Known by many as “the world’s smartest billionaire”, Jim Simons is the founder of the prestigious Renaissance Technologies fund. The fund- one of the most successful in the world- has an incredible portfolio value of over $78 billion. Based on 13F forms that hedge funds are required to file with the SEC, we can ascertain the fund’s sentiment on key small cap biotech stocks. In the latest quarter, we can see how Simons ramped up the fund’s positions in Kamada Ltd (NASDAQ:KMDA) and Antares Pharma Inc. (NASDAQ:ATRS) but substantially reduced its exposure to Aeterna Zentaris Inc (NASDAQ:AEZS).
The fund uses a quantitative trading fund based on carefully formulated mathematical and statistical methods. “Renaissance is the commercial version of the Manhattan Project,” says MIT finance professor Andrew Lo. He concludes: “They are the pinnacle of quant investing. No one else is even close.”
Now let’s examine three of the fund’s most interesting recent biotech moves:
Simons showed a bullish approach to biopharma Kamada Ltd. He has increased the fund’s KMDA holding significantly- by 30% to 342,200 shares valued at $2.05 million.
Kamada will soon receive the outcome of an FDA review into its anti-rabies drug candidate. The PDUFA dare for Kamada’s new human rabies immune globulin (IgG) is set for August 29 2017- and if approval is granted the share price is likely to spike. Rabies is a life-threatening disease that impacts some 40,000 Americans a year. Usually people catch the disease after being bitten by a rabies infected animal.
Five-star Jefferies analyst Raj Denhoy says that regulatory approval for the anti-rabies drug will give KMDA access to a $130 million market in the US with only one competitor. He reiterated his buy rating on the stock on August 10 with a $6 price target. This translates into very big upside from the current share price of 33%. Overall Denhoy has a 66% success rate and 14.2% average return per recommendation.
Kamada has already been selling IgG since 2003 in various countries outside the US under the brand name KamRAB. American biopharma Kedrion will exclusively market the therapy in the US subject to FDA approval.
Following positive clinical trials which met the primary endpoint and showed the drug is safe and well tolerated, Garrett Bergman, Senior Director, Medical Affairs at Kedrion said: “Rabies is a completely preventable condition, and emergency room healthcare professionals and pharmacists, in particular, will welcome the arrival of an additional choice in providing urgent medical care to those who may have been exposed to this deadly virus.”
Aeterna Zentaris Inc
Simons slashed the fund’s holding in Canada-based biopharma Aeterna Zentaris. He cut the holding by 39% to 131,433 shares worth just $131,000.
Aeterna focuses on developing drugs for oncology and endocrine therapy, as well as various unmet medical needs. In particular the company is seeking FDA approval for Macrilen, which helps adults suffering with growth hormone deficiency (AGHD). The drug stimulates growth hormone and could help about 75,000 adults suffering from AGHD across the US, Europe and Canada. The PDUFA date for Macrilen is currently set for December 30 2017- this is the date by which the FDA regulatory body must review the new drug application.
On July 21 Aeterna also announced that ahead of the Macrilen launch it is forming a special committee of directors to review the company’s finances and strategy in order to maximize shareholder value. This could even involve recommending changes to the company’s management. Aeternis has already revealed that David Dodd has now resigned as CEO and President and has been replaced by Michael Ward from Sagent Pharma.
Antares Pharma Inc
Simons boosted the fund’s holding in Antares by 10%. Renaissance now holds over 3.4 million shares in Antares which have a value of approximately $11.1 million.
And Simons isn’t the only one displaying a bullish attitude towards ATRS. On August 9, HC Wainwright analyst Corey Davis reiterated his buy rating on the stock with a $5 price target. This translates into huge upside from the current share price of 67%. Antares is currently gearing up for the launch of its testosterone injection therapy Xyosted. The PDUFA date is set for 20 October 2017 which means that, if approved, commercial launch should take place in late 2017 or early 2018.
The drug represents the largest opportunity for Antares, and Davis likes the set up going into the launch. He says: “ATRS is laying all the groundwork it can ahead of approval, conducting payer and clinical advisory boards to hone its rebating, patient assistance, and targeting strategies.” This should ensure maximum access for Xyosted in the fast-growing injectable testosterone market.