Corcept Therapeutics Inc (CORT) 2014 Q1 法說會逐字稿

Welcome to the Corcept Therapeutics conference call.

(Operator Instructions)

Please note that this conference is being recorded. I'll now turn the call over to Charlie Robb, CFO. Mr. Charlie Robb, you may begin

Thank you. Good afternoon.

My name is Charles Robb. I'm Corcept's Chief Financial Officer. Joining me today is Dr. Joseph Belanoff, our Chief Executive Officer; and Steven Lo, our Chief Commercial Officer. Thank you all for participating in the call.

Earlier today we issued a news release disclosing our summary first-quarter financial results. Complete results will be available when we file our quarterly report on Form 10-Q with the SEC. The release also announced that we are discontinuing our Phase 3 trial of mifepristone for the treatment of psychotic depression. To get a copy of this release, go to Corcept.com and click on the investors tab.

Today's call is being recorded. A replay of the call will be available through May 21 at 1-888-843-7419 from the United States, and 1-630-652-3042 internationally. The passcode is 37151424. It will also be available at Corcept.com.

Before I begin, I wanted to remind you that statements made in this news release, other than statements of historical fact, are forward-looking statements. These forward-looking statements, including statements regarding the magnitude or timing of Corcept's revenues and expenses, are subject to known and unknown risks and uncertainties that might cause actual results to differ materially from those expressed or implied by such statements.

Including the pace of Korlym's acceptance by physicians and patients; the reimbursement decisions of government or private insurers; pace of enrollment in or the outcome of the Company's study of mifepristone and the treatment of triple-negative breast cancer; the effects of rapid technological change and competition; the protections afforded by Korlym's Orphan Drug designation or by Corcept's other intellectual property rights; or the cost, pace, and success of Corcept's product development efforts.

These other risks are set forth in the Company's SEC filings, all of which are available from the Company's website, Corcept.com, or from the SEC's website, www.SEC.gov. Corcept disclaims any intention or duty to update any forward-looking statement made in this press conference.

Before I turn the call over to Dr. Belanoff, I'll recap our financial results. Our net revenue in the first quarter of 2014 was $4.4 million, compared $1.7 in the same period last year. We incurred a net loss of $13.9 million, or $0.14 per share, for the first quarter of 2014, compared to a net loss of $12.1 million, or $0.12 per share for the same period in 2013.

The net loss for the first quarter of 2014 and the corresponding period in 2013 each included significant non-cash expenses of $2.4 million. After adjusting for these non-cash expenses, our net loss on a non-GAAP basis was $11.5 million, or $0.11 per share for the first quarter of 2014, compared to $9.7 million, or $0.10 per share, for the same period in 2013.

The first quarter of 2014 net loss also included $3.3 million in performance bonuses paid to employees. No bonuses were paid in 2013. A reconciliation from GAAP net loss to non-GAAP net loss is contained in a table attached to our press release.

Our cash balance on March 31 was $43.6 million, compared to $54.9 million on December 31, 2013. Based on our performance in the first quarter and our expectations for the rest of the year, we are increasing our 2014 revenue guidance from a range of $24 million to $28 million for the full year to a range of $25 million to $29 million for the full year.

As we have said in prior quarters, based on our current plans and expectations, which include fully funding our Cushing's syndrome commercialization efforts, moving forward with our study of Korlym for the treatment of triple-negative breast cancer, and advancing to the clinic two of our next-generation compounds, we believe we will reach cash flow breakeven without having to raise additional funds.

I will now turn the call over to Dr. Belanoff. Joe?

Thank you, Charlie, and thank all of you for joining us. Before I discuss our Cushing's syndrome franchise and oncology research and the development of our next-generation compounds, I'll describe the results of our interim analysis of data from our Phase 3 study of mifepristone for the treatment of psychotic depression.

The data monitoring committee for this study has told us that the results for the first 226 patients indicated that, although the response rate to mifepristone was higher than the response rate to placebo, the difference did not reach statistical significance and was unlikely to do so with full study enrollment of 450 patients. As a result, we are stopping the study and will redirect our resources to more promising programs. The study raised no safety issues.

Now I have no quantitative information for you in regard to the analysis. All of that detail will come out in time, and we will certainly release it and then ultimately publish it. But there are a few qualitative things I can tell you about this study for your interest. But one is that mifepristone beat placebo at all of the endpoints, but again, not with statistical significance.

Again, as we've seen in previous studies, the patients who developed a higher plasma drug level of mifepristone had greater improvement than those with a lower plasma drug level of mifepristone. And last, the comparator, placebo in the first week, and then antidepressant alone for the remaining seven weeks of the study, had a high response rate -- a response rate that was exceeded again by mifepristone, but not with statistical significance.

