Billionaire George Soros certainly evokes some rather divided feelings due to his entrance into the realm of politics. But there's no denying his prowess as a money manager. His namesake fund, Soros Fund Management, has been one of the most successful at growing investors' capital over the past four-plus decades. And that's why the quarterly activity of the Soros Fund remains a focal point for many investors.
Interestingly, Soros' capital management team purchased over $2.1 million worth of shares of rare-disease and cancer drugmaker Aeglea BioTherapeutics (AGLE -3.68%) in the second quarter of this year. Now, if you've never heard of this small-cap biotech, you're probably not alone.
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Aeglea, after all, has only been a publicly traded company for a little over two years and the biotech hasn't made any major waves since doing so. Aeglea's stock has actually lost 5.8% of its value since its initial public offering on April 7, 2016, which is rather convincing evidence that the market hasn't been particularly enthusiastic about this relative newcomer so far.
With Aeglea starting to attract top investors like Soros, however, this situation might be about to change for the better soon. Should investors take a cue from Soros' top-shelf money managers, or is this clinical-stage biotech still too risky to consider? Let's dig deeper to find out.
Aeglea is nearing an inflection point
Unlike classic value investors like Warren Buffett, Soros and his team have made their bones, so to speak, by playing the momentum game. To do so, Soros Fund Management often buys smallish positions in stocks barreling toward a pivotal event and then they buy more if the stock begins to move as predicted. Aeglea appears to fit that momentum-driven investing thesis perfectly.
Aeglea's lead investigational candidate, pegzilarginase, is set to roll out multiple clinical updates in the next three months as a potential treatment for the ultra-rare condition known as Arginase 1 Deficiency or ARG1-D for short. ARG1-D is an autosomal recessive disorder of the urea cycle that causes toxic levels of arginine to accumulate in the blood, according to the company's latest presentation.
With an incidence rate of around 1 in every 950,000 live births and no treatments specifically approved for this inherited disease, pegzilarginase would undoubtedly garner an eye-popping price tag in a manner similar to other rare-disease drugs and therapies, if approved.
This treatment would also likely enjoy an extended period of exclusivity, thanks to the extreme level of rarity for its first indication, as well as an overall dearth of would-be competitors in development right now. Pegzilarginase should therefore be able to generate respectable sales figures for a lengthy period of time, if everything goes according to plan.
In addition, Aeglea is investigating this treatment as a monotherapy for small-cell lung cancer (SCLC) and melanoma, as well as part of a combination therapy with Merck's Keytruda for SCLC. While this line of inquiry is rather novel from a cancer treatment perspective, this second batch of indications does offer investors another set of high-value catalysts that could drive growth well into the future.
Is this clinical-stage biotech a buy?
Although Aeglea is a clinical-stage biotech that has yet to validate its platform, there is a lot to like about this stock right now. Experimental treatments for ultra-rare conditions such as ARG1-D tend to sport breakneck development timelines and these types of therapies are also often approved with far less evidence of efficacy compared to their closely related cousins for "rare" diseases. Aeglea could thus realistically transform into a commercial operation within just a few short years.
As a result, Aeglea's stock appears poised for healthy gains as pegzilarginase's clinical program continues to mature. Of course, there's no guarantee of success with any investment in the risky world of clinical-stage biotechs. But this name seems to have the odds tilted firmly in its favor -- at least based on the overwhelmingly positive track record of ultra-rare disease drugmakers in general.
