Hedge fund Perceptive raises $323M life sciences debt fund

Successful biotech investor Perceptive Advisors has added a new $323 million fund designed to offer debt, royalty and convertible structures to life sciences and healthcare companies. With this, the firm is expanding its ability to do credit and nondilutive capital structures.

New York-based Perceptive is a life sciences hedge fund focused on public company investment, but it also makes crossover investments into private, venture-backed companies. The new fund, dubbed the Perceptive Credit Opportunities Fund, gives it the means to invest in vehicles such as direct secured loans, royalties and convertible structures for public and private companies.

"We are seeing strong interest from healthcare companies seeking minimally dilutive funding for growth opportunities," said Sam Chawla, portfolio manager of the Perceptive Credit Opportunities Fund, in a statement. "Our capital base will enable us to invest in attractive opportunities that we are seeing in the market. We are grateful for the strong support we received from our broad base of limited partners."

The fund will invest across all stages and subsectors including biopharma, medical devices, diagnostics, life science research and healthcare information technology. 

Perceptive Advisors was founded in 1999 by Joseph Edelman, who remains its CEO. Prior to that he was a senior analyst at the Aries Fund, a Paramount Capital Asset Management biotechnology hedge fund, and a senior biotechnology analyst at Prudential Securities.

Edelman made it onto Institutional Investor’s list of top-earning investors last year, earning a reported $300 million on the roughly 52% gain for his Perceptive Advisors Life Sciences Fund. But for early this year, the fund was reporting double-digit losses.

The firm has had some good news of late with recent high-profile wins for Sarepta Therapeutics ($SRPT) and Tesaro ($TSRO), which are its most valuable current positions that it held at June 30. These positions would now be worth about $177 million and $135 million, respectively.

On the private side, Perceptive recently led a Series C in antibiotic-resistant dermatology company Vyome and participated in another for microinjection ophthalmic drug startup Clearside Biomedical. It was also part of a $61.5 million pre-IPO mezzanine round for Zymeworks. This summer, it extended lines of credit to vital sign monitoring patch company VitalConnect and another to drug delivery player Monosol Rx.

At June 30, Perceptive filed a public company portfolio with the SEC worth about $1.4 billion; it had total assets under management of about $2.7 billion at the end of March.