Corcept Focuses On Stress Hormone

| About: Corcept Therapeutics (CORT)
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As its name implies, Corcept Therapeutics (NASDAQ:CORT) is focused on cortisol. Secreted by the adrenal glands, cortisol is called the "stress hormone" because it effects how the body responds to stress. Cortisol also regulates the metabolism of proteins, carbohydrates, and fats, helps maintain blood pressure and cardiovascular function, reduces inflammatory response, balances the effects of insulin...and it may play a role in a broad range of metabolic and psychiatric disorders.

CORT has a portfolio of patents for the use of cortisol receptor antagonists to potentially treat:

  • weight gain after antipsychotic medication treatment;
  • mild cognitive impairment;
  • stress disorders;
  • early dementia and Alzheimer's disease;
  • delirium;
  • muscular dystrophy;
  • gastroesophageal reflux disease;
  • cognitive deterioration in adults with Down's Syndrome;
  • psychosis associated with cocaine addiction;
  • increased therapeutic response to ECT.

Since May 1998, CORT has researched and developed a very controversial drug. Korlym (mifepristone) is a glucocorticoid receptor II (GR-II) antagonist that blocks cortisol activity. The active ingredient in the drug, Korlym, previously known as Corlux, is mifepristone, also known as RU-486, "the morning after pill" or the "French abortion pill". Since mifepristone blocks progesterone, it effectively terminates pregnancies. Korlym utilizes a different aspect of the drug, which is its ability to block cortisol.

Cushing's Syndrome

On February 17, 2012, the Food and Drug Administration (FDA) approved Korlym 300 mg Tablets as a once-daily oral medication for treatment of hyperglycemia secondary to hypercortisolism in adult patients with endogenous Cushing's syndrome who have type 2 diabetes mellitus or glucose intolerance and have failed surgery or are not candidates for surgery. Korlym received Orphan Drug Designation from the FDA in July 2007 and from the European Union in October 2011.

Cushing's syndrome is a disorder caused by prolonged exposure of the body's tissues to high levels of cortisol. The disease was first described in 1932 by Harvey Williams Cushing (1869 -1939), a pioneer of brain surgery and often called the "father of modern neurosurgery." Also known as "hypercortisolism," Cushing's syndrome is relatively uncommon and usually affects adults 20 to 50 years old. An estimated 10 to 15 of every one million people are diagnosed with this syndrome each year, resulting in approximately 3,000 new patients. About 20,000 people in the United States have Cushing's syndrome. The preferred treatment for Cushing's syndrome patients is surgery. If successful, surgery can cure the disease. However, surgery is unsuccessful in approximately one-half of patients. Cushing's syndrome and associated complications, such as high blood pressure, can be fatal if undiagnosed or diagnosed too late.

GlobalData estimates that the international Cushing's syndrome therapeutics market was valued at $45.2 million in 2011, after increasing at a compound annual growth rate (CAGR) of 6.2% during the 2006-2011 period. The market is expected to experience a CAGR of 9.1% throughout 2011-2019 to reach a value of $90.8 million by 2019, due to the expected launch of late-stage pipeline molecules.

Less than eight weeks after FDA approval, CORT released Korlym for sale on April 10, 2012. CORT is marketing Korlym in the United States without a partner. Due to the small size of the market, the company is hiring a small number of "medical science liaisons" to educate endocrinologists and other health care providers about Korlym. The company estimates that approximately 300 endocrinologists are treating a significant portion of the Cushing's syndrome patients. They have also executed agreements with a specialty pharmacy, a specialty distributor and a third-party logistics company to distribute Korlym and provide logistical support.

For the three months ended June 30, 2012, CORT recognized approximately $875,000 in net Korlym sales. Cost of sales was approximately $48,000, which equates to 5.5 percent of net product sales, the majority of which represented costs related to stability testing.

On January 20, 2012, the Novartis AG (NVS) drug, Signifor, won the European Committee's backing to treat patients with Cushing's disease. Last year, NVS withdrew their marketing application for Signifor in the United States due to a problem in its chemistry, manufacturing and controls (CMS) section. Signifor is an injectable drug that has to be injected twice daily, while Korlym is an oral once-a-day drug.

