In this piece, we will take a look at the top 15 pharmaceutical stocks to buy according to Peter Kolchinsky’s RA Capital.
RA Capital Management, LP is an American hedge fund operating out of Boston, Massachusetts. It was co-founded by Dr. Peter Kolchinsky in 2004. The fund is solely dedicated to investing in biotechnology firms, which are also Dr. Kolchinsky’s specialty. Its strategy is centered around what is dubbed in the financial world as ‘evidence-based investment’, which involves using research to create a low-cost diversified investment approach.
Dr. Kolchinsky is one of three managing partners at RA Capital Management, with the other two being Rajeev Shah and Dr. Andrew Levin. This makes him one of the few hedge fund managers with a doctorate, and one from the prestigious Harvard University to boot. The executive researched the human immunodeficiency virus (HIV) at Harvard and went on to create RA Capital after he received his Ph.D. He is known for his outspoken views on drug affordability and the importance of reducing out-of-pocket costs for medical treatments and speeding up the process for generically making and selling drugs.
Some of Dr. Kolchinsky’s hedge fund’s largest holdings are in Ascendis Pharma A/S (NASDAQ:ASND), Novavax, Inc. (NASDAQ:NVAX), and Eliem Therapeutics, Inc. (NASDAQ:ELYM). Combined, these three top holdings represent roughly 25% of RA Capital Management’s $7.2 billion portfolio.
Peter Kolchinsky of RA Capital Management
Our Methodology
In order to determine which stocks are on Dr. Kolchinsky’s radar, we sifted through RA Capital Management’s 13-F filings with the Securities and Exchange Commission for the third quarter.
Pharmaceutical Stocks to Buy According to Peter Kolchinsky’s RA Capital
15. Acumen Pharmaceuticals, Inc. (NASDAQ:ABOS)
RA Capital Management’s Stake Values: $145 million
Percentage of RA Capital Management’s 13F Portfolio: 2%
Number of Hedge Fund Holders: 11
Acumen Pharmaceuticals, Inc. (NASDAQ:ABOS) is a biopharmaceutical firm that focuses on treating neurodegenerative diseases such as Alzheimer’s disease. It is headquartered in Charlottesville, Virginia, and was incorporated in 1996.
Dr. Kolchinksy’s hedge fund held 9.7 million Acumen Pharmaceuticals, Inc. (NASDAQ:ABOS) shares by the end of Q3 of 2021. These were worth $145 million and represented 2% of its portfolio. During the same time period, 11 of the 867 hedge funds tracked by Insider Monkey had holdings in the company.
Acumen Pharmaceuticals, Inc. (NASDAQ:ABOS) reported $3.9 million in net loss and -$0.10 in its third quarter, beating analyst estimates for EPS. Since it is a recent addition to the public markets, several investment banks have just commenced coverage. Out of these, UBS set the company’s price target to $27 in an August 2021 investor note, sharing optimism about Acumen Pharmaceuticals, Inc. (NASDAQ:ABOS)’s Alzheimer’s treatment.
Like Ascendis Pharma A/S (NASDAQ:ASND), Novavax, Inc. (NASDAQ:NVAX), and Eliem Therapeutics, Inc. (NASDAQ:ELYM), Acumen Pharmaceuticals, Inc. (NASDAQ:ABOS) is one of Dr. Kolchinsky’s favorite stocks.
14. Nkarta, Inc. (NASDAQ:NKTX)
RA Capital Management’s Stake Value: $155 million
Percentage of RA Capital Management’s 13F Portfolio: 2.15%
Number of Hedge Fund Holders: 10
Nkarta, Inc. (NASDAQ:NKTX) is a developer and seller of cancer treatments. The company’s products involve specifically targeting certain elements present on a tumor cell. It is headquartered in San Francisco, California and was founded in 2015.
Nkarta, Inc. (NASDAQ:NKTX) earned -$0.68 in GAAP EPS during its third quarter as it beat analyst estimates. Out of the 867 hedge funds surveyed by Insider Monkey by Q3 end, 10 had held a stake in the company.
Dr. Kolchinsky’s RA Capital Management held 5.6 million Nkarta, Inc. (NASDAQ:NKTX) shares by the end of Q3. These were worth $155 million and represented 2.15% of the firm’s portfolio. Oppenheimer set a $75 price target for the company along with an Outperform rating in a July 2021 analyst note, which highlighted that the company’s cancer treatments have the potential to be both easily accessible and deliver good results.
13. Connect Biopharma Holdings Limited (NASDAQ:CNTB)
RA Capital Management’s Stake Value: $169 million
Percentage of RA Capital Management’s 13F Portfolio: 2.34%
Number of Hedge Fund Holders: 6
Connect Biopharma Holdings Limited (NASDAQ:CNTB) is a Chinese healthcare company that is developing treatments for inflammation and autoimmune diseases such as asthma. It is headquartered in Taicang, China, and was founded in 2012.
