Peter Kolchinsky‘s RA Capital Management recently filed its 13F with the SEC for the reporting period of June 30. Peter Kolchinsky started RA Capital Management after completing his Ph.D. in virology from Harvard in 2001. The fund was seeded by Vertex Pharma co-founder Rich Aldrich, who invested $4 million at its inception. Since then RA Capital Management has grown to about $1.8 billion in assets under management. The fund primarily invests in healthcare companies using an ‘evidence-based’ investing strategy. Apart from investing in publicly-traded companies, RA Capital Management also invests in private and early-stage healthcare companies. The latest 13F filing of the fund revealed that its U.S public equity portfolio at the end of June was worth $994.10 million. During the second quarter the fund had a turnover of 47.46% in its equity portfolio, having initiated a stake in 15 stocks and sold out of 13 stocks, among other moves. Although the fund had a stake in 58 companies at the end of June, its top three holdings accounted for over 26% of its equity portfolio. We’ll take a closer look at those three stocks in this article, which are Axovant Sciences Ltd(NYSE:AXON), Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), and Dyax Corp. (NASDAQ:DYAX).
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RA Capital initiated a huge stake in Axovant Sciences Ltd (NYSE:AXON), purchasing 5.0 million shares of the company during its IPO. As of June 30, this stake was worth almost $102 million and represented RA Capital’s largest equity holding, accounting for 10.25% of its portfolio. Axovant Sciences Ltd (NYSE:AXON) is a subsidiary of Roivant Sciences, a holding company founded by another healthcare investor, Vivek Ramaswamy. Mr. Ramaswamy left Daniel Gold‘s hedge fund QVT Financial in May 2014 to start Roivant Sciences. Axovant Sciences Ltd (NYSE:AXON) was created as a subsidiary of Roivant Sciences in November 2014 and shortly thereafter it acquired an unapproved and abandoned Alzheimer’s drug from GlaxoSmithKline plc (ADR)(NYSE:GSK) for $5 million. During Axovant Sciences Ltd (NYSE:AXON)’s IPO, Roivant Sciences sold a 20% stake of the company and raised $315 million. Since its debut in the public markets, several analysts and industry experts have raised concerns about the $1 billion-plus valuation of Axovant Sciences Ltd (NYSE:AXON), arguing how a company with an old, unapproved drug which it bought for $5 million a few months ago and hasn’t invested a lot in since then, can trade at such a high valuation. The market seems to agree, as shares of Axovant have crashed by 60% in just two months, though the company’s market cap still stands at $1.16 billion. Apart from RA Capital Management, Jacob Gottlieb‘s Visium Asset Management also purchased 80,000 shares of Axovant Sciences Ltd (NYSE:AXON) during its IPO.
Moving on to RA Capital Management’s second-largest holding, Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN); the fund increased its stake in its former top holding by 21% to around 9.95 million shares. At the end of June, this stake was worth $88.12 million. Shares of the biopharmaceutical company have had a rough 2015, down by 10.1% in the second quarter and almost 40% year-to-date. On August 10 the company reported worse-than-expected second quarter results. While the Street was expecting the company to declare an EPS loss of $0.18 for the quarter, the company declared an EPS loss of $0.25 instead. Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) announced a $1.1 billion deal with Johnson & Johnson (NYSE:JNJ) in May this year whereby the latter will be investing $225 million in the former and will also be developing and selling the former’s Hepatitis C drugs. In the past couple of months there have been several rumors circulating that Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) is a prime takeover target for major pharmaceutical firms. Phill Gross and Robert Atchinson‘s Adage Capital Management also increased its stake in the company , by 6% to over 3.0 million shares during the April-June period.
Although RA Capital Management reduced its stake in Dyax Corp. (NASDAQ:DYAX) by 35% to slightly over 2.7 million shares during the quarter, the company still ended up becoming RA Capital Management’s third-largest holding for the latest reporting period, owing to the phenomenal 58% rise in its stock during the April-June period. On July 29, the company reported mixed second quarter earnings. While its EPS loss of $0.06 was worse than the $0.04 loss analysts were expecting, revenue of $264 million blew away analysts’ estimates of just $23.40 million. Analysts at Jefferies Group reiterated their ‘Buy’ rating on July 2 and set a price target of $31 on the stock, representing a potential 35% upside to its current trading price. Although RA Capital Management reduced its stake in the company, renowned healthcare-focused hedge fund Baker Bros. Advisors, managed by Julian Baker and Felix Baker, increased its stake in Dyax Corp. (NASDAQ:DYAX) during the second quarter by 31% to almost 8.0 million shares.