It's important to keep in mind that Corcept has always had a broader purpose, which has been borne out by our own research, and the research of academic investigators. Cortisone modulation, as evidenced by mifepristone and our proprietary library of next-generation molecules, has therapeutic potential in many illnesses.

The FDA's approval of Korlym for Cushing's syndrome is an example of this potential. As our work with mifepristone and oncology progresses in our next-generation compounds moving to the clinic, we hope to provide others. We'll use resources formally earmarked for psychotic depression to pursue these -- for our psychotic depression program to pursue these broader goals, particularly our oncology program.

As many of you who follow Corcept know, Cushing's syndrome is caused by a tumor that produces cortisol, or ACTH, which stimulates the body to produce cortisol. If the tumor can be removed surgically, the patient is cured; however, if the tumor cannot be removed, the patient's health risks are dire and the disease can be lethal. Korlym was approved in 2012 to treat these patients.

As the number of new and repeat Korlym prescribers continues to increase, and their familiarity with the medicine and its benefits grow, we expect this growth to accelerate. As Charlie has already mentioned, we have raised our 2014 revenue guidance to $25 million to $22 million (sic -- see press release, "$29 million") for the full year.

I'd like to speak a bit about our oncology program here. Increasing evidence shows that three dire cancers are stimulated by the shared mechanism of excess cortisol activity. Here's a bit about each of them.

Last quarter, we announced the start of our Phase 1 trial of mifepristone in combination with eribulin to treat triple-negative breast cancer, a deadly disease for which there is no approved treatment, and one that afflicts about 40,000 women each year.

Our study follows the work of University of Chicago investigators, who reported successful findings for their own clinical trial involving mifepristone in triple-negative breast cancer last December at the 2013 San Antonio Breast Cancer Symposium.

We have licensed patent rights from the University of Chicago covering the use of competitive GR antag, and it's including mifepristone in combination with anti-cancer agents to treat triple-negative breast cancer. I'm pleased to say that we begin enrolling patients in our own trial, and expect to report initial safety and efficacy data in the first half of 2015.

There is also evidence that two other deadly cancers, ovarian cancer and castrate-resistant prostate cancer, are stimulated by excess cortisol activity. There are studies underway of mifepristone in combination with chemotherapy as a potential treatment for each of them.

Those of you who follow clinicaltrials.gov already know that Russell Szmulewitz at the University of Chicago is conducting a phase 2 study of mifepristone in combination with enzalutamide for the treatment of castrate-resistant prostate cancer.

While we explore mifepristone's potential in oncology, we are about to start development of the leading drug candidates from our library of more than 300 proprietary selected GR antagonists. Like Korlym, these next-generation compounds competitively block the receptor for cortisol, but they do not block the progesterone receptor, and so do not terminate pregnancy.

We plan to advance these molecules to the clinic in the next few quarters. We have not yet selected which indications we plan to study, but triple-negative breast cancer and Cushing's syndrome's are candidates, as are other oncologic, psychiatric, and metabolic illnesses.

To sum up, our Korlym revenue from the treatment of Cushing's syndrome is on track to reach between $25 million and $29 million this year. We are redeploying funds formally earmarked for a psychotic depression program to support development of mifepristone and our next-generation compounds in more promising areas, particularly oncology.

Our many academic collaborators continue to explore the use of mifepristone as a potential treatment for a wide range of indications. Our leading next-generation molecules will enter the clinic this year and next as potential treatments for an even wider range of illnesses than mifepristone can reach.

We look forward to a productive year. And I'll stop here and answer any questions.

(Operator Instructions)

Boris Peaker, Oppenheimer.

Good evening. Thanks for taking my question.

So with Korlym, could you break down, in terms of the growth or the top line, how much of that came from price versus demand? And in the same context, how aggressive do you plan to be with pricing over the next several years?

Charlie?

Yes. With respect to pricing, we did have a price increase in the quarter, toward the end of the quarter. And pricing is something that as a matter of policy we consider continually. We do not have any set plans for future price increases, but it is something that we look at every quarter.

As for the percentage of growth from the quarter that was attributable to the price increase, I would say approximately 50% of the growth came from the price increase, and the balance from other factors.

Okay. I see. I have a pipeline question, as well.

In looking at your earlier-stage GR II antagonists, I'm just curious, now that you're investigating Korlym in various indications -- some are in different tumor types -- would you also investigate your earlier-stage GR II antagonists in some of these malignancies?

