The stock of Synthetic Biologics Inc (NYSEMKT:SYN) has started the morning session on a positive note, as the biotechnology company announced the commencement of phase 2 clinical trial of SYN-010, which is helpful in the treatment of irritable bowel syndrome with constipation (IBS-C). The stock gained around 11% in the first hour of trading, but has later retracted and is currently trading around 0.35% in red.
While announcing the initiation of the clinical results, Jeffrey Riley, Chief Executive Officer of Synthetic Biologics, said, “We anticipate initiating the second Phase 2 trial and reporting top line results from the first Phase 2 clinical trial during the second half of 2015.” The biotechnology company mentioned that over 45 million people in North America suffer from IBS and the prescribed or over-the-counter medications offer only temporary symptomatic relief. SYN-10 intends to work towards the root cause of this problem, i.e. lower methane production in the gut, which causes bloating, constipation and pain.
It has been a progressive year for Synthetic Biologics Inc (NYSEMKT:SYN)’s stock, with a year-to-date growth of around 100%. A successful Phase 2 clinical trial results could fuel the appreciation in the second half of 2015. Another parameter that can help discover profit-making opportunities in a stock is the analysis of hedge fund sentiment towards the stock. Among the hedge funds tracked at Insider Monkey, four hedge funds held around $15.44 million worth of stock at the end of March. Insiders of Synthetic Biologics have remained mostly inactive, with some negligible transactions in the past six months.
However, we don’t just track the latest moves of funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research, with back tests for the period between 1999 and 2012 and forward testing for the last 2.5 years. The results of our analysis show that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in back tests. Moreover, since the beginning of forward testing in August 2012, the strategy worked brilliantly, outperforming the market every year and returning 144%, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
For medical companies, a positive clinical test result could definitely weigh in against other parameters, but knowing the latest hedge fund transactions might offer some insights. S0, let’s check out the fresh action encompassing Synthetic Biologics Inc (NYSEAMEX:SYN).
What do hedge funds think about Synthetic Biologics Inc (NYSEAMEX:SYN)?
As stated earlier, at the end of the first quarter of 2015, a total of four hedge funds tracked by Insider Monkey held long positions in this stock, flat over the quarter. However, the last round of 13F filings showed that two investors closed their stakes and two other funds initiated new positions during the first three months. MSDC Management, led by Marc Lisker, Glenn Fuhrman and John Phelan, is the largest shareholder of Synthetic Biologics Inc (NYSEMK:SYN) with some 3.58 million shares worth $7.85 million. It is followed by Fred Knoll’s Knoll Capital Management with 3.40 million shares valued at $7.45 million.
Among the hedge funds with new positions in Synthetic Biologics are Israel Englander’s Millennium Management and Michael Platt & William Reeves’ Bluecrest Capital Management. Millennium Management owns 42,945 shares of the biotech company and Bluecrest Capital Management’s position stands at 24,251 shares, as of the end of March. On the other hand, Jeffrey Jay and David Kroin’s Great Point Partners and Ken Griffin’s Citadel Investment Group closed their stakes during the first quarter.
It is important to note that a positive result of this clinical trial could help the shares of Synthetic Biologics gain momentum in the upcoming months. Considering its impressive share performance in 2015, we consider that the stock is a ‘Buy’.