We can look back at a successful year both for the fund and for our group of portfolio companies.  The year started strongly with several M&A transactions as large pharma companies were out shopping for innovation. In January the fund had two take outs with significant premiums. During the spring the general sentiment around the sector as a whole deteriorated due to intense political rhetorics in the US regarding a new health care reform, but the fund had a strong June due to another take-out of one of the conviction holdings within oncology. In the fourth quarter transforming clinical data brought interest back for fundamentals, and we witnessed a strong interest for our innovative biotech companies.  Another two portfolio companies were taken out in M&A transactions, underscoring the industry’s interest in new emerging technologies. 

>> Arctic Aurora LifeScience Christmas Letter 2019

Our YTD performance as of December 16 reached 31.3% (NOK), 33.1% (SEK) and 26.0% (USD) which is approximately 6.5 % better than our benchmark.  The total return and the outperformance is a result of careful stock selection giving 5 take outs (average premium 72%) during 2019 and many important clinical milestones. Meeting with the management of the companies is important for us. We have had approximately 200 face to face meetings discussing strategies and milestones. We decided to invest in 23 new companies during 2019 and divested 17 companies including the M&A take outs.

During the closing months of the year we saw truly transforming late-stage clinical data from many of our portfolio companies that also contributed to the fund performance. Interestingly, after years of therapeutic progress drought in kidney diseases, several new therapies looks to be en route to drug approvals in 2020. Reata Pharmaceuticals and Aurinia Pharmaceuticals both had market values more than double in the past months after positive clinical data in kidney conditions where treatment alternatives today are poor or non-existent. Within big pharma, AstraZeneca also presented late-stage data for their new drug for chronic kidney disease and the new RNAi powerhouse Alnylam Pharmaceuticals very recently announced solid Phase 3 data in a rare inherited disease that primarily affects kidneys. 

That is not to forget the great progress we have seen in oncology this year with completely new treatment technologies raising treatment effect bars across many cancer types. Gene therapy has continued to show crucial patient impact in clinical studies, the second gene therapy was approved for commercial use during the year and a number of specialized companies in the field was acquired by larger pharma companies.  And what is more promising is that we see no slowing down in the number of therapeutic innovations coming through clinical development as we are heading into the new decade. Importantly, new medicines will be developed to treat patients and help families around the world.

We are excited to enter a new decade and we wish you a happy and prosperous new year!

Merry Christmas from the Arctic Aurora LifeScience team!                           

 

 

Arctic Aurora LifeScience is an equity fund investing in global biotechnology and pharmaceutical companies. The fund is run by former portfolio manager in the Swedish Governmental Pension Fund AP3, Ulrica Bjerke, as well as Dr. Torbjørn Bjerke, both with 20 years of experience from the market. Arctic Aurora LifeScience was launched in May 2016 with both hedged and un-hedged share classes.

Past performance in Arctic Aurora LifeScience is no guarantee for future returns. Future returns depend on the market, fund manager skill, fund risk level, costs, among others. Performance in the fund may at times be negative and may for this fund vary considerably within periods.