SAC Capital loaded up on shares of InterMune, a pharmaceutical company, when it looked like the company’s hotly anticipated new drug would get approval from the Food and Drug Administration. But after the approval did not come through and the stock plunged 80% in one day, the prognosis for that investment does not look good.
SAC Capital was not alone, with several other big-name hedge funds, including Citadel Investment Group, D.E. Shaw and Millennium Management, holding shares in InterMune, a biopharmaceutical company that develops drugs for pulmonary and liver diseases. If the company’s new drug, Pirfenidone, had gotten approval, it would have been the first drug to cure idiopathic pulmonary fibrosis, a fatal lung disease that afflicts an estimated 130,000 Americans.
SAC founder Steve Cohen in particular owned a significant portion of the company, buying loads of InterMune stock earlier this year when it was flying high. As of March 30, SAC Capital owned 1,940,393 shares of InterMune, according to regulatory filings, and by April, Cohen, through a combination of the fund and other holdings, owned 4,465,400 shares, or 8.2%, of the Brisbane, Calif.-based company. The stock rose to $45 in late March as an advisory committee to the FDA voted nine to three to approve Pirfenidone, also known as Esbriet. But on May 4, InterMune’s stock plummeted after the drug failed to secure the expected approval, ending the day at $11.38—down from $45.44 at the trading day’s open. The price has stagnated since then, hovering around $10.
Cohen aggressively dumped InterMune shares between the end of the first quarter and the second. As of June 30, SAC Capital only owned 10,983 shares.
Many other big name funds held large positions in the first quarter, though a handful have cut those positions by the end of the second quarter. It is unclear whether these funds cut their stakes before the stock’s bloodbath. Citadel, Millennium and D.E. Shaw all reduced their exposure from the first quarter. Balyasny Asset Management and Visium Asset Management increased their exposure from the first quarter. Duquesne Capital Management, Kingdon Capital Management, Renaissance Technologies and Soros Fund Management were all invested in the first quarter but by the second quarter had sold their holdings.
Four months later, analysts have mixed opinion of the stock. JP Morgan senior analyst Geoffrey Meacham noted that U.S. approval of Pirfenidone is extremely unlikely until the first half of 2011. But equity research firm Canaccord Genuity noted that while InterMune’s immediate outlook is uncertain, there is a possible upside if the European pharmaceutical regulator European Medicines Agency approves Pirfenidone before the U.S. Adam Cutler, senior analyst at the firm, has advised investors to hold InterMune stock, as he expects it to generate returns of up to 10% in the next 12 months.
Hedge funds investors in InterMune stock
|
Filer |
Shares Held
03/31/2010 |
Shares Held
06/30/2010 |
Change |
|
QVT Financial |
741,339 |
4,361,632 |
3,620,293 |
|
Visium Asset Management |
2,250,303 |
2,312,500 |
62,197 |
|
Balyasny Asset Management |
350,000 |
1,885,000 |
1,535,000 |
|
Alyseka Investment Group |
|
1,500,000 |
1,500,000 |
|
D. E. Shaw & Co. |
2,407,414 |
1,125,910 |
(1,281,504) |
|
Millennium Management |
700,000 |
40,193 |
(659,807) |
|
Numeric Investors |
|
20,000 |
20,000 |
|
Citadel |
245,112 |
13,739 |
(231,373) |
|
SAC Capital Advisors |
1,940,393 |
10,983 |
(1,929,410) |
|
Orbimed Advisors |
1,141,000 |
|
(1,141,000) |
|
Duquesne Capital Management |
773,334 |
|
(773,334) |
|
Kingdon Capital Management |
700,000 |
|
(700,000) |
|
Adage Capital Partners |
250,000 |
|
(250,000) |
|
Viking Global Investors |
226,400 |
|
(226,400) |
|
Renaissance Technologies |
177,329 |
|
(177,329) |
|
Soros Fund Management |
10,705 |
|
(10,705) |
|
AQR Capital Management |
4,900 |
|
(4,900) |
—Suzy Kenly