As reported in the New York Times in 2006, Kubrick's son-in-law, Philip Hobbs, found the 80-page treatment in 1999 -- described as a dark mystery about an escaped axe-murderer -- while archiving Kubrick's papers. "When Stanley died, he left behind lots of paperwork," Hobbs told the NYT. "We ended up going through trunks of it, and one day we came across 'Lunatic at Large.' I knew what it was right away, because I remember Stanley talking about 'Lunatic.' He was always saying he wished he knew where it was, because it was such a great idea."
Thompson, author of now-classic pulp works like The Grifters and The Killer Inside Me, worked with Kubrick on 1956's The Killing. The writer was deeply disappointed that the project fell apart due to Kubrick's firing from One-Eyed Jacks, followed by his involvement directing Spartacus and Lolita. Thompson died in 1977, never seeing the swell of interest in his work that came in the 1990's.
The 2006 script adaptation was described by the NYT:
His finished screenplay has the feel of authentic Thompsonian pulpiness. Set in New York in 1956, it tells the story of Johnnie Sheppard, a former carnival worker with serious anger-management issues, and Joyce, a nervous, attractive barfly he picks up in a Hopperesque tavern scene. There's a newsboy who flashes a portentous headline, a car chase over a railroad crossing with a train bearing down, and a romantic interlude in a spooky, deserted mountain lodge.The great set piece is a nighttime carnival sequence in which Joyce, lost and afraid, wanders among the tents and encounters a sideshow's worth of familiar carnie types: the Alligator Man, the Mule-Faced Woman, the Midget Monkey Girl, the Human Blockhead, with the inevitable noggin full of nails.
No details are available right now as to how many hands have handled the screenplay since then, or the current director. But this is one project to keep an eye on.