Deerfield Management

By the Numbers
Amount in fund at 6/30/2014:
$2.5 billion
Change from 12/31/2013:
Number of positions:
Three largest holdings:
Dendreon, Auxilium, InterMune
Three new positions:
HCA Holdings, Tenet Healthcare, Cigna
Three closed positions:
Merck, Synageva BioPharma, Quest Diagnostics

About the fund: Deerfield Management launched in 1994 with $17 million in equity. Twenty years later, it manages funds in excess of $5 billion. So, only roughly half of its holdings, when measured by value, are represented in its latest SEC filing.

This summer, Deerfield raised a $1.6 billion private fund, although it's been investing in private companies since about 2006. Last year, Deerfield brought on Jonathan Leff from high-profile venture firm New Enterprise Associates to head up its private company investment. The firm was founded by Arnold Snider; when he retired in 2005, James Flynn took over the top spot.

Deerfield is famous, and perhaps a bit infamous, for its structured financings for out-of-favor healthcare companies, particularly biotechs. These financings have helped many a biotech live to fight another day and subsequently prosper, but the financing terms are often steep--often including warrants, which allows the firm to purchase stock cheaply at a later date when its stock price may have climbed substantially. The firm prides itself on employing the most relevant financing structure, regardless of type. This gives it an edge over some investors who can be tied to particular forms of investment given their fund structure. Not Deerfield. It will do a debt, secondary, IPO, or royalty financing.

The funding Deerfield reports in the SEC filing is for its public company holdings.

Deerfield has weathered a number of downturns and flourished after the last one even as some of its healthcare-focused peers didn't survive.

"If you took a list of healthcare hedge funds from 10 years ago, there might be 10% to 20% of them left. Meanwhile, there have been an equal number of new launches," Flynn said when I profiled Deerfield last year for Elsevier. "The 2008-2009 period helped us a lot, relatively speaking. We were flat in 2008, up around 40% in 2009 and up a competitive amount in each subsequent year."

Show me the money: Deerfield has had a pair of major wins this year. Its second and third largest positions at June 30 were Auxilium (5.1% of portfolio value) and InterMune (4.1%). Auxilium ($AUXL) has spiked in recent weeks by more than 70% on an FDA approval for its erectile dysfunction drug as fast-acting, while InterMune ($ITMN) has climbed an astonishing 400% this year.

For more:
KemPharm picks up $60M to advance its anti-abuse pain med
Deerfield bets on robotic surgery with OMNIlife science deal
Deerfield unveils a $1.6B new fund as med tech VC lags
Deerfield eyeing new biotech investments after launching $1.6B fund

Deerfield Management

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