Rx for reversal

Tue Aug 26, 2008

Healthcare, biotech funds spiked in July with more M&A and drug approvals in the works

By Pete Gallo

After several years on life support, healthcare and biotech funds staged a massive recovery in July, with some portfolios posting their best monthly returns ever. The talk of more merger and acquisition deals and a modest increase in drug approvals dramatically revived a sector written off by all but the most rugged investors.

"The biggest catalyst in July was talk about M&A deals - Imclone [by Bristol-Myers Squibb] and Genentech [by Roche Holdings]," says Sam Isaly, who oversees the $1 billion Caduceus Capital International portfolio, which was up 14.4% for the month. Deal talk, Isaly says, "was the spark."

In addition to Caduceus, big winners include Pequot Healthcare Offshore Fund, up 13.7%, Galleon Healthcare Offshore, up 10%, and MPM Bioequities Fund, whose gain of the same amount marked the best...


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