Cohen's Point72 Pours $14M in This Biotech Stock That Gained 250% in a Month, and Recently Raised $138M in Funding

New York Mets owner and billionaire investor Steven Cohen is known for his agility and high-risk/reward investing approach. He founded the now-defunct SAC Capital Advisors, which was among the most successful hedge funds.

In 2013, Cohen converted his investment operations into a family office and formally adopted the Point72 Asset Management name the following year. In 2018, the firm became a registered investment advisor and started accepting outside capital. Cohen, who has a net worth of $23 billion (£17 billion), steered his firm to massive profits in the past three years, markedly outperforming the S&P 500 index.

His hedge fund's top 20 holdings have gained 131% cumulatively in the past three years, compared to the 64% gains for the S&P 500. Point72 also recorded an impressive 18% return in Q2.

Cohen's latest investment was in Palisade Bio (NASDAQ:PALI) , a stock which has gained over 250% in one month. The stock is a new addition to Point72's portfolio. The hedge fund purchased over 7.5 million shares of the biotech firm for $14.4 million (£10.7 million) at an average buy price of $1.91 (£1.43) per share.

The emerging biotech firm focuses on developing treatments for ulcerative colitis, which is a chronic intestinal condition affecting millions across the world. The stock rally was triggered by the company announcement a few weeks ago that new data from its ongoing phase 1b trial of PALI-2108, its lead drug candidate designed to maximise anti-inflammatory and anti-fibrotic effects while lowering class-related tolerability issues, demonstrated 100% clinical response and 'promising' signals related to the drug's efficacy in ulcerative colitis.

The interim trial data showcased a favourable safety profile of the drug with no serious adverse events or lab abnormalities observed.

'These results highlight the differentiated profile of PALI-2108, demonstrating strong safety, rapid clinical activity, and broad biomarker engagement in ulcerative colitis, while reinforcing its potential as the first targeted anti-fibrotic therapy in Crohn's strictures,' JD Finley, CEO of Palisade Bio, had stated. 'We are excited to advance this program into its next stage of development as we prepare for Phase 2.'

The stock rally gained further momentum last week when the company said it closed an upsized $138 million (£103.2 million) public offering of 197.1 million common shares at $0.70 (£0.52) apiece, which included a full exercise of an overallotment option by the underwriter. The registered offering was led by healthcare heavyweights like RA Capital, Perceptive Advisors, and Janus Henderson. The proceeds from the offering will support the upcoming phase 2 clinical trial for PALI-2108.

'This financing not only validates the strength of our lead program but also allows us to execute a more robust and comprehensive development plan. With these resources, we are well-positioned to accelerate our progress and maximise the value to our shareholders,' Finley said in a separate press release.

While Cohen's investments in Palisade Bio form a tiny part of his portfolio, the investor is known for identifying inflexion points.

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