Although the $20+ million stake is not significant for a multi-billion dollar hedge fund, the move raised eyebrows on Wall Street. OREX is not one of the fund's top ten holdings. However, OREX only has a market cap of $430 million making SAC Capital one of the largest shareholders.
More importantly, investors are betting that Cohen's stake means that his firm believes that Orexigen's drug will be approved by the FDA. The FDA decision that was due today but was delayed.
The stock rose 9.3% today in response to either the filing or the expectation that the obesity drug will be approved by the FDA.
Orexigen has two obesity drugs in the pipeline including Contrave, which has completed Phase III clinical trials; and Empatic that has completed Phase II clinical trials. Contrave is a combination of two drugs, bupropion and naltrexone, in a sustained release formulation (SR).