The last time we checked in with Joseph Edelman, the founder, chief executive and portfolio manager of Perceptive Advisors and its hedge fund, Perceptive Life Sciences, he was buying stocks ahead of the new year.
Perceptive is a fund to watch. Edelman famously oversaw a 4% gain in 2016 as the biotech sector tumbled 20%. Perceptive soared over 43% in 2017, more than doubling the 20% gain in the Standard & Poor’s 500 Index and the 21% gain in the Nasdaq Biotechnology Index.
What stocks are Edelman, and his chief investment officer, Adam Stone, buying now? Earlier this month, Perceptive unveiled larger stakes in Agile Therapeutics (ticker: AGRX), La Jolla Pharmaceutical (LJPC) and Amicus Therapeutics (FOLD).
Perceptive’s stake in Agile has risen to 3.53 million shares, or 10.3%, as of March 21, up from 3.38 million, or 9.9% at Dec. 22. Coincidentally, that December day was when the Food and Drug Administration handed Agile a setback for its Twirla contraceptive patch and Agile shares became downwardly mobile, ending the year with a 53% drop. So far this year shares have slipped 4% through Thursday’s close. Perceptive’s current stake would make it Agile’s second-largest shareholder, according to S&P Capital IQ. H.C. Wainwright & Co. analyst Oren Livnat wrote in a March 13 report that Agile’s $36 million is “barely…enough cash to get through 2018.” He rates Agile at Buy, however, on hopes of a Twirla refiling soon. Livnat’s $8 price target envisions shares more than tripling from Thursday’s close at $2.57.
Perceptive was adding to the position in La Jolla at the end of 2017 and the end of the first quarter finds it once more buying stock. The fund paid $20.7 million for 700,000 more La Jolla shares in a public offering on March 15; the shares were priced at $29.50 each–8.3% lower than what it closed 2017 with. Perceptive now owns 4.3 million shares of La Jolla, a developer of treatments for hypotension, hereditary hemochromatosis and other ailments. Perceptive is La Jolla’s top shareholder with a 16.5% stake. La Jolla shares rocketed 84% in 2017, but have taken a breather in 2018; shares are down 7%.
Amicus, which develops medicines for rare metabolic diseases, shares were just short of tripling in 2017. So far in 2018, they have gained another 5%. From March 1 through 5, Perceptive bought a total of 536,000 shares for $7.3 million, or about $13.65 each. The fund now owns 18.4 million Amicus shares, a 9.9% stake, making it the biggest shareholder. It was a prescient time to buy. Through Thursday’s close, those just-purchased shares are already up 10% on average.
Amicus was one of the stocks Edelman suggested could outperform in 2017, and it wasn’t even one of his three main picks. The fact that he’s buying more Amicus shares even after 2017’s rocket launch is extremely bullish.