While receiving their first FDA approval was a milestone for CORT, drugs in CORT's development pipeline to treat psychotic depression and antipsychotic associated weight gain are why most CORT investors are excited about the company.

Psychotic Depression

Psychotic depression is a serious psychiatric disorder that affects approximately three million people annually in the United States. It is more prevalent than either schizophrenia or manic depressive illness. The disorder is characterized by severe depression accompanied by delusions, hallucinations or both. People with psychotic depression are approximately 70 times more likely to commit suicide than the general population. They are often hospitalized because they are suicidal or are receiving electro-convulsive therapy (NYSE:ECT), a procedure that requires careful supervision because of its side effects. There are approximately 100,000 psychotic depression-related hospitalizations per year in the United States. Patients with psychotic depression are frequently incapacitated, are unable to maintain interpersonal relationships, or hold a job. There is no FDA-approved treatment for psychotic depression.

Several studies have shown that patients with psychotic depression have elevated levels and abnormal release patterns of cortisol, while most patients with non-psychotic depression do not. More than 20 years ago, one of CORT's scientific co-founders, Alan Schatzberg, MD, hypothesized that elevated levels of cortisol in patients with psychotic depression led to elevated levels of dopamine. Since elevated levels of dopamine has been associated with both delusional thinking and hallucinations, regulating the level and release patterns of cortisol could normalize dopamine levels in the brain, and thus, improve psychotic depression symptoms. In addition to cortisol's effect on dopamine levels, research has also indicated that prolonged elevated cortisol levels may play a role in causing psychotic depression symptoms.

Since 1999, Joseph K. Belanoff, M.D., has served as CEO and as a member of Corcept's Board of Directors. Belanoff is a practicing psychiatrist who also serves as a clinical faculty member in the Psychiatry and Behavioral Sciences Department at Stanford University. In the 1990's, Belanoff trained under Schatzberg, the chairman of the Stanford University Medical School psychiatry department, as a post doctoral fellow.

During the 1970s and 1980s, Schatzberg conducted pioneering research at Harvard University's McLean Hospital where he identified a link between psychotic depression and cortisol. He then searched for a compound capable of regulating cortisol levels. In 1991, Schatzberg became chairman of the psychiatry department at Stanford University. During 1996, Belanoff was able to obtain mifepristone for research purposes. Schatzberg and Belanoff conducted a study testing mifepristone on a small number of patients suffering from psychotic depression. They were very impressed with the results. Stanford University applied for and was granted a patent covering the use of mifepristone to treat psychotic depression and other disorders. Belanoff and Schatzberg were named as co-inventors on the patent and the patent was assigned to Stanford University. Corcept Therapeutics was founded to start development on a drug using mifepristone to treat psychotic depression. After its standard bidding process, Stanford licensed the patent to Corcept Therapeutics.

Since then, CORT scientists have conducted numerous clinical trials to see if mifepristine could effectively treat the psychotic features of psychotic depression and other disorders.

On March 19, 2007, CORT announced that Study 06, the last of three Phase 3 trials evaluating mifepristone for treating the psychotic features of psychotic major depression, did not achieve statistical significance with respect to its primary endpoint. However, CORT researchers found that those patients who took 1,200 mg of mifepristone in Study 06 developed higher drug plasma levels than did the groups of patients who received lower doses. CORT researchers also found that there was no discernible difference in the incidence of adverse events between patients who received placebo and those who received 300 mg, 600 mg or 1,200 mg of mifepristone.

In March 2008, CORT began enrollment in Study 14, their current, ongoing Phase 3 trial in psychotic depression. The protocol for this trial incorporates what CORT scientists learned from three previously completed Phase 3 trials. This study will use a Korlym dose of 1,200 mg once per day for seven days. The study's primary endpoint will be a comparison of the number of patients who meet response criteria at both days 7 and 56, the same criteria used in Corcept's previous psychotic depression studies.

Antipsychotic-induced Weight Gain Mitigation

During 2003, CORT initiated a discovery research program to identify and patent selective GR-II antagonists. CORT scientists identified three distinct series of GR-II antagonists. These compounds, like their lead product mifepristone, block the cortisol receptor (GR-II) but, unlike mifepristone, do not appear to block the PR (progesterone), ER (estrogen), AR (androgen) or GR-I (mineralocorticoid) receptors. Both the United States Patent & Trademark Office (USPTO) and the European Patent Office (EPO) have issued composition of matter patents to CORT.

