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Steven Cohen Expands Health Care Holdings With Tricida

After previously exiting a position in the fourth quarter of 2020, Point72 Asset Management leader Steven Cohen (TradesPortfolio) disclosed a new 5.03% stake in Tricida Inc. (NASDAQ:TCDA) last week.

With the goal of generating superior risk-adjusted returns, the billionaire 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.

According to GuruFocus Real-Time Picks, a Premium feature, Cohen invested in 2.5 million shares of the San Francisco-based pharmaceutical company on March 23, impacting the equity portfolio by 0.06%. The stock traded for an average price of $5.01 per share on the day of the transaction.

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The company has a $254.74 million market cap; its shares were trading around $5.15 on Friday with a price-book ratio of 2.34.

The median price-book chart shows the stock is trading near its historical value currently, suggesting it is fairly valued. GuruFocus says the share price is also approaching a three-year low.

Tricida is focused on developing its investigational drug candidate, veverimer, to treat metabolic acidosis in patients with chronic kidney disease. On March 3, the company announced it has been granted additional U.S. patent coverage for its composition of matter related to the treatment through 2038. Veverimer, however, is still awaiting the Food and Drug Administration’s approval as the agency feels more data is needed in regard to its efficacy.

The company also reported its fourth-quarter and full-year 2020 results on Feb. 25. Research and development expenses for the quarter were $27.3 million, while the net loss was $1.09 per share.

For the full year, research and development expenses came in at $148.4 million, while the earnings loss was $5.29 per share.

In a statement, President and CEO Gerrit Klaerner, Ph.D., commented on the company’s performance and the progress of its key drug candidate.

“We accomplished a great deal in 2020 but were obviously disappointed that we could not launch veverimer as the first and only FDA-approved treatment for chronic metabolic acidosis in patients with CKD,” he said. “We will now focus on the VALOR-CKD trial to generate additional data prior to the end of 2022.”

GuruFocus rated Tricida’s financial strength 4 out of 10. In addition to an Altman Z-Score of zero, which warns the company could be at risk of bankruptcy, the Sloan ratio is indicative of poor earnings quality.

The company’s profitability fared even worse, scoring a 1 out of 10 rating on the back of negative returns that underperform a majority of competitors. Tricida also has a low Piotroski F-Score of 3, which suggests operating conditions are in poor shape.

Cohen is currently Tricida’s largest guru shareholder. Jim Simons (TradesPortfolio)’ Renaissance Technologies also owns the stock.

Portfolio composition

Cohen’s $20.5 billion equity portfolio, which was composed of 879 stocks as of the three months ended Dec. 31, is most heavily invested in the technology, health care and consumer cyclical sectors.

Other drug manufacturers the guru was invested in as of the end of the fourth quarter included AstraZeneca PLC (NASDAQ:AZN), Eli Lilly and Co. (NYSE:LLY), Merck & Co. Inc. (NYSE:MRK), Bristol-Myers Squibb Co. (NYSE:BMY), Bausch Health Companies Inc. (NYSE:BHC), Biogen Inc. (NASDAQ:BIIB), Sanofi SA (NASDAQ:SNY) and many more.

Disclosure: No positions.

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