WertArt Capital, an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. A return of 16.9% was delivered by the fund for the Q2 of 2021, slightly below both its MSCI World Gross TR benchmark that delivered a 6.99% return for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of WertArt Capital, the fund mentioned Supernus Pharmaceuticals, Inc. (NASDAQ: SUPN) and discussed its stance on the firm. Supernus Pharmaceuticals, Inc. is a Rockville, Maryland-based pharmaceutical company with a $1.3 billion market capitalization. SUPN delivered a -1.51% return since the beginning of the year, while its 12-month returns are down by -0.48%. The stock closed at $24.74 per share on August 13, 2021.
Here is what WertArt Capital has to say about Supernus Pharmaceuticals, Inc. in its Q2 2021 investor letter:
“Supernus recently launched a drug for the treatment of attention deficit / hyperactivity disorder, or ADHD for short. Symptoms are poor concentration, impulsive behavior and / or physical restlessness. With the right therapies, children and adults can practice the practical skills to better control their behavior. In addition, drug treatment is necessary for many patients, but at the same time, it is also controversial as the medical treatment options for children and adolescents as well as adults are currently hardly sufficient.
In the USA alone, doctors write 75 million prescriptions for ADHD annually. More than 6 million patients have been diagnosed with ADHD acc. to Supernus management. Most of the prescriptions are for stimulant ADHD therapies. However, stimulants are not suitable in many situations, including the 25% to 30% of patients who do not achieve optimal symptom reduction or do not tolerate stimulants for a variety of reasons.
While there are more than 30 stimulant preparations currently available in the US, only three nonstimulants have been approved by the United States Food and Drug Administration (FDA) so far. Strattera (Atomoxetine) was introduced 15 years ago as the first nonstimulant ADHD drug ever and is the only one approved for adults. With Kapvay (Clonidine) and Intuniv (Guanfacine), there are alternatives for children and adolescences available. However, patient dissatisfaction is high with nonstimulants and all three of them come with significant safety concerns. Therefore, the need for better treatment options remains high.
Viloxazine extended-release (ER) is a novel nonstimulant that was approved in April 2021 by the FDA under the trade name Qelbree for the treatment of attention-deficit/hyperactivity disorder (ADHD) in pediatric patients 6 to 17 years of age. Viloxazine has already been approved for the treatment of depression in the 1970’s in Europe. However, just recently Supernus Pharmaceuticals started to test the substance for the medication of ADHD. Supernus’ Management claims that Qelbree provides the first nonstimulant innovation in over a decade since the introduction of Strattera. Following the trial results, Qelbree could provide a more effective and less harmful medical alternative for children with ADHD, who do not need a stimulate, cannot take a stimulate due to health conditions or where stimulants do not work. If this turns out to be the case, it will be of benefit for many patients diagnosed with ADHD.
Supernus just recently launched Qelbree in the US. The re-opening of the US economy is helping the 175 sales representatives to approach doctors to present the new medication. If Qelbree turns out to improve patients’ day-to-day life significantly as indicated in the trials, the market potential for
Supernus will be substantial. In addition, management expects to receive approval for treatment of adult patients in the remainder of 2021. The adult segment represents about half of the total ADHD market in the US.Supernus already has an established central nervous drug portfolio generating around USD 500 m in revenues annually. While revenues from the existing drug portfolio will decline due to a patent expiration of one medication in 2023, Qelbree and additional near time product launches should more
than compensate for the patent expiration. Assuming that Qelbree can at least win a comparable market share like currently available nonstimulants, Qelbree should reach another USD 500 m in annual sales over the coming years. With a market cap of USD 1.4 bn and USD 400 m in net cash available, Supernus is attractively priced.”
Copyright: zneb076 / 123RF Stock Photo
Based on our calculations, Supernus Pharmaceuticals, Inc. (NASDAQ: SUPN) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. SUPN was in 15 hedge fund portfolios at the end of the first quarter of 2021, compared to 19 funds in the fourth quarter of 2020. Supernus Pharmaceuticals, Inc. (NASDAQ: SUPN) delivered a -19.62% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
