Redmile Group’s Top Q4 Moves as Its Long Positions Show Gains of 20% in 2015

Redmile Group is a San Francisco-based investment firm managed by Jeremy Green, which primarily focuses on the healthcare sector. Redmile has an equity portfolio worth nearly $1.34 billion as of the end of 2015, while approximately 96% of this portfolio comprises healthcare equity investments. Although Redmile Group is not widely-known in the hedge fund industry, the performance of its long positions is outstanding. The data compiled by Insider Monkey show that the fund’s 29 long positions in companies with a market capitalization of at least $1 billion generated a weighted average return of 26.8%, based on the size of those positions at the beginning of each quarter. Even though Redmile Group’s actual returns may differ significantly from our calculations, individual investors could have generated this return by simply examining the fund’s quarterly 13Fs. Without further ado, let’s proceed to the discussion of Redmile’s top moves carried out during the final quarter of 2015.

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To begin with, Redmile Group lifted its position in Amicus Therapeutics Inc. (NASDAQ:FOLD) by 1.95 million shares or 23% during the fourth quarter, ending the year with a stake of 10.28 million shares valued $99.72 million. The biopharmaceutical company focuses on the development of advanced therapies for the treatment of devastating rare and orphan diseases. The shares of Amicus Therapeutics Inc. (NASDAQ:FOLD) are down by 26% over the past 12 months, mainly owing to a delay in the filing process for FDA approval of its product migalastat HCI for the treatment of Fabry disease. However, the company successfully submitted marketing authorization application (MAA) to the European Medicines Agency (EMA) for approval of migalastat in Fabry patients with amenable genetic mutations. The review of the MAA for migalastat is still in progress, while Amicus Therapeutics anticipates an opinion from the Committee for Medicinal Products for Human Use in early 2016. A total number of 23 hedge funds from our system were invested in Amicus at the end of December, accumulating 39.20% of the company’s outstanding common stock. Joseph Edelman’s Perceptive Advisors reported owning 15.24 million shares of Amicus Therapeutics Inc. (NASDAQ:FOLD) in its latest 13F filing.

Jeremy Green’s Redmile significantly increased its exposure to Clovis Oncology Inc. (NASDAQ:CLVS) during the December quarter, as the firm boosted its stake by 838,302 shares or 87% to 1.80 million shares. The freshly-increased stake was worth $62.86 million at the end of 2015 and accounted for 4.70% of the fund’s equity portfolio. The shares of the biopharmaceutical company that focuses on developing anti-cancer agents have plummeted 77% over the past 52 weeks, mainly following news in November that Clovis Oncology Inc. (NASDAQ:CLVS)’s potential FDA approval of its lung cancer product candidate, called rociletinib, might be delayed. The FDA was anticipated to communicate its decision regarding rociletinib by March 30, but the review was prolonged by a few months after the agency had asked for additional clinical data. Although a three-month delay does not seem to be a serious problem, investors worry that a potential delay in the FDA approval and in the possible commercial launch of rociletinib will enable competitors’ lung cancer treatments to establish a strong position in the market. The number of hedge funds from our database with stakes in Clovis dropped to 24 from 31 during the final quarter of last year. Zach Schreiber’s Point State Capital owns 3.50 million shares of Clovis Oncology Inc. (NASDAQ:CLVS) as of December 31.

Redmile trimmed its holding in Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) by 199,420 shares or 17% in the December quarter to 938,139 shares, valued at $61.58 million. The global pharmaceutical company operates its business through two main segments: generic medicines, which include chemical and therapeutic equivalents of originator medicines in various dosage forms; and specialty medicines. On July 27, 2015, the Israel-based pharmaceutical company announced that it had agreed to acquire Allergan’s generics drug business Actavis Generics, which will enable Teva to become the largest maker of generic medicines in the world. Under the terms of the deal, Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) will pay $33.75 billion in cash and roughly 100 million Teva shares should the deal be approved. However, if the deal does not go through, Teva must pay Allergan $1 billion. Teva shares are up 1% over the past year, despite dropping by 12% since the beginning of 2016. Meanwhile, fresh statistics show that short interest in Teva is slowly fading away, with 14.77 million shares being shorted by investors as of February 12. The hedge fund sentiment towards the stock was positive in the fourth quarter, as the number of money managers with positions in the company climbed to 81 from 70 quarter-on-quarter. John Paulson’s Paulson & Co reported owing 20.41 million shares of Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) through its most recent 13F.

The San Francisco-based firm increased its position in Ironwood Pharmaceuticals Inc. (NASDAQ:IRWD) by a whopping 3.48 million shares during the October-to-December period to 3.67 million shares, worth $42.55 million. The commercial biotechnology company currently relies on its only commercial product called linaclotide, which was approved by the FDA in 2012 for the treatment of irritable bowel syndrome with constipation (IBS-C) or chronic-idiopathic constipation (CIC). The product is available to adults suffering from IBS-C in the United States under name LINZESS and to adults suffering from IBS-C in several European countries under name CONSTELLA. According to the recently-revealed fourth-quarter earnings report, LINZESS U.S. net sales grew by 53% year-on-year to $455 million in 2015. However, Ironwood Pharmaceuticals Inc. (NASDAQ:IRWD) plans to reach LINZESS annual net sales of at least $1 billion by 2020. Meanwhile, the stock is 40% in the red over the past 12 months, after having dropped by 20% in 2016. There were 20 hedge funds tracked by Insider Monkey with stakes in the company at the end of 2015, amassing nearly 19% of the company’s total outstanding shares. Samuel Isaly’s Orbimed Advisors is the largest equity holder of Ironwood Pharmaceuticals Inc. (NASDAQ:IRWD) within our database, holding 11.23 million shares as of December 31.

Mr. Green’s fund added a 2.25 million-share position in Boston Scientific Corporation (NYSE:BSX) to its portfolio during the December quarter, which was valued at $41.51 million at the end of the quarter. The manufacturer of medical devices used in interventional medical specialties has seen its stock advance by 2% over the past 52 weeks. The company generated net sales of $7.48 billion in 2015, up from $7.38 billion reported for 2014. It is important to note that the company’s top-line results were severely impacted by foreign currency fluctuations. Boston Scientific Corporation (NYSE:BSX)’s net sales, excluding the impact of foreign currency and sales from divested businesses, increased $606 million or 8% year-over-year. Its adjusted net income increased to $1.27 billion or $0.93 per share from $1.13 billion or $0.84 per share reported for 2014. The number of smart money investors from our database with stakes in the company dropped to 33 from 37 during the final quarter of 2015. Israel Englander’s Millennium Management holds a stake of 6.06 million in Boston Scientific Corporation (NYSE:BSX) as of the end of the December quarter.

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