Corcept Therapeutics, Inc. (NASDAQ:CORT)

CAPS Rating: 2 out of 5

A pharmaceutical company which is engaged in the development of drugs for the treatment of severe psychiatric and metabolic diseases.

Recs

1
Player Avatar zzlangerhans (99.80) Submitted: 9/22/2011 8:25:20 PM : Outperform Start Price: $2.66 CORT Score: +7.39

For once I seem to have gotten lucky with a red thumb. I predicted incorrectly that the phase III study of Corlux in Cushing's disease would be a failure, given the prior failure of the drug for several other indications. The company ultimately reported positive results for the primary endpoints of hypertension and glucose intolerance, as well as the secondary endpoint of global clinical improvement. Corcept submitted an NDA for Corlux for Cushing's syndrome in April and the share price maxed out at 5 in early June. However, by the time the FDA accepted the Corlux NDA the stock was well into a decline that has now erased almost 50% of the peak market cap.

I'm unsure why Corcept has sold off so intensely in recent months. The stock might have become overvalued for the commercial potential of Corlux, given the rarity of Cushing's syndrome. Also, the full data set for the phase III trial (as delineated at http://www.corcept.com/news_events/pr_1307237503) raises some concerns. One sentence that troubled me was this: "There were 21 patients enrolled in the hypertension group, of which 38% (p<0.05) achieved a 5 millimeter or greater reduction in diastolic blood pressure without increasing the patient’s prescribed hypertensive medication." This highlights the problems of running small, single-arm, open-label trials. Only 50 patients were in the study, out of which only 21 were in the cohort designed to evaluate efficacy of Corlux in hypertension. Of those 21, only about 8 showed a significant response. Despite the p-value, how likely is it that the FDA will approve a drug for an indication in which it was effective in 8/21 patients?

In Corlux's favor, the company has stated that the FDA has indicated that the phase III trial “may provide a reasonable basis” for an NDA. And indeed the FDA has accepted the NDA and assigned a PDUFA of February 17, 2012. But that is no guarantee of approval and I feel there is a substantial likelihood of a Complete Response letter. I do feel that it is unlikely that the share price will continue to drop much further, given the optimism that brought the share price to 5 in the first place.

Featured Broker Partners


Advertisement