What Investors Get Wrong About Biotech
Most investors in this community underwrite what they can see. A rent roll, a cap rate, a debt schedule, a comp set two streets over. Biotech offers none of that. It asks you to fund a molecule that either works or it doesn't, on a timeline you don't control, with no distributions along the way. So most passive investors skip the category and call it a science problem.
The argument on this call is that it was never a science problem. Between now and 2030, roughly 190 drugs lose patent protection, about 70 of them blockbusters, putting more than $200 billion of branded revenue at risk. Branded drugs can shed up to 80% of their revenue in the first year after exclusivity ends. Big pharma cannot invent its way out of that hole fast enough, and it's sitting on well over a trillion dollars of deal capacity. That's not a forecast. It's a buyer with a deadline, which is something this room already understands.
Litan Yahav and Mike Arndorfer are joined by Ran Nussbaum, co-founder and managing partner of Pontifax, who has been investing in life sciences since 2004.
What we get into:
Why "I don't understand the science" is the wrong reason to skip the category, and what a life sciences fund is actually underwriting instead
The patent cliff in plain numbers, and what a forced buyer does to the price of everything upstream of it How you build a portfolio around binary outcomes, where one trial readout takes a position to zero and no amount of diligence prevents it
Why biotech returns don't move with rates, occupancy, or cap rates, and what that non-correlation is worth next to a real estate heavy book
The honest cost of entry: eight to twelve year holds, a deep J-curve, and zero cash flow while you wait
What the Kite Pharma and Prevail exits actually looked like from the inside, including the parts that weren't obvious at the time Bring your questions. If you've looked at a life sciences fund and passed, this is the room to say why.
Ran co-founded Pontifax in 2004, a healthcare-dedicated investment firm with offices in Tel Aviv and Boston. He has served on the boards of Kite Pharma (acquired by Gilead), Prevail (Lilly), cCAM Therapeutics (Merck) and ArQule (Merck).
Live and on camera. No pitch, no slides. Just an asset class most investors wrote off without looking at it.