I was chatting recently with an investor about why I liked life sciences and biotech funds. I’m a long term bull, with life sciences exposure hovering at something between 15 and 25% at the portfolio level. Favourite funds include RTW Ventures, Syncona and BB Biotech plus Biotech Growth Trust.

Anyway sad investor chuckled and said I shouldn’t bother as the biotech sector was in bubble territory especially after the pandemic. But is that true ? Probably not is the answer. Last week I caught up with the team behind the RTW Ventures fund which has now transitioned to a main market listing. Their recent numbers were impressive and it sounds like they have a long list of potential portfolio companies looking to list.  That IPO/SPAC pipeline might close of course especially if investors think we are in a bubble.

Which we’re not. First piece of evidence is below, from RTW, which shows recent sell offs for Russell Biotech index since 2000 (source data from Capital IQ). The slide in biotech share prices is the fourth worse since 2000.
Biotech sell offs

(Source Capital IQ)


Feb-29-2000 5139.62
May-23-2000 2092.34
Jul-27-2015 3485.45
Feb-08-2016 1803.27
Feb-19-2020 4498.476941
Mar-16-2020 2812.84
Feb-08-2021 8252.34
May-13-2021 5330.41
Aug-31-2018 4428.258537
Dec-28-2018 2982.519078

The chart below puts these numbers in a graphical form.

As for valuations, sector valuations look only slightly above the historical average based on these two charts below