Mitch Gold made a lot of money as the CEO of Dendreon (NASDAQ: DNDN), the Seattle-based cancer drug developer. David Miller made his reputation as an investment analyst with in-depth, bullish reports on the company. Now these two are going to work together on a new Seattle-based biotech hedge fund called Alpine BioVentures
Gold isn’t saying how much of his money he’s putting into Alpine, but it will be “a modestly sized fund” in the “multiple millions” at the start. Gold says he plans to spend about half his time on the fund, with the other half going toward his cancer immunotherapy startup, Alpine Biosciences. Miller, the president of Biotech Stock Research, is stepping back from the company he co-founded in 1999 and will no longer write his independent research reports now that he’s managing money.
Alpine’s plan is to do fundamental research, and invest in companies with strong technology and potential to improve patients’ lives, Gold says. The fund is starting out by “primarily” managing Gold’s money, but it intends to add additional outside investors over time once it has a track record, Gold says. Alpine also intends to make occasional investments in private companies that have a chance of making a big impact on patients, and generating near-term liquidity, he says. R.J. Kirk’s Third Security, Arie Belldegrun’s Two River, and Baker Brothers Advisors all offer good models for public/private biotech investment, Gold said.
Gold and Miller’s new venture is getting started during a clear upswing for the highly volatile biotech industry. There have been 31 initial public offerings of biotech companies this year, about triple the usual volume seen in the years following the financial crisis of 2008. The NASDAQ Biotech Index has surged 41 percent this year, compared with about a 19 percent gain year-to-date in the broader NASDAQ Composite Index. Some of that surge can be explained by investors becoming increasingly aware of a number of good drugs in development, Gold says.
“You’re seeing a lot of interesting developments in cancer and rare diseases, and I want to be a part of it,” Gold said.
Miller said he sees a lot of opportunities, but he also has a personal motivation to try something new. “After 14 years of writing about [biotech investing], for me, it’s time to do it,” Miller said. He adds: “I have a great deal of respect for Mitch and what he was able to build at Dendreon and before that. He’s got a track record of success. I’m really excited about taking our combined 30-plus years of experience in biotech and applying it in a new way.”
Gold and Miller crossed paths over the past 10 years when Gold was running Dendreon and Miller was an analyst covering the company. Gold raised about $2 billion in capital for the company and became known for making bold statements about how Dendreon was bound to transform the lives of prostate cancer patients. Miller became known in those years for his unwavering belief in Dendreon’s technology, and his criticism of the company’s marketing strategy and execution.
Gold was replaced by John H. Johnson as CEO of Dendreon in February 2012, after the company stumbled in the early days of marketing its drug, sipuleucel-T (Provenge). He stepped down from the Dendreon board a year later.
While many shareholders lost their shirts, Gold did well personally. In one two-day period just after FDA approval in April 2010, Gold pocked about $26.7 million through sales of Dendreon stock at prices of more than $50 a share. Dendreon closed last Friday at $2.84.
Biotech Stock Research (BSR) will continue to publish research reports by co-founder Alan Leong, Miller said, although the company’s coverage universe will be scaled back. As a portfolio manager making day-to-day investment decisions, Miller will no longer author the independent research reports that BSR is known for. He said he wants to avoid conflicts of interest that he says plague so many research reports on public companies.
Although Miller won’t be writing detailed independent research reports any more, he does plan to stay engaged in the public conversation about biotech stocks that occurs daily on Twitter. His new Twitter account is @AlpineBV_miller. “I don’t think there’s any way to do this job without Twitter,” Miller said. “And the only way to get the best out of Twitter is to participate and not be a lurker.” Gold said he wanted Miller as a portfolio manager for a number of reasons. “What I liked about David is he comes to his research with a real independent mind, and can look at companies from a scientific perspective. I like that. We didn’t always agree on things, which is good. I wanted an original thinker. He’s also got an incredible work ethic, and he’s hungry to be successful.”
Both Miller and Gold emphasized their desire to build the Alpine fund in Seattle. “Both Mitch and I are big believers in Seattle as a biotech space,” Miller said. “We see there are great funds here, but not a lot of them. The opportunity when we’re successful to grow the fund here, and operate in Seattle, is icing on the cake for us. We’re both pretty passionate about it.”