"Tracking Baker Brothers Portfolio – Q1 2021 Update"
"Baker Brothers’ 13F portfolio value decreased from $26.54B to $23.07B this quarter.The large stake in Alexion Pharmaceuticals was decreased during the quarter.The top three positions are Seagen, BeiGene, and Incyte Corporation and they add up to almost ~57% of the portfolio.This article is first in 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  filed on 05/17/2021. The 13F portfolio value decreased ~13% from $26.54B to $23.07B this quarter. Although there are 126 positions in the 13F portfolio, the holdings are concentrated among a few large stakes. There are 18 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 Seagen, BeiGene, Incyte, Kodiak Sciences, and ACADIA Pharmaceuticals. They add up to ~69% of the portfolio.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 thru 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), and Salix (acquired by Valeant). Also, last December, AstraZeneca (AZN) agreed to acquire Alexion in a cash-and-stock deal ($60 cash and 2.1243 AZN per ALXN held).New Stakes:None.Stake Disposals:None.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. Since then, the activity has been minor. The stock currently trades at $82.13.Note: Baker Brothers controls ~15% of the business.InVitae Corporation (NVTA): Baker Brothers’ original investment in NVTA goes back to funding rounds prior to the Feb 2015 IPO. Shares started trading at ~$20 and currently goes for $32.12. Recent activity follows. Q4 2018 saw a ~55% selling at prices between ~$9.50 and ~$15. The position was rebuilt in Q3 2019 at prices between ~$18.50 and ~$27. Q2 & Q4 2020 saw a two-thirds stake increase at prices between ~$12.50 and ~$57.50. There was a marginal further increase this quarter. The position is now at 2.61% of the portfolio.Note: Baker Brothers controls ~9% of the business.Prelude Therapeutics (PRLD): PRLD is a 1.90% of the portfolio position. The stake goes back to funding rounds prior to their IPO last September. Shares started trading at ~$33 and currently goes for $26.70. There was  a marginal increase this quarter.Note: Baker Brothers controls ~29% of the business. Julian Baker joined the board in January 2021.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 this quarter at prices between ~$268 and ~$380. The stock currently trades at ~$312 and the stake is at 1.34% of the portfolio.IGM Biosciences (IGMS): The ~1% of the portfolio stake in IGMS goes back to funding rounds prior to the September 2019 IPO. The position has remained almost steady since. There was a marginal increase this quarter. Shares started trading at ~$18 and currently goes for $81.96.Global Blood Therapeutics (GBT): GBT is a small 0.57% of the portfolio position built over the last two quarters at prices between ~$37.50 and ~$74.50. The stock currently trades at $33.50.BioCryst Pharmaceuticals (BCRX): BCRX is a very long-term stake that has been in the portfolio since 2004. It is still a very small position at 0.56% of the portfolio. Last major activity was in 2019 when Q2 to Q4 saw a roughly one-third selling at prices between ~$1.60 and ~$8.70. The stock currently trades at $15.89.Note: Baker Brothers controls ~10% of BioCryst Pharmaceuticals.Stake Decreases:Alexion Pharmaceuticals (ALXN): ALXN is now a 2.65% of the portfolio stake. The position came about as a result of Alexion’s acquisition of Synageva in May 2015. The deal called for $115 cash and 0.6581 shares of Alexion stock for each share of Synageva held. Baker Brothers had ~11.7M share stake in Synageva for which they received Alexion shares. Q2 2017 saw a roughly one-third stake increase at prices between ~$98 and ~$144. There was a ~55% selling this quarter at prices between ~$148 and ~$162. The reduction followed the announcement of AstraZeneca’s deal for Alexion last December. The stock is currently at ~$184.Amarin Corp plc (AMRN): The original AMRN stake was built in Q3 2016 at prices between ~$2.15 and ~$3.15. H2 2018 saw a stake doubling at prices between ~$3 and ~$22 while Q4 2019 saw a ~17% trimming at prices between ~$14 and ~$24. That was followed with a similar reduction over the last two quarters  at prices between ~$3.60 and ~$8.80. The stock currently trades at $4.25.Note: Baker Brothers controls ~7% of Amarin Corp.Kept Steady:Seagen Inc. (SGEN): SGEN is currently the largest position by far at 28.46% of the entire portfolio. It is a very long-term stake that has been in the portfolio for over fifteen years. The position was built to ~20.5M shares in the 2004-2011 timeframe at prices between low-single-digits and low-20s. Q1 2014 to Q1 2016 saw another stake doubling at prices between ~$30 and ~$55. Since then the activity has been minor. The stock currently trades at ~$150.Note: Baker Brothers controls ~26% of the business.BeiGene Limited (BGNE): The large (top three) 17.61% BGNE stake has been in the portfolio since their US listing in Q1 2016. Shares started trading at ~$24 and currently goes for ~$315. 