Corcept Therapeutics Inc (CORT) 2014 Q3 法說會逐字稿

Welcome to the Corcept Therapeutics conference call. My name is Janette, and I will be your operator for today's call.

(Operator Instructions)

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

Thank you. Good afternoon. My name is Charles Robb, 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 third quarter financial results. Complete results will be available when we file our quarterly report on Form 10-Q with the SEC. 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 will be available through November 18th at 1-888-843-7419 from the United States, and 1-630-652-3042 internationally. The pass code will be 38270277.

Before we begin, I want to remind you that any statements during this call other than statements of historical fact are forward looking statements. These include statements regarding anticipated future revenues, the timing of clinical trials and clinical trial results, and the advancement of additional compounds 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. The pace of enrollment in or the outcome of the Company's phase I study of its next generation selective GR antagonist, CORT 125134, and of its study of mifepristone in the treatment of triple negative breast cancer. The effects of rapid technological change in 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 other product development efforts.

These and other risks are set forth in our SEC filings, all of which are available from our website, Corcept.com, or from the SEC's website. We disclaim any intention or duty to update any forward looking statement made during this call.

Now, I'll recap our financial results. Corcept's net revenue in the third quarter was $7.3 million, compared to $5.9 million in the second quarter, and increase of 24%. Our third quarter net loss on a GAAP basis was $6 million, compared to a net loss of $7.6 million in the second quarter.

Our net loss on a GAAP basis included significant non-cash expenses of $2.1 million in the third quarter of this year, and $2.2 million in the second quarter. Excluding these, our net loss on a non-GAAP basis was $3.9 million for the third quarter, and $5.4 for the second quarter. As of June 30th, we held cash and cash equivalents of $26.8 million.

Based on our performance in the third quarter and our expectations for the rest of the year, we are narrowing our 2014 revenue guidance from a range of $25 million to $29 million to a range of $25 million to $27 million.

I want to close by reiterating what we have said in prior quarters. Based on our current plans and expectations, which include fully funding our Cushing's syndrome franchise, completing our phase I study of Korlym for the treatment of triple negative breast cancer, and advancing to the clinic at least two of our next generation compounds. We believe we will reach cash flow break even without needing to raise additional funds.

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

Thank you, Charlie, and thank you all for joining us.

As you know, Corcept markets Korlym, our first generation cortisol modulator for the treatment of Cushing's syndrome. A life threatening disease that afflicts approximately 20,000 patients in the United States. I'll speak more about our Cushing's syndrome business in a moment.

Corcept's activities extend well beyond Cushing's syndrome. Corcept develops medications that utilize the therapeutic potential of cortisol modulation. Cortisol, commonly known as the stress hormone, is essential for life.

There are cortisol receptors in almost every tissue of the body. However, excessive cortisol activity can cause severe illness and sometimes death. In some diseases, even moderately elevated cortisol activity can be damaging.

For instance, there's evidence that activation of the cortisol receptor, know as the glucocorticoid receptor or simply GR, aggravates central serous retinopathy. A serious ophthalmologic disorder.

Another example that I'll address in some detail in a moment, is that cortisol also appears to help triple negative breast cancer tumor cells resist chemotherapy. And seems to promote tumor growth in castrate resistant prostate cancer cells.

In fact, many clinical and pre clinical studies have demonstrated that cortisol modulation has the potential to treat a wide variety of serious illnesses. In addition to Cushing's syndrome and the other conditions I've already mentioned, potential targets of medications that modulate cortisol include alcoholism, Post Traumatic Stress Disorder, cocaine addiction, Alzheimer's disease, ALS, fatty liver disease, weight gain induced by anti psychotic medication, metabolic syndrome, and ovarian cancer.

Pre clinical or clinical studies are now taking place in each one of them. If a person that's being studied in all of the indications I just mentioned, but our next generation [molecules will] also [be] being investigated pre clinically in a wide range of diseases.

As many of you know, we have developed a large portfolio of proprietary next generation cortisol receptor antagonists that unlike mifepristone do not block the progesterone receptor. And so [they] do not terminate pregnancy. Both we and our academic collaborators have shown that some of these compounds perform even better than mifepristone in a variety of animal and in vitro models of various human diseases, including triple negative breast cancer and fatty liver disease.

The promise of our new compounds should not obscure the fact that mifepristone is an excellent compound to advance for diseases as diverse as triple negative breast cancer, castrate resistant prostate cancer, alcohol dependence, Post Traumatic Stress Disorder, and soon central serous retinopathy. Investigator initiated clinical trials are under way in all of these diseases. And as most of you know, our own trial of mifepristone for the treatment of triple negative breast cancer is in progress.

