We know, We know. Enough already with SoftBank. But bear with us. Because this time it’s not about Uber or WeWork —it’s about how Alzheimer’s and data mining might give us an insight into SoftBank’s investment strategy.
At first glance, it seems as if the Japanese company doesn’t have an investment strategy for its $93 billion megafund. Its bets range from ride-hailing apps to robotics companies to instant messaging tools. This scattergun approach was underscored in late August when SoftBank led a $1.1 billion investment into pharmaceutical group Roivant Sciences Ltd. —one of the biggest-ever biotech investments.
Roivant, founded by ex-hedge-fund partner Vivek Ramaswamy, 32, analyzes data to hunt out unwanted and unapproved drug candidates, which it develops through a range of subsidiaries such as Axovant, which focuses on neurology, Myovant (women’s health and endocrine diseases), Enzyvant (rare diseases), and Urovant ( yep, urology).
It’s crunch time for Axovant right now. Investors and the medical community are waiting to see late-stage results for its experimental Alzheimer’s treatment intepirdine, due in late September.
No drug has yet proven to significantly slow Alzheimer’s and related dementia, which affect about 45 million people in the world. In the past year, experimental drugs from Merck & Co. and Eli Lilly & Co. have joined the dozens of failures aimed at blocking the disease or slowing its progress.
Axovant is currently trading at around $25 a share. If the trial is successful, analysts at Jefferies see the stock reaching $40 to $100 a share, potentially turning a $2.7 billion clinical-stage startup into a $10 billion company.
Not everyone agrees. The trial might fail, or work modestly, and not in a way that will be a commercial or clinical boon, according to Gbola Amusa, an analyst at Chardan Capital Markets who recommends selling the shares. Amusa said in an interview that he’s discouraged partly because similar drugs were unsuccessful and intepirdine’s mid-stage data showed modest benefit.
Wait. It gets more confusing.
The investment into Roivant was led by Akshay Naheta, managing director of SoftBank Group International. Naheta was previously a hedge-fund manager and value investor — meaning he looked for companies that traded for less than their intrinsic value.
So we have former fund manager who is an expert in value investing, not pharma, leading a $1 billion bet on pharma holding group — which may or may not have a lucrative subsidiary in a few weeks’ time.
Still, there’s one piece of the puzzle missing. SoftBank sees its investment into Roivant not as a bet on Axovant, but an investment into data mining within the pharma industry. On Wednesday, Roivant announced the formal launch of its latest subsidiary Datavant, which is using AI to sift through datasets to help get drugs through the clinical trial process. Datavant has already compiled data from 85 different datasets comprising more than 20 million patient visits.
Data is SoftBank’s current dreamboat. It has invested in companies such as graphics chipmaker Nvidia and bought U.K. chipmaker ARM Holdings to tap into the growing need of companies to manage an ever-increasing flow of data.
This is what SoftBank’s investment into Roivant is really about. Not only is there the potential of some immediate short turn upside with Axovant, but if that goes wrong SoftBank is betting that Datavant will keep feeding potential drugs for its other subsidiaries to push through the clinical trial process. It’s a sort of hedge. Like investing in a range of ride sharing apps to either pick the winner or perhaps one day merge them all, or investing in semiconductor companies that in the short term are a cash cow but perhaps later on will be essential to AI.
Yes, it still seems a bit nuts, and there is plenty of intelligent skeptisicm into Roivant’s strategy, but regardless of the industry, where there is data, you may find SoftBank.
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