FOIAengine Reveals a Giant Hedge Fund‘s Interest
Elon Musk sounded ecstatic when he tweeted out the big news last November. The world’s richest person had just closed the $44 billion Twitter deal. But there was so much more to be jazzed about. A few months earlier, he’d played the dazzling fashionista in white tie and tails as he squired his mother up the red carpet at the Met Gala. Tesla’s long-delayed Cybertruck was almost in production. And SpaceX was riding high with a whole bunch of successful launches, more progress on his big plan to colonize Mars.
So, yeah, he was feeling pretty good about business. Time to get personal.
“Down 30 lbs!” Musk preened in a post-midnight tweet to his 138 million followers.
“What’s made the most difference?” a Tesla owner asked.
Musk replied with the names of two drugs that are reshaping the $224 billion weight-loss industry, reciting the new slim-down mantra of everyone from coastal elites to the TikTok generation: “Fasting + Ozempic/Wegovy + no tasty food near me.”
He is not alone.
The new drugs, called GLP-1 receptor agonists, gained Food and Drug Administration approval a few years ago. The drugs – injectables Ozempic, Wegovy, and Mounjaro, and a pill called Rybelsus – are prescription medications developed to improve blood sugar control in adults with Type-2 diabetes. They work by targeting areas in the brain that stimulate insulin and control appetite.
The drugs are not approved by the FDA for losing weight. Moreover, the Danish pharmaceutical company that makes Ozempic and Wegovy warns that weight loss will immediately reverse if users stop the weekly injections. Still, once a drug has been cleared by the FDA, doctors are free to prescribe it off-label.
That is what happened once Ozempic and Wegovy became social media phenoms. The TikTok hash tag #Ozempic links to more how-to-inject and before-after videos than one person could probably watch in a lifetime, and has clocked over 904 million views. A related TikTok site about Ozempic has 1.2 billion views, and the influencer topping that site is a Beverly Hills cosmetic surgeon who calls himself “dr.90210.”
All the buzz around Ozempic and its cousins got us wondering whether there were players who jumped in early and caught the big wave – and who still might be riding it. FOIA requests could provide a clue, particularly since information from the FDA’s database of adverse reports – submitted by doctors, patients, and drug makers reporting side effects – requires an interested party to put a FOIA request on the public record. Amid the noise, that may signal an activist investor’s interest.
FOIA requests can be an important early warning of bad publicity or litigation to come. Or, in Ozempic’s case, a stock-market bonanza. That is why PoliScio Analytics’ competitive-intelligence database FOIAengine tracks FOIA requests in as close to real-time as their availability allows. Of particular interest are requests that may significantly affect stocks and markets once the stories hit.
Digging into FOIAengine, we discovered that one of the world’s biggest hedge funds, with the power to move markets, had Ozempic on its radar from the outset.
The social-media-fueled Ozempic craze started last summer. By last October, the Wall Street Journal had taken note, name-checking Andy Cohen, the Bravo host and “Real Housewives” executive producer, for a tweet to his 2.4 million followers in which he said “Everyone is suddenly showing up 25 pounds lighter. What happens when they stop taking #Ozempic ?????” People responded to his tweet with their own off-label stories, including a cardiologist who encouraged the drugs’ “revolutionary” use and a Miami woman who said, “I can get it black market for $175 a pen, 2 for $250 in one day delivered to your house.” (The retail cost of one Ozempic injection pen, before insurance, can be $1,000 or more.)
Diet-and-nutrition giant Weight Watchers (NASDAQ: WW) quickly took a hit. With its business model disrupted and its stock price down to $4 a share (from a pandemic-high $40), Weight Watchers started scrambling. Two months ago, it bought a new app-based Ozempic-prescribing platform called Sequence for $106 million. By then, the diabetics for whom the drugs were intended began encountering problems, because pharmacies were running out of the drugs and the manufacturers couldn’t keep up with the surging demand. An FDA site that keeps track of drug shortages persistently lists Ozempic and Wegovy as being in short supply.
The weight-loss frenzy brought big upsides for two drug makers and their shareholders. Investors in Novo Nordisk (NYSE: NVO), which produces Ozempic, Wegovy, and Rybelsus, saw a 70 percent increase in the company’s share price. The drug maker’s stock hasn’t stopped climbing; it reached an all-time high this week. Eli Lilly (NYSE: LLY), maker of Mounjaro, also saw its shares hit an all-time high this week. Lilly’s shares are up 47 percent since last summer.
