How Did Michael Castor’s Picks Play Out in Q4?

#2 Neos Therapeutics Inc (NASDAQ:NEOS)

– Shares Owned by Sio Capital (as of September 30): 666,729

– Value of Holding (as of September 30): $14 million

Neos Therapeutics Inc (NASDAQ:NEOS) was a new position in Sio Capital’s equity portfolio at the end of the third quarter. With its shares falling by over 30%, it was also the worst performer among Sio Capital’s top five equity holdings during the last three months of 2015. Neos Therapeutics Inc (NASDAQ:NEOS) manufactures and commercializes products for the treatment of attention deficit hyperactivity disorder (ADHD). It made its debut on NASDAQ in July last year and since then its shares have fallen by nearly 50% since the IPO.

Neos’ stock took a hit in October, when the US Food and Drug Administration said that it would not approve the company’s methylphenidate Orally Disintegrating Tablet (ODT) on November 9 (the target approval date). The FDA issued a complete response letter asking the company to conduct a bridging study to provide more details about the to-be-marketed product. Nevertheless, Neos still plans to launch the drug in 2017.

“Ultimately, we think that the delay for methylphenidate ODT has only a small impact in our expected valuation of NEOS. This remains a high conviction holding,” Michael Castor said in his third-quarter letter to investors.

Jason Karp‘s Tourbillon Capital Partners trailed Sio Capital as the company’s largest shareholder among the funds covered by us at the end of the third quarter; it held 611,686 shares of Neos Therapeutics.