Baker Brothers & Biotech Bets

10/06/2016 8:00 am EST

Focus: STOCKS

Bret Jensen

Editor, Biotech Gems

In the world of biotechnology and healthcare, the billionaire duo of Julian and Felix Baker – the Baker Brothers – have earned their reputation, states Bret Jensen, editor of Biotech Gems.

They started their hedge fund in 2003 with $256 million and today it has $9.5 billion in assets.

We can see what the two brothers are doing by browsing their quarterly 13F filing with the Securities and Exchange Commission. Among their newly-established positions, here are three speculative biotech’s worth keeping on a watch list.

Minerva Neurosciences (NERV) is a clinical-stage biopharma company focused on a portfolio of product candidates to treat central nervous system diseases.

MIN-101 is the company’s flagship molecule, which was licensed from Mitsuibishi Tanabe. Its target market is schizophrenia and works by blocking the 5HT2A receptors. Phase 2b completed, extension phase ongoing.

Other products under development target major depressive disorders as well as primary insomnia. Another – which is in pre-clinical trials -- is aimed at Parkinson’s disease.

Glycomimetics (GLYC) is a development-stage biopharma with several drugs in its pipeline portfolio. Its most advanced therapy is Rivipansel, targeted for use in vaso-occlusive crisis (VOC), which can occur in people with sickle cell anemia.

The drug is in Phase 3 trials and is quite promising. Pfizer (PFE) has partnered with Glycomimetics on its development and hoped-for commercialization.

Perhaps even more promising is its GMI-1271 drug, which targets Acute Myeloid Leukemia (AML). Current therapies have little success as some cancer cells ‘hide’ in the bone marrow where therapies can’t reach them.

Glycomimetics’ approach is unique. Its drug encourages cancer cells to disadhere from the marrow, allowing other therapies to kill them. Phase II trials for GMI-1271 began in June.

Alder Biopharmaceuticals (ALDR) is a clinical-stage biopharma; its two main product candidates are ALD403 and ALD1910, which are both aimed at the prevention of migraine headaches.

Phase II trials of its ALD403 drug demonstrated among patients at least a 75% reduction in migraine days over the course of three months. Importantly, this reduction occurred at a low dosage of only 30 milligrams.

This would seem to put the company ahead of its competitors. Another advantage is that Alder could tap both the intravenous and self-administration markets to further differentiate itself from competitors.

I would call all three of these stocks speculative, carrying perhaps more than the usual risks surrounding biotechnology firms.

But the vote of confidence from the Baker Brothers is definitely a plus and a reason I will keep an eye on them for possible future purchase.

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By Bret Jensen, Editor of Biotech Gems

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