MONTREAL (HedgeWorld.com)–A manager of a biotech hedge fund, Sectoral Asset Management has found a number of ways to leverage its expertise in the biotechnology and healthcare sectors.
The firm is launching a new offshore private equity fund and is considering the launch of a market-neutral hedge fund next year. The firm also appointed to its board of directors Frederick Frank, vice chairman and managing director of Lehman Brothers.
With US$1 billion in assets under management, Sectoral now has US$22 million in its S.A.M. Healthcare/Biotech Equity Fund I, a hedge fund with a long bias. Since the funds’ launch in July 2001, manager and founder Michael Sjostrom has kept the biotech strategy 70% to 80% net long.
The market-neutral fund would be similar in strategy except the exposure to the market would be limited. The firm depends heavily on fundamental analysis of the biotech sector, an area that has been hard hit by the lagging economy.
“We have seen that it’s been an extremely tough environment,” said Jerome Pfund, founder and chief executive officer of Sectoral. Valuation ratios are at their lowest point in 10 years and many hedge funds have either stopped reporting or closed up shop, he added.
A scientific advisory network of doctors and scientists around the world enhances the firm’s fundamental bottom-up approach. This network evaluates new products in development and the advisory team gives its opinion as to the likely benefits and uses for the technologies.
Sectoral’s new board member, Mr. Frank. fits the profile of a Sectoral adviser. He has participated in the biotech industry as an investment banker. Mr. Frank is chairman of the National Genetics Foundation, a member of The Salk Institute National council, a director of The Salk Institute and a member of the board of governors for the National Center for Genome Resources.