Israel “Izzy” Englander is a self-made man living the American dream, whose Polish parents have since seen their son carve out a small fortune for himself of a whopping $5.2 billion. An NYU graduate, this hedge fund guru kick-started Millenium Management 28 years ago, taking the firm from $35 million to now $34 billion in assets. A man who once worked along Wall Street, Englander learned the ins and outs of the financial world, managing to return 13% for Millenium seven years ago, and achieving a 6% rise one year later. The billionaire’s firm has since outperformed a great deal of its competitors. These days, in a biotech-enthusiastic first quarter, Englander has boosted shares in three top players: Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Gilead Sciences, Inc (NASDAQ:GILD), and Synergy Pharmaceuticals Inc (NASDAQ:SGYP). Let’s explore the guru’s confidence in the biotech sector:
Valeant Snaps Up a Hoist
Millennium Management shipped out another slice of Valeant, adding 322,132 shares to its holding in the biotech giant, rounding out 1,657,778 shares worth $18,285,000. Since the last SEC filing, these shares have gained 25% of their value. Perhaps Englander respects Papa’s chess moves in a game taken over a few turns behind in terms of financial stability.
Valeant intends to face its debt by placing its iNova Pharmaceuticals business up for sale with a $930 million price tag. CEO Joseph Papa is the man to steer the ship away from its debt shackles that have escalated above $30 billion. With the intention of closing the deal by the back half of this year, Papa is making serious strides to circle his ambitious objective to meet $5 billion in debt reduction by February of next year. The iNova division sale could help Valeant come close to circling $500 million away from Papa meeting this target by his goal: February 2018.
Papa proceeds acquisition-hungry Mike Pearson, the prior VRX CEO, picking up the debt crumbles in April. How bad was the damage left behind for Papa to piece together? Pearson’s purchasing bender initially led the shares skyrocketing from the $20s sharply up to $257 in 2015. However, soon the biotech giant ship hit a torrent of negative publicity thanks to specialty pharmacy Philidor legal wrinkles that ballooned into a climate of investor apprehension.
Therefore, in a debt-heavy era for Valeant, Papa has assumed the role of captain delevering his ship, selling extraneous assets to ease that tremendous debt load. Papa has chosen to prioritize dermatology, gastrointestinal, and eye segments, keeping these while adopting an ‘everything goes’ mentality for the rest. As of nearly three months ago, the debt stood at $28.54 billion. The question lingers as to whether the $5 billion will be sufficient in the grand scheme of the whale of a debt swimming around Valeant.
For now, most of the Street is hedging its bets on this giant, as TipRanks analytics show VRX as a Hold. Out of 14 analysts polled by TipRanks in the last 3 months, 2 are bullish on Valeant stock, 9 remain sidelined, and 3 are bearish on the stock. With a return potential of nearly 47%, the stock’s consensus target price stands at $18.40.
Gilead Gets Goosed
Englander led Millenium Management to get more bullish on Gilead, with the hedge fund increasing its stake in the biotech giant by 480,376 shares, with a total position of 1,896,066 shares worth $128,781,000. Since the last SEC filing, these shares have earned 34% of their value.
Gilead has been on a roll lately, having recently brought successful data read-outs to the table from four Phase 3 trials evaluating bictegravir (BIC), a novel investigational integrase strand transfer inhibitor, in fixed dose combination (BIC/FTC/TAF) with emtricitabine and tenofovir alafenamide in adult HIV.
It was a meaningful sweep for the biotech giant and many were left not altogether surprised, considering Phase 2 results were also strong, and management has expressed conviction these 12 months for its HIV program- arguably the company’s best franchise. Phase 3 trials proved BIC attained its primary objective of non-inferiority, an important stride forward.
BIC sales revenue could gravitate around $6 billion, marking a key growth driver for Gilead. With the Gilead team having just announced today it has submitted its BIC NDA while angling for an FDA green light by the first quarter of next year, thanks to clinical milestones, shares seem to be in a solid position. Looking ahead, GILD intends to submit a BIC/FTC/TAF marketing authorization application in the European Union by the third quarter of this year.
The bullish tide continues to be strong for this biotech giant, with TipRanks analytics indicating GILD as a Strong Buy. Based on 12 analysts polled by TipRanks in the last 3 months, 9 rate a Buy on Gilead stock while 3 maintain a Hold. The 12-month average price target stands at $81.75, marking a 26% upside from where the stock is currently trading.
Over 3 Million Shares Invested in Synergy
Englander sees reason to be confident when assessing Synergy’s prospects, buying 1,118,394 shares, taking his position up to 3,256,067 shares worth $15,173,000. The shares have since collected 75% of their value as of the most recent SEC filing, with a pipeline that leaves plenty of room to instill positivity in SGYP investors.
Lead candidates plecanatide (Trulance) and dolcanatide specifically could excite the bulls, as there is potential in the field of gastrointestinal (GI) disorders. Trulance has the capacity to treat not only patients suffering from chronic idiopathic constipation (CIC) but also could aid those with irritable bowel syndrome with constipation (IBS-C), making the drug candidate doubly as compelling.
Trulance should dominate the short-term value of the stock and if the drug garners a green light in the indication of IBS-C, the shares could see a meaningful rise in value. Just last Wednesday, the biotech firm revealed the FDA approved its filed sNDA for Trulance in IBS-C, setting a PDUFA date for January 24, 2018, marking a crucial climb on the ladder for Synergy in tapping into the IBS-C market.
Additionally, dolcanatide could prove valuable for the expansion of the firm’s GI franchise, as the drug is designed to treat ulcerative colitis (UC). While other treatments are certainly out there for tackling UC, should dolcanatide prove itself effective, SGYP could have an advantage in the market as far as safety when held against its competitors. The cash roadway looks solid for the firm through the long-term when taking under account commercial prospects lining a profitable path for years to come. A lot will be riding on the PDUFA date, where all eyes of the biotech-verse will be focused come January.
Wall Street mirrors Englander’s vote of confidence, considering TipRanks analytics exhibit SGYP as a Buy. Out of 6 analysts polled by TipRanks in the last 3 months, 5 are bullish on Synergy stock while 1 is bearish. With a return potential of 208%, the stock’s consensus target price stands at $12.40.