Unsurprisingly, among more than 30 FOIA requests about the weight-loss drugs were several from Novo Nordisk and Eli Lilly. They were, in effect, performing standard due diligence, asking the FDA for reports on file about their own drugs.
But also making Ozempic-related FOIA requests were two hedge funds – Tri Locum Partners and Point72. Tri Locum Partners was founded in 2019 and places investment bets, including short sales, in the healthcare sector. Its most recent 2023 SEC filing reported operations in the U.S. and offshore in the Cayman Islands, with $417 million in assets under management and most of its clients outside the U.S.
Tri Locum used FDA shorthand, requesting in December 2021 “any Form 483s” for a plant in Belgium that produces Wegovy under a contract with Novo Nordisk. FDA investigators file a Form 483 when unsafe practices are observed at a facility, indicating that a drug “has been adulterated or is being prepared, packed, or held under conditions whereby it may become adulterated or rendered injurious to health.”
Tri Locum’s size makes it a relatively small fish in the hedge-fund world. But two other Ozempic/Wegovy requests came from hedge fund Point72, a whale at the top of the food chain. Point72 has $140 billion in assets under management, according to its most recent 2023 SEC filing, making it one of the world’s biggest.
Point72’s sole shareholder is a phenomenally successful billionaire stock trader named Steven A. Cohen. If you’ve heard of him, it might be because he’s had some fun as the new owner of the New York Mets. Or because he was in the news a decade ago as the top criminal target who dodged every investigative bullet from then-Manhattan U.S. Attorney Preet Bharara. Cohen’s hedge fund is so big that, on any given day, it may account for an outsized share of total trading volume in listed stocks.
A few other numbers help to put Cohen’s, and Point72’s, success in perspective: In 2020, Cohen paid a Major League Baseball-record $2.4 billion to buy the Mets. A few years before that, he paid $141 million for an Alberto Giacometti bronze that made him the owner of the most expensive sculpture ever sold at auction.
Cohen has 2,311 employees working for him at Point72, including over 1,100 traders and portfolio managers – and at least one FOIA requester who was very curious about the weight-loss drugs at the start of the big run-up last summer. The requests dated August 2, 2022 were sweeping, asking for details on any adverse reports on file for Mounjaro or Wegovy.
In other words, Point72 was doing its homework. While some hedge funds rely on computer-driven proprietary algorithms to guide trading, Cohen calls Point72 “an ideas business” and is known to be a devotee of the mosaic theory of stock picking – digging for nuggets of non-public (but not illegal) information, like FOIA, in order to get an edge. It made him a billionaire, but he has also spent much of his professional life under investigation by authorities who question whether his shrewd trades step over the line into illegality.
In 2013, Cohen’s previous hedge fund, the eponymous SAC Capital, pleaded guilty to federal civil and criminal insider-trading and money-laundering charges, and paid a $1.8 billion fine – the largest insider trading penalty in history. The fund’s guilty pleas finally resolved a 10-year federal criminal investigation of Cohen and his firm. Bharara had wiretaps and informants, but he could only nail Cohen’s firm, and not the man himself. Cohen was never personally charged in the federal criminal case.
The guilty pleas shut down Cohen’s hedge fund, but the penalties didn’t prevent him from remaining a Wall Street player. He simply renamed SAC Capital as Point72 and reopened it as a family office – a very big family office, with Cohen as the only investor. In 2016, Cohen settled insider trading charges with the SEC, agreeing to a two-year ban on taking money from outsiders. He didn’t admit guilt to the SEC, either. He converted his family office back to a hedge fund after his suspension ended. Wealthy clients soon returned. Point72 became bigger than ever. And the rest is history, so far.
Next: In weeks to come, we’ll be taking a closer look at Point72’s numerous other FOIA requests.
John A. Jenkins, co-creator of FOIAengine, is a Washington journalist and publisher whose work has appeared in The New York Times Magazine, GQ, and elsewhere. He is a four-time recipient of the American Bar Association’s Gavel Award Certificate of Merit for his legal reporting and analysis. His most recent book is The Partisan: The Life of William Rehnquist. Jenkins founded Law Street Media in 2013. Prior to that, he was President of CQ Press, the textbook and reference publishing enterprise of Congressional Quarterly. FOIAengine is a product of PoliScio Analytics (PoliScio.com), a new venture specializing in U.S. political and governmental research, co-founded by Jenkins and Washington lawyer Randy Miller. Learn more about FOIAengine here. To review FOIA requests mentioned in this article, subscribe to FOIAengine.