Dr. Kolchinsky’s hedge fund held 6.9 million shares of Connect Biopharma Holdings Limited (NASDAQ:CNTB) by the end of Q3 2021, in a stake worth $1.69 million. 6 of the 867 hedge funds tracked by Insider Monkey during Q3 2021 had holdings in the company.
Connect Biopharma Holdings Limited (NASDAQ:CNTB) had a net loss of $145 million by the end of the first half of this year. Following the results, Piper Sandler increased the company’s share price target to $31, highlighting a positive near-term future for the company.
12. DICE Therapeutics, Inc. (NASDAQ:DICE)
RA Capital Management’s Stake Value: $170 million
Percentage of RA Capital Management’s 13F Portfolio: 2.36%
Number of Hedge Fund Holders: 18
DICE Therapeutics, Inc. (NASDAQ:DICE) is an American company that develops medicines to treat immunology and other diseases involving organs such as the lungs and bowels. It was founded in 2013 and is headquartered in San Francisco, California.
During its third quarter, DICE Therapeutics, Inc. (NASDAQ:DICE) reported a GAAP EPS of -$2.30. In an October 2021 analyst note, Bank of America set a $41 price target for the company, outlining that its products can allow it to compete in a $30 billion global market.
Dr. Kolchinsky’s RA Capital Management held 5.2 million DICE Therapeutics, Inc. (NASDAQ:DICE) shares by the end of the year’s third quarter. These were worth $170 million and represented 2.36% of the firm’s portfolio. Out of the 867 hedge funds tracked by Insider Monkey by Q3 2021 end, 18 had stakes in the company.
11. Icosavax, Inc. (NASDAQ:ICVX)
RA Capital Management’s Stake Value: $171 million
Percentage of RA Capital Management’s 13F Portfolio: 2.36%
Number of Hedge Fund Holders: 10
Icosavax, Inc. (NASDAQ:ICVX) is an American firm that specializes in developing treatments for serious respiratory illnesses. It is headquartered in Seattle, Washington, United States, and was incorporated in 2017.
Dr. Kolchinsky’s RA Capital Management held 5.7 million shares of Icosavax, Inc. (NASDAQ:ICVX) by the end of the third quarter. These were worth $171 million and represented 2.36% of the firm’s investment portfolio. By Q3 2021 end, 10 of the 867 hedge funds tracked by Insider Monkey had holdings in the company.
The company reported $1.8 million in revenue and GAAP EPS of -$1.30 in its third quarter, missing analyst estimates on both counts. Evercore ISI set an Outperform rating and a price target of $50 for Icosavax, Inc. (NASDAQ:ICVX) in an August 2021 analyst note highlighting that the company’s vaccines have the ability to cost-effectively scale production.
10. Aerovate Therapeutics, Inc. (NASDAQ:AVTE)
RA Capital Management’s Stake Value: $173 million
Percentage of RA Capital Management’s 13F Portfolio: 2.4%
Number of Hedge Fund Holders: 11
Aerovate Therapeutics, Inc. (NASDAQ:AVTE) is an American company that works on developing medicines to enhance the lives of patients with heart diseases such as pulmonary arterial hypertension. It was incorporated in 2018 and is located in Boston, Massachusetts.
Aerovate Therapeutics, Inc. (NASDAQ:AVTE) reported -$0.26 in GAAP EPS by the end of its third-quarter results, which met analyst estimates. Evercore ISI set a $30 price target for the company in a July 2021 analyst note, highlighting that its drugs could lead to better delivery and therapy options.
Dr. Kolchinsky’s hedge fund owned 8.2 million Aerovate Therapeutics, Inc. (NASDAQ:AVTE) shares by the end of Q3, which were worth $173 million and represented 2.4% of the firm’s portfolio.
9. Vor Biopharma Inc. (NASDAQ:VOR)
RA Capital Management’s Stake Value: $174 million
Percentage of RA Capital Management’s 13F Portfolio: 2.41%
Number of Hedge Fund Holders: 6
Vor Biopharma Inc. (NASDAQ:VOR) is the developer of stem cell therapies for cancer patients. The company was founded in 2015 and is headquartered in Cambridge, Massachusetts.
Dr. Kolchinsky’s RA Capital Management held 11 million Vor Biopharma Inc. (NASDAQ:VOR) shares by the end of the third quarter. These were worth $174 million and represented 2.4% of the company’s portfolio. During the third quarter of 2021, 6 of the 867 hedge funds polled by Insider Monkey held Vor Biopharma Inc. (NASDAQ:VOR) shares.
