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Corcept Therapeutics (CORT): Solid Speculative Play

Excerpt from the Bret Jensen’s article at SeekingAlpha

Corcept Therapeutics Incorporated (CORT) is a pharmaceutical company that develops and markets drugs for the treatment of severe metabolic and psychiatric disorders. It focuses on disorders that are associated with a steroid hormone called cortisol.
7 reasons CORT is solid speculative play at $1.40 a share:

  1. Two separate directors have bought approximately $800K worth of new shares in November. Most purchases were made at higher than the current stock price.
  2. The company has over $70mm in net cash on its balance sheet. This would fund over 2½ years of operations at the company’s current burn rate.
  3. The median price target on CORT held by the 6 analysts that cover the stock is $3.65. There is a wide range to these targets (Low Target: $1.10, High Target: $8). Throwing out the high and low target prices gives us a median price target of $3.20 on the shares, more than double the current stock price.
  4. Analysts have a consensus revenue target of over $24mm for FY2013 currently on CORT. This is quadruple the under $6mm in revenue the company is tracking to book in FY2012.
  5. In February the FDA approve Korlym (mifepristone) 300 mg Tablets as a once-daily oral medication for a very specific conditions found in some Cushing’s Syndrome patients. Corcept is also currently conducting a Phase 3 study of the effects of Korlym on the psychotic features of psychotic depression. The FDA has granted Corcept “Fast Track” status for this compound. The company is in the early stages of testing to see if this drug can counteract the weight gain impacts of certain antipsychotic drugs as well.
  6. Given CORT’s small market capitalization (around $75mm after net cash subtracted), growing sales and possible new uses of its signature product; I could see it as a logical acquisition target by a bigger player with a larger distribution network and sales force.
  7. The stock has traded in a range of roughly $1 to $5 a share. It is much closer to the bottom of that range than the top

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About CORT:

Corcept Therapeutics Incorporated, a pharmaceutical company, engages in the discovery, development, and commercialization of drugs for the treatment of severe metabolic and psychiatric disorders. It focuses on disorders that are associated with a steroid hormone called cortisol.