Bios scores big on 89bio, rotates to new opportunities
Healthcare
Bios Research’s long call on 89bio has paid off handsomely: since turning bullish in Apr 25, the shares have climbed ~120%, culminating in Roche’s announced takeover at $14.50/share plus a $6 CVR. With conviction now removed, Bios suggests rotating into SMID-cap biotech to capture what they see as the early stages of a new bull cycle. On the short side, the team has just launched a new idea with 30-50% expected downside over the next 6 months. Their track record is strong: 15 of 22 shorts over the past 18 months have generated absolute returns (~72% alpha-adjusted hit rate), with notable successful conviction removals including Apellis, Butterfly Network, Geron and Inspire Medical.
Edition: 221
- 03 October, 2025
Plenty of value on offer in Big Pharma
Healthcare
The sharp fall in the median implied to Y3 EBITM ratio for Willis Welby’s Healthcare coverage is all about Pharma. This leaves a median ratio for the subsector of just 94 which gets you good financial productivity, neutral revisions and a median consensus Y3 revenue growth rate of 7.4%. While the share price of Novo Nordisk discounts a lot of success, at the other end of the scale there are some companies where ratios seem to be getting more cautious without much obvious justification. GSK and Sanofi’s share prices are both consistent with a catastrophic future which makes no sense. Roche is not far behind. Given the normal dislocation of Pharma dynamics from wider economic ones this also looks like a major opportunity from a risk management perspective as well as from a value perspective.
Edition: 173
- 10 November, 2023