Thursday, April 05, 2007

4.83 Million Reasons to Be Conflicted

Corcept Therapeutics just got an infusion of cash. From the press release:
Corcept Therapeutics Incorporated (NASDAQ: CORT) today announced the completion of a private placement of 9,000,000 shares of its common stock at a price of $1.00 per share, pursuant to a definitive agreement entered into today with accredited investors. The investors are led by Paperboy Ventures LLC, who is currently a significant shareholder of Corcept. Sutter Hill Ventures, Alta Partners, LLP, venture capital firms that are currently significant shareholders in Corcept, and members of the Corcept Board of Directors, Joseph C. Cook, Jr., James A. Harper, David L. Mahoney, Alan F Schatzberg, M.D. and James N. Wilson, are also investors. In addition, investors in this financing round included Black Point Group, LLP, Vaughn Bryson and Daniel Bradbury.
Already a good short-term investment, as the stock is now at $1.21 a share. If you've read my prior writings about Corcept, you can see that I'm highly skeptical about it's main product, Corlux (mifepristone/RU-486), which is aiming to treat psychotic depression. Although the company has tried to spin negative findings as actually being positive, it's hard to see how a series of studies showing poor efficacy will lead to helping patients in any meaningful fashion. Might the latest influx of cash help out the Corcept insiders who hold a major stake in the company? Sure.

Conflicts of Interest: It appears that Dr. Alan Schatzberg bought 50,000 shares in the latest round of funding. It has been reported previously that Schatzberg has written quite positive comments about Corlux in journals and some have questioned whether his financial stake in the company has skewed his judgment on the topic. I want everyone to consider the following conundrum...

Schatzberg holds about 4.83 million shares of Corcept currently. So, if Corlux bombs a clinical trial, is he going to:
A. Immediately report the negative results in a press release
B. Move publishing the negative results in a scientific journal to the top of his to-do list
C. Spin the results in a very favorable fashion (or make sure that someone who writes the press release and/or scientific paper does so)
D. Just bury it entirely (probably not an option with such a small company that likely announces most if not all of its trials beforehand)

If I was in a position where I had such a large financial stake, I'd have a hell of a time doing A. or B. When large dollar amounts are at stake, it's not easy to say, "Hey, this product doesn't seem to work" and watch your stock holdings evaporate. This is why conflicts of interest are a problem.

Some academic researchers really are just in it for the money. I think they are a very small minority. I bet that most researchers who end up with big-time conflicts of interest start off thinking, "Hey, this could be a great new form of treatment for condition X." Then, hey, why not make some money while you're doing God's work, helping to heal people. We're an entrepreneurial society, so we tend to believe that people should be rewarded for having an enterprising spirit. Now, if the product turns out to not be so effective and/or to have some unpleasant side effects, then look at the predicament... Here's the conflict -- help people with condition X or help my own cash flow?

Or say I'm a doctor who makes some good money on the side giving "educational" speeches to fellow physicians about a drug, say, Zyprexa. When I find out that said drug is linked to numerous health problems, do I bring that up in my speeches, knowing fully that such discussion is likely going to get me canned from the speaking circuit?

The list of potential examples could go on for days.


. said...


You are a person after my heart :)

I agree, there is so much invested, literally and figuratively in research results, that doing the ethical thing is VERY challenging, even for people who consider themselves very fair, scientific and ethical. I have seen people who I truly believed had impeccable morales, bend and mold their ethics to insure funding for their research teams.

Hope u have a good vacation... BK

Anonymous said...

"impeccable morales"

You clowns wouldn't know Mr. Morales if he hit you in the face with a taco.

Companies like Corcept have to compete in an open and very harsh marketplace of ideas "to insure funding for their research teams". This inconvenient reality places your smug and pithy scepticism in a very bad light, especially considering the ethically challenged schenanigans that the entire government/private funded research community engages in on a habitual basis - activities that wouldn't last 2 seconds in the real world were you actually have to put your money where your mouth is.

The fact of the matter is the potential impact of GR-II antagonists is massive, and well beyond the relatively narrow realm of PMD. In PMD however, it is certainly massive enough, it would seem, to truly render your manner of "healing" archaic.

And that would be a bad thing wouldn't it, even if it did benefit the patient?!?

CL Psych said...


Well, if the impact of Corlux on PMD is "massive," then why does the drug have such a difficult time outperforming a placebo?

As for the rest of your rant, don't give me the standard marketplace of ideas garbage. You've not provided a single shred of evidence to support the idea that Corlux works. You've also failed to give a reason why I shouldn't be suspicious when a major shareholder of Corcept is saying such wonderful things about Corlux in the absence of supporting evidence.