In 2003, Felix and Julian Baker, two brothers with a background in medicine and finance, made a bet on Seagen, a biotechnology company developing the next generation of cancer treatments. This investment paid off big-time earlier this year when pharmaceutical giant Pfizer acquired Seagen for 43 billion dollars.
Baker Bros. Advisors, the hedge fund run by the brothers, owned almost 25% of Seagen’s shares and received around 10 billion dollars for them after the purchase. The proceeds were distributed to their investors, marking one of the largest returns on equity in the industry. The success of this investment showcases the potential for significant gains in the biotech sector, driven by large-scale acquisitions and scientific breakthroughs like gene editing.
What sets Baker Bros. apart from other hedge funds is their independent and secretive investment style. While many funds diversify to minimize risk, Baker Bros. took a concentrated bet on Seagen, which accounted for a significant portion of their holdings. This strategy can lead to volatility, as seen in fluctuations in the value of their investments in companies like Kodiak Sciences.
Felix and Julian Baker founded Baker Bros. in 2000 with the goal of making biotech investments. Over the years, they remained steadfast in their support of Seagen through challenging times such as the departure of one of its founders. Eventually, their persistence paid off with the successful sale of Seagen to Pfizer.
The sale of Seagen allowed Baker Bros. to return significant funds to their investors while also highlighting their commitment to delivering value
