Steve Cohen’s Point72 Asset Management has initiated a new position in Inotek Pharmaceuticals Corporation (NASDAQ:ITEK). In a freshly-submitted filing with the Securities and Exchange Commission, the investment firm disclosed a 1.36 million-share passive stake in the company, which accounts for 5.2% of its outstanding common stock. In the meantime, Peter Kolchinsky’s RA Capital Management has reported a new passive stake of its own, in Aquinox Pharmaceuticals Inc. (NASDAQ:AQXP). RA Capital currently owns 1.03 million shares of the company, representing 9.6% of its outstanding shares.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 118% and beating the market by more than 60 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
Point72 Asset Management LP is a family office that manages the assets of its founder, Steven A. Cohen, and other eligible employees. Point72 is considered the descendant of SAC Capital Advisors, Cohen’s hedge fund that stopped managing money for outside investors in early 2014 after charges of insider trading. Cohen’s long/short investment firm oversees a public equity portfolio worth $14.44 billion as of June 30. Just recently, Point72 also disclosed a 5.0% stake in another pharmaceutical company, Ironwood Pharmaceuticals Inc. (NASDAQ:IRWD).
Inotek Pharmaceuticals Corporation (NASDAQ:ITEK) is a clinical-stage biopharmaceutical company that focuses on the discovery, development, and commercialization of therapies for glaucoma and other ocular diseases. Its lead product candidate, trabodenoson, is a first-in-class selective adenosine mimetic designed to restore the eye’s natural pressure control mechanism. The shares of Inotek have more than doubled since its IPO in February, mainly thanks to the announcement of a positive end-of-phase 2 meeting with the FDA earlier this summer. Subsequently, Inotek is working on the final preparations to commence its first Phase 3 trial to support a New Drug Application (NDA) for its lead product candidate. Just a few days ago, Inotek sold 5.4 million shares through a public offering at a price of $12.75 per share, as well as 810,000 greenshoe options that have been fully exercised by underwriters, raising approximately $79.2 million before underwriting discounts and commissions, and offering expenses. Following the public offering, Inotek currently has more capital to fund the continued development of its product candidates, which are expected to unlock a blooming revenue stream should the company’s Phase 3 study on its trabodenoson be successful. Matthew Halbower’s Pentwater Capital, a major shareholder of Inotek Pharmaceuticals Corporation (NASDAQ:ITEK) with 787,200 shares as of June 30, saw its stake in the biopharmaceutical company skyrocket in value after the aforementioned announcement of the positive meeting with the FDA.
Let’s now provide a brief introduction to the other hedge fund we are discussing in this article. RA Capital Management, an investment firm specializing in healthcare and life-sciences companies, was founded by Peter Kolchinsky in 2001. The firm provides private, IPO, and follow-on financing for its portfolio companies, enabling management teams to drive value creation without facing capital shortages from inception through product commercialization. According to its most recent 13F filing, RA Capital Management oversees a public equity portfolio worth $994.11 million.
Aquinox Pharmaceuticals Inc. (NASDAQ:AQXP) is a clinical-stage pharmaceutical company that engages in discovering and developing therapeutics for diseases in the areas of inflammation and immune-oncology. The company’s lead drug candidate is AQX-1125, which has demonstrated convincing preclinical activity in a broad range of relevant inflammatory studies. The recently-announced positive results from the company’s Phase 2 Leadership trial with AQX-1125 in patients with bladder pain syndrome/interstitial cystitis have pushed the stock to new highs. Specifically, the shares of Aquinox have returned 136% year-to-date and are highly likely to go even higher should the company’s lead drug candidate reach the market. However, it might be the case that the market initially overvalued the drug’s potential, as the stock has gradually dropped from a high of over $55 per share to a current share price of $17.70. In the meantime, the company’s AQX-1125 in BPS/IC is closer and closer to commercialization. Aquinox is believed to be working on finalizing its crucial trial designs in consultation with the U.S. FDA and the European Medicines Agency in setting the path for the potential approval of the drug. Julian Baker and Felix Baker’s Baker Bros. Advisors LP had amassed a 39.8% stake in Aquinox Pharmaceuticals Inc. (NASDAQ:AQXP) before the stock started rallying to unbelievable levels, making the brothers a great deal of money in the process.