Baxalta Inc (NYSE:BXLT)’s stock jumped by more than 15% after it reported positive phase three results for its underdevelopment drug BAX 111 and Shire PLC (ADR) (NASDAQ:SHPG)’s unsolicited bid for the biopharmaceutical firm. The journal of American Society of Hematology has published a report indicating a positive effect of BAX 111 in the treatment of Von Willebrand Disease. The drug was able to manage all the bleeding episodes effectively and it is under the review of the U.S. Food and Drug Administration for approval. If approved by the FDA, BAX 111 will “become the first recombinant replacement treatment for managing bleeding episodes for von Willebrand patients.”
RAJ CREATIONZS / shutterstock.com
Von Willebrand is a medical condition under which the patient suffers from excessive bleeding and the disease is usually inherited from parents but may even develop by itself. The patients suffering from this disease are exposed to excessive blood loss even after minor injuries because of a delayed blood-clotting process. John Orloff, M.D., chief scientific officer and head of Research & Development of Baxalta, said, “BAX 111 has the potential to transform the standard of care, especially for patients with severe von Willebrand disease, by offering an effective individualized treatment option.”
Baxalta went public at the beginning of June, after it had been spun-off from Baxter International Inc (NYSE:BAX). According to a statement from Shire PLC (ADR) (NASDAQ:SHPG), it proposed a $30 billion all-stock buyout offer for Baxalta Inc (NYSE:BXLT) last month, which represents around $45.23 per share. However, Baxter refused to engage in any discussion with Shire. The statement added, that a combination between Baxalta and Shire could generate sales of $20 billion by 2020.
Under the terms of the spin-off, the existing shareholders of Baxter received 80.5% of the existing common shares of the new biopharmaceutical company, whereas Baxter kept the remaining 19.5%. For every single share of Baxter International, its shareholders received one share of Baxalta Inc (NYSE:BXLT). In this way, as we are in the current round of 13F filings, among the shareholders of Baxalta, we could see Richard S. Pzena’s Pzena Investment Management, Jim Simons’ Renaissance Technologies, and Ric Dillon’s Diamond Hill Capital, who were among the top shareholders of Baxter at the end of March.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 123% and beating the market by more than 65 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
Disclosure:None