Corcept Therapeutics Inc (CORT) 2014 Q4 法說會逐字稿

Welcome to the Corcept Therapeutics conference call. My name is Leslie, and I will be your operator for today. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session. Please note that this conference is being recorded. I will now turn the call over to Mr. 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. Thank you all for participating on the call. Earlier today we issued a news release giving our fourth quarter and full year 2014 summary results. Complete results will be available when we file our Annual Report on Form 10-K 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 February 12th at (888)843-7419 from the United States, and (630)652-3042 internationally. The passcode will be 38869004.

Before we begin, I want to remand you that any statements during this call other than statements of historical fact are forward-looking statements. These forward-looking statements such as statements regarding completion of our financial closing procedures, final adjustments, and other developments that may arise between now and the time our financial results are finalized, 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 the 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 1/2 study of Korlym in the treatment of triple-negative breast cancer, and of the Phase 1 study of it's next generation selective GR antagonist, CORT 125134, 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 other product development efforts.

These and other risks are set forth in our SEC filings, which are available on our website, or from the SEC's website. We disclaim any intention or duty to update forward-looking statements made during this call. Now I'll review our financial results.

Corcept's estimated net revenue in the fourth quarter was $9.0 million, compared to $7.3 million in the third quarter, an increase of 24%. Our revenue for 2014 was $26.6 million, compared to $10.4 million in 2013, an increase of 156%. As of December 31st, 2014, we held cash and cash equivalents of $24.2 million. We anticipate that our business will continue to grow in 2015, generating revenue of between $47 million and $53 million. Based on our current plans and expectations, which include fully funding our Cushing's syndrome franchise, completing our Phase 1/2 study of Korlym for the treatment of triple-negative breast cancer, and our Phase 1 study of CORT 125134, and advancing to the clinic at least one more of our next generation compounds, we believe we will reach cash flow breakeven 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. Corcept develops and commercializes medications that modulate the effects of cortisol, widely known as the stress hormone. We market our first generation cortisol modulator Korlym for the treatment of Cushing's syndrome, a life-threatening disease that affects approximately 20,000 patients in the United States. I'll speak more about our Cushing's syndrome business in a moment. To help you better understand Corcept's activities in 2014 and our plans for 2015 and beyond, let me first briefly describe our medical and scientific environment. Corcept's research and the work of independent investigators around the world have shown that cortisol modulation has great therapeutic potential. Cortisol is essential to life, there are receptors for cortisol in nearly every tissue of the body, however, excessive cortisol activity, even activity that is only moderately excessive can cause severe illness and sometimes death. In addition to Cushing's syndrome therapeutic targets for medications that modulate cortisol's activity include metabolic, psychiatric, ophthalmologic, and oncologic diseases. Clinical or preclinical studies are taking place in each of these areas.

Korlym is currently being used in clinical studies of triple-negative breast cancer, castrate-resistant prostate cancer, alcohol dependence, post-traumatic stress disorder, and central serous retinopathy. Korlym's development for these and other indications has the advantage of being able to proceed relatively rapidly and inexpensively, because any new approval is a label extension, utilizing the toxicology, carcinogenicity and CMC work that is already being completed and accepted by the FDA. Most immediately our Phase 1/2 trial of Korlym in combination with chemotherapy for the treatment of triple-negative breast cancer, is entering its efficacy Phase, and will produce data this year. If its results are positive, we expect that its Phase 3 trial will begin in early 2016. In addition, as many of you know, we have developed a large portfolio of proprietary next generation GR antagonist, that unlike Korlym do not block the progesterone receptor, and do not terminate pregnancy. While none of these compounds are board fashions, they are not precisely identical to Korlym. Some for instance appear to be more tissue specific, and some perform even better than Korlym in animal models of various human diseases, including for instance, triple-negative breast cancer and fatty liver disease.

