Corcept Therapeutics Inc (CORT) 2015 Q1 法說會逐字稿

Welcome to the Corcept Therapeutics Conference Call. My name is Anna, and I will be your operator for today's call. 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 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 in the call.

Earlier today we issued a news release giving our first quarter summary financial results and a corporate update. To get a copy of this release, go to Corcept.com and click on the Investors tab. Complete financial results will be available when we file our Form 10-Q with the SEC.

Today's call is being recorded. A replay will be available through May 21st at 1-888-843-7419 from the United States and 1-630-652-3042 internationally. The passcode will be 39586872.

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 forward-looking statements 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.

Forward-looking statements include statements regarding anticipated net revenues, the timing of clinical trials and clinical trial results, the pace of Korlym's acceptance by physicians and patients, the pace of enrollment in or the outcome of our Phase 1/2 study of Korlym in the treatment of triple-negative breast cancer in the University of Chicago's Phase 1/2 study of Korlym to castration-resistant prostate cancer, the advancement of CORT 125134 to Phase 2 testing, the effects of rapid technological change in competition, the protections offered by Korlym's orphan drug designation or other intellectual property rights or the cost, pace, and success of our other product development efforts including the pre-clinical development of CORT 118335.

These and other risks are set forth in our SEC filings, which are available at Corcept's website and also the SEC's website. We disclaim any intention or duty to update any forward-looking statement made in this press release.

Now I'll review our financial results.

Corcept's net revenue in the first quarter was $10.1 million compared to $4.4 million in the first quarter of 2014, an increase of 129%. Our revenue guidance for 2015 remains unchanged between $47 million and $53 million.

Our net loss in the first quarter was $4.8 million, or $0.05 per share compared to $13.9 million, or $0.14 per share in the first quarter of 2014. Losses in both periods included noncash expenses -- $2.2 million in the first quarter of 2015, and $2.4 million in the first quarter of 2014. Excluding these noncash items, our net loss was $0.03 per share in the first quarter of 2015 and $0.11 per share in the first quarter of 2014. A reconciliation of GAAP net loss to non-GAAP net loss is provided in our press release.

Our cash balances at March 31st was $38 million. We generated gross proceeds of $17.2 million in the quarter from the exercise of warrants. 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, advancing CORT125134 to Phase 2 studies in both Cushing's syndrome and an oncology indication, 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 Dr. Belanoff. Joseph?

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.

Our Cushing's syndrome business has grown steadily since its inception in 2012, and we expect its growth to continue. We reaffirm our revenue guidance of $47 million to $53 million this year, roughly, double our total for 2014. As has been true in every quarter since we first made Korlym available, the number of patients with Cushing's syndrome who take Korlym has increased as has the number of physicians who prescribe the medication.

Speaking as a physician, I want to say that this increase is excellent news. Korlym has been a transforming, even life-saving medication for many patients. We have taken steps to reach even more patients and physicians by increasing the size of our salesforce to 24 on its way to 25. Our companion group of medical science liaisons is now complete at eight.

Our new personnel will complete their training soon, and we look forward to their contributions in future quarters. We are confident that this greater national reach will yield substantial growth in revenues in 2015 and beyond.

Our ecology development efforts made significant progress last quarter including the dosing of the first patients in the efficacy portion of our Phase 1/2 study of Korlym in combination with eribulin in women with GR positive triple-negative breast cancer.

For those of you who are not familiar with triple-negative breast cancer, let me provide some background. Triple-negative means that these patients have tumors that do not express the estrogen, progesterone or HER2 receptors. So targeted treatments like Tamoxifen or Herceptin have no target and are ineffective. However, our research indicates that significantly more than half of these women have tumors that express GR, the cortisol receptor to which Korlym competitively binds.

I remind you that there is no FDA-approved treatment for triple-negative breast cancer, and the prognosis for patients with metastatic disease is poor. 40,000 women each year in the United States are diagnosed with the disease.

The high rate of GR expression in triple-negative breast cancer tumors is important because there is substantial evidence that it is cortisol's binding to GR that opens the pathway for tumor cells to escape chemotherapy. At the December 2013 San Antonio breast cancer symposium, investigators from the University of Chicago reported the successful findings from their own clinical study of Korlym in combination with chemotherapy to treat this disease.

