Andreas Halvorsen’s Firm Curbs Roivant Sciences Stake

Summary

• The position was trimmed by 14.73%.

Viking Global Investors, which was founded by Andreas Halvorsen (Trades, Portfolio), disclosed earlier this week it reduced its stake in Roivant Sciences Ltd. (ROIV, Financial) by 14.73%.

As a former protégé of Tiger Management (Trades, Portfolio)’s Julian Robertson, the guru’s Greenwich, Connecticut-based hedge fund takes a long-term, research-intensive approach to investing. The firm selects stocks based on its understanding of the company’s fundamentals, business model and management team, while also taking cyclical and secular industry trends into consideration.

According to Real-Time Picks, a Premium GuruFocus feature based on 13D, 13G and Form 4 filings, Viking sold 13 million shares of the biotech company on June 22, which had an impact of -0.61% on the equity portfolio. The stock traded for an average price of $9.97 per share on the day of the transaction.

It now holds 75.24 million shares in total, which account for 3.56% of the equity portfolio. GuruFocus estimates Viking has gained 8.55% on the investment since establishing it in the fourth quarter of 2021.

The stock was also among the firm’s top 10 holdings in the fourth quarter of 2022, but has since fallen into the top 20.

About Roivant Sciences

Founded in 2013, the U.K.-based health care company focuses on applying technology to drug development. Its pipeline of drugs, which are in various stages of development, cover a range of therapeutic areas, including immunology, oncology, hematology and dermatology.

Roivant operates through a single segment.

Pipeline

Only one of Roivant Sciences’ drugs has reached the commercialization stage, which is Tapinarof for the treatment of psoriasis. The drug is currently undergoing trials for treating atopic dermatitis as well.

Last week, the company announced positive long-term results for a study involving its ulcerative colitis treatment called RVT
VT
-3101, which is being developed in partnership with Pfizer
PFE
Inc. (PFE, Financial). The monoclonal antibody resulted in improved clinical remission of 36% at week 56 versus 29% at week 14.

Valuation

Roivant Sciences has a $6.87 billion market cap; its shares were trading around $9.06 on Tuesday with a price-book ratio of 6.86 and a price-sales ratio of 148.54.

Since going public via a combination with a special purpose acquisition company in October 2021, the stock has risen around 11.44%. Year to date, it is up nearly 27%.

At 17 out of 100, the GF Score indicates the company has poor future performance potential. Since it only received a moderate rating for financial strength, however, Roivant’s full prospects are not accurately reflected.

Earnings review

Roivant Sciences reported results for its fiscal third quarter in February.

For the three months ended Dec. 31, the company posted revenue of $17 million and a net loss of $352 million, or 49 cents per share. Both figures were down from the prior-year quarter.

In a statement, CEO Matt Gline commented on Roivant’s performance for the quarter, which he noted was “significant.”

“We announced the in-licensing of our potentially first-in-class and best-in-class TL1A program RVT-3101 along with highly encouraging Phase 2 induction data,” he said. “Earlier this month we completed a $230 million equity financing to further advance our TL1A programs in Phase 3 and Phase 2 for ulcerative colitis and Crohn’s disease, respectively. Additionally, we reported strong growth in VTAMA net revenue and made significant progress on payor coverage with a majority of commercial lives now covered. These recent developments and our strengthened balance sheet continue to support Roivant’s growing leadership in immunological and inflammatory diseases and point to an incredibly catalyst-rich year ahead.”

The company’s fourth-quarter and full-year 2023 earnings are scheduled to be released before the opening bell on June 28.

Guru investors

Halvorsen’s firm has the largest position in Roivant Sciences currently with a 9.92% stake.

According to 13F filings for the first quarter, the stock is also being held by the Vanguard Health Care Fund (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Jefferies Group (Trades, Portfolio).

Portfolio composition

More than half of Viking’s $21.23 billion equity portfolio, which the 13F filing showed was composed of 80 stocks as of the end of the first quarter, was invested in the health care and financial services sectors.

Other companies in the biotechnology space Viking Global had positions in as of March 31 included BridgeBio Pharma Inc. (BBIO, Financial), Royalty Pharma PLC (RPRX, Financial), Karuna Therapeutics Inc. (KRTX, Financial), Adaptive Biotechnologies Corp. (ADPT, Financial), Biomarin Pharmaceutical Inc. (BMRN, Financial) and Ginkgo Bioworks Holding Inc. (DNA, Financial).

Investors should be aware that 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.