This year we plan to transform therapeutic potential of our pipeline into actively developed medications. CORT 125134, one of our lead next generation compounds, will complete Phase 1 in the second quarter, and move if the outcome is positive to Phase 2 by year end. Before I talk about our recent clinical progress and upcoming development milestones, let me discuss our Cushing's syndrome business, which has just produced another quarter and year of substantial growth. As many of you know, Cushing's syndrome is a disease of cortisol excess and a natural target for a medication like Korlym, which modulates cortisol's effects. Cushing's syndrome is caused by a tumor that produces cortisol, or a tumor that produces ACTH, which in turn stimulates the body to produce cortisol. If this tumor cannot be removed the excess cortisol it creates makes the patient extremely ill, and can be lethal. Korlym treats Cushing's syndrome by competitively blocking cortisol GR, one of its two receptors. Our Cushing's syndrome revenues have grown steadily since we first made Korlym available in April 2012. They were $3.3 million for our nine months of commercial activities in 2012, $10.3 million in 2013, and $26.6 million in 2014. As Charlie just said, we expect $47 million to $53 million in revenue this year. Despite our growth to date, it is important to note that there are more than 10,000 patients with Cushing's syndrome who could benefit with Korlym, and only a small percentage of them have been treated with it. There is great growth potential for Korlym in this population. I'm also pleased to report that we have completed the dose finding Phase of our Phase 1/2 study of Korlym in combination with chemotherapy drug eribulin for the treatment of relapsed metastatic triple-negative breast cancer. This month we began recruiting the 20 patients who will participate in the study's efficacy Phase. These patients will receive one 300-milligram Korlym tablet each day, combined with eribulin administered on days one and eight of a 21-day cycle. We expect to have results by the end of this year. Let me provide some background so that you can better understand the significance of this clinical milestone. 40,000 women each year in the United States have triple-negative breast cancer. triple-negative means that these patient have tumors that do not express estrogen, progesterone, or HER2 receptors, so targeted treatments like Tamoxifen, or Herceptin have no targets and are ineffective. There is no FDA approved treatment for the disease, and the prognosis for patients is poor. However our research indicates that substantially more than half of these women have tumors that express GR, the receptor to which Korlym competitively binds. The high rate of GR expression in triple-negative breast cancer tumors is important, because there are substantial in vitro, in vivo, and clinical evidence suggesting that it is cortisol's binding to GR that allows the tumor cells to escape chemotherapy. At the December 2013 San Antonio Breast Cancer Symposium, investigator data from the University of Chicago, who pioneered this area of research, reported the successful findings from their own clinical studies of Korlym in combination with chemotherapy to treat triple-negative breast cancer in patients with relapsed metastatic disease. Of the six patients in their study whose tumors were GR positive, two had a complete response to treatment, two had a partial response, and one had stable disease. Even allowing for the small sample size, these are extraordinary results. All of these women had previously failed at least one course of taxane based chemotherapy. and yet five of the six appeared to benefit when Korlym was added to their taxane based treatment. Had there been even one responder the research would have continued.

The University of Chicago is currently following up their first study with a study of Korlym in combination with a separate chemotherapy regimen, to treat both women with triple-negative breast cancer and women with ovarian cancer. Corcept licensed the pertinent intellectual property for this work more than a year ago. Because the dose finding Phase of our study was designed to assess only safety and tolerability, it did not restrict enrollment to patients with GR positive triple-negative breast cancer. Nonetheless a bit of interesting efficacy data were produced. Of the six patients in that Phase who received the selected dose, three have triple-negative breast cancers. The only patient known to have GR positive triple-negative breast cancer exhibited a partial response defined as a 30% or greater reduction in tumor size, and has been on therapy for nine cycles. In contrast the only patient known to have GR negative triple-negative breast cancer separate progression of disease. The third patient with triple-negative breast cancer began treatment recently. Her GR status and response to therapy is not yet known. The efficacy phase of our only study will recruit only women with GR positive metastatic triple-negative breast cancer. We will determine GR positivity using our proprietary CLIA validated assay. This assay is an important part of our oncology program, because it will allow us to target treatment to the patients who are most likely to benefit. When we seek approval of Korlym or one of our selective GR antagonists to treat triple-negative breast cancer, we will include use of this assay in our requested label. I've also spoken before about Corcept's portfolio of more than 300 next generation selective GR antagonists. Like Korlym these compounds modulate cortisol. Unlike Korlym, they do not bind to the progesterone receptor, and so are not [a board of fashions], an important advantage. These compounds also have the valuable characteristic of behaving differently from one another in important respects. Some get into the brain, some do not. Some have potent metabolic affects, others are even more potent that Korlym in animal models of oncologic disorders.