And if so, are you going to pick one for each separate malignancy? How do you see it transitioning in your pipeline into the oncology space?

Yes, thank you, Boris. I understand your question. Just to repeat it, broadly, I think what you're asking is, what our we doing with our next-generation compounds in regard to oncology.

I just have to give a little bit of preamble before I answer that question, which has been a really interesting thing that we've found over time. It's that although the initial plan for our next-generation compounds were essentially to discover mifepristone without progesterone antagonism, so a potent cortisol modulator that wasn't an abortifacient.

As it's turned out over time, its nuclear septum cistern is quite complicated, and that we have many compounds, all of which blocked cortisol and don't block progesterone, but they vary from each other. As a consequence, we really do think that over time, these compounds may have individual attributes for treating different illnesses.

And as I said on earlier conference calls, in the broadest sense, there are some that are potent in creating weight loss. There are some potent in creating insulin sensitivity. There are some that get into the brain, there's some that don't get into the brain.

But now to extend that to oncology, what I can tell you is we've already begun our preliminary screening of these molecules in oncologic mediums, particularly triple-negative breast cancer. And there is varied responses.

We actually have compounds which are more potent than mifepristone in treating animal-model and cell-based models of triple-negative breast cancer, and some which are less potent, or even not potent at all in that. That screening is now taking place. But yes, we do anticipate that in this first group of new molecules that we're bringing forward, one or more of them will be for an oncologic indication.

Is it safe to say that, it's my last question, that Korlym's, your investigation of Korlym in these oncological indication is more just a proof-of-concept to confirm the mechanism, and not necessarily with the intention of taking it to market? Or do you intend to take it to market specifically?

No, I'm glad you asked, because we absolutely intend to bring mifepristone, should it prove efficacious, to market for these diseases, particularly triple-negative breast cancer. So, no. It's not just for proof-of-concept.

We think that mifepristone can actually potentially be quite effective in these oncologic treatments, particularly triple-negative breast cancer, and we'll develop the other compounds as we can as they go along. Mifepristone is well ahead of any of them.

Great. Thanks for taking my questions.

Not at all.

Kim Lee, Janney Capital.

Good afternoon. Thanks for taking the questions.

First off, can you give us some launch metrics here, as far as how many new scripts have been written, how many physicians you guys have targeted recently? I know you haven't given much metrics in the past. But if you're able to now, and if not, when would you feel comfortable doing so?

And also, secondly, if you could give us an update on the European regulatory front, that would be great. Thanks.

Okay. Yes. In fact, we had not given the launch metrics, I think, that you're asking about in the past, and we're not prepared to give them now, although we always consider that decision. We can actually speak to the number of physicians that we're targeting at this point, which I think was one of your questions. And I'll let Steve answer that.

Sure. Number one, we do target only the endocrinology audience. There are approximately 3000 endocrinologists that we target. And I'd like to say that, on top of that, we've been really pleased with increasing the number of prescribers. Encore Limited, as Joe mentioned, and subsequently, we've added quite a few patients.

We do look at metrics in terms of prescribers, patients, and payers. And on all three of those, we certainly have seen good progress in our second full year of launch.

And to answer your question about where we are in Europe right now, we've actually received the -- I see, no. We've applied for approval at the MAA. We've received 120-day questions, and are actually in the process right now of preparing responses. So that's a very recent event.

Great. And just a follow-up here. The percentage of physicians that you're targeting, what percentage have you been able to penetrate so far? And that's one follow-up.

I'm not sure what you mean by penetration. Part of what we do is, there are many degrees of education to physicians, and that varies.

What I'm more excited about is next week, we'll be at the American Association of Clinical Endocrinology. And many of these physicians who have treated patients with Korlym will actually be presenting some of their cases there.

So again, to recap, we haven't disclosed the percent penetration, but I will say that amongst the 3000 that we target, we put them into various tiers in terms of high potential. And I think we're feeling pleased that we've been able to reach both academic and community physicians on that target list.

Great. And as far as your revenue guidance goes, can you walk us through some of the assumptions that go into why you've upped revenue guidance?

Is it more because of the price increase? Or other things, like increase in number of patients that you expect on drugs? Thanks.

I think I can just answer that question broadly and then we can move on. Which is that we've upped our guidance, because we see the business growing. And we think it's growing in terms of the number of patients who we're seeing and the number of doctors who are becoming more comfortable with Korlym. Next question, please.

Steve Byrne, Bank of America.

Hi. This is Sarah on for Steve. Thanks for taking the question.

