Artisan Partners, an investment management company, released its “Artisan Mid Cap Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. The final quarter of 2023 saw a continuous fluctuation between recessionary fears and soft-landing optimism. In the fourth quarter, the fund’s Investor Class fund ARTMX returned 8.86%, Advisor Class fund APDMX posted a return of 8.93%, and Institutional Class fund APHMX returned 8.96%, compared to a 14.55% return for the Russell Midcap Growth Index. The portfolio generated a positive absolute return in Q4 but underperformed the Russell Midcap Growth Index due to poor security selection, particularly in health care and information technology. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Artisan Mid Cap Fund featured stocks like Argenx SE (NASDAQ:ARGX) in the fourth quarter 2023 investor letter. Headquartered in Amsterdam, the Netherlands, Argenx SE (NASDAQ:ARGX) is a biotechnology company. On March 6, 2024, Argenx SE (NASDAQ:ARGX) stock closed at $390.66 per share. One-month return of Argenx SE (NASDAQ:ARGX) was -1.07%, and its shares gained 14.42% of their value over the last 52 weeks. Argenx SE (NASDAQ:ARGX) has a market capitalization of $23.167 billion.
Artisan Mid Cap Fund stated the following regarding Argenx SE (NASDAQ:ARGX) in its fourth quarter 2023 investor letter:
“Health care was our weakest performer for the year, primarily due to our biotech holdings. Our two largest holdings in the industry, Argenx SE (NASDAQ:ARGX) and Ascendis, both enjoyed solid commercial sales progress in 2023 but also faced R&D setbacks. Argenx’s Vyvgart launch in myasthenia gravis continued to shine, reaching sales north of $1 billion ahead of schedule. And the company reported compelling phase 3 data in chronic inflammatory demyelinating polyradiculoneuropathy (CIDP), which we expect to be Vyvgart’s second blockbuster indication. But in Q4, trials in two additional indications surprisingly failed, marring an otherwise stellar year. Ascendis’ Skytrofa for pediatric growth hormone deficiency also tracked well in its second year on the market. But FDA approval for its second medicine, TransCon PTH for hypoparathyroidism, was delayed due to manufacturing-related questions, pushing out sales of what we expect to become its largest-selling drug.
While disappointing, we continue to have high confidence in both investments. Argenx’s Vyvgart has multibillion-dollar sales potential just in its two de-risked indications and is being studied in 11 additional diseases (with more on the drawing board). The company also has a second promising autoimmune disease drug in mid-stage clinical trials. Ascendis, meanwhile, has resubmitted its FDA application for TransCon PTH (expected approval in mid-2024), and the drug has recently been approved by the European Union. Importantly, both companies market their products to rare disease populations and specialist physicians, resulting in modest sales and marketing expense requirements that we expect to result in very attractive profit margins as sales grow.
In fact, somewhat counterintuitively, we think 2023 supports our longstanding approach to biotech investing. We focus on companies that possess de-risked assets (Vyvgart for Argenx, Skytrofa for Ascendis) with strong long-term profit potential. After establishing that franchise value base, we look for evidence of diversified R&D pipeline opportunities that leverage proven intellectual property (for Argenx, Vyvgart’s foundational mechanistic impact on circulating autoantibody levels; for Ascendis, the TransCon extended-release delivery platform). With exciting biotech innovation comes risk, as 2023 illustrated. But our selective approach leads us toward companies where setbacks do not represent “existential” risk and where we have been able to sustain long-term investment campaigns through the volatility. We are optimistic that 2024 will bring better news for both holdings and note that a recent wave of biotech M&A by big pharma is evidence of strong private market demand for innovative growth companies that can help sustain the finances of the industry’s largest players.”
A lab setting filled with scientific equipment and researchers in lab coats working together to develop new therapies for autoimmune diseases.
Argenx SE (NASDAQ:ARGX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Argenx SE (NASDAQ:ARGX) was held by 53 hedge fund portfolios, down from 48 in the previous quarter, according to our database.
We discussed Argenx SE (NASDAQ:ARGX) in another article and shared the list of most advanced countries in medicine. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
