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Hedge Fund Alert: Avoro Alum Planning Biotechnology Vehicle

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The number-two investment executive for Avoro Capital’s high-performing biotechnology-stock hedge fund is forming his own firm.

Senai Asefaw is in the process of setting up Paradigm Biocapital, where he would run his own biotechnology hedge fund. His goal is to begin marketing the vehicle in August. Asefaw will remain at Avoro through July.

While in its early stages, Asefaw’s plan is attracting significant attention given his history.

Asefaw has been at Avoro, formerly known as venBio Select Advisor, since 2014, working under portfolio manager Behzad Aghazadeh in New York. Since its inception in 2010 through April 2019, Aghazadeh’s hedge fund, now called Avoro Life Sciences Fund, produced an annualized return of 35.7%, far outperforming both the HFRI Equity Hedge Sector Healthcare Index and the Nasdaq Biotechnology Index.

The fund’s asset growth reflects those high-flying returns. At yearend, the Avoro fund had $4.6 billion of gross assets, up from $2.2 billion at yearend 2018 and $859 million at yearend 2016.

Asefaw, an assistant clinical professor at the Yale School of Medicine, mainly invested in mid-to late-stage companies at Avoro.

Aghazadeh formed Avoro in May 2019 as a holding company with a partner, HealthQuest Capital founder Garheng Kong, to house a private equity business led by Kong and Aghazadeh’s hedge fund business.

Working with Asefaw as an outsourced operations manager is David Gerber, via his own business, Wolfgang Advisors. Gerber formed Wolfgang in November. His activities for the past few years are unclear, but from 2011 to 2014, he was president and chief operating officer at Daruma Capital. Gerber earlier worked for healthcare-focused Great Point Partners as its chief financial officer.

The firm is using Ron Geffner, a partner Sadis & Goldberg, as its fund-formation lawyer.

Asefaw’s Paradigm joins a large crop of biotechnology funds forming this year, reflecting a view that the sector remains ripe for profit. The coronavirus pandemic has in some cases accelerated that investment as pharmaceutical companies race to produce a vaccine.

The HFRI healthcare index was up 2.1% in the first half of this year, compared with a 5.1% loss in the HFRI Fund Weighted Composite Index.

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