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The following is an excerpt from a S-1/A SEC Filing, filed by CORCEPT THERAPEUTICS INC on 4/14/2004.
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CORCEPT THERAPEUTICS INC - S-1/A - 20040414 - DILUTION

DILUTION

 

The actual net tangible book value as of December 31, 2003 was $(31.5) million, or $(3.37) per share, based on 9,334,982 shares of common stock outstanding. Actual net tangible book value per share represents our total tangible assets less total liabilities and convertible preferred stock by the actual number of outstanding shares of our common stock.

 

The pro forma net tangible book value of our common stock as of December 31, 2003 was $10.2 million, or approximately $0.56 per share, based on 18,142,128 shares of common stock outstanding pro forma. Pro forma net tangible book value per share represents our total tangible assets less our total liabilities divided by the number of shares of our common stock outstanding after giving effect to the conversion of all outstanding shares of our convertible preferred stock into common stock upon the completion of this offering.

 

After giving effect to the sale by us of 5,000,000 shares of our common stock in this offering at an assumed initial public offering price of $12.00 per share, less the underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of December 31, 2003 would have been $64.9 million, or approximately $2.81 per share. This represents an immediate increase in pro forma net tangible book value of $2.25 per share to existing stockholders and an immediate dilution of $9.19 per share to new investors purchasing our common stock in this offering.

 

The following table illustrates the per share dilution to new investors:

 

Assumed initial public offering price per share

                  $ 12.00

Actual net tangible book value per share as of December 31, 2003

   $ (3.37 )             

Pro forma increase in net tangible book value per share attributable to the conversion of convertible preferred stock

     3.93               
    


            

Pro forma net tangible book value per share as of December 31, 2003

           $ 0.56       

Increase in pro forma net tangible book value per share attributable to this offering

             2.25       
            

      

Adjusted pro forma net tangible book value per share after this offering

                    2.81
                   

Dilution in per share to new investors in this offering

                  $ 9.19
                   

 

The following table summarizes, on a pro forma as adjusted basis as of December 31, 2003, the differences between the number of shares of common stock purchased from us, the total price and the average price per share paid by existing stockholders and by the new investors, before deducting the underwriting discounts and commissions and estimated offering expenses payable by us, at an assumed initial public offering price of $ 12.00 per share.

 

     Shares Purchased

    Total Consideration

    Average Price
Per share


     Number

   Percent

    Amount

   Percent

   

Existing stockholders

   18,142,128    78 %   $ 42,166,663    41 %   $ 2.32

New investors

   5,000,000    22 %     60,000,000    59 %   $ 12.00
    
  

 

  

     

Total

   23,142,128    100 %   $ 102,166,663    100 %      
    
  

 

  

     

 

If the underwriters’ over-allotment option is exercised in full and none of these shares are sold by the selling stockholder, the number of shares held by the new investors will be increased to 5,750,000, or approximately 24% of the total numbers of shares of our common stock outstanding after this offering.

 

The existing stockholder amounts in the table above have been calculated on a pro forma basis, which includes shares outstanding as of December 31, 2003, including the conversion of all outstanding shares of preferred stock into 8,807,146 of common stock upon the completion of this offering, but excludes:

 

  470,500 shares issuable upon exercise of outstanding options to purchase our common stock at a weighted average exercise price of $5.46 per share;

 

 

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  3,000,000 shares available for future issuance under our equity incentive plan; and

 

  43,640 shares of our common stock issuable upon conversion of a promissory note.

 

After this offering and assuming the exercise in full of all options outstanding, vested and exercisable as of December 31, 2003, our pro forma net tangible book value per share as of December 31, 2003 would be $2.81 per share, representing an immediate increase in net tangible book value of $2.24 per share to existing stockholders and an immediate dilution in net tangible book value of $9.19 per share to new investors.

 

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