I want to remind you of an important point. Mifepristone's development for any new indication is a [wable] extension. Not the development of an [NCT], and utilizes the toxicology, carcigenicity, phase 1 studies, and other work that we have already completed for Korlym.

Let me describe in a bit more detail the major business of Corcept right now. As you know, our first approval was for patients who have Cushing's syndrome. Cushing's syndrome is a disease of cortisol excess.

It is caused by a tumor that produces cortisol or a tumor which produces ACTH, which in turn stimulates the body to produce cortisol. If the tumor can be removed surgically, the patient is cured. If the tumor cannot be removed, the elevated cortisol levels caused by the tumor make the patient extremely ill and can be lethal.

Korlym treats Cushing's syndrome by competitively blocking cortisol at one of its two receptors. The patient still has elevated cortisol, but its ill effects are reduced, often greatly reduced.

Although our revenues have grown substantially since we made Korlym available in 2012, a relatively small percentage of patients who could benefit from the medication have received it so far. For that reason, we expect that sales of Korlym for Cushing's syndrome patients will continue to grow.

Already, revenue from the Cushing's syndrome business produces cash that supports our research and development efforts. A surplus that we expect to grow, even as our clinical program develops.

As many of you already know, we initiated a clinical study of mifepristone in combination with the chemotherapy drug eribulin for the treatment of triple negative breast cancer earlier this year. There is in vitro animal and human data indicating that mifepristone's blockade at the cortisol receptor can prevent tumor cells from escaping chemotherapy.

Triple negative breast cancer afflicts approximately 40,000 women each year in the United States. There is no FDA approved treatment for the disease, and the prognosis for patients with the disease is poor. Our program is aimed at women whose triple negative tumors are GR positive, a sizable sub group.

I'm pleased to report that last quarter we made good progress with our study. We expect to identify the appropriate dose of mifepristone and eribulin soon, and to begin the efficacy phase of the study early next quarter.

This phase of the study will enroll 20 patients with triple negative breast cancer with tumors that are GR positive. We expect to have results of the study next year.

We will determine GR positivity in our study using a clear validated proprietary assay that we have recently developed. This assay is an important part our oncology program, because it will allow us to target our medication to the patients who are most likely to benefit, sparing those who won't, from ineffective treatment. When we seek approval of mifepristone [for] one of our selective GR antagonists to treat triple negative breast cancer, we will include use of this assay in our [eclectic] label.

As I emphasized earlier, our study with mifepristone on oncology builds on work by University of Chicago investigators, who report successful findings from their own study of mifepristone in triple negative breast cancer last December at the 2013 San Antonio Breast Cancer Symposium.

The study was small. It contained six patients whose tumors were GR positive. Of those six patients, two had a complete response to treatment, two had a partial response, and one had stable disease.

Even taking the small sample size into account, these were surprising positive results. Had there been even one responder, the research would have continued.

In addition to our triple negative breast cancer study, the University of Chicago is currently following up their first study with a study of mifepristone in combination with a separate chemotherapy regimen. In the treatment of both metastatic triple negative breast cancer and metastatic ovarian cancer.

There's also evidence that mifepristone may help treat castrate resistant prostate cancer. A form of the disease with a poor prognosis. Dr. Russell Szmulewitz, a colleague of the University of Chicago team studying mifepristone utility in the treatment of triple negative breast cancer and ovarian cancer, has begun a 100 patient phase 2 study of mifepristone in combination with enzalutamide for the treatment of castrate resistant prostate cancer. We look forward to seeing the results of his work.

I've discussed at some length the promise of mifepristone in a range of indications. Because I want everyone to understand how efficient it can be to develop a well-studied already approved medication for a new indication. But I also do not want to lose sight of the important progress we have made advancing our library of proprietary selective GR antagonists.

While all of these compounds modulate cortisol, none of them affect progesterone [and so are not aboard fashions]. However, these compounds have a valuable characteristic behaving differently from one another in some important respects. Some get into the brain, some do not, some have potent metabolic effects, others are more potent in fact than mifepristone in animal models of oncologic disorders.

In September, we began dosing patients in our phase I study of one such molecule, CORT 125134 with more molecules moving forward next year. We have not yet selected which indications we plan to study in phase 2, but Cushing's syndrome and one or more oncology indications are likely candidates.

To sum up, our revenue from Korlym for the treatment of Cushing's syndrome grew 24% last quarter, and is on track to reach between $25 million and $27 million this year. Our losses continue to narrow, and we expect to reach cash flow break even without having to raise additional funds.

Our own clinical activities and the research of our many academic collaborators continues to advance cortisol modulation as a potential treatment for many indications. Our study of mifepristone in the treatment of triple negative breast cancer will produce additional efficacy data next year. A lead compound from our portfolio of next generation cortisol antagonists is in the midst of phase 1 testing.

