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Seth Klarman Buys New Stock Kindred Biosciences, Cuts Stake in Enzon

January 10, 2014 | About:
Holly LaFon

Holly LaFon

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Seth Klarman (Trades, Portfolio) of the Boston-based Baupost Group, which trades sparingly, has purchased a new stock: Kindred Biosciences (KIN), according to GuruFocus Real Time Picks.

The purchase consisted of 2.9 million outstanding shares, giving Klarman 17.93% interest in the company. The transaction occurred on Dec. 31, 2013, when the price closed at $11.17 per share.

Kindred is an animal pharmaceutical company developing treatments for dogs, cats and horses. The company is creating drugs for animal diseases based on drugs that work for humans with similar versions of the diseases. Products in its pipeline include an osteoarthritis drug for dogs, an atopic dermatitis drug for dogs, and an analgesic for postoperative pain for dogs, among others.

New animal drug applications for the drugs will be submitted in the U.S. beginning in 2014, and the products are slated to launch by the second half of 2015.

Kindred held its initial public offering on Dec. 11, 2013. It sold 7.5 million shares of common stock priced at $7 per share, for a total offering amount of $52.5 million before expenses. Underwriters of the offering agreed to exercise their option to purchase an additional 1.125 million shares, bringing the total shares sold to 8.625 million. Kindred raised a total of $60.375 million in the offering.

As of yet, Kindred has earned no revenue and has no products approved for marketing and sale. It has incurred net losses of $119,611 since its inception on Sept. 25, 2012 though Dec. 31, 2012, and a further $1.83 million for the nine months to Sept. 30, 2013.

Also as of Sept. 30, 2013, the company has $1.95 million in debt and cash of $10.99 million.

Klarman also cut his stake in Enzon Pharmaceuticals (ENZN) by 43.6%, Real Time Picks shows. The sale reduced his position with the company from 7,691,453 shares held at third quarter-end, to 4,337,858 shares. This means he retains a 9.88% stake in the company.

Klarman purchased Enzon shares in the third quarter of 2009 when they averaged $8 per share. In the past five years the stock lost more than 80% of its value, dropping to $1.14 per share at close Friday.

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