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. The stock currently trades at ~$315.Note: Baker Brothers controls ~13% of the business.Kodiak Sciences (KOD): KOD is a large (top five) ~7% 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 $92.58. Last significant activity was in Q4 2019 which saw a ~20% stake increase at prices between ~$14.50 and ~$76.Note 1: Baker Brothers controls ~27% of the business.Note 2: In December 2019, Baker Brothers stuck a deal for a capped 4.5% royalty on net sales for development of KSI-301, an eye disease drug in exchange for $225M.ACADIA Pharmaceuticals (ACAD): The 4.69% ACAD stake was established in the 2012-2013 timeframe at very low prices. Last major activity was in Q4 2018 when there was a ~40% stake increase at prices between ~$14 and ~$22. The stock currently trades at $23.97.BioMarin Pharmaceutical (BMRN): A small stake in BMRN was first purchased in 2006 but was eliminated the following year at higher prices. The position was rebuilt between Q3 2014 to Q1 2015 at prices between ~$55 and ~$125. Last major activity was a ~60% stake increase in 2017 at prices between ~$80 and ~$95. The stock is now at $83.04.Ascendis Pharma A/S (ASND): The bulk of the current ~2% of the portfolio stake in ASND was built in 2017 at prices between ~$20 and ~$40. Last major activity was a ~20% stake increase in Q1 2019 at prices between ~$62 and ~$129. The stock currently trades at ~$127.Note: Baker Brothers controls 6.6% of the business.AbCellera Biologics (ABCL): ABCL had an IPO in December 2020. Shares started trading at ~$49 and currently goes for ~$19. Baker Brothers’ stake goes back to funding rounds prior to the IPO.Madrigal Pharmaceuticals (MDGL) and Mirati Therapeutics (MRTX): These two small (less than ~1% of the portfolio each) stakes were kept steady this quarter. Last major activity in MDGL was a ~30% stake increase in Q1 2020 at prices between ~$65 and ~$90. The stock is now at $97.62. Last major activity in MRTX was a ~50% selling in Q3 2019 at prices between ~$76 and ~$106. The stock currently trades at ~$159.Note: Baker Brothers controls ~10% of Madrigal Sciences.The rest of the positions are very small. Positions that are between 0.10% and 0.50% of the portfolio are Achilles Therapeutics plc (ACHL), Adaptimmune Therapeutics plc (ADAP), ADC Therapeutics SA (ADCT), Aeglea BioTherapeutics (AGLE), Aligos Therapeutics (ALGS), Alkermes plc (ALKS), Allakos (ALLK), Altimmune (ALT), Apellis Pharmaceuticals (APLS), Atreca (BCEL), Axsome Therapeutics (AXSM), BioAtla (BCAB), Cerus Corporation (CERS), ChemoCentryx (CCXI), DBV Technologies SA (DBVT), Design Therapeutics (DSGN), Forma Therapeutics (FMTX), Fulgent Genetics (FLGT), Heron Therapeutics (HRTX), Horizon Therapeutics (HZNP), Immatics NV (IMTX), Immunocore Holdings plc (IMCR), Instil Bio (TIL), Insmed Incorporated (INSM), Kiniksa Pharmaceuticals (KNSA), Kymera Therapeutics (KYMR), Krystal Biotech (KRYS), Mereo BioPharma Group plc (MREO), Merus NV (MRUS), Neoleukin Therapeutics (NLTX), Neurocrine Biosciences (NBIX), Novavax (NVAX), Nurix Therapeutics (NRIX), Opthea Limited (OPT), Pacific Biosciences (PACB), Protagonist Therapeutics (PTGX), Reata Pharmaceuticals (RETA), Rhythm Pharmaceuticals (RYTM), Talis Biomedical Corporation (TLIS), Ultragenyx Pharmaceutical (RARE), Verastem (VSTM), and Zymeworks (ZYME).Note: Baker Brothers has significant ownership stakes in the following businesses – Aeglea BioTherapeutics (AGLE), Heron Therapeutics (HRTX), IGM Biosciences (IGMS), Idera Pharma (IDRA), Immunocore (IMCR), InflaRx NV (IFRX), Kystal Biotech (KRYS), Mereo Biopharma (MREO), Neoleukin Therapeutics (NLTX), Opthea Ltd. (OPT), Otonomy (OTIC), Rhythm Pharma (RYTM), Talis Biomedical (TLIS), Verastem (VSTM), and Zymeworks (ZYME).The spreadsheet below highlights changes to Baker Brothers’ 13F holdings in Q1 2021:Source: John Vincent. Data constructed from Baker Brothers’ 13F filings for Q4 2020 and Q1 2021."