Since the beginning of November, Peter Kolchinsky‘s RA Capital Management has informed the U.S. Securities and Exchange Commission that it’s increased its positions in two of its holdings: Dynavax Technologies Corporation (NASDAQ:DVAX) and Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN).
The fund now owns almost 26 million shares from Dynavax Technologies, up from 6 million previously declared. This accounts for a 9.9% stake in the company. RA Capital has also acquired about 3.6 million Achillion Pharmaceuticals shares over the last month. Following the reported transactions, RA now owns almost 20.5 million shares of the pharmaceutical company, valued at approximately $ 51.6 million. Owning about 21.2% of the firm, it stands as the largest bull amongst the hedge funds that we track, followed by Daniel Gold’s Qvt Financial.
RA Capital has also become Dynavax’s largest hedge fund bull, having surpassed Arthur B Cohen and Joseph Healey’s Healthcor Management Lp, which holds about 17.6 million shares, and Samuel Isaly’s Orbimed Advisors, owner of almost 9 million shares.
Both of the aforementioned investments fit perfectly into RA Capital’s equity portfolio, composed mostly of life-sciences and drug development companies (more than 90% of the total holdings). The fund looks for companies with promising technologies and/or products. This strategy has helped the fund triple its initial investment -$4 million- in its initial two years; its portfolio is now worth more than $750 million.
Dynavax Technologies, for example, provides appealing prospects going forward (especially in terms of product development). The company focuses on the treatment and prevention of allergies, infectious diseases, and chronic inflammatory diseases, usually seeking to alter immune system responses in very specific ways. Recently, it made the design of its next clinical study for its HEPLISAV drug -an investigational adult hepatitis B vaccine- public:
“It will be an 8,000 subject, Phase 3, observer-blinded, randomized, active-controlled, multicenter trial of the safety and immunogenicity of HEPLISAV compared with Engerix-B in adults 18 to 70 years of age.”
The motivations for RA Capital to invest in Achillion, a pharmaceutical firm focused on innovative treatments for infectious diseases, are not as clear.
The FDA recently refused to remove a “hold” on clinical trials of Sovaprevir, an NS3 protease inhibitor in the treatment of hepatitis C. Consequently, the stock plummeted from more than $7 a piece in September to around $2.5 each in November, opening an attractive entry point for RA Capital, which seized the opportunity to make a value play.