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Biotech Stock Mailbag: Corcept Therapeutics, Reader Retorts

Stocks in this article: CORT ONTY OSIR REGN SNY

Updated with response from Osiris Therapeutics.

BOSTON ( TheStreet) -- Portman86 kicks off this week's Biotech Stock Mailbag: " Corcept Therapeutics (CORT) -- Approval or not?"


Corcept is seeking FDA approval for Korlym as a treatment for Cushing's Syndrome, a rare condition in which a tumor on an adrenal gland like the pituitary causes excess production of the hormone ACTH. Excess ACTH, in turn, causes the body to produce too much of the stress hormone cortisol.

Patients with Cushing's suffer from severe cardiovascular and metabolic disease that can be fatal. No drugs are currently approved in the U.S. to treat the disorder, but Novartis (NVS) recently received approval for the first Cushing's therapy in Europe.

Corcept's FDA approval decision date for Korlym is Friday, Feb. 17.

I'm predicting an FDA rejection. Here's why:

Corcept made a subtle but important change to the risk factor statements in its most recent 10Q filed with the Securities and Exchange Commission. The company now warns of "the possibility that the FDA may impose additional pre-approval requirements in regard to Korlym for the treatment of Cushing's Syndrome."

The addition of this important risk factor is hard to find. It's a new bullet point among many older bullet points included within the context of more expansive, cautionary language about Corcept's cash resources. Look on page 25-26 of Corcept's 10Q filed Nov. 11, 2011.

Companies add risk factors to their SEC filings for a reason. Keep in mind that FDA accepted the Korlym filing for review in June of last year. Corcept filed its 10Q for the second quarter 2011 on Aug. 9 without this warning about the possibility of additional pre-approval requirements for Korlym. My guess is that something happened between last August and November -- an interaction or warning from FDA regarding the Korlym review -- that forced Corcept to add this new risk language in its latest 10Q.

I was already skeptical of Korlym's approval chances since FDA refused to grant the drug a priority, six-month review despite Cushing's being a serious, fatal disease with no currently approved U.S. treatments. FDA also decided not to hold an advisory panel, which is odd, even if the active ingredient in Korlym, mifepristone, is well known to FDA. Mifepristone is also the active ingredient in the "abortion pill" RU-486.

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