That last point bears elaboration. Some of our proprietary molecules perform better than Korlym in animal models of triple-negative breast cancer, the disease for which we are advancing Korlym. We plan to move Korlym to Phase 3 quickly if results from our current trial are positive, we have follow-on compounds in our pod points that may also prove effective in triple-negative breast cancer, and importantly, other solid tumor human cancers. In September, we began dosing patients with our next generation selective GR antagonist CORT 125134 in a Phase 1 study. That study has progressed smoothly so far and will conclude in the second quarter of this year. Our expectation is that we will advance this molecule to Phase 2 for both an oncology indication and Cushing's syndrome early next year.

To sum up, our revenue from Korlym for the treatment of Cushing's syndrome again grew significantly last quarter and last year, and we believe growth will continue. Our forecast is for revenue between $47 million and $53 million this year. We expect to reach cash flow breakeven without having to raise additional funds. Our own work and the research of many of our academic collaborators have shown that cortisol modulation is a potential treatment for many serious and underserved diseases. This year we plan to take important steps towards realizing that potential. Our Phase 1/2 study of Korlym to treat GR positive triple-negative breast cancer will produce efficacy data. Korlym could be in Phase 3 for this indication by early 2016.

Our proprietary companion diagnostic kit will allow us to target therapy to the patients most likely to, benefit and avoid unnecessary treatment for patients unlikely to respond. The lead compound from our library of next generation selective GR antagonists will complete Phase 1 in the second quarter. We hope to advance it to Phase 2 for an oncology indication in Cushing's syndrome early next year. 2015 will truly be a transformative year for Corcept. I'll stop here and answer any questions.

Thank you. (Operator Instructions). Our first question is from Christopher James with Brinson Patrick. Please go ahead.

Good afternoon Joe and Charlie. Thanks for taking my questions. And congratulations on your progress, particularly in triple-negative breast. You mentioned that some of the second generation compounds looked better than Mifepristone in triple-negative breast. How did CORT 125 look relative to Mifepristone in preclinical assays of triple-negative breast, if you have looked at that?

Indeed we have. CORT 125 I think really just to back up a little bit, in the preclinical models, the live animal models of xenigraphed mice with triple-negative breast cancer, Mifepristone actually looks quite good relative to chemotherapeutic agent like Taxol, in combination it produces a superior result to Taxol alone. CORT 125134 produces an even better result than Mifepristone, as do some of our other compounds.

Okay. Great. And then just a couple questions on Mifepristone in the triple-negative breast or the oncology study. Maybe could you talk a little bit about the baseline characteristics of the patient with the partial response? Does this patient look similar to the patients in the University of Chicago study who had a similar response with respect to progression of disease?

All of these patients have relapsed metastatic triple-negative breast cancer, so they are very, very sick patients, in fact, sadly we've had patients who have died between signing the consent and their first dose. They're all very, very ill patients. So roughly their individual characteristics are very similar.

Okay. And then on dose, do you think there's a possibility to dose significantly above the 300 MG per day dose, and maybe even potentially lower the eribulin dose?

What I can say at this point is that the dose finding study we did led us to the dose we have described, 300 milligrams of Mifepristone and 1.1 of eribulin. And that's what we're going with at this point in time. Can't really answer your question directly, but I can tell you, I think the internally I sort of joke with the team, kind of the Shoots and Ladder system that you use to get a dose, led us to this dose.

Okay. That's helpful. And then just moving on to Korlym in Cushing's, happy to see that you're making inroads with the endocrinologists. Could you speak to anything specific that you're doing to increase your confidence in the 2015 sales forecast? Are you detailing more aggressively, or are the endocrinologists simply becoming more comfortable with the profile? What are you seeing?

It is an interesting story in some respects. Just to harken back to many years ago when we first approved, Mifepristone worked exceedingly well in the 50 patient open label study that we ran to get approvals, to a degree where it was approved on a 50 patient study without an advisory committee on its PDUFA date, and that was terrific. A disadvantage of that was at that point in time, 17 physicians had used Mifepristone in Cushing's syndrome. I think we really understood with this new mechanism of action that it was really going to take significant detailing of scientific explanation to get physicians comfortable and ready to use the medications, and that has grown over time in a very significant way. I outlined our growth intentionally. It has grown each year and each quarter, and we anticipate the growth will continue going forward. Specifically I think it really requires making sure that doctors understand the story, and that endocrinologists as a group are relatively conservative, often it takes talking to them several times, it takes talking to them with clinical specialists and medical science liaisons, who can adequately express the story, and it takes having the geographic coverage to make sure that all of the potential patients who could be treated get to hear about it, and that's all taking place.