Vor Biopharma Inc. (NASDAQ:VOR) reported a GAAP EPS of -$0.50 during its third quarter, beating analyst estimates. JMP Securities set a $40 price target for the company in October 2021 and shared optimism for upcoming proof of concept demonstrations of its products.
8. Janux Therapeutics, Inc. (NASDAQ:JANX)
RA Capital Management’s Stake Value: $187 million
Percentage of RA Capital Management’s 13F Portfolio: 2.59%
Number of Hedge Fund Holders: 10
Janux Therapeutics, Inc. (NASDAQ:JANX) is a cancer treatment provider based in the United States. Its drugs also work with T-cells in the human body.
Janux Therapeutics, Inc. (NASDAQ:JANX) earned $1.16 million in revenue and -$0.26 in GAAP EPS during its third quarter, beating analyst estimates for revenue.
Dr. Kolchinsky’s firm held 8.6 million Janux Therapeutics, Inc. (NASDAQ:JANX) shares by the end of the third quarter, worth $187 million and representing 2.59% of its portfolio.
7. Atea Pharmaceuticals, Inc. (NASDAQ:AVIR)
RA Capital Management’s Stake Value: $190 million
Percentage of RA Capital Management’s 13F Portfolio: 2.63%
Number of Hedge Fund Holders: 25
Atea Pharmaceuticals Inc. (NASDAQ:AVIR) is an American company that develops and sells medicines and drugs for patients with viral infections. These include COVID-19, hepatitis and respiratory viruses.
Atea Pharmaceuticals Inc. (NASDAQ:AVIR) reported $32.8 million in revenue and -$0.34 in GAAP EPS for its third quarter, missing analyst estimates for both. In an October 2021 analyst note, SVB Leernik lowered the company’s price target to $20 in a staggering 66% cut, outlining that its COVID-19 vaccines struggled to meet expectations in recent trials.
Dr. Kolchinsky’s RA Capital held 5.4 million Atea Pharmaceuticals Inc. (NASDAQ:AVIR) shares that were worth $190 million and represented 2.63% of its portfolio by the end of the third quarter.
6. Cytek Biosciences, Inc. (NASDAQ:CTKB)
RA Capital Management’s Stake Value: $205 million
Percentage of RA Capital Management’s 13F Portfolio: 2.85%
Number of Hedge Fund Holders: 13
Cytek Biosciences, Inc. (NASDAQ:CTKB) provides instruments for researching cells for a wide variety of fields such as research and drug development. The company is headquartered in Fremont, California, and was incorporated in 2014.
Dr. Kolchinsky’s hedge fund held 9.6 million Cytek Biosciences, Inc. (NASDAQ:CTKB) shares worth $205 million and constituting 2.85% of its portfolio by Q3 end. During the third quarter of 2021, 13 of the 867 hedge funds polled by Insider Monkey held Cytek Biosciences, Inc. (NASDAQ:CTKB) shares.
Cytek Biosciences, Inc. (NASDAQ:CTKB) reported revenue of $34 million and GAAP EPS of $0 during its third quarter, beating analyst estimates for revenue. In an August 2021 analyst note, Goldman Sachs set the company’s price target to $28 and outlined that its instruments have a cost advantage and are competitively differentiated from their peers.
Cytek Biosciences, Inc. (NASDAQ:CTKB) is one of Dr. Kolchinsky’s hot stocks, just like Eliem Therapeutics, Inc. (NASDAQ:ELYM), Ascendis Pharma A/S (NASDAQ:ASND), and Novavax, Inc. (NASDAQ:NVAX).
5. Forma Therapeutics Holdings, Inc. (NASDAQ:FMTX)
RA Capital Management’s Stake Value: $208.9 million
Percentage of RA Capital Management’s 13F Portfolio: 2.89%
Number of Hedge Fund Holders: 16
Forma Therapeutics Holdings, Inc. (NASDAQ:FMTX) is an American company that focuses on developing treatments for liver and cancer diseases. It was founded in 2007 and is headquartered in Watertown, Massachusetts.
Forma Therapeutics Holdings, Inc. (NASDAQ:FMTX) earned -$0.91 in its GAAP EPS for the third quarter, beating analyst estimates. The company’s share price target was lowered to $53 by H.C. Wainwright in an August 2021 analyst note.
Dr. Kolchinsky’s RA Capital held 9 million Forma Therapeutics Holdings, Inc. (NASDAQ:FMTX) shares worth $208.9 million which represented 2.89% of its portfolio during Q3. During Q3 2021, 16 of the 873 hedge funds polled by Insider Monkey had holdings in the company.
4. Adagio Therapeutics, Inc. (NASDAQ:ADGI)
RA Capital Management’s Stake Value: $225 million
Percentage of RA Capital Management’s 13F Portfolio: 3.12%
Number of Hedge Fund Holders: 12
Adagio Therapeutics, Inc. (NASDAQ:ADGI) is a young American company founded in 2020 that aims to develop antibody-based treatments for infectious diseases. The company is currently developing a treatment for Covid-19.
