Versartis Inc (NASDAQ:VSAR) is one of the top gainers today, as its shares have soared by nearly 30% in afternoon trading Monday. The huge push for the shares comes after it was announced this morning that the FDA had removed a partial clinical hold on the trial testing of Versartis’ VRS-317, which has set the company back on track to be the first to market with an rhGH (recombinant human growth hormone) treatment for those with growth hormone deficiency (GHD).
“Our team has continued to work diligently with the FDA and we are excited to be moving forward with the Phase 3 clinical trial of VRS-317 in pediatric GHD patients. There is a significant need for these patients to have treatment options that are less burdensome than the daily injections that are the current standard of care. We continue to expect VRS-317 to be the first and longest-acting rhGH product candidate in development to reach the market and, with the removal of the partial clinical hold, we remain on track to achieve this goal,” President and Chief Executive Officer Jay Shepard said in a press release announcing the news.
Despite the big gains today, Versartis Inc (NASDAQ:VSAR), which went public back in March of 2014, is still down by more than 15% this year and more than 39% lifetime. Shares of Versartis were particularly hard hit in early May when the company announced the FDA had placed the VRS-317 trial on partial clinical hold as it waited for additional bioanalytical data.
At the time, Versartis expressed that it would attempt to minimize any delays in its trial programs by continuing to recruit participants during that time, with the firm anticipating its enrolment in the phase 3 VELOCITY trial targeting GHD in children would be completed by the middle of 2016, and that 12-month, top line trial data from that study would be available by the middle of 2017. The company reasserted those timelines today, noting that potential FDA approval for its lead drug candidate could be sought as early as late-2018. A separate clinical trial for GHD in adults has completed phase 1 testing.
The latest surge doesn’t seem to have caught hedge funds off guard, who were showing some bullish signs on the company in the first quarter of the year. The number of hedge funds with positions in the company increased to 15 from 10, while the total value of their holdings increased to $187.42 million from $184.55 million, despite shares of Versartis Inc (NASDAQ:VSAR) declining by over 18% during the first quarter. Shares are now up by about 3% since the end of the first quarter.
The most bullish investor on Versartis continued to be Julian Baker and Felix Baker’s Baker Bros. Advisors, not a bad backer to have in your corner, considering the fund just ranked as the best performing fund in our database during the second quarter (using our unique metric, which differs from actual returns), out of the more than 700 funds that we track at Insider Monkey. Oh, and its specialty just happens to be healthcare stocks. Baker Bros. held 2.98 million shares of the company, increasing its position by 31% during the first quarter.
Follow Julian Baker And Felix Baker's Baker Bros. Advisors
Dennis Purcell’s Aisling Capital also remained a firm supporter of Versartis, holding 2.28 million shares on March 31, having increased its own position by 15% during the first quarter. The firm’s Anthony Sun sits on the Versartis Board of Directors as an MD Partner. Other investors include healthcare-focused funds Perceptive Advisors and Healthcor Management LP, while Peter Kolchinsky’s RA Capital Management, which reported a large position in the company shortly after its IPO, still maintains a holding of over 231,000 shares in the company.
Professional investors like Purcell spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 135% and beaten the market by more than 80 percentage points since the end of August 2012, and by 4.6 percentage points in the first quarter of this year (see the details).
Disclosure: None
