Baron Funds, an investment management company, released its “Baron Health Care Fund” second quarter 2023 investor letter. A copy of the same can be downloaded here. The fund advanced 9.22% (Institutional Shares) in the quarter compared to a 3.44% gain for the Russell 3000 Health Care Index (benchmark) and an 8.74% gain for the S&P 500 Index. Since its inception, on April 30, 2018, the fund gained 13.58% on an annualized basis, compared to the benchmark’s 10.85% gain and the S&P 500 Index’s 12.54% return. Favorable stock selection led the fund to outperform in the quarter. Investments in biotechnology, pharmaceuticals, and healthcare equipment accounted for most of the relative gains of the fund in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Health Care Fund highlighted stocks like Arcellx, Inc. (NASDAQ:ACLX) in the second quarter 2023 investor letter. Headquartered in Gaithersburg, Maryland, Arcellx, Inc. (NASDAQ:ACLX) is a clinical-stage biotechnology company. On July 24, 2023, Arcellx, Inc. (NASDAQ:ACLX) stock closed at $33.97 per share. One-month return of Arcellx, Inc. (NASDAQ:ACLX) was 5.92%, and its shares gained 58.52% of their value over the last 52 weeks. Arcellx, Inc. (NASDAQ:ACLX) has a market capitalization of $1.63 billion.
Baron Health Care Fund made the following comment about Arcellx, Inc. (NASDAQ:ACLX) in its second quarter 2023 investor letter:
“We initiated a small position in Arcellx, Inc. (NASDAQ:ACLX)., an early-stage biotechnology company that is developing cell therapies for multiple myeloma. We are bullish on the overall multiple myeloma space and expect cell therapy to revolutionize multiple myeloma care. Right now, there are a few clinical stage assets, but only three platforms with any real commercial viability. We identify these as Legend/J&J, Two Seventy/Bristol Myers, and Arcellx/ Gilead. Long term, we predict Legend and Arcellx will dominate the commercial market and generate billions in free cash flow. For rough math, these therapies are priced around $500,000 (equivalent to or cheaper than a bone marrow transplant) and have better outcomes, which, if all 200,000 patients in the U.S. alone had the procedure done, would equate to $100 billion in revenue. Longer term, this will be a global market and pricing will be lower, but directionally this helps describe the size of the opportunity. While earlier than its other two competitors, Arcellx has presented clinical data (100% overall response rate with median follow-up of 15 months) equivalent to if not better than market leader Legend and both perform better than Two Seventy. Ultimately there are nuanced technical differences in the way the cell therapy constructs are made, which explain why Legend and Arcellx have found success where Two Seventy has lagged. These cell therapies are difficult to manufacture at scale and given significant market demand, we take comfort that Legend has a partner in J&J and Arcellx in Gilead. Gilead bought Kite, the current market leader for cell therapies globally in the adjacent diffuse large B cell lymphoma market.”
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Arcellx, Inc. (NASDAQ:ACLX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held Arcellx, Inc. (NASDAQ:ACLX) at the end of first quarter which was 24 in the previous quarter. In addition, please check out our hedge fund investor letters Q2 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.