Recently the sector has struggled. The biotech index has dropped 6.9% since March 1, compared with a 8.3% gain in the S&P 500. That’s partly due to increased scrutiny over drug pricing, but also the rising popularity of Senator Elizabeth Warren in the Democratic presidential primaries, who’s taken a combative approach to the pharmaceutical industry.

The brothers rely on talented executives and scientists, often discovered at companies they invest in. These people frequently end up on boards of other companies where Baker Bros. is a stakeholder. When the executives launch businesses, the Bakers have often backed them in their new endeavors.

Board Members
Of the Baker Bros. top 20 disclosed public company investments eight have at least one board member who works for Baker Bros. Chief executives for seven of those twenty companies also serve as board members on other large Baker investments.

Eve Slater, the first woman assistant secretary for the U.S. Department of Health and Human Services, has served on the boards of Idera Pharmaceuticals Inc. and AnorMED Inc., alongside representatives for Baker Bros. She described them as “very scientifically driven” and “active” board members, who steered AnorMED through a difficult period.

Others have been more critical of their influence.

Great Point Partners, a Connecticut hedge fund that owned shares of BioCryst Pharmaceuticals Inc., wrote a letter to the drugmakers’ board in February 2018 opposing a proposed merger with Idera.

Great Point co-founder David Kroin argued that the deal appeared to favor Idera’s largest shareholder, who was also a significant investor in BioCryst, to the detriment of other BioCryst investors. He didn’t name Baker Bros., but the firm was the biggest Idera shareholder at the time and also held a smaller stake in BioCryst.

Kroin lambasted the tie-up and “the inherent benefit to [BioCryst’s] largest shareholder at the expense of everyone else,” and argued the deal could even give the shareholder “effective voting control.” Investment firm RA Capital Management echoed these concerns, also not naming Baker Bros. BioCryst investors ultimately rejected the deal.

For CEOs like Ablynx’s Moses, Baker Bros.’ financial influence and expertise was a valuable asset. Moses said the firm used its sway to drum up engagement from Wall Street banks, who provided favorable terms for the company’s 2017 public offering. He even said that the investment firm pledged to stand by him if he decided to reject a takeover offer from French drugmaker Sanofi. Sanofi ultimately bought Ablynx in a deal worth $4.8 billion.

“If I do another biotech venture, having them as an investor would be something to be proud of,” Moses said.