Since excessive cortisol plays a role in weight gain and has other adverse metabolic effects, CORT scientists believe that the company's pipeline of selective cortisol (GR-II) receptor antagonists may be effective treating weight gain and other metabolic disorders.

Atypical antipsychotics, including Eli Lilly's (NYSE:LLY) Zyprexa® (olanzapine), Johnson & Johnson's (NYSE:JNJ) Risperdal® (risperidone), Novartis's Clozaril® (clozapine) and AstraZeneca's (NYSE:AZN) Seroquel® (quetiapine), are widely used to treat schizophrenia and bipolar disorder. All medications in this group are associated with weight gain and carry a warning in their labels relating to treatment-emergent hyperglycemia and diabetes mellitus.

Those investors bullish on CORT believe that there is a very lucrative market for an FDA approved drug that mitigates antipsychotic weight gain. Consider these statistics:

  • The number of annual atypical antipsychotic prescriptions rose to 54 million in 2011 from 28 million in 2001, a 93 percent increase, according to IMS Health.
  • 3.1 million patients were treated with antipsychotic medications resulting in $18.2 billion in annual spending, growing by $2.1 billion in 2011 versus $1.5 billion in 2010, according to IMS Health.
  • Anti-diabetes medicine spending grew by $1.9 billion in 2011 with 11 million patients being treated with diabetes medications, according to IMS Health.
  • United States weight loss market revenues were $60.9 billion in 2010, up from $60.4 billion in 2009, and up 32% from $58.6 billion in 2008, according to the biennial Marketdata Enterprises study, The U.S. Weight Loss and Diet Control Market (11th Edition).
  • weight gain occurs in up to 40 per cent of patients taking atypical antipsychotics, according to Centre for Addiction and Mental Health (OTC:CAMH) scientist James Kennedy, senior author of a recent study published online in the Archives of General Psychiatry.

This weight gain can lead to obesity, type 2 diabetes, heart problems and a shortened life span. In 2003, the FDA required all manufacturers of atypical antipsychotics to change their labeling to include a warning about the hyperglycema and diabetes risks.

In April 2005, CORT scientists announced results from two preclinical studies conducted in a rat model of Zyprexa {olanzapine}-induced weight gain. These studies demonstrated that mifepristone's GR-II antagonist action has the potential to reverse and prevent the weight gain associated with olanzapine.

CORT then conducted studies in humans. In 2007, CORT researchers found a statistically significant reduction in weight gain in those subjects who took Zyprexa® plus mifepristone compared to those who took Zyprexa® plus placebo. Adding mifepristone to Zyprexa® also had a beneficial impact on secondary metabolic measures, such as fasting insulin, triglycerides and abdominal fat.

In January 2009, CORT announced positive results from a similar study evaluating the ability of mifepristone to mitigate weight gain associated with the use of Risperdal®. This study confirmed and extended the earlier results seen with mifepristone and Zyprexa®, demonstrating a statistically significant reduction in weight and secondary metabolic endpoints of fasting insulin, triglycerides and abdominal fat.

All this research has not come cheap. CORT has incurred operating losses since inception. As of June 30, 2012, the company had an accumulated deficit of $227.2 million. On July 2, 2012, the company sold 11 million shares of their common stock in an underwritten public offering for net proceeds of approximately $46.1 million after deducting expenses of the offering.

As of June 30, 2012, CORT had cash and cash equivalents of $34.9 million, compared to $39.6 million on December 31, 2011. Net cash used in operating activities for the six-month periods ended June 30, 2012 and 2011 was $18.0 million and $14.5 million, respectively.

CORT has a market capitalization of $248.21M.

CORT recently fell to a 52 week low trading at $2.43 per share on October 23, 2012. The stock reached a 52 week high on February 21, 2012 trading at $4.90 per share.

Over 14 years, CORT has conducted numerous clinical trials to develop a platform of cortisol receptor antagonists that could generate treatments for many severe illnesses. Although it has been slow going, the patient, long-term investor may be rewarded by bringing lifesaving drugs to a potential billion dollar market.

Disclosure: I am long CORT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.