Cortisol modulation using mifepristone in our next generation selective GR antagonists is a rich, therapeutic area. We are pleased to be leading its exploration on so many fronts.

I'll stop here and answer any questions. Thank you.

Our first question comes from Steve Byrne of Bank of America. Please go ahead.

Hello. I was wondering if the payers are giving you any pushback on your semi annual price increases? And if you could comment on the 24% sequential revenue gain, how much of that was price, versus increased in average dose, versus increases in number of patients?

Steve, this is Joe. I'm going to pass the microphone over to Steve Lo who runs our commercial area.

Hello, Steve.

I believe your two questions relate to price and payers, and then secondly related to just the 24% growth.

Right.

So as it relates to price, we have not had any reimbursement hurdles with Korlym. And that's been the case since launch. I think there's a variety of factors that go into that to include the fact that our payers understand how efficacious this drug is. And as well, many physicians report the fact that their patients have gotten much better after being on another medication, or after a failed surgery.

As it relates to growth over the last quarter, the price increase that we took was on September 1 of the quarter. So we were obviously benefiting from the higher price for only one month in that quarter. The growth largely is based on unit increase, which includes the fact that we've had more prescribers and more patients on Korlym.

And where would you say average dose is now, and has that been trending upward?

Well I think what happens is because we have new patients coming in, as well as we have many patients who still are on Korlym since launch, that average dose is going to fluctuate. But I think the best place that I can point you to is our seismic study, and I think that will help you determine that the average dose over time is going to be fairly stable.

Steve, the one point I would add is that in the seismic study, the patients were -- because they were seen very frequently, were on a relatively rapid titration schedule. And what we've really found in the real world is that sort of degrees of titration take place over a longer period of time.

As Steve points out, there is a mix of patients. And obviously, new patients are starting generally at the lowest dose, and as patients are on the medicine longer the dose rises. But ultimately, we see no reason why the doses that we achieved in the seismic study won't be eventually the steady-state doses we see in commercial practice.

And just lastly, again on commercial. Where do you think the opportunity is for you in reaching more Cushing's patients? Is it that these patients are not being diagnosed, or do you need to reach out further and reach a broader set of physicians?

I think the answer to your question is both. This is unfortunately a disease that is still largely under diagnosed.

But at the same time, what we have found is that we've been really effective with our physician targeting. And given our small sales force, unfortunately we haven't reached all the physicians that should be prescribing Korlym. We are going to increase the size of our sales organization by year end, and it's our hope that will both increase the frequency, as well as the reach of our targeted audience.

And can you just comment on the size of that sales force increase?

Yes, absolutely. So currently, we're staffed at 23 folks in the field. Our goal is to get to 33 by the end of the year.

We actually have openings right now, and we've actually been busy recruiting and we're slowly adding people. But definitely for 2015, our goal is to start off with 33 sales representatives, and medical science liaisons in the field.

Okay, thank you.

And our next question comes from Christopher James of Brinson Patrick Securities. Please go ahead.

Hello, good afternoon. Thanks for taking my questions, and congrats on the progress. Just a quick follow up.

So I'm just trying to understand, maybe you can put it into perspective the magnitude of the potential prescribers in Cushing's? Remind me what are the total number of endocrinologists treating Cushing's, and what percent would you say have written a script for Korlym?

So I'll start at the very highest number, which is if you go into the endocrinology databases, the Endocrine Society reports that there are approximately 3,000 to 4,000 endocrinologists in the United States. They call themselves endocrinologists. We target 1,500 endocrinologists who we believe based on claims data, et cetera, to actually be treating Cushing's syndrome patients.

And as such, I would say, just based on the numbers of our 23 people out in the field sales force, you can tell that we haven't reached all of them. Nor have we had the frequency that we would like, which is the reason why we are increasing our sales and medical science liaison organization.

Great, that's helpful.

And then just moving onto CORT 125. While you haven't disclosed the indication, maybe what can you tell us about the pre clinical studies with respect to its potency and half life? Does this look pretty much like mifepristone without the side effects from progesterone antagonism? Or is this a much more potent compound entirely?

Well, I'm glad you asked me about that, Chris.

125134 has maybe a modestly shorter half life, but we perceive it as once a day dosing. So in that way, it's similar to mifepristone. What's interesting, as I mentioned earlier, is that, while it shares some characteristics with mifepristone, an important it does not is that it is not a progesterone antagonist. So it is not an [abort fashion].

What's interesting about it is that I can tell you that in two relevant pre clinical models. One is that, in essentially exogenous Cushing's syndrome. So as you know as a physician that you can produce Cushing's syndrome by giving someone a steroid like prednisone. It has real potency. You can see how it works in animal models in the same way that mifepristone works.

