Corcept Plunges on Study Results - Analyst Blog

Shares of Corcept Therapeutics Inc. (CORT) were down 50.5% after the company announced that it will discontinue the study on Korlym (study 14) for the treatment of psychotic depression after an interim analysis (n=226) revealed that the study has failed to meet its primary endpoint, which was a rapid and sustained reduction in the patients' psychotic symptoms with statistical significance.

Hence, the independent data monitoring committee recommended Corcept that the study is unlikely to generate a statistically significant result even after full enrollment.

Concurrent with the study results, Corcept reported first quarter 2014 results. Corcept posted a loss per share of 14 cents in the first quarter of 2014, wider than the Zacks Consensus Estimate of a loss of 10 cents and a loss of 12 cents in the year-ago quarter.

Corcept generated revenues of $4.4 million in the first quarter of 2014, missing the Zacks Consensus Estimate of $5.0 million. Revenues jumped 156.5% y/y.

In Apr 2012, Corcept launched its drug, Korlym, in the U.S. Korlym is approved in the U.S. and the EU as a once-daily oral medication for the treatment of hyperglycemia secondary to hypercortisolism in adults suffering from endogenous Cushing’s syndrome, who have type II diabetes or glucose intolerance.

We note that Corcept enjoys orphan drug designation for Korlym from the FDA for the approved indication.

Selling, general and administrative expenses were $9.8 million in the first quarter of 2014, up 17.0% from the year-ago quarter.

Research and development expenses surged 71.1% in the first quarter to $7.3 million. The increase was mainly attributable to increased enrolment in Study 14 and additional spending for the development of the company’s next-generation selective GR-II antagonists.

2014 Outlook Upped

Corcept now expects revenues of $25 million–$29 million in 2014, up from the previous guidance of $24 million–$28 million. The Zacks Consensus Estimate of $26.0 million was well within the new guidance provided by the management.

Our Take

Even though we are encouraged by the increase in 2014 guidance, the discontinuation of the phase III study on Korlym was a major setback. Corcept has only one approved drug in its portfolio, Korlym. The label expansion of Korlym for additional indication would have boosted the top line.

Corcept currently carries a Zacks Rank #3 (Hold). Right now, Johnson & Johnson (JNJ), Allergan (AGN) and Shire (SHPG) look attractive. All three carry a Zacks Rank #2 (Buy).

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