>
  1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Sydnee Gatewood
Sydnee Gatewood
Articles (3340) 

Steven Cohen Boosts Health Care Exposure With 2 Biotech Stocks

Guru takes stakes in Regulus Therapeutics, Allena Pharmaceuticals

Billionaire investor Steven Cohen (Trades, Portfolio) disclosed earlier this week his firm, Point72 Asset Management, established a 14.37% stake in Regulus Therapeutics Inc. (NASDAQ:RGLS) and a 7.96% position in Allena Pharmaceuticals Inc. (NASDAQ:ALNA) on Dec. 4.

In order to generate superior risk-adjusted returns, the guru's Stamford, Connecticut-based firm invests in a wide range of asset classes worldwide. Its long-short strategy is based on bottom-up research processes focusing on fundamentals and macroeconomic conditions.

Regulus Therapeutics

According to GuruFocus Real-Time Picks, a Premium feature, Cohen invested in 5.63 million shares of Regulus Therapeutics, allocating 0.02% of the equity portfolio to the stake. The stock traded for an average per-share price of 76 cents on the day of the transaction.

He previously sold out of the stock in the third quarter of 2018, when it traded around $3.37 per share.

bf7930363e22d896a65075dd5461116f.png

The Carlsbad, California-based biopharmaceutical company, which focuses on developing first-in-class drugs that target microRNAs to treat a broad range of diseases, has a $49.64 million market cap; its shares were trading around $1.26 on Friday with a price-book ratio of 5.96 and a price-sales ratio of 9.17.

According to the GF Value Line, the stock appears to be a potential value trap.

e322d8b425a83b7bff9eeddb63acb355.png

On Nov. 5, Regulus Therapeutics reported its third-quarter results, posting a net loss of 4 cents per share on $5 million in revenue. It also had $17.8 million in cash and cash equivalents as of Sept. 30.

bee7d013713e1f71431231681d762cdb.png

In a statement, CEO Jay Hagan said he is pleased with the company's progress.

"Next year is shaping up to be an important one for Regulus, with data from the first cohort anticipated by end of Q1 2021," he said. "We also achieved $10 million in milestones from our collaboration with Sanofi enabling us to reduce our outstanding debt to $4.7 million and extend the interest-only period through the end of 2021."

The company also announced a $19.4 million private placement of equity on Dec. 1 to existing institutional and other accredited investors as well as new institutional investors. The investors agreed to purchase approximately 24.3 million shares of Regulus' common stock along with accompanying warrants to purchase up to an aggregate of around 18.2 million shares at a combined purchase price of 71.58 cents per share. The offering closed on Dec. 8.

GuruFocus rated Regulus' financial strength 2 out of 10. In addition to debt ratios that are underperforming versus other industry players, the extremely low Altman Z-Score of -21.06 warns the company could be in danger of bankruptcy if it does not improve its liquidity. It has also recorded a decline in revenue per share over the last five years.

The company's profitability fared even worse with a 1 out of 10 rating. In addition to a declining operating margin, Regulus has negative returns that underperform a majority of its competitors and a low Piotroski F-Score of 3, which suggests business conditions are in poor shape.

As Jim Simons (Trades, Portfolio)' Renaissance Technologies sold out of Regulus during the third quarter, Cohen is currently the only guru invested in the stock.

Allena Pharmaceuticals

The guru picked up 4 million shares of Allena Pharmaceuticals, dedicating 0.03% of the equity portfolio to the stake. Shares traded for an average price of $1.29 each on the day of the transaction.

The late-stage, clinical biopharmaceutical company headquartered in Newton, Massachusetts, which develops oral enzyme therapeutics to treat metabolic and kidney disorders, has a market cap of $64.32 million; its shares were trading around $1.28 on Friday with a price-book ratio of 2.55.

The price chart shows the stock is trading slightly below its median price-book ratio.

c8348ea6fb44dfceadfb48e926b6ec39.png

Allena reported its third-quarter financial results on Nov. 9. It posted a net loss of $8 million, or an earnings loss of 22 cents per share. This was an improvement from a net loss of $13.3 million, or 57 cents per share, in the year-ago quarter.

1e60c9d7a6bc037c212303d1636dc308.png

The company recorded cash and cash equivalents of $30.1 million, while research and development expenses were $5 million and general and administrative costs totaled $3 million.

On Dec. 1, Allena also announced a $13 million bought deal offering with H.C. Wainwright & Co. LLC. Under the terms of the agreement, the underwriter purchased 10.4 million shares of common stock for an average price of $1.25 per share. It also has the 30-day option of purchasing up to an additional 1.56 million shares at the public offering price.

Allena's financial strength was rated 4 out of 10 by GuruFocus, while its profitability scored a 1 out of 10 rating. In addition to negative returns that underperform a majority of industry peers, the company is being weighed down by a low Piotroski F-Score of 3, which suggests business conditions are in poor shape.

Since Simons' firm sold out of Allena in the third quarter, Cohen is currently the only guru with a position in the stock.

Portfolio composition

Cohen's $19.52 billion equity portfolio, which was composed of 894 stocks as of the three months ended Sept. 30, is most heavily invested in the health care, technology and consumer cyclical sectors.

afd10c13621b3f58483fd774d8d4a1d8.png

Other biotech companies Cohen owned as of the end of the third quarter included Alexion Pharmaceuticals Inc. (NASDAQ:ALXN), Arena Pharmaceuticals Inc. (NASDAQ:ARNA), Macrogenics Inc. (NASDAQ:MGNX), Biomarin Pharmaceutical Inc. (NASDAQ:BMRN), Novavax Inc. (NASDAQ:NVAX) and Arrowhead Pharmaceuticals Inc. (NASDAQ:ARWR).

Disclosure: No positions.

Read more here:

Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

About the author:

Sydnee Gatewood
I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:



Performances of the stocks mentioned by Sydnee Gatewood


User Generated Screeners


pjmason14Momentum
wigbertHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)