What's also interesting and still being really explored is that in the model of triple negative breast cancer, both in the in vitro model and then the xenograft model that [myacid] is even more potent than mifepristone. And mifepristone is fairly potent.

So the interesting thing about these compounds is that you have to get well beyond binding affinity. All of these are potent GR antagonists by that definition and to see what they actually do in living systems. Because even small differences can make real in vivo differences. So we're quite pleased with what its pre clinical profile looked like. It's moving through phase I at this point. And as we gain more pharmacodynamic information, we'll know where to take it.

And the interesting thing about our phase I study is that we're actually able to do a little bit of pharmacodynamic information gathering. We actually are able to, for instance, to give patients prednisone in one of the arms, and see if this medication is successful as mifepristone as reducing -- really reversing its effects.

Great, that's helpful.

And then finally on the triple negative breast cancer study, will the data be -- all the data be shown in the first half of 2015? All 40 patients? Or will you show an interim look of the first 20 patients, and then the second 20 patients after that?

Well, let me just give you a little bit more detail. Remember, the first part of the study is a dose-finding study. And its eligibility is not the group of patients who ultimately we plan to study for approval. It's really to see if people can tolerate the medicine.

So only a small sub group of the people who are getting the medicine for dose binding have triple negative breast cancer that is GR-positive. So put that aside for a second. And the exact number of patients that's going to be in that part of the study is not yet determined, because in the way these 3-plus-3 design studies work, you go to have the exact dose. So put that study for its purpose to one side. Its purpose is really to establish a dose level and tolerability.

The efficacy portion of that study is a 20 patient open label study in women whose tumors are triple negative but GR-positive, as I mentioned before. And we expect that those 20 patients will enroll over the course of 2015, and we will present results as they are available.

It is an open-label study. And we'll have results as it's going along. But the intent at this point in time is to run 20 patients and see what their results are.

Thanks, Joe. Appreciate the clarity.

And our next question comes from Alan Leong of Analyst Biowatch. Please go ahead.

I'm with actually Biowatch News, but thanks. Joe, a couple questions.

First one, with CORT 125134, when are the milestones coming up? Will you be sharing ongoing results? Or when might you schedule -- when are you hoping to have top line results occur?

Well, again, it's a phase I study. So essentially it's moving through. And we're not going to announce -- we just don't think it's material or important to announce each cohort that we run through.

But certainly we'll announce at the end of it where we are and what we intend to pursue in phase II. And my best guess at that right now is that that's going to be about mid-year 2015. And we'll know where that's going.

For my second question, I want to see if I can get an answer -- I (inaudible) to have an answer of broad stroke. Hoping to have -- [Cortiflux] was hoping to have a second drug in the clinic in the near term, and perhaps other drugs farther out. How shall we see the current direction in the shorter-term area of the Company?

The Company early promised cancer indications, and you're also treating a metabolic disease. Is Corcet concentrating its cancer in Cushing's syndrome for the next couple years, or will the Company consider direct involvement in indications beyond these?

Well, I'm pretty sure I heard you, Alan, and I'm going to try to answer best I can. But if I've somehow gotten off-base, let me know.

Again, the platform of the Company are diseases which are modulated by cortisol activity. And there's a variety of them. One of the things that I think is interesting and certainly we've really been able to take advantage of, is that orphan diseases, diseases that have relatively small populations. Have development programs we understand, can fund, and move forward. And it turns out that this is a potent -- at least in the studies we've done so far, this platform of cortisol modulation goes across several different oncologic indications.

We've mentioned them, but I'll just repeat them; triple negative breast cancer, ovarian cancer, castrate resistant prostate cancer. They're good mechanistic reasons why one would pursue those indications. And of course those are very severely ill patients, and making progress in their care really has utility.

But there are other cortisol modulating diseases that also are ones we can approach. An example, and it's an interesting one, is this ophthalmologic disease called central serous retinopathy. Also a relatively small population, but for patients with chronic disease, or real medical need. And a very interesting investigator study is going to start shortly in that area.

And finally, to get to your point, yes, Cushing's syndrome is something we understand well. We're certainly very interested in building the follow-on compound for Korlym in Cushing's syndrome. We really think we know how to study that disease, and where to go, and we think that eliminating the progesterone receptor activity is a very important medical advantage. So we will go there as well.

As you can see, we have steered away from potentially what are extremely large clinical areas for development, because I think they're beyond really our scope. So areas like diabetes or metabolic syndrome are very intriguing, but at this point in time, don't really allow us within our means to go forward. So we're focusing on, as I said, the disorders of oncology, ophthalmology, metabolics that we've talked about.

Thanks.

And I'm showing no further questions -- I'm sorry, go ahead.

I was just going to thank everyone for listening in. And really hope to make contact with all of you before the next conference call a quarter from now. So thank you very much, and we'll talk with you soon.

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