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MENLO PARK, Calif. (
Corcept Therapeutics(CORT - Get Report) deserves a heaping platter of congratulations for winning FDA approval for Korlym, the first--in-class treatment for a rare hormonal disorder known as Cushing's syndrome. Corcept shares are up 48% to $4.47 in Tuesday trading following Friday night's approval announcement.
A foul serving of crow is what I deserve for
not believing Corcept would get Korlym approved on its first attempt. More on what I got wrong later; first, let's look at Corcept's future with Korlym approved.
Corcept plans to launch Korlym on May 1. The company has yet to disclose pricing but Alan Leong of
Biotech Stock Research estimates conservatively one year of therapy will cost $75,000. [Leong deserves kudos for correctly predicting Korlym's approval.]
Again being conservative, Leong estimates that about 2,000 Cushing's patients in the U.S. will be eligible for Korlym therapy, leading to $150 million in U.S. sales by 2016. Corcept is pursuing Korlym approval in Europe, which could ultimately generate another $75 million in sales or $225 million total.
Corcept intends to market Korlym on its own in the U.S. and will only need to hire a small sales force since most Cushing's patients are treated by a handful of specialists. This means Corcept should be able to maintain high profit margins.
The FDA stated that as many as 5,000 patients may be eligible for Korlym treatment, which implies a peak U.S. market opportunity of $375 million (assuming $75,000-per-year pricing.)
Corcept's current market cap of $370 million is not fully valuing Korlym's market potential. Why? Likely because some early investors in the company are taking profits now while others may wait to see how Korlym launches before jumping in.
Corcept is also studying Korlym as a treatment for psychotic depression and weight gain caused by antipyschotics.
Cushing's syndrome is 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.
FDA approved Korlym to control high blood sugar levels in adults with Cushing's. The drug works by preventing cortisol from binding to its receptor thereby blunting cortisol's effects on the body. Korlym does not decrease levels of cortisol in the body.
Corcept also sought approval for Korlym to treat hypertension in Cushing's patients but FDA rejected that claim.
predicted an FDA rejection for Korlym -- a call that obviously went wrong. My biggest mistake was probably under-estimating the significance of Cushing's being a rare, life-threatening disease with no current treatment options. Korlym causes significant side effects but the drug is also well understood by FDA (the active ingredient is mifepristone also known as the "abortion pill" RU-486) and the benefits in this vulnerable Cushing's patient population outweigh the risks. I didn't think through the risk-benefit equation for Korlym well enough.
I also placed too much emphasis on a change in Corcept's risk factors (disclosed in the company's SEC filings) that warned of FDA possibly requiring additional pre-approval requirements for Korlym in Cushing's. In the past, changes like this made to a company's SEC filings have proven to be reliable indicators of trouble, but not this time.
--Written by Adam Feuerstein in Boston.
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