BargainValueHunter Posted December 21, 2011 Share Posted December 21, 2011 http://www.gurufocus.com/news/155620/seth-klarman-buys-1692-stake-in-targacept-trgt-after-stock-drops-60 Renowned investor Seth Klarman is portfolio manager of the Baupost Group, which has averaged returns of nearly 20% since inception in 1983, and loves cheap stocks. He also wrote “Margin of Safety,” a value investing classic. On December 9, Klarman bought 5,649,678 shares of Targacept Inc. (TRGT), according to GuruFocus Real Time Picks. Targacept is a small, clinical-stage biopharmaceutical company that discovers and develops NNR Therapeutics, a new class of drugs for the treatment of central nervous system diseases and disorders. Targacept has a broad 52-week price range of $30.47 to $6.88. Its stock chart shows a sudden drop of 60% on November 8. The same day, Targacept announced that its Phase 3 clinical trial of TC-5214, what could be a breakthrough adjunct therapy to antidepressants in patients with treatment-resistant major depressive disorder, failed to have a meaningful effect compared to placebo. Targacept began working on developing and commercializing the drug in partnership with Astrazeneca (AZN) in December 2009. It is the only of its drugs to be in Phase 3, the stage prior to reaching the market. Eight others are at various stages in its pipeline. http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201112201049dowjonesdjonline000355&title=updateastrazeneca/targacept-antidepressant-misses-study-goal An experimental antidepressant co-developed by AstraZeneca PLC (AZN, AZN.LN) and Targacept Inc. (TRGT) again failed to meet the efficacy goal in a late-stage clinical trial, the companies said Tuesday. The setback further clouds the prospects for the drug, TC-5214, which is designed to mimic the antidepressive effects of cigarette smoking and other nicotine-containing products. The drug also failed to meet its efficacy goal in a previous study, announced in November. The setback is a blow for Targacept because TC-5214 is the company's lead product candidate. It also hurts AstraZeneca's efforts to bring new drugs to market that can help offset looming patent expirations for current best-sellers. AstraZeneca also disclosed Tuesday it will halt development of experimental ovarian cancer drug olaparib, citing an analysis of clinical data. Biopharma investing is tough! Link to comment Share on other sites More sharing options...
cogitator99 Posted March 22, 2012 Share Posted March 22, 2012 And down again recently. Anyone have thoughts on this one? Link to comment Share on other sites More sharing options...
berkshiremystery Posted March 22, 2012 Share Posted March 22, 2012 And down again recently. Anyone have thoughts on this one? TRGT @ $5.12 looks cheap, if someone compares it with BV of $5.22 and cash of $5.84. http://finance.yahoo.com/q/ks?s=TRGT+Key+Statistics But I don't know anything else about their future earnings prospects? http://finance.yahoo.com/q/ae?s=TRGT+Analyst+Estimates It could be from extreme negative to extreme positive, but I rather think after the current situation, that earnings might be rather sluggish and nothing. Anyway I just looked into TRGT for the first time. BV could lose if the burn further money. Cheers! Link to comment Share on other sites More sharing options...
berkshiremystery Posted March 22, 2012 Share Posted March 22, 2012 Article from local newspaper: "Targacept considering downsizing in wake of failed drug" http://www2.journalnow.com/news/2012/mar/21/wsmain01-targacept-considering-downsizing-in-wake--ar-2067537/ Link to comment Share on other sites More sharing options...
cogitator99 Posted March 23, 2012 Share Posted March 23, 2012 That's what makes it look interesting, that it sells below cash. Of course the cash will get burnt through sooner or later. What puzzles me about this is that the stock went up ~50% after that large crash late last year, which was also about TC-5214. Link to comment Share on other sites More sharing options...
biaggio Posted March 23, 2012 Share Posted March 23, 2012 If it was not for the cash burn then I can make sense of purchase which would a be buy at a discount to IV(cash) + get the pipeline for free. All their R&D is in phase II which would be high risk in my opinion. Maybe he knows something about some of these potential products. I think its a very small position ~ 1% for him. Link to comment Share on other sites More sharing options...
berkshiremystery Posted March 23, 2012 Share Posted March 23, 2012 If it was not for the cash burn then I can make sense of purchase which would a be buy at a discount to IV(cash) + get the pipeline for free. All their R&D is in phase II which would be high risk in my opinion. Maybe he knows something about some of these potential products. I think its a very small position ~ 1% for him. Here you have a view into his portfolio: http://holdings.nasdaq.com/asp/OwnerPortfolio.asp?FormType=OwnerPortfolio&CIK=0001061768&HolderName=BAUPOST+GROUP+LLC%2FMA Link to comment Share on other sites More sharing options...
compoundinglife Posted March 23, 2012 Share Posted March 23, 2012 If it was not for the cash burn then I can make sense of purchase which would a be buy at a discount to IV(cash) + get the pipeline for free. All their R&D is in phase II which would be high risk in my opinion. Maybe he knows something about some of these potential products. I think its a very small position ~ 1% for him. Here you have a view into his portfolio: http://holdings.nasdaq.com/asp/OwnerPortfolio.asp?FormType=OwnerPortfolio&CIK=0001061768&HolderName=BAUPOST+GROUP+LLC%2FMA Keep in my mind Baupost invests in debt, real estate, and basically anything they can find good bargains in. So the equities on that web page only represent ~15% of their total assets depending on what their AUM is. I think AUM is between 20-25 billion, but don't quote me on that. Link to comment Share on other sites More sharing options...
biaggio Posted March 23, 2012 Share Posted March 23, 2012 If it was not for the cash burn then I can make sense of purchase which would a be buy at a discount to IV(cash) + get the pipeline for free. All their R&D is in phase II which would be high risk in my opinion. Maybe he knows something about some of these potential products. I think its a very small position ~ 1% for him. Here you have a view into his portfolio: http://holdings.nasdaq.com/asp/OwnerPortfolio.asp?FormType=OwnerPortfolio&CIK=0001061768&HolderName=BAUPOST+GROUP+LLC%2FMA Keep in my mind Baupost invests in debt, real estate, and basically anything they can find good bargains in. So the equities on that web page only represent ~15% of their total assets depending on what their AUM is. I think AUM is between 20-25 billion, but don't quote me on that. Good point. Has ~ 30 million in Targacept of 3 billion portfolio which is very tiny compared to almost 30B in AUM So really ~0.1% I wonder why he would even bother? Link to comment Share on other sites More sharing options...
cogitator99 Posted March 26, 2012 Share Posted March 26, 2012 True. Out of the prominent value guys, they seem to be the only one to follow the biotech space? Link to comment Share on other sites More sharing options...
ExpectedValue Posted March 27, 2012 Share Posted March 27, 2012 True. Out of the prominent value guys, they seem to be the only one to follow the biotech space? They actually aren't, maybe of the more well known guys, but there are a number of value funds / event driven value funds that watch the biotech space. Third Point has an analyst who solely looks for biotech plays, Icahn is sometimes active in it too. If you look at 13Ds there's a Biotech Deep Value fund that sometimes posts. Link to comment Share on other sites More sharing options...
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