelmed,
patients are too at-risktogotohospi-
tals to getthese treatments, or the
treatments require coordination and
resourcesthatjustcan’t be spared
right now.
Howbadlywill these delaysset back
science—andbiotechcompanies?
The delays will be counted in months,
not years, but they are delays. For
some companies,the data on clinical
trials are critical for capital-raising.
For undercapitalizedcompanies,de-
lays could be eternal.But not all test-
ing sites are shut down. And, compa-
nies are lookingto regionson the
other side of the crisis, such as China,
to pick up some of the slack.
Do any prospective treatments for
Covid-19 excite you?
We are most hopefulabout Gilead
Sciences ’[GILD] remdesivir, which
was developedto treat Ebola and
Marburg. It is being adapted as a
treatment for Covid. The in vitro data
are promising; we should get more
insight in four to six weeks.
Has the current crisis altered the
long-term outlook for investors?
It has turnedthe industry from the
heel of people’s opinionto the hope.
Look at Gilead, which came under fire
for pricingits hepatitis-C drug too
highly. Now it is regarded as some-
thing of a savior. Also, the industry is
used to shift and remotework. It can
remainproductive even if Covid-
flares up again. The life-changing
drugs and diagnostics being devel-
oped by biotech and life-sciences
companiesare critical. For growth
investors lookingfor high-value,
sustainable businesses,the industry
could becomeeven more attractive.
So,does this meanit’stime to buy?
Thereisn’t atonofliquidityinthestock
market,andit couldretestitslows.But
therearecompanieswithstrongbal-
ancesheets,maturepipelines,andcom-
mercialorsoon-to-becommercialprod-
ucts.Also,inapandemic,small
moleculesarebetterthanbiologicsand
celltherapies.Youcangetthemat a
pharmacy,andtheyareeasiertotake.
Small-molecule-targetedmedicine
companieslookparticularly attractive.
We’reinterestedin BlueprintMedi-
cines [BPMC],along-termholding.
Blueprintisdevelopingtargetedmedi-
cinesforrare,geneticallydrivencancers.
It willhave threeproductsonthemar-
ketinthenext18months.It raised
moneybeforeCovid-19hit,soitiswell
capitalized.Thestockisdown42%from
itsJuly2019high,andtradesfor$57.
Blueprintmay bedisruptedinthenear
term,butpatientsneedthesemedicines.
Businesswillcomeback.
Evenbeforethecoronavirushit,we
wereincreasingly interestedinChina
biotech.ThiscrisisacceleratesChina’s
efforts,particularly inoutsourced
researchanddevelopmentandmanu-
facturing.Weown WuXi Biologics
[2269.HongKong]and WuXi AppTec
[2359.HongKong].WuXiBiologicshas
5% oftheglobalmarketforbiologics
outsourcing,anda78%shareinChina.
WuXiAppTecisaleadingcontract
researchorganization.
What else appealsto you?
Invitae [NVTA] has been disrupted,
and the stock has becomevolatile. It
peaked at $28 on Feb. 19, and now
trades around$12. We own it and have
been buying again. Invitae provides
genetic testing for children with devel-
opmental disorders. The company
isn’t going to go out of business.It
made a series of acquisitions in the
past year that enable the practice of
virtualmedicine, so it was prepared,
in a sense, for what is happeningnow.
We also like stocks in the cell-
therapy space; bluebird bio [BLUE],
a leader in targeted cell therapy, has
products approved or about to be ap-
proved. The sales ramp is delayed, but
not permanently. The stock has fallen
50% since mid-February, to $42. Fate
Therapeutics [FATE] and Crispr
Therapeutics [CRSP] are other cell-
therapy companieswe like. They are
well financed.You don’t want to be
lookingfor moneyin this market.B
BiotechCouldBe
ABigWinner
AftertheCrisis
Life-sciencesinvestorEliCasdin,ofCasdinCapital,
spotlightssevencompanieswithgrowthpotential
By LAURENR. RUBLIN
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