Korlym sales sequentially were up modestly. Do you see any specific hurdles to adoption, such as either physician reluctance, identifying the right patients, or any competition from other products? Or do think it has to do with seasonality, or could you provide more color on the number?

I can provide a little bit more color on it. And again, this is not a new issue, but one that we think we're really beginning to overcome, is that it's a new mechanism of action for this drug. It works in a way that endocrinologists have not had for the treatment of Cushing's syndrome.

I think there are, as Steve has said, a growing number of physicians who have prescribed Korlym, but there are also many physicians who have not yet prescribed Korlym, who could prescribe Korlym. And I think there's really opportunity for growth in that area. And your second question?

You touched upon this briefly, but you raised your guidance. Is there anything you're seeing in the past couple of months that have driven you to raise this? Has there been meaningful penetration in the past couple months?

I apologize. I had forgotten for a second, you asked about seasonality. So let me ask that for a second.

The answer is, I think there really is a bit of seasonality to this. January is a time, particularly for Orphan Drug companies, where insurance changes, where through the payer assistance program, more deductibles end up getting paid by the companies that support those sorts of programs. So I do think there is a bit of seasonality.

I think the main reason that we, again, have raised our guidance is that, although we saw the business grow quite a bit over the course of the last year, we're continuing to see it grow further this year. And we don't really see a top end to that at this point. In fact, we think we're really just getting into the teeth of the growth.

We felt that it was only fair, since our estimate of where we would be in the course of the year was greater than it was three months ago, that we share that guidance publicly.

Okay. Thank you. And then just a follow up, with the EU process moving along, what are your current commercialization plans for the region?

Yes. We're still actually thinking about which way to go with that. We obviously have not gotten to approval yet. That's still in the future.

And we're considering both doing it independently and considering doing it with a partner. Both of those have been on the table now. And as we get more information on each of those accounts, potential partnerships, and our own marketing research on our ability to sell the drug there, we'll make that decision.

Okay, great. Thank you.

Biowatch News.

Hi, Joe. Thanks for taking my questions. I have a couple.

First thing is, mifepristone has been in a number of early proof-of-concept trials in humans. Some have been completed, and some are ongoing. It's a wonderfully large portfolio.

On the other hand, you can be breakeven and have a rather conservative expenditure rate to preserve that. I wonder if you and Charlie could provide a little color of how you want to navigate. You've got a number of indications already among your independent investigators that look promising. On the other hand, a possible conservative burn rate.

Alan, thank you for asking that question. It really allows me to give you broader view of the whole company at this point.

We're very pleased where we are with Korlym for Cushing's syndrome. Steve and his group have successfully commercialized the drug to this point, and we think that there really is substantial growth still to be had. And as Charlie mentioned in his introduction, we believe that that growth and the revenues that we'll produce, and the cash that we already have on hand, will allow us to be self-funding. So you're absolutely right, that that is in itself quite a good and interesting business.

The other thing you mentioned is also -- I'll just be blunt about it -- we've always been a company with more ideas than money, and that's because we have lots of ideas. We collaborate with, I guess about, at this point, about 30 different academic investigators around the world. And again, I know you know, because you've followed the Company for quite a while, the triple-negative breast cancer program came out of a years-in-making collaboration with investigators at the University of Chicago. And again, I know, because you follow this, we have many programs like that around.

We just finished actually at the Board meeting, one of the things we really discussed was, what are our priorities, because we have many disorders from which to choose to direct both mifepristone and even a wider group for our new compounds. I think that within the style that we've always used, which is conservative spending, but a look to the future, we're going to make our clinical choices.

As you know, in December, the oncologic results, although for a small number of patients, were so strong that we really felt like we could not just leave that in the hands of the academic investigators any more, but needed to move that in-house to be able to spur its movement forward. It would not surprise me if there were other disorders -- treatment of other disorders which produce those kinds of results, where we'll make that change.

But I want to return to the beginning. Korlym for Cushing's syndrome is what drives us. That's really the engine for the financing of the Company. We continue to see that improve. Over time, we'll be able to do more and more things.

Joe, this question's for you. It's a gut check, and forgive me for asking this in public, but you initially got into Corcept with, I believe, the psychotic depression indication, and now that's on the shelf. I'd like to have you comment what Corcept means to you professionally, and what the Company looks like going forward for you.

I think that I'll have to get you to replace Barbara Walters when she retires, Tom. But I will try to answer your question.

I did, in fact, personally treat the first five patients ever with mifepristone for psychotic depression, and developed the initial intellectual property when I was on faculty at Stanford. And that ultimately became the foundation for Corcept.

