VASUDA LIFE SCIENCES FUND
A directional long/short equity fund
July 2014
Confidential
Contact Information:
Bhavneesh Sharma
718-501-7515 (cell)
info@vasudacapitalmanagement.com
© 2014 Vasuda Capital Management, LLC. All rights reserved.
General Disclaimers and Risk factors
• This communication is for information purposes only and should not be regarded as an offer to
sell or as a solicitation of an offer to buy any financial product, an official confirmation of any
transaction, or as an official statement of Vasuda Capital Management, LLC. This presentation is for
information purposes only, is confidential and may not be reproduced or distributed. The purchase
of interests in the Fund is suitable only for sophisticated investors for whom an investment in the
Fund does not constitute a complex investment program and who fully understand and are willing
to assume the risks involved in the Fund’s investment program. An investment in the Fund involves
a number of risks.
• There is no assurance that the Fund will be able to achieve its investment objectives, as a result of
which a prospective investor may lose some or all of its investment. The Fund has a short operating
history and there is no guarantee that past performance may be replicated in future. Risks are
mentioned in detail in the offering memorandum which may be requested.
• Information contained herein was compiled from sources that Vasuda Capital Management, LLC
believes to be reliable; however, neither Vasuda Capital Management, LLC, nor its affiliates make any
representations or warranties, express or implied, with respect to the accuracy or completeness of
such information.
© 2014 Vasuda Capital Management, LLC. All rights reserved.
Executive Summary
Overview : Vasuda Life Sciences Fund, LP was formed to provide investors with a directional, long/short
equity strategy focused on the life sciences (pharmaceutical, biotechnology and medical devices) sector.
Strategy :
• The strategy employs a fundamental, relative-value approach to exploit valuation discrepancies in all market
conditions.
• The fund seeks to capitalize established as well as early stage life sciences companies with a promising product
pipeline.
• Generate superior risk-adjusted returns.
Approach : Proprietary quantitative screening model and financial review.
• In-depth qualitative screening process.
Differentiators : The Portfolio manager is a physician with an MBA in Finance, Financial Markets from NYUStern. The Assistant Portfolio Manager also holds an MBA in Finance from NYU and has extensive experience in
the hedge fund industry.
• Team has extensive experience in investing in this sector and are able to use their medical as well as finance
expertise to evaluate potential investments.
© 2014 Vasuda Capital Management, LLC. All rights reserved.
Competitive advantage: Our Team
Bhavneesh Sharma, MD, MBA: Portfolio Manager:
•
•••-
Board certified physician with an MBA in Finance and Financial Markets (NYU-Stern).
Fundamental, value based investment approach with a margin of safety.
Extensive training and experience in medicine and business valuation techniques.
Uses combination of clinical experience as well as finance training to evaluate companies.
Eugenia Kolomeitseva, MS, MBA: Assistant Portfolio Manager:
- Experienced finance professional with Masters in Finance and MBA in Finance from NYU-Stern.
- Over 10 years of experience in all aspects of hedge fund industry, including marketing, advisory and
technical expertise for investment funds (hedge funds), especially focused on emerging markets
© 2014 Vasuda Capital Management, LLC. All rights reserved.
Market Opportunity: A revolution in biotechnology
• Revolution in the biotechnology sector with new treatments like cure for chronic
hepatitis C, oncology, cystic fibrosis etc. increasing life expectancy and even providing
cure for some cancers.
• Regenerative medicine: Ability to use stem cells to produce any cell type. Useful
especially in treatment of degenerative diseases.
• Genomic Medicine: Ability to sequence and manipulate genetic information. Enables
treatments personalized to an individual’s genetics makeup.
© 2014 Vasuda Capital Management, LLC. All rights reserved.
Investment process
Identify
potential
investments
Portfolio
manager’s clinical
experience and
relationships with
other specialist
physicians and
industry experts to
identify innovative
medical therapies
Product
pipeline and
financial
analysis
- Analyze Results
of early stage
clinical trials to
predict likelihood
of success of
clinical trials and
FDA approval.
- Analyze cash on
balance sheet and
cash burn rate to
identify need for
equity dilution.
© 2014 Vasuda Capital Management, LLC. All rights reserved.
Qualitative
screening and
valuation
- Discuss product
potential and
chances of FDA
approval with
industry experts and
management.
- Corporate
Governance
evaluation: Senior
Management, Board
of Directors,
operations, growth
prospects.
Position sizing
- Quantitative
method to
calculate position
size in the
portfolio based on
risk/reward.
- In general,
maximum position
size not to exceed
15% of the
portfolio.
Investment
opportunity
Long
positions
selected based on
- Relative value
- Financial
condition
- Growth
prospects
- Management
Examples of some recent Fund
investments
© 2014 Vasuda Capital Management, LLC. All rights reserved.
This company makes a drug which increases
the survival and lung function for a deadly lung
disease.
Sold at around $ 42
for 300% gain.
Bought in
January’14 around
$ 14/share in
personal account
© 2014 Vasuda Capital Management, LLC. All rights reserved.
Stock gaps up after
successful phase 3
drug trial
A promising new drug for a once fatal liver
disease
Company was acquired at
$ 24/share in June. We
sold at 480% gain.
Long position opened
around $ 5/share in
February 2014 in
personal account
© 2014 Vasuda Capital Management, LLC. All rights reserved.
This company makes the first new drug in twenty
years for a common neurological disorder
FDA approves the drug,
Option position closed after
150% gain
Company later
acquired around $
6.50/share
Position opened around $
4/share (Long call options)
in personal account
© 2014 Vasuda Capital Management, LLC. All rights reserved.
Few current investments
• Company makes a novel drug that has cured a once deadly and common
disease. Earnings tripled this year from year before. Potential for at least
200% return by 2016. Also has novel drug in pipeline for fibrotic diseases.
• Company has a new oncology drug in pipeline which may be combined with
another new oncology drug and may have applications in different cancers.
Novel mechanism of action. Potential acquisition target. Potential 250%
return by 2016.
• Company has found genetic cure for a common childhood disease. Shares
doubled last month after successful phase 3 results. More clinical trials in
progress to expand target population. Potential 200% return by 2016.
© 2014 Vasuda Capital Management, LLC. All rights reserved.
RISK MANAGEMENT
Portfolio Exposures:
• Evaluate results of clinical trials and FDA meetings continuously.
• Exit position at maximum losses of 25-30 % from the entry price. However, use the pullback to add to the position if
fundamentals of the company are intact.
• No more than 2x leverage.
• Hedge in market downtrends using index put options or futures.
Individual stocks:
• Diversify: Maximum position size will be 15% of the portfolio.
• Thorough due diligence before investments.
• Trading strategy favors adding to winners and will cut losers.
Operational Risks:
Reliance on first class service providers.
- Cash movements are limited and accessible only to the portfolio manager.
- Financial models and research backed up on ‘cloud’.
-
Terms and Service Providers
Fund Terms
Launch
April 2013
Domicile
United States
Legal structure
3 (C) (1) Massachusetts Limited Partnership
Management fees
2% annually (paid quarterly in advance)
Incentive fee
20% of net profits (paid annually)
Minimum Investment
$ 1 million
Liquidity
Quarterly withdrawals allowed, no lockup period (2% early withdrawal fee if less than one year)
High Water Mark
Yes
Investor Reporting
Monthly
Service Providers
Prime Broker
Interactive Brokers LLC
Administrator
Amicorp Fund Services
Auditor
Marcum LLP
Custodian
Interactive Brokers LLC