ACADIA earnings, page-104

Interesting!

Baker Bros have put all of their shares up for offer. They may decide to sell all, some or none.

Why?

The Baker Bros. fund focuses on publicly listed biotech companies which, as we know, have been smashed over the last 18 months. The fund has only a handful of large clients and, typically, has all available assets invested. From a height of US$26.5bn at the commencement of 2021, the Baker Bros. fund value has fallen to around US$14.7bn.

While the Baker Bros. typical investment horizon is around 3 years, they have been invested in ACAD now for over a decade. Their initial investment was at less than US$2 per share. More recently, in late 2018, they increased their stake at US$17 per share. ACAD closed yesterday at US$15.96.

One possible explanation is that a redemption request has forced the fund to liquidate some assets.

Another is that the Baker Bros are aware that cashed up pharmas will be sizing up takeover targets in this depressed environment. Eighteen months ago, the ACAD market cap was ~US$8.5bn. With a current market cap of just ~ US$2.5bn, a 26.34% stake offering in Acadia could be a rather attractive bait.