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A bunch of hedge funds are cashing in big on the Celator drug deal

Musicians playing Saxophone, trumpet, trombone. French Quarter, New Orleans, Mardi Gras Day, 2003.

Dublin-based Jazz Pharmaceuticals (JAZZ) agreed on Tuesday to buy Ewing, New Jersey-based Celator Pharmaceuticals for $30.25 per share, a deal valued at approximately $1.5 billion.

Shares of Celator (CPXX) rose more than 70% following the announcement and were last trading around $29.93.

The relatively small biotech M&A deal is a nice win for a bunch of hedge funds who piled into the stock earlier this year.

Celator Pharmaceuticals ranked No. 1 on Goldman Sachs’ list of stocks with “the largest increase in hedge fund concentration” during the first quarter. According to Goldman, 18 of the 841 hedge funds the bank tracks owned the stock.  What's more is data compiled by WhaleWisdom, a site that monitors hedge fund regulatory filings, shows that 58 funds own the stock with 43 of those funds initiating a new position in the first quarter.

This year, Celator had been engaged in a clinical trial for its lead product VYXEOS, which is meant to treat acute myeloid leukemia. In mid-March, the company announced positive results for its Phase 3 trial after the treatment showed “statistically significant improvement in overall survival.” The company is currently preparing to submit a New Drug Application with the US Food and Drug Administration.

Here’s a rundown of the top ten biggest hedge fund shareholders, according to 13F data compiled by Symmetric.

  • Visium Asset Management: 1,450,000 shares
  • venBio Select Advisor: 1,416,257 shares
  • Ra Capital Management LLC:  1,414,114 shares
  • Perceptive Advisors: 1,100,000 shares
  • Adage Capital Partners: 850,000 shares
  • BVF Inc.: 800,000 shares
  • First Eagle Investment Management: 741,000 shares (added 128,400 in Q1)
  • Millennium Management: 643,802 shares
  • Cormorant Asset Management: 620,000 shares
  • EAM Investors: 549,455 shares

Nearly all of these funds, most of which focus on healthcare and biotech, initiated a new position in the first quarter. One fund added to its already existing stake it had acquired during the fourth quarter of 2015.

This nearly $1.5 billion acquisition price is a nice premium, especially since the company had an equity market capitalization of $601 million at the end of the the first quarter.

The stock is up 180% since March 31. Celator’s stock has risen more than 1,605% since January.

Julia La Roche is a finance reporter at Yahoo Finance.

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