Andres Hove and Bong Koh’s VHCP Management revealed its top 3 biotech picks heading into 2015, in a 13F Form filed with the U.S. Securities and Exchange Commission last month. While Juno Therapeutics Inc (NASDAQ:JUNO) was the largest position in the hedge fund’s equity portfolio at the end of the year, the investment firm was also betting big on Avalanche Biotechnologies Inc (NASDAQ:AAVL) and Anacor Pharmaceuticals Inc (NASDAQ:ANAC).
Venrock Healthcare Capital Partners, L.P. was originally founded in 1969 by Laurence S. Rockefeller, as the venture capital branch of the Rockefeller family. The investment firm has always been engaged in the technology sector, while placing its focus on the healthcare industry and biotechnology sector in recent years. As it tends to invest in early-stage companies and start-ups, VHCP Management continues to establish partnerships with entrepreneurs in order to create successful and long-lasting businesses. The fund has been very successful in its ventures, landing big wins by supporting publicly traded equities such as Apple Inc (NASDAQ:AAPL), Intel Corporation (NASDAQ:INTC), and Gilead Sciences, Inc. (NASDAQ:GILD).
Juno Therapeutics Inc (NASDAQ:JUNO) was VHCP Management’s top pick at the end of the last quarter, accounting for more than 20% of its equity portfolio. The fund only began betting on the company recently, as the position in Juno is a new one opened during the fourth quarter, which amounts to approximately 1.75 million shares. Following this acquisition, VHCP Management has become the largest institutional investor betting on the stock amongst the funds we track. Another fund taking a bullish stance towards Juno Therapeutics Inc (NASDAQ:JUNO) last quarter was Peter Kolchinsky’s RA Capital Management, which owned 280,000 shares. Guy Shahar’s DSAM Partners also entered a position in the company last quarter, disclosing a stake of 103,500 shares.
VHCP Management’s top pick is already delivering hefty returns, as the stock has gained more than 30% since its IPO in December. According to Zacks Investment Research, brokerages have set a twelve-month consensus price target of $67.67 per share, a premium of nearly 50% on the current trading rate of shares, meaning the fund could see returns rise even higher in 2015. Juno Therapeutics is a Seattle-based biopharmaceutical company that is focused on the development of cell-based cancer immunotherapies.
VHCP Management has been betting on Avalanche Biotechnologies Inc (NASDAQ:AAVL) since August of 2014, when it acquired a new stake of 4.33 million shares, though it quickly reduced its stake to just 1.38 million shares by the end of September. According to its latest 13F filing, the fund still owns 1.38 million shares, unchanged during the previous quarter. James E. Flynn’s Deerfield Management is also backing the company, which ranks amongst its top picks, with a stake of 1.61 million shares in its last 13F filing. Although the stock has gained more than 30% since it began trading in August, shares are down by 31% year-to-date. Nevertheless, numerous Wall Street analysts seem optimistic regarding the company, which was rated as a “strong buy” by the brokers at Zacks.
Avalanche Biotechnologies Inc (NASDAQ:AAVL) is a $786 million market cap biotechnology company, that aims to discover and develop new gene therapies for the treatment of ophthalmic diseases. The biotech firm has received a twelve-month consensus price target of $47.75 from analysts at Zacks, while Jefferies Group believes shares will reach $46.00. Furthermore, the company is expected to post $0.40 earnings per share this quarter. Shares closed trading on Monday at $36.80.
Anacor Pharmaceuticals Inc (NASDAQ:ANAC) was VHCP Management’s third largest holding last quarter, with around 1.78 million shares. Although the fund did not alter its stake in the company during the fourth quarter, it now accounts for 10.4% of its equity portfolio, down from 12.96% at the end of the third quarter, despite gaining 23.96% during the quarter, as the value of VHCP’s equity portfolio increased by more than 50% to $363.50 million from $222.51 million at the end of the third quarter.
Not only has VHCP Management been betting on this stock for quite some time, but one of the fund’s partner, Andres Hove, serves on the company’s Board of Directors. Furthermore, Anacor Pharmaceuticals Inc (NASDAQ:ANAC) has been performing very well as of late, gaining 36.5% year-to-date, after growing by 90% in 2014. In addition to posting great returns, the company enjoys the backing of numerous funds, such as Steve Cohen’s Point72 Asset Management, which owns 1.56 million shares. Julian Baker and Felix Baker’s Baker Bros. Advisors is also bullish regarding the stock, as it owns 4.20 million shares, and is Anacor Pharmaceuticals’ largest institutional investor.