Investing in Science: When Scientific Expertise Pays Off
Without doubt, people don’t go to graduate school to make money. On the contrary, graduate students master an art of living on minimal wages while battling envy for the paychecks of their peers that hold ‘real’ jobs. However, several UCSF students decided that they can make money by capitalizing on their scientific knowledge and started an investment fund, which they called EVEXIA Bio Fund. So far, EVEXIA has been incredibly successful, making about 65% profit over the last year. T.J. Hu, a third-year BMS student and one of the founders of the Fund, attributes their success to the ability to ‘leverage our scientific expertise to beat the market.’
Given that the Bay Area is a biotech hub, it is not surprising that many students at UCSF are interested in investing in biotech. About two years ago several graduate students started the Investment Club at UCSF, which organizes educational workshops and regularly brings speakers from local venture capital firms and hedge funds. Thus, when Hu came up with an idea of starting an investment fund, there was already a body of students who were prepared to ‘get their feet wet’ and make their own investment choices. The risk was worth taking - in nine months EVEXIA share price rose from $100 to $165, while the value of the Fund went from about S30,000 to $95,000 and as the Fund grew from eighteen to forty eight members.
EVEXIA buys stocks of mostly small to mid-cap biotech companies that have solid science, but are still overlooked by the market. Recognizing a promising company requires the ability to critically evaluate the company’s potential for creating great drugs, which, in turn, necessitates understanding the biology behind the drug. For instance, last year they invested in Medivation, which is a Bay Area-based biotech company that got approval for XTANDI, one of the most promising prostate cancer drugs. Several members of the Fund saw XTANDI’s full potential before the market did; as a result they acquired Medivation’s stocks before they doubled in price. Recognizing XTANDI’s potential required reading primary papers on clinical trials, as well as reaching out to UCSF prostate cancer clinicians to ask their opinion about the best lines of treatment.
In general, any member of EVEXIA can pitch a company for investment, and members usually follow their research expertise when they select their targets. For instance, Hu studies small RNAs, thus, he proposed to invest in Isis Pharmaceuticals, which specializes in pharmaceutical anti-sense RNA drugs. The company was promising, but undervalued, and the Fund invested at the share price of $30.22 in May and sold at $65.64 in December. The Fund clearly benefits from its members’ expertise that spans basic life sciences, medicine and pharmacology. Moreover, although EVEXIA mainly consists of scientists from UCSF community, it also has attracted several members from local biotech industry.
When asked about his future career plans, Hu says that he is “still very interested in science, but can’t deny that one day he might make use of his graduate school investing experience.” Regardless of whether the members of the Fund will one day choose an academic or venture capital track, investing while in grad school is a fun hobby that makes a different use of analytical skills and scientific training.
EVEXIA Bio Fund is run through joint efforts of T.J. Hu, Evan Markegard, Gorjan Hrustanovic and Sirj Goswami. The Fund meets every first Tuesday of the month at Mission Bay and accepts new members every quarter. If you have any questions, please contact T.J. Hu at Tj.Hu@ucsf.edu.