Dr. Kolchinsky’s RA Capital held 5.3 million Adagio Therapeutics, Inc. (NASDAQ:ADGI) shares by the end of this year’s third quarter. These were worth $225 million and represented 3.12% of its portfolio.
Adagio Therapeutics, Inc. (NASDAQ:ADGI) earned -$0.98 in GAAP EPS during its third quarter, missing analyst estimates.
3. Eliem Therapeutics, Inc. (NASDAQ:ELYM)
RA Capital Management’s Stake Value: $236 million
Percentage of RA Capital Management’s 13F Portfolio: 3.27%
Number of Hedge Fund Holders: 8
Eliem Therapeutics, Inc. (NASDAQ:ELYM) is an American company that develops treatments for neurological diseases such as major depressive disorder, seizures, anxiety, and epilepsy. It was founded in 2018 and is headquartered in Redmond, Washington.
Eliem Therapeutics, Inc. (NASDAQ:ELYM) earned -$0.70 in GAAP EPS during its third quarter. The company’s price target was set to $33 by SVB Leernik in a September 2021 analyst note which saw the firm praise Eliem Therapeutics, Inc. (NASDAQ:ELYM)’s chances of clearing regulatory hurdles.
Dr. Kolchinsky’s investment firm held 13 million Eliem Therapeutics, Inc. (NASDAQ:ELYM) shares worth $236 million and 3.27% of its portfolio in Q3.
2. Novavax, Inc. (NASDAQ:NVAX)
RA Capital Management’s Stake Value: $434 million
Percentage of RA Capital Management’s 13F Portfolio: 6.02%
Number of Hedge Fund Holders: 35
Novavax, Inc. (NASDAQ:NVAX) is a vaccine developer that is targeting diseases such as Covid-19, influenza, Ebola, and other respiratory viruses. It was founded in 1987 and is headquartered in Gaithersburg, Maryland.
Dr. Kolchinsky’s RA Capital held 2 million Novavax, Inc. (NASDAQ:NVAX) shares in the third quarter of this year. These were worth $434 million and represented 6.02% of the firm’s investment portfolio.
Novavax, Inc. (NASDAQ:NVAX) earned $178 million in revenue and -$4.31 in GAAP EPS during its third quarter. At a September conference, the company outlined that it plans to double its COVID-19 vaccine manufacturing capacity to ship 2 billion doses next year. B. Riley kept the company’s price target at $305 in a November 2021 analyst note, highlighting that more regulatory approvals were headed their way this year.
1. Ascendis Pharma A/S (NASDAQ:ASND)
RA Capital Management’s Stake Value: $1.17 billion
Percentage of RA Capital Management’s 13F Portfolio: 16.31%
Number of Hedge Fund Holders: 23
Ascendis Pharma A/S (NASDAQ:ASND) is a Danish company developing therapeutics for growth hormone deficiency, hypoparathyroidism, and oncology. It was founded in 2006 and is headquartered in Hellerup, Denmark.
Ascendis Pharma A/S (NASDAQ:ASND) earned €1 million in revenue and -€1.47 in GAAP EPS during its third quarter.
Dr. Kolchinsky’s firm held 7.3 million Ascendis Pharma A/S (NASDAQ:ASND) shares in Q3, which were worth $1.17 billion and made up for 16.31% of its portfolio.
In its first quarter 2021 investor letter, Artisan Partners had the following to say about Ascendis Pharma A/S (NASDAQ:ASND):
“Among our bottom Q1 contributors was Ascendis Pharma. Ascendis Pharma underperformed in sympathy with the broader biotech sector as drug price legislation discussions in Washington have resumed. We believe the company’s fundamental outlook remains very positive as its TransCon technology platform—which enables protein-based medicines to be delivered in a sustainedrelease manner—yields promising, relatively low-risk new drug candidates. The company’s first product, TransCon hGH, the first weekly pediatric growth hormone injection, is expected to be approved by the FDA in the coming quarters. Two other promising rare endocrinology disease medicines are in clinical trials, with TransCon PTH for hypoparathyroidism already having shown compelling Phase II data in 2020. We believe these endocrinology products alone make Ascendis an attractive long-term investment opportunity, even before considering the company’s early stage cancer pipeline and its ~40% equity ownership in VISEN Pharmaceuticals, a Chinese drug developer. Furthermore, we believe drug price legislation will be manageable for Ascendis, which is far more dependent on creating new medicines than on raising the price of existing products.”
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Disclosure. None. 15 Pharmaceutical Stocks to Buy According to Peter Kolchinsky’s RA Capital is originally published on Insider Monkey.
