Steve Cohen’s SAC Capital is taking a hit after the FDA rejected Orexigen’s proposed diet drug this morning.
Orexigen had an anti-obesity drug in the works, Contrave, but the FDA ruled that there were heart safety concerns and requested a clinical trial.
Yesterday, SAC Capital disclosed a new 7.2% stake ($31.14 million) in Orexigen. And now the stock is plunging this morning after the news. Orexigen’s only drugs in the works are anti-obesity drugs, and everything was riding on Contrave, according to Reuters.
It’s down 73% so far and it’s only been half an hour since the news was announced. That puts Cohen out about $23 million, if he didn’t hedge it.
For those who are interested in the drug – it combined an antidepressant (bupropion, which also boosts metabolism) and a drug that fights addiction (naltrexone). Trials showed that 35% of people lost 5% of their bodyweight. But it also showed that people who took it experienced a slight rise in blood pressure and pulse rates.