Most life sciences and biopharma hedge funds started 2026 on the back foot, giving up ground in January after one of the strongest years on record for the sector with the pull-back coming despite a 2.5% gain in the Nasdaq Biotechnology Index, according to a report buy Institutional Investor.
Many managers posted single-digit losses for the month, following outsized gains in the second half of last year.
Biopharma-focused funds were among 2025’s standout performers, led by Perceptive Advisors, which surged 82% for the year. While January marked a pause, investor optimism around the sector remains intact.
In a February report, the biotech innovation team at Janus Henderson said many companies are entering 2026 with stronger balance sheets and clearer visibility on late-stage clinical data. The firm also pointed to steady FDA approval activity in 2025 as supportive for planning and capital deployment across the sector.
Performance across managers was mixed. The Janus Henderson Biotech Innovation Fund fell less than 1% in January, while RA Capital Management was broadly flat. Most other funds recorded modest declines.
RTW Investments dropped around 6% for the month, weighed down by a near-16% fall in Madrigal Pharmaceuticals, its largest long position at the end of the third quarter. Madrigal also pressured returns at Avoro Capital Advisors, which declined roughly 3%, and Affinity Healthcare Fund, which fell 2.55%.
Soleus Capital lost 4.9% in January, despite a 13.4% rise in its largest holding, Krystal Biotech. Losses were driven by a sharp sell-off in Beta Bionics, which fell more than 50% after reporting disappointing preliminary results.
Elsewhere, Averill saw its main fund decline 3%, while Averill Madison fell 4.8%. Casdin Capital was down about 2%.
Perceptive Advisors, last year’s top performer, slipped 2.53% in January. Among its larger holdings, Travere Therapeutics was a notable detractor, falling nearly 19%.
There were, however, pockets of upside. Affinity Healthcare Fund benefited from a 54% jump in Ventyx Biosciences after Eli Lilly agreed to acquire the company for $1.2bn.
