Recro Pharma, Inc. (REPH): Here are Midwood Capital Management’s Thoughts On The Pharmaceutical Company

Midwood Capital Management explained recent Recro Pharma (NASDAQ:REPH) stock price fluctuations in its Q1 2019 Investor Letter. If you are interested you can find a copy of the letter here.  The fund also disclosed the quarterly return of 10.6%, and an annualized return since inception of 9.5%.

“Recro Pharma, Inc. (REPH; $8.36; $184million market cap): We highlighted REPH in our Fourth Quarter 2018 Letter to Investors–when the stock was at $7.91 –believing that one key catalyst would be FDA approval of REPH’s new drug application for Intravenous Meloxicam(IVM), a non-opioid drug for moderate to severe acute pain. REPH had a PDUFA date for completion of the FDA’s review by March 26, 2019. Our analysis indicated that the probability of IVM’s approval was high. Unfortunately, however, REPH received a second Complete Response Letter on March 22 indicating that the FDA would not approve its NDA in its present form. The stock, which had crept up to $9.72 prior to the announcement, fell as much as 43%. However, management has already taken actions that reinforce our belief –and the market’s –that the company will maximize value for shareholders by curtailing its acute care drug development program and monetizing its valuable CDMO business. These positive developments have caused the stock to recover from the mid-$5s. REPH dragged on the Fund’s performance by 74 bps in the first quarter”

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Recro Pharma, Inc. is a specialty pharmaceutical company with a market cap of $193.74 million. Year-to-date, the company’s stock gained 18.89%, and on May 7th it had a closing price of $8.81.

Heading into the first quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in REPH over the last 14 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Among these funds, Broadfin Capital held the most valuable stake in Recro Pharma Inc (NASDAQ:REPH), which was worth $14.5 million at the end of the third quarter. On the second spot was Newtyn Management which amassed $11.4 million worth of shares. Moreover, Alyeska Investment Group, Engine Capital, and Renaissance Technologies were also bullish on Recro Pharma Inc (NASDAQ:REPH), allocating a large percentage of their portfolios to this stock.

Dislcosure: None.
This article is originally published at Insider Monkey.