Wall Street turns to social-listening tools to guide pharma bets

The explosion in online discussions about medicines and the rise of social-listening tools to mine and analyze the data have given drugmakers another way to learn what patients think about their products. But pharma companies aren't the only ones listening. Wall Street has its ear to the digital grapevine, too.

Bloomberg reports how hedge funds are using social-listening systems like Treato to gather evidence to support their bets on pharma companies. While some of Treato's rivals, like Saama Technologies and Signals Intelligence Group, are pitching their products squarely at healthcare organizations, the Tel Aviv, Israel-based company has a sideline delivering data to investors. And with billions of dollars at stake, investors are interested in anything that can give them an edge.

"If it's proven you can actually make better investment decisions by using this, investors will flock to it," Les Funtleyder, portfolio manager at Esquared Asset Management, said. Funtleyder is skeptical about using social data to guide investment decisions, but others are already using it to validate their hunches. When Ofir Levi of Israeli hedge fund Adamas Healthcare suspected Medivation's ($MDVN) cancer drug Xtandi was being used off-label, he turned to Treato to try to confirm his suspicions.

The data backed up the hunch. "By looking at patient discussions, we figured that pre-chemo patients were also getting this drug," Levi said. With off-label use potentially swelling the number of patients receiving Xtandi, Levi bet sales would surpass expectations. On May 8, Medivation said it was raising its guidance because of stronger-than forecast-sales. The company's stock increased 8%.

- read Bloomberg's article

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