With the goal of generating superior risk-adjusted returns, the guru’s Stamford, Connecticut-based firm executes a long-short strategy that involves fundamental, bottom-up research processes, macro investments and insights.
According to GuruFocus Real-Time Picks, a Premium feature, Cohen invested in 5.5 million shares of Verastem on Jan. 22, allocating 0.06% of the equity portfolio to the position. He previously exited a smaller holding in the fourth quarter of 2017.
Steven Cohen’s holding history for Verastem.
The Needham, Massachusetts-based pharmaceutical company, which develops medicines to improve the survival rate and quality of life for cancer patients, has a $161.34 million market cap; its shares were trading around $2.17 on Wednesday with a price-book ratio of 7.48 and a price-sales ratio of 10.85.
The median price-sales chart shows the stock is trading above its historical value, suggesting it is overvalued.
Median price-sales chart for Verastem.
Verastem reported its third-quarter 2019 earnings on Oct. 29, 2019. It posted an adjusted net loss of $26.2 million, or 35 cents per share, on $9 million in revenue.
It also emphasized its commitment to its “6-2-5” strategy, which is intended to narrow the gap between its revenue and commercial spend by the end of fiscal 2019, as well as achieve break-even cash flow for both the commercial and clinical Copiktra program, its flagship treatment, by mid-2021 and broaden the indications of the drug through additional products in its pipeline by the middle of 2024. As part of this restructuring initiative, management plans to reduce overall operating expenses, which will include eliminating 40 positions across the company.
In a statement, CEO Brian Stuglik said the company is making progress with Copiktra as “the intent to prescribe and new prescriber base grows week over week due to solid progress across our commercial efforts.”
“We also believe in the long-term potential for our current COPIKTRA indications,” he added. “We are deeply committed to our long-term strategy to achieve sustainable growth and progress our mission on behalf of patients. In order to achieve these ambitious goals and provide us with greater financial flexibility going forward, we are streamlining our organization and reducing operating expenses, which will result in approximately $25 million in annualized cost savings next year.”
The company is expected to report its financial results for the fourth quarter and full-year 2019 in March.
GuruFocus ranked Verastem’s financial strength 2 out of 10 on the back of a low Altman Z-Score of -3.8, which warns it could be in danger of going bankrupt. In addition, the company’s Sloan ratio indicates it has poor earnings quality.
Weighed down by negative margins and returns that underperform a majority of competitors, the company’s profitability scored a 1 out of 10 rating. Verastem has a Piotroski F-Score of 3, which suggests it has poor business operations, and has recorded a decline in revenue per share over the past year.
Cohen is the only guru invested in the stock.
Cohen’s $16.28 billion equity portfolio, which is composed of 1,089 stocks as of the three months ended Sept. 30, 2019, is largely invested in the technology, health care and consumer cyclical sectors.
Sector weighting for Cohen’s portfolio.
Other biotech stocks the guru is invested in as of the end of third-quarter 2019 include Aimmune Therapeutics Inc. (NASDAQ:AIMT), Aptose Biosciences Inc. (NASDAQ:APTO), BioCryst Pharmaceuticals Inc. (NASDAQ:BCRX), Audentes Therapeutics Inc. (NASDAQ:BOLD), CymaBay Therapeutics Inc. (NASDAQ:CBAY), Chimerix Inc. (NASDAQ:CMRX), CytomX Therapeutics Inc. (NASDAQ:CTMX), Epizyme Inc. (NASDAQ:EPZM) and Fate Therapeutics Inc. (NASDAQ:FATE).
Disclosure: No positions.
Read more here:
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.