One of the things that's very important is that we have established that 25 sales territories across the country are the right number, and at this point in time we have representatives covering 17 of them. The next time we talk we'll have representatives in all 25. We're very, very selective based on what we learned about who are the likely people who are sophisticated enough to be able to develop the appropriate messages for physicians to feel comfortable using the medication. We've also gotten better at targeting these patients. Many have been unfortunately failed by the medical system, and they sort of scatter to the winds. So actually locating those patients has taken real effort, and I think we've gotten a better handle on how to do that, and can now approach them in a way which can be productive for the patient.

Great. Thanks, Joe. Congratulations, great progress.

Thank you.

Next question comes from Charles Duncan with Piper Jaffray. Please go ahead.

Hi, guys. Thanks for taking the question, and congratulations on the progress over the last year. I have similar question, Joe, regarding the key growth initiatives that you think are important to hitting revenue guidance. If you were to point to one thing in the next year that you would like to be known for in terms of pushing through with greater Korlym use what would it be? Would it be breadth of prescribers, would it be depth within a certain prescriber's practice, or just tell me what you want?

Thanks for the question Charles. And good to talk to you. I think the depth questions is actually the easier thing. I think once physicians have used the medication, and seen its effects which often takes three, four months to see in full, it's much easier for them to write a second or third prescription, so that's not the issue. I think the issue is the breadth of prescribers. And I think that one of the things we've been heartened by in the last six months, is that the number of first time prescribers continues to grow, and there are many prescribers who have not yet become first time prescribers. And I think the real growth for both 2015 and 2016 will be that we will add new prescribes, because we're confident that once we have a prescriber who writes their first prescription, it gets much easier having seen the effects to write second and third prescriptions.

Okay. That's helpful. And consistent with what I would have hoped to hear. The second question I had regarding Korlym is really, what are the key determinants of use relative to say, generic ketoconazole, or frankly are you seeing the serotype make any inroads? I mean what are the kind of feedback, points of feedback that you're getting that really highlight the potential for Korlym growth?

I think that a really critical thing to understand about Korlym is that it works in all forms of Cushing's syndrome. And Cushing's syndrome is an end organ disease caused by excessive cortisol activity. It's specifically mentioned [pasceriatide] octreotide, it is specifically for ACTH producing tumors, which are found in the pituitary. So that's it's niche. Ours is quite different, and is broader because of the mechanism of action. Now this is a new mechanism of action. Prior to our approval the idea of modulating cortisol with competitive antagonism, there was nothing approved for that. Ketoconazole doesn't work in that way. Nor frankly is ketoconazole actually an approved medication. But from a scientific point of view what ketoconazole does is by poisoning the production of cortisol, it generally lowers cortisol levels and can, in fact, bring cortisol levels over a pooled 24 hour period to the normal level.

Korlym does something very different. By modulating cortisol it allows the normal rhythm of cortisol activity, which is high in morning, lower in the afternoon, and high in the morning still continue to take place. We suspect that's part of the reason that we have patients who have taken ketoconazole, not done so well on it, switched to Korlym, and immediately talk about feeling much better. It's really a completely different mechanism of action, and I think the major thing is really what we talked about in your first question, getting physicians to give it a try at the beginning. Unfortunately for many of these patients they've really done quite poorly, and are very difficult to treat. And we now both in our own clinical trial and in our post-trial experience have been able to really show both patients and physicians that not just a somewhat better life is possible, but a much better life is possible, and that's really the message we want to get to physicians as we progress.

Okay. I appreciate that, Joe. Now moving onto just the growth potential for Corcept really not only the triple-negative breast cancer use of Korlym, but also second generation regarding PMDC, do you anticipate data to be possibly presented at ASCO, and then secondarily, can you help us understand GR-positivity? Is it a continuum, or are there certain absolute value levels that you're looking for?

