Kevin Tang‘s Tang Capital Partners is one of the funds that have already revealed their equity portfolios as of the end of last year. The healthcare-focused investment firm reported an equity portfolio valued at $182.38 million, down from $193.00 million in the previous quarter. In this article we are going to take a closer look at Tang’s track record and will discuss in detail its top three largest holdings in terms of value, which are represented by Heron Therapeutics Inc (NASDAQ:HRTX), La Jolla Pharmaceutical Company (NASDAQ:LJPC), and Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP). These three stakes amass around 68% of the fund’s equity portfolio value.
Tang Capital Partners was founded by Kevin Tang in 2002. Mr. Tang has an extensive experience of 19 years in evaluating biopharmaceutical companies from the perspective of portfolio manager and also as a financial analyst at Deutsche Bank Alex. Brown. Moreover, Mr. Tang serves on the board of several companies, including Heron Therapeutics Inc (NASDAQ:HRTX), and La Jolla Pharmaceutical Company (NASDAQ:LJPC). Mr. Tang’s fund has an impressive track record and since its inception managed to provide sold returns to its investors. Since its inception in 2002 aand until June 2010, Tang provided total returns net of all fees and expenses of 520%, while its annualized rate of return amounted to 26%.
Let’s talk about Tang’s largest equity stakes as of the end of 2014. On the first place is Heron Therapeutics Inc (NASDAQ:HRTX), where Mr. Tang serves as a board director. In its latest 13F filing, Tang Capital reported ownership of around 4.92 million shares of the company, valued at $49.49 million. The fund first disclosed shares of Heron Therapeutics Inc (NASDAQ:HRTX) in its 13F for the first quarter of 2014, initially holding around 4.41 million shares. Overall, the stock of the $249 biopharmaceutical company gained around 13% during the last year. Also, at the beginning of 2014, Heron Therapeutics changed its name from A.P. Pharma and conducted a 1-for-20 reverse stock split aimed to increase its share price. Moreover, its last financial report showed a significant year-on-year increase in revenues to $15 million, from $6.0 million a year ago and the company also narrowed its net loss to $0.66 from $0.80.
Another shareholder of Heron Therapeutics Inc (NASDAQ:HRTX) is Kevin Kotler‘s Broadfin Capital, which reported ownership of 2.81 million shares, held as of the end of June. Venrock Healthcare Capital Partners, an investor that focuses entirely on biotech stocks, also disclosed ownership of around 1.1 million shares.
Next on the list comes La Jolla Pharmaceutical Company (NASDAQ:LJPC), a stock in which Tang raised its stake during the fourth quarter of 2014. The fund reported holding some 2.14 million shares of the company, up by 12% on the quarter, and the value of the position amounts to $39.56 million. Tang initiated a stake in the company during the third quarter and during the following months it substantially raised its stake from 11,200 shares it held initially. La Jolla is a $337 million biotech company that is involved in development of therapeutics for improvement of outcomes in patients with life-threatening diseases. Moreover, as it was mentioned earlier, at the end of August, Mr. Tang was appointed to the board of directors of La Jolla Therapeutics.
Broadfin Capital is also a shareholder of La Jolla, holding around 1.11 million shares as of the end of September. Moreover, other healthcare-focused investors also bet on the company, such as Baker Bros and Visium Asset Management.
On the last spot in our top is Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP), of which Tang Capital reported ownership of 300,000 shares, valued at $34.48 million. The stake remained unchanged during the fourth quarter, but it lost a significant portion of its value and slid to the third spot, from the first position it held in the previous quarter.
In comparison with the previous two positions, Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) is a much bigger company, boasting a market cap of $8.3 billion. In addition, Salix is a specialty pharmaceutical company that develops drugs for prevention and treatment of gastrointestinal disorders. Tang has been holding shares of Salix Pharmaceuticals since the first quarter of 2012 and has kept its position unchanged at 300,000 shares. The stock more than doubled in value since then, but in the last quarter it fell by around 26%.
Salix lost ground in November, mainly on the back of its financial results. The company reported a 49% increase in sales on the year to $354.7 million and EPS growth of 72% on the year to $1.53. However, the results came below the estimates of $392.9 million in revenue and EPS of $1.55. Moreover, the company’s guidance for the fourth quarter came below the consensus estimates.
Aside from Tang, another shareholder of Salix is Andreas Halvorsen‘s Viking Global, which owned 2.72 million shares at the end of September, followed by Jacob Gottlieb‘s Visium Asset Management with 2.30 million shares.
In addition, during the fourth quarter, Tang Capital initiated a stake in OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI), of which it owns 365,000 shares. The fund also closed its stakes in four other companies.
Disclosure: none
