Jeffrey Jay and David Kroin’s healthcare-focused fund, Great Point Partners, decreased its passive stake in the Israel based biopharmaceutical company, Alcobra Ltd (NASDAQ:ADHD), according to a recent filing with the SEC. The new stake comprises of 1.12 million ordinary shares, which represents 5.56% of the total outstanding stock and is owned through five of Great Point’s funds. Earlier in January, the fund had initiated a stake in the company amounting to some 1.13 million shares.
Alcobra Ltd (NASDAQ:ADHD) is aiming to treat Attention Deficit Hyperactivity Disorder, or ADHD with its oral drug candidate MDX, which, unlike other prevalent treatments, is not a stimulant that works by increasing brain chemicals dopamine and norepinephrine. The company is planning to initiate a second phase 3 clinical trial for MDX, following discussions with the FDA. Among other investors of Alcobra Ltd (NASDAQ:ADHD) are Kevin Kotler‘s Broadfin Capital and James Flynn’s Deerfield Management, both of which initiated passive stakes in January.
Great Point Partners’ team of about 25 professionals provides its expertise and industry contacts to help the healthcare companies with clearly defined business models to grow. With regards to this, the fund doesn’t actively involve itself with the everyday operations of their target companies, instead it takes the role of being active on its board and advises the company’s management. Founded in 2003, Great Point has been investing in both public and private companies. While the fund has nearly $800 million under its management, the market value of its equity portfolio stood at $207.76 million at the end of 2014. Besides Alcobra Ltd (NASDAQ:ADHD) some of the other Great Point’s most valuable healthcare bets include Connecture Inc (NASDAQ:CNXR), Hyperion Therapeutics Inc (NASDAQ:HPTX), Alimera Sciences Inc (NASDAQ:ALIM) and Ocera Therapeutics Inc (NASDAQ:OCRX).
Insider Monkey tracks 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 6 basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of 7 basis points per month between 1999 and 2012. These stocks were able to generate alpha because of their lower risk profile. 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. These stocks were slightly riskier, so their monthly alpha was 80 basis points (read the details here). We believe investors will be better off by focusing on small-cap stocks rather than large-cap stocks.
Great Point held some 5.50 million shares valued at $49.58 million in its largest holding represented by Connecture Inc (NASDAQ:CNXR), at the end of the fourth quarter. The newly initiated stake represents 23.86% of the fund’s equity portfolio. Since its IPO in mid December last year, the stock of the provider of an online platform for the distribution of health insurance has been up by about 41%. The company delivered record revenues of $84.6 million in 2014, an increase of 45% from the previous year. Adjusted EBITDA stood at $1.3 million as compared to a loss of $17.3 million in 2013. Besides adding eight new customers during the last calendar year, Connecture Inc (NASDAQ:CNXR) introduced its cloud-based broker private exchange solution, On Ramp, which will significantly help its customers streamline their operations. Jeremy Green‘s Redmile Group and Deerfield Management are two other prominent stockholders of Connecture Inc (NASDAQ:CNXR).
Jay and Kroin’s second largest holding in their fund’s portfolio is represented by Hyperion Therapeutics Inc (NASDAQ:HPTX) and it received a 25% bump during the fourth quarter to about 998,100 shares valued at $23.95 million. The $959.37 million bio-pharmaceutical company has recently been acquired by Horizon Pharma PLC (NASDAQ:HZNP) for approximately $1.1 billion. Hyperion Therapeutics Inc (NASDAQ:HPTX)’s portfolio of orphan drugs, RAVICTI and BUPHENYL is expected to add $100 million to Horizon’s adjusted EBITDA in 2016, according to Horizon’s CEO Timothy Walbert. Among the funds that we track, 18 investors had an aggregate investment of $94.09 million in Hyperion Therapeutics Inc (NASDAQ:HPTX) at the end of the fourth quarter as compared to 14 funds with $66.87 million in the previous quarter. Michael Blutt‘s Consonance Capital Management is the largest shareholder among them.
Alimera Sciences Inc (NASDAQ:ALIM) was another one of Great Point’s top picks with 2.62 million shares valued at $14.51 million. The stock of the $219.99 million company dedicated to developing treatments for diseases of the retina is down by about 9.57% year to date. This has particularly been bad news for Deerfield Management which increased its stake in Alimera Sciences Inc (NASDAQ:ALIM) by 119% during the fourth quarter to 4.05 million shares valued at $22.41 million.
Lastly, there is Great Point’s stake in Ocera Therapeutics Inc (NASDAQ:OCRX), amounting to 1.96 million shares valued at $12.51 million. The company’s main focus is the development of treatments for acute and chronic liver diseases. Interim analysis of Ocera Therapeutics Inc (NASDAQ:OCRX)’s lead program OCR-002 in phase 2b STOP-HE study was completed earlier this month. The stock of Ocera Therapeutics Inc (NASDAQ:OCRX) is down by 38.3% year to date, which has been a disappointment for Anders Hove and Bong Koh, as their fund VHCP Management held some 703,700 shares valued at $4.48 million at the end of 2014.
Disclosure: None
