Corcept Therapeutics Incorporated — Q2 2011 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2011. Corcept was a development-stage pharmaceutical company with no marketed products. Its lead candidate, CORLUX (mifepristone), was under FDA review for endogenous Cushing’s Syndrome; the FDA accepted the NDA for filing in June and set a February 17, 2012 PDUFA goal date.
Financial performance and liquidity
| Metric | Q2 2011 | Q2 2010 | Six months 2011 | Six months 2010 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $6.203 million | $4.574 million | $11.127 million | $9.063 million |
| General and administrative | $2.666 million | $1.871 million | $4.840 million | $3.446 million |
| Net loss | $8.882 million | $5.695 million | $15.983 million | $11.768 million |
| Net loss per share | $0.11 | $0.09 | $0.19 | $0.18 |
| Cash used in operating activities | Not separately stated | Not separately stated | $14.502 million | $10.404 million |
At June 30, cash and cash equivalents were $52.230 million, up from $24.578 million at December 31, 2010; working capital was $48.8 million and accumulated deficit was $192.2 million. Total current liabilities were $3.856 million. The filing reports no material debt balance. The January 2011 public offering of 11.5 million shares generated approximately $41.9 million net proceeds. Gross margins are not meaningful because the company had no product revenue.
Changes and management outlook
- Six-month operating expenses increased: R&D by about 23% and G&A by about 40%. Management attributed the increases mainly to NDA preparation and prosecution, CORLUX manufacturing and commercialization readiness, and development of selective GR-II antagonists.
- Net loss widened year over year. The 2010 comparative period included approximately $750,000 of favorable litigation settlement income; 2011 interest and other income was nearly zero.
- Management expected R&D, G&A and operating cash use to increase during the rest of 2011. It believed existing resources could fund planned operations through the end of 2012, but said additional funding would be needed thereafter for development and potential commercialization.
- The company had raised about $2.6 million through June 30 under its Kingsbridge committed equity facility; availability depends on market price, registration and other conditions. Management estimated that up to approximately $28 million might be raised based on share-price data through August 4, 2011.
Programs, risks and contingencies
- The Cushing’s Syndrome Phase 3 study met its primary endpoints, and 87% of patients showed significant global clinical improvement. The NDA remained subject to FDA review and possible requests for further information or studies.
- A Phase 3 CORLUX study for psychotic depression continued; three earlier Phase 3 studies in that indication had failed to meet primary or key secondary endpoints. CORT 108297 was in Phase 1b/2a development.
- Manufacturing is a key risk: the tablet supplier was a single source, and a potential backup had not completed process transfer or test manufacture. The company also cited reliance on third-party manufacturers and clinical research organizations.
- Other material risks include continued losses and uncertain access to capital; regulatory approval and market acceptance; mifepristone-related political and safety concerns; competition; reimbursement; patent protection; and possible dilution from future equity financing. The company reported no material legal proceedings and no off-balance-sheet arrangements.
- Management stated that disclosure controls were effective and that there were no material changes in internal control over financial reporting during the quarter.
Investor facts to verify
- FDA review status, any additional information or studies requested, and the February 17, 2012 PDUFA goal date.
- Cash burn and whether the stated runway through year-end 2012 remains adequate as development and launch-preparation spending rises.
- Qualification and readiness of a backup tablet manufacturer, and the timing and cost of CORLUX validation batches.
- Enrollment, progress and eventual results of the psychotic depression and CORT 108297 studies.
- Potential dilution and actual availability of the Kingsbridge facility or other financing; 84,203,431 common shares were outstanding on August 4, 2011.