Okay. I'm going to answer your second question first. So again, let me just, I know you're familiar with it, but let me just say it for the larger audience, triple-negative breast cancer are tumors, breast cancers tumors, where usual targeted treatment is ineffective because the receptors that are targeted aren't on the tumors. There are no estrogen receptors, there are no progesterone receptors, there are no HER2 receptors, and I think as all of you know for those tumors that are positive for those, great strides have been made in the last decade with treatment, it really us a completely different picture. Unfortunately for the women who have tumors that are triple-negative, none of those treatments are really effective, and they really have a dire course once the disease becomes metastatic, and that's the big issue. Now GR, the cortisol receptor appears to act as a growth factor for those tumors. That's what the University of Chicago's work, preclinical work showed, and now their translation work in women shows.

Very good. Thanks.

Good afternoon. So yes, we're intending to submit an abstract for this upcoming ASCO meeting.

Okay. That's exciting. Do you anticipate to be able to speak to any of these responses for any of these patients by that time?

I think we should be in a position to be able to do that.

Okay. Good deal. Thanks for he tag my question, folks. Congratulations on the progress and we are looking forward to seeing that data with the second gen compounds later on this year.

Thanks you very much, Charles.

Our next question is from Steve Byrne with Bank of America. Please go ahead.

I was curious you had 24% quarter-to-quarter sequential growth in revenue. Can you parse that up any, how much of that was increased number of patients, versus any change in unit price, and then potentially higher average dosing per patient?

Yes. Thanks very much for the question. There was no increase in dose. It was all from unit growth, so more patients being treated, and there also was a slight increase in the average dose, and I think one of the things we have talked about is we, from our study, we have a sense of what we think the optimum dose yet is, and we are moving towards that direction each quarter. So again, no price increase in the fourth quarter. All unit increase growth.

And are you at that average dose that you achieved in Phase 3?

We are not. We're still below that, and part of that is sort of an artifact of when you add new patients they start at the lower dose, so the average is lower. One of the things that we really take as one of our sales tests is to explain to people, explain to doctors that this is a medication for optimum treatment that needs to be titrated, and we continue to have that message out there, and we think as we have worked very hard in the last six months to really increase the retention of our patients, that the doctors really understand the way to get the maximum response is actually to have an appropriate treatment for each patient. We think that there are patients who have been underdosed, and we think part of that is driven by the fact that the doctors who treat these patients aren't really used to seeing these patients make great improvements, and become satisfied with modest improvements. We think great improvements can be made with each patient being individually titrated.

Can you talk any about average duration that you're seeing so far with Korlym in these patients?

The answer is I can't talk to you in anything but an anecdotal way. Patients vary a great deal. I'll give you the extreme ends of it. We have some patients at one end who are very, very ill with something like metastatic adrenal cancer, and their ability to stay on the medicine is over ridden by the fact that sometimes the cancer just gets to them and they die. At the other end we have patients who have been on the medication now from the clinical trial, so have been on the medication for three or four years, and all numbers in between.

Okay. And then just the last one on the additional changes in your sales force, are the 17 that you have out there now, are any of those reps covering multiple territories that they would then have to carve up when you bring on more reps?

We actually do have, obviously we make a point of covering anybody who is there, but our outreach is obviously going to be less than what it is with 25 than it is with 17. And just let me digress for one second, because I really do think that it takes a special person to be a Korlym rep at Corcept. One, they have to be relatively sophisticated about the scientific story. And two, I guess it's a little bit like being a soccer fan. Goals are hard to come by, but every goal is extremely valuable, so it takes a rep who is tenacious and persistent, and really willing to do the leg work, because sometimes physicians have to be touched many times before a prescription is written. I think that we will have broader geographic coverage than we have now for obvious reasons, although we try even with our current group of reps to get to people for whom it's obvious that touch is important.

So that's a 50% increase in your sales force. Are you well on your way to securing these individuals now if you think that the next time we speak you'll have them onboard?

The highest commercial priority and we actively interview on an hourly basis. But I will tell you, we're very selective about it. It's making the right hires and we now have really increased our sense of what that is, is truly the most important thing. We do not hire just to fill a spot.

Okay. And your guidance for roughly $50 million for this fiscal year, is that assuming those additional reps become as productive as your legacy reps in a fairly short order?

The answer is yes, although certainly with the caveat that our projections allow for a time of learning, a time of getting up to speed, but certainly as the year progresses we expect them to be able to be as productive as the reps we currently have.

Okay. Thank you, Joe.

Sure. Thank you.

Thank you.

Alright. Listen thank you very much. Again, an exciting quarter and year for us, and we hope to really add to the story by the next time we speak. So thank you very much. Bye bye.

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