Alaska Permanent Fund reaps benefits from biotech investments

JUNEAU, Alaska — Alaska’s economic eminence stems from the discovery of oil on the North Slope in the 1960s. But its more recent crown as a biotech sugar daddy started in March 2013 with a chance meeting on a flight from Boston to Seattle.

David Fallace, then head of special opportunities for the Alaska Permanent Fund, the agency that manages the state’s massive oil wealth, was boarding a plane when he met Larry Corey, who then led the Fred Hutchinson Cancer Research Center. The pair talked so much about Corey’s research into using the immune system to fight cancer that a flight attendant had to insist they stop blocking the aisle and go back to their seats. The discussion resulted in Alaska that year initiating what ultimately became a $129 million investment for about 25 percent of the company Corey started, Juno Therapeutics. The stake is now worth $1.04 billion.

With a $50 billion fund willing to sit on illiquid investments for years, Alaska sees patience as a competitive advantage in making long-term bets on the drug industry, said Stephen Moseley, who succeeded Fallace in January.

“When I worked on my first biotech deal in the ’90s, this old industry sage said to me, ‘You know, Moseley, it’s called the life sciences because it takes a lifetime to get your money back,’ ” he recalled. “Liquidity is a risk, but it’s one that’s identifiable and ironically kind of attractive to us” because the lack of liquidity is rewarded with the opportunity for higher returns.

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Source: Bloomberg

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