VHCP Management Produced Impressive Returns From Its Pharma Stock Picks In The Turbulent Third Quarter

Avalanche Biotechnologies Inc (NASDAQ:AAVL) is the only stock among VHCP Management’s top five equity holdings that is trading down for the year. At the end of June, VHCP owned over 1.38 million shares of the company, worth $22.45 million. The nearly 50% decline that shares of Avalanche Biotechnologies Inc (NASDAQ:AAVL) endured in the third quarter, after they had already fallen by more than 50% in June has caused the company to lose over 85% of its market capitalization in 2015. The company is currently facing a securities class action lawsuit from its shareholders, who have alleged that it issued materially misleading business information concerning its Phase 2a of the AVA-101 study. Even though its shares slumped heavily during the second quarter, several hedge funds covered by us either initiated or increased their stakes in Avalanche Biotechnologies Inc (NASDAQ:AAVL) during that period. Among them was Israel Englander‘s Millennium Management, which increased its stake more than eight-fold to 984,884 shares.

Finally, we come to VHCP Management’s fifth-largest equity holding, Zafgen Inc (NASDAQ:ZFGN), in which the fund held 541,480 shares worth $18.75 million as of June 30. Shares of Zafgen Inc (NASDAQ:ZFGN) have remained highly volatile throughout the year, but are currently trading with year-to-date gains of 13.6%. On September 28, the company announced that Robert Perez and Geoffrey McDonough, M.D., will be joining its Board of Directors. Analysts at Leerink Swann, who have a $61 price target on the stock, reiterated their ‘Outperform’ rating on it on October 6. Among the hedge funds we track, James E. Flynn‘s Deerfield Management was the largest shareholder of Zafgen Inc (NASDAQ:ZFGN) at the end of the second quarter, owning slightly above 1.0 million shares.

Disclosure: None