Jeffrey Jay and David Kroin’s Great Point Partners is one of the newer funds we track at Insider Monkey, and we’ll cover the healthcare-focused fund’s top picks for the first time. The fund had an equity portfolio valued at $207.76 million at the end of the year, which consisted of 27 long positions, and one put position, and $936.83 million in assets under management.
Great Point Partners was founded in 2003, and has a long history of investing in both public and private healthcare companies, providing them with the financing and insight needed to maximize their operations as well as shareholder value. The fund has invested more than $1 billion in more than 100 healthcare businesses since its inception. Great Point is also unique in that a bigger portion of the fund’s investment, 8%, comes from the fund’s own partners, compared to just 1% of a typical private equity firm’s investment. Thus the partners are just as invested in the company as its own investors are.
Great Point’s top pick is Connecture Inc (NASDAQ:CNXR), a new position for the fund in the fourth quarter, as the web-based platform of health insurance went public in December. Great Point was an investor in Connecture while the company was still private, recapitalizing them in August 2012 as Connecture was on the verge of drastically ramping up its services thanks to the implementation of the Affordable Care Act. Connecture CEO Doug Schneider described the partnership as invaluable.
“The Great Point team has the health care information technology and payer sector domain expertise to complement and support our strategic vision as a company. They were able to bring value immediately, most notably with the sourcing and execution of DRX on very favorable debt financing terms,” Schneider said.
Connecture Inc (NASDAQ:CNXR) priced its IPO of 6.64 million shares at $8.00 each, and shares are up just over 10% since, at $8.81 in afternoon trading Monday. Connecture releases its fourth quarter and full-year earnings results on March 10. Connecture was a popular stock among hedge funds we track, with 13 opening new positions between the IPO and the end of the year, though the majority of them were small. The largest such position after Great Point’s was that of Jeremy Green’s Redmile Group, which held 943,000 shares.
Alimera Sciences Inc (NASDAQ:ALIM) lands in third, with Great Point reporting year-end ownership of 2.62 million shares, unchanged from the previous quarter. Alimera Sciences is a stock other funds have also started to take notice of, with James E. Flynn’s Deerfield Management upping its stake in the company to 2.4 million shares early in the fouth quarter, and to 4.05 million shares by the end of it, an increase of 119% over the quarter. Deerfield and Alimera also entered into a Securities Purchase Agreement during the quarter. Alimera Sciences, which is focused on the research and development of prescription ophthalmic pharmaceuticals is down 6.14% year-to-date.
Ocera Therapeutics Inc (NASDAQ:OCRX) lands in fourth, with Great Point increasing its stake in the clinical stage biopharmaceutical company by 5% during the fourth quarter, to 1.96 million shares. Ocera’s leading drug candidate is OCR-002, an ammonia scavenger treatment for those suffering from Hepatic Encephalopathy (HE), a condition that arises from various forms of liver disease. The treatment has been granted orphan drug designation (treatment for a rare disease) and has been fast-tracked by the U.S Food and Drug Administration. Signs of HE are observed in as many as 70% of patients suffering from cirrhosis of the liver. VHCP Management, another fund we recently began tracking, was also an investor in Ocera Therapeutics, with ownership of 703,700 shares at the end of 2014.
Derma Sciences Inc (NASDAQ:DSCI) rounds out Great Point’s top five, as the fund owned 1.19 million shares worth $11.04 million at the end of 2014. Derma Sciences manufactures products and devices for the skin care and wound management sector, including the skin substitutes sector, with its licensed products AMNIOEXCELand AMNIOMATRIX. It also manufactures MEDIHONEY, a honey-based dressing for the treatment of wounds and burns. Derma Sciences is down over 14% in 2015 following mediocre earnings results on January 8 that showed stagnant growth in its Traditional Wound Care products, and single-digit growth in overall sales.