A top investor who cashed in on recent $8 billion and $5 billion biotech takeovers earlier this year told us he's looking beyond the 'sexy' parts of healthcare as he places his next bets
- Since Eli Casdin founded life sciences investment firm Casdin Capital eight years ago, Casdin Capital has made winning bets on some of the biggest names in the space.
- That includes drugmakers making cutting-edge new medicines, but the firm also looks at areas that "may not seem as sexy" and obvious but are really good business opportunities, Casdin told us.
- You can think of this like the tech industry, where chip manufacturers help make the Ubers and Facebooks of the world successful.
- Healthcare is exactly the same way, which is why Casdin Capital has invested in companies like Codexis and BioLife Solutions, he said.
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Eli Casdin, the founder and chief investment officer of the firm Casdin Capital, likes to say that he has two advanced business degrees: "an MBA from Columbia but an even better dinner-table MBA."
Casdin's father was an early biotech investor back in the 80s, and his son, too, became passionate about the field. After spending four years at asset management firm Alliance Bernstein researching and investing in healthcare and life sciences, Eli Casdin started Casdin Capital nearly eight years ago.
Specializing in healthcare and life sciences, the firm has made winning bets on the biotechs Loxo Oncology, Spark Therapeutics, and Flatiron Health, which were recent takeover targets for the drugmakers Eli Lilly and Roche. It had holdings of about $910 million as of the end of March, up from $584 million at the end of 2018, according to financial filings. The company doesn't discuss performance, Casdin said.
The firm invests "across the entire life sciences continuum," including companies that "may not seem as sexy as a gene therapy or as impactful but actually are huge enablers of these fields," Casdin explained to Business Insider.
Casdin compares his philosophy on this to an industry like tech, where chip manufacturers and supply chain companies are part of an ecosystem that all enable companies like Uber and Facebook to be successful.
"While it may not be as obvious as ridesharing, there's a lot of high margin, really attractive businesses within the ecosystem," Casdin said. "Life sciences is exactly the same way."
Those less "sexy" seeming bets include Codexis, a protein engineering company that Casdin Capital recently invested a fresh $50 million in as part of a private placement, and BioLife Solutions, which sells products to cool and freeze the cells and tissue that are crucial for biopharma companies. Codexis's protein work has applications in many fields, including the manufacturing and discovery of drugs for the pharma industry.
That said, drug companies are still the majority of Casdin Capital's investments. But Casdin predicts that companies like Codexis that make up the wider healthcare and life sciences ecosystem will only become more important.
Think of, for instance, cell therapies that use human cells to treat diseases like cancer. One popular type employs a patient's own cells, which are first taken from them, preserved, taken to a manufacturer, treated, shipped back, and then re-infused into the individual.
"There's a whole universe outside of drug development of suppliers and supporters that you can find," Casdin said, noting that BioLife is one company in that space.
"And I think the questions you have to find are: Is it a good business? Is it growing well? And are there people behind it that make it work?" he said.