Roberto Mignone’s Bridger Management has amassed a 5.5% stake in Arrowhead Research Corp (NASDAQ:ARWR) according to a 13G filing with the Securities and Exchange Commission on January 23. Bridger Management now owns 2.98 million Arrowhead shares as of the time of the filing.
Mignone was one of the 23 hedge fund managers profiled in Katherine Burton’s 2007 novel Hedge Hunters. In it, she described the very meticulous and calculated way in which Mignone manages his fund, which the Harvard Business School grad started in 2000. Bridger maintains a very balanced equity portfolio of approximately 30 long positions and 60 short positions, with each of those holdings limited in size so that the overall gross exposure never exceeds 200%, while the net exposure falls between 20% and 60%. As of September 30, Bridger’s equity portfolio was valued at $1.47 billion.
The position in Arrowhead Research Corp (NASDAQ:ARWR) is a new one for Bridger, which reporting no position in the company as of September 30, according to their most recent 13F filing. The strong push into another pharmaceutical stock is nothing new for the fund, which has placed a high emphasis on the healthcare sector.
As we reported in October, Bridger has greatly increased their position in The Medicines Company (NASDAQ:MDCO), upping their stake from 1.86 million shares as of June 30, to 3.3 million shares by early October, nearly doubling their position. That elevated The Medicines Company to the top position in their equity portolio as of September 30, representing 4.72% of its total value. Bridger also has strong positions in Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) with 1.21 million shares, and Envision Healthcare Holdings Inc (NYSE:EVHC) with 1.74 million shares. Both of those positions were greatly increased during the third quarter of 2014, with Teva’s increasing 62%, and Envision’s up 30%.
In Arrowhead Research Corp (NASDAQ:ARWR), a small biotech company with a market cap of $351.61 million, Bridger will be hoping the development-stage company can overcome the FDA restrictions recently placed on the next phase of testing for its hepatitis B treatment ARC-520. Early January 12, it was announced by Arrowhead that the FDA had placed a partial clinical hold on their proposed Phase 2b study of patients suffering from chronic hepatitis B. Arrowhead’s proposed multiple dose strategy for the testing, of 2mg and 4mg doses per kg, was shot down by the FDA, who requested they begin testing at 1mg doses per kg.
That news sent Arrowhead Research Corp (NASDAQ:ARWR)’s stock down 22% in pre-market trading on January 12, and it ended the day down 23.8% from the previous trading day’s close. It was the latest set-back involving ARC-520 for Arrowhead, following a crash in early October 2014 after results from the mid-point of its Phase 2a testing of the drug were not quite as strong as had been anticipated. That sent its stock crashing 43.6% on October 8, from which it has yet to recover.
With numerous other hepatitis B drugs from other pharmaceutical companies being in various stages of development and testing, the competition is fierce to be the first to market with an effective new treatment. That’s also why the clinical hold on the Phase 2b testing is so potentially damaging, as it was 2mg per kg doses that resulted in the underwhelming results, and Arrowhead Research Corp (NASDAQ:ARWR) had planned to use higher dosages to try and generate better results, as they had in their chimpanzee testing of the drug.
Arrowhead Research Corp (NASDAQ:ARWR) is a partner to two other drugs that are in testing, Adipotide, an anti-obesity drug that targets and destroys the blood supply which supports the growth of fat, and CRLX-101, a nanomedicine that delivers toxic, anti-cancer components into cancerous tissue.
Other hedge funds we track with positions in Arrowhead Research Corp (NASDAQ:ARWR) include Samuel Isaly’s Orbimed Advisors with 5.18 million shares, Daniel Gold’s QVT Financial with 1.87 million shares, and Joseph Edelman’s biotech-focused fund Perceptive Advisors with 1.25 million shares. It was revealed in a filing with the SEC that Arrowhead insider and Chief Scientific Officer L. David Lewis sold his remaining 15,000 shares on January 5.
Disclosure: None
