Corcept: We'll Take Our Ball and Go Home

...because we can't afford the basketball court. Corcept, which has run a series of studies (1, 2) demonstrating poor efficacy of its drug Corlux (mifepristone/RU-486) in treating psychotic depression, has watched its chief financial officer resign (way to get off the sinking ship Fred!) recently. Corcept also stated in a press release that...

For the fourth quarter of 2006, Corcept reported a net loss of $3.9 million, or $0.16 per share, compared to a net loss of $5.2 million, or $0.23 per share, for the fourth quarter of 2005. For the full year 2006, the company reported a net loss of $24.9 million, or $1.09 per share. This compares to a net loss of $20.1 million, or $0.89 per share, for the full year 2005.As of December 31, 2006, Corcept had cash, cash equivalents and marketable securities of $9.5 million. The total cash used in the company's operating activities for the full year 2006 was $23.2 million. Commenting on Corcept's financial guidance for 2007, Fred Kurland, Corcept's Chief Financial Officer, stated, "Based on the currently planned timeline of our clinical development program and assuming that we are able to raise funds for intended operations, we expect that net cash used in 2007 will be between $10 million and $15 million. If we are not able to raise additional funds, we will not be able to continue operations beyond the second quarter of 2007."

Sounds like a plea of desperation to me. Anyone willing to sign up? I'll just get my checkbook out now. Corcept stock (incredibly) was once valued at over $10 per share, and now sits at 71 cents. I guess you could call this an extreme form of value investing (except for the company's lack of earnings). It appears that just issuing press releases and/or writing journal articles that spin their negative findings as positive is not working so well.