Updated March 18, 2021 by Nikolaos Sismanis
Founded in 2002 by Peter Kolchinsky and Rich Aldrich, RA Capital Management is a Boston-based hedge fund specializing in multi-tier life science investments. The fund has approximately $ 4.6 billion (AUM) in assets under management. The company consists of professionals trained in biology, chemistry and medicine and industry experience at executive and board level.
Investors who filed the company’s 13F filings over the past three years (from mid-February 2018 to mid-February 2021) would have seen a strong annualized total return of 3.3%. By comparison, the S&P 500 ETF (SPY) achieved an annualized total return of 12.5% over the same period.
Note: The 13F filing performance differs from the fund performance. See here how we calculate the 13F storage capacity.
You can download an Excel spreadsheet of metrics relevant to RA Capital Management’s current 13F stock holdings:
Keep reading this article to learn more about RA Capital Management.
Strategy and values of RA Capital Management
RA Capital is a unique hedge fund as 100% of its portfolio investments are made in the healthcare sector. The company has many years of experience in the industry. It is dedicated to evidence-based investments in listed and unlisted life science companies at various stages of drug, medical device and diagnostic development.
Her strategy includes providing seed capital for startups, leading private funding rounds, and helping a company on its way to IPO. RA Capital’s unique insight into the industry enables companies to turn their early ideas from the labs into a commercialized product.
What sets Kolchinsky and his team apart from other hedge funds is their expertise in RNA, protein fold correctors, and gene therapy, which is rare and doubles when this knowledge is combined with financial and investment skills. Since most funds focus on more convective investment ideas and often mimick the major indices, Ra Capital offers its clients an alternative investment strategy that bypasses the systematic risk and return of the overall market.
The company’s values are to be aware of how RA interacts with both its own employees and those outside the company. Mr. Kolchinsky has a set of clear RA principles that work relationships are based on trust, collaboration, care, and integrity. Mr. Kolchinsky believes that doing this will maximize everyone’s potential and build strong relationships.
Portfolio development & private investments
With the fund helping small businesses get started and hoping to go public, RA Capital holds both public and private companies. The public equity portion of the fund currently has 48 stocks, of which the top 10 account for nearly 65.7% of the total weight. The company’s strategy is reflected in these holdings as most of them are just out of their IPO stage, with a very short trading history and an average market capitalization of around $ 4 billion. As mentioned, 100% of the stakes are in the life sciences.
Source: 13F documents, author
During the last quarter, Ra Capital made the following notable portfolio changes:
- Before Biopharma Inc (VOR)
- Atea Pharmaceuticals Inc. (AVIR)
- Kinnate Biopharma Inc. (KNTE)
- Rocket Pharmaceuticals Inc (RCKT)
- Olema Pharmaceuticals, Inc. (OLMA)
- Silverback Therapeutics, Inc. (SBTX)
- Five Prime Therapeutics Inc (FPRX)
- Curis Inc (CRIS)
- Constellation Pharmaceuticals Inc (CNST)
- Pacific Biosciences of California, Inc. (PACB)
- C4 Therapeutics, Inc. (CCCC)
- Satsuma Pharmaceuticals Inc (STSA)
- CytomX Therapeutics Inc (CTMX)
- ORIC Pharmaceuticals, Inc. (ORIC)
- Marinus Pharmaceuticals Inc (MRNS)
- BCLS Acquisition Corp. (BLSA)
- Cogent Biosciences Inc (COGT)
- Frazier Lifesciences Acquisition Corp. (FLACU)
- TherapeuticsMD Inc (TXMD)
- 5:01 am Acquisition Corp. (FVAM)
- Profound Medical Corp. (PROF)
- ARYA Sciences Acquisition Corp II (ARYBU)
- Cardiff Oncology Inc (TROV)
- Keros Therapeutics, Inc. (KROS)
- Verastem Inc (VSTM)
- Essa Pharma Inc (EPIX)
- Eidos Therapeutics Inc (EIDX)
- Galera Therapeutics Inc (GRTX)
- Gemini Therapeutics Inc (GMTX)
- Arvinas Holding Company LLC (ARVN)
- Celldex Therapeutics Inc. (CLDX)
- Iterum Therapeutics Plc (ITRM)
- Relmada Therapeutics Inc (RLMD)
- Seres Therapeutics Inc (MCRB)
- Prevail Therapeutics Inc (PRVL)
However, many of the Fund’s holdings are unlisted and consist of early stage private investments prior to commercialization. Of RA Capital’s 198+ private investments, nearly 97 have resulted in a successful exit. This is evidence of the management’s ability to identify and mine diamonds early on.
The company’s private highlights include the following investments:
Novavax, Inc. (NVAX)
Although RA is a publicly traded company, RA closed a $ 200 million private financing round in early June in response to Novavax’s need for capital. RA’s expertise and value creation in this sector quickly made itself felt as stocks have more than tripled since then.
Moderna, Inc. (MRNA)
Moderna has hit the headlines of investment for the past few months as the company appears to be making rapid progress on a COVID-19 vaccine. The company has been listed on the stock exchange for almost two years. During this period, stocks have rewarded investors with multi-dredger returns. RA Capital invested in the company back in 2015 at a fraction of its current valuation.
Pandion Therapeutics Holdco LLC (PAND)
Eventually, the fund participated in Pandion’s $ 80 million Series B round. The biotech company went public just a few months later. The valuation was almost six times higher than that of its private funding. Given the company is missing from RA’s last 13f holdings, the hedge fund posted a quick multi-dredger profit in just a few months.
This is just a glimpse of RA Capital’s multiple successes in private funding.
RA Capital Management is a specialty hedge fund. While the fund’s public equity returns may seem weak, the actual returns should be much higher as foam investments in healthcare companies come before they go public. Mr. Kolchinsky and his team are real value creation experts with in-depth industry know-how. Hence, investors are likely to find several hidden gems in Ra’s stock portfolio. Note, however, that even retail investors must have a relatively high level of familiarity and experience before investing in the very risky biotech industry.
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