At the time, which is now quite a few years ago, 15 years ago, there were some people who were interested in the cortisol modulation as a disease factor. But there are many, many more of those people right now. And research has taken place in many disorders besides the psychiatric disorders I was initially interested, including ones -- . Of course, where we now have approval, Cushing's syndrome, the oncologic things we're talking about, other metabolic diseases, even ophthalmologic diseases.

Yes, I'll answer it in both ways. It's a disappointing day, because our study results have always given us a signal that mifepristone would be useful in psychotic depression.

I think the real difficulty for us has been designing a study which could produce that result in a statistically significant and consistent way. As you know that that's been a problem for many CNS programs, and obviously, this one is mine, so I have the greatest amount of interest in it.

I would say that if we really could figure out in the future a way to design studies that might produce a result that would make the expenditure of money worth it, we could reconsider going back to psychotic depression, potentially with one of our new compounds. But really, at the current time, I think we've maxed out what we think we can do to make these studies run the best way that we can. Because so many other areas of cortisone modulation, areas where we have a tremendous amount of knowledge and the ability and context to gain even more knowledge, are really just a better source of our funds.

All in all, everyone here is really very optimistic. We think this platform has a lot of legs to it.

And it is disappointing personally to not be able to get this treatment to patients with psychotic depression. But, we did our best.

All right. Thank you.

Christopher James, Brinson Patrick.

Hello. Good afternoon. Thanks for taking my questions, and let me add my condolences to the folks involved in Study 14.

My first question is specifically on the Korlym Cushing's opportunity. Have you seen any additional growth this quarter? Or beneficial effects from the ketoconazole restrictions around the Cushing's indication? Or have you heard anything specifically from the docs you're targeting around this?

Let me just review what that actually -- obviously, you know and understand, but just for the remainder of the audience.

Ketoconazole is an antifungal agent which is been used off label for many years, because really nothing else was available to treat patients with Cushing's syndrome. Basically, one of its toxic side effects is essentially a poisoning of the adrenal gland, and it reduces the production of cortisol.

And, has Chris has pointed out, several months ago, in the fall of the year, the FDA put out a warning about the hepatotoxicity of this drug. And basically, put out -- it's essentially an edict that physicians that use this drug take liver function tests on a weekly basis to see how that part of people's health is progressing.

Now to your question, yes, I think that there are now in a number of patients who were taking Korlym, an increasing number who have once taken ketoconazole. So I do think it is a factor in the growth of our business. But we also think that, as the only approved drug for all forms of Cushing's syndrome, that the drug has a lot to offer on its own, even away from ketoconazole. So ketoconazole actually is a spur to a conversation with the physician, but I think that the attributes of Korlym also stand on their own.

Great, that's helpful. And then one final, just a quick housekeeping. How should we view R&D expense, given the PMD study results and the shifting oncology for 2014? Do you have a sense of what the percentage of R&D in oncology versus non-oncology will be going forward?

We haven't released that information yet, Chris. But, keep in mind that the studies at this point, we're doing oncology, are relatively small studies and not particularly expensive studies. Obviously, the closing of the psychotic depression program does release some cash. But these studies, the ones that we've already talked about, are already funded in our budget.

Okay. Thanks for taking my questions.

Ravi Mehrotra, Credit Suisse.

Hi. This is [Kuna] actually asking a question on behalf of Ravi. I just had a question regarding the readout for the oncology program next year.

I noticed on your Phase 1 that your initial part of it will not be looking at GR positive patients, but in the dose expansion part, you will be. I just want to know, in the early 2015 release, will we be seeing data on the dose expansion part, or will it still be early days on the Phase 1? Thanks.

Again, I think that probably many of you are familiar with it. Phase 1 studies in oncology actually are treating patients. They're getting both safety, as well as efficacy data.

Now it is true, and I think you raise an important distinction, in the dose finding portion of the study, which is the first part of it, we will be treating people who have potentially metastatic, but not triple-negative breast cancer. And even with patients who have triple-negative breast cancer, not all of them have GR-positive breast cancer.

So that study is mainly about tolerability, and picking a right dose for the next part of the study. Although some efficacy data will be gleaned from that, because there will be some patients, undoubtedly, in that who fit the profile of who we will study in the expansion phase, which are women with triple-negative breast cancer, whose tumors also have receptors for cortisol.

So because it's an open-label study, as soon as in some sense that data is batched, we will release it. I don't know exactly when that's going to be, but as soon as we've actually gotten to each bridge point, we'll release the information that we can.

Okay. Thank you.

All right. Well it sounds like we've run out of questions, so I'm going to end the call here. Thank you all very much for listening in, and I look forward to talking to you next quarter.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.