Of the six patients in their studies 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 them and yet five of the six appeared to benefit when Korlym was added to their taxane-based treatment. If even one patient had responded, we certainly would have continued to support the research at the University of Chicago.

However the strength of their results demanded that we bring this program in-house and conduct it with the greatest speed and efficiency possible.

I would also like to remind you that the GR status of the tumors in our study is being determined using our proprietary CLIA-validated assay. When we seek approval of Korlym to treat triple-negative breast cancer we plan to include the use of this assay in our requested label.

We expect efficacy results from our Phase 2 study by the end of this year. If they are positive, we plan to begin our Phase 3 study in early 2016. However, triple-negative breast cancer is no longer the exclusive focus of our clinical oncology efforts. Researchers at the University of Chicago are conducting a 100-patient Phase 1/2 study of Korlym in combination with enzalutamide to treat castration-resistant prostate cancer.

The study follows extensive in vitro and in vivo work showing the cortisol stimulation of GR is a separate path of tumor growth in this disease, and the GR blockade by Korlym or one of our selective GR antagonists when used in combination with an androgen deprivation agent such as enzalutamide could be a potent treatment.

We recently licensed intellectual property rights to this step therapy from the University of Chicago. In fact, using our proprietary assay for GR positivity, we are testing a wide variety of other solid tumor types, seeking to identify those that tend to express GR and so may be targets for treatment with Korlym or one of our selective GR antagonists. There are many possibilities, and we look forward to selecting the most promising of them for future study.

I've spoken before about Corcept's portfolio of next-generation selective GR antagonists. There are more than 300 such compounds, all of which modulate cortisol's activit,y but unlike Korlym, do not bind to the progesterone receptor. These compounds are not a abortifacients and do not have the other side effect such as endometrial thickening seen with progesterone receptor blockade. This is a very important medical advantage for our new compounds.

Another advantage of these new compounds is they do not behave identically to each other in some important respects. Some get into the brain, some do not. Some have potent metabolic effects, others are even more potent than Korlym in animal models of oncologic disorders. It is possible that our library of compounds will generate several tissue-specific compounds best-suited to individual disorders.

Our lead next-generation compound, CORT 125134, has now successfully completed Phase 1 and should advance to Phase 2 in the first quarter of 2016. Data from the Phase 1 study showed that the compound was safe and well tolerated. It also showed that CORT 125134 appears to share Korlym's ability to potently reverse the effect of excess cortisol activity, a quality that makes it a promising candidate to treat metabolic disorders such as Cushing's syndrome.

We confirmed that CORT 125134 is functionally active by dosing patients with the steroid prednisone, which activates GR in the same way that excess cortisol activates GR in patients with Cushing's syndrome. We then administered a well-tolerated dose of CORT 125134, which reversed prednisone's effect on glucose tolerance as Korlym does. It also reduced the presence of other biomarkers caused by prednisone's activity.

In the first quarter of 2016, we plan to begin a Phase 2 study to test the hypothesis that CORT 125134 can effectively treat patients with Cushing's syndrome. Equally important, CORT 125134 appears to be a potential therapy for certain types of cancer. For example, it's at least as potent as Korlym in mouse models of GR positive triple-negative breast cancer, and we were testing it in models of other solid tumor types. We plan to advance CORT125134 to Phase 2 in an oncology indication in the first quarter of 2016.

It is important to understand that the current targets of our research and development efforts are just the beginning of utilization of cortisone modulation's therapeutic potential. There are receptors for cortisol in nearly every tissue of the body. Excessive cortisol activity, even activity that is only moderately excessive, can exacerbate many illnesses with sometimes dire consequences. In addition to Cushing's syndrome and oncologic disorders, therapeutic targets for medications that modulate cortisol's activity include other metabolic, psychiatric, and even an ophthalmologic disorder.

As many of you know, Corcept's own efforts are complemented by the work of academic investigators around the world with whom we collaborate. At any point in time, we have about 30 of these collaborations in progress. These investigators are working with both Korlym and compounds from our portfolio of next-generation selective GR antagonists using cell-based and in vivo models of a wide range of human diseases.

I am pleased to tell you that we have used a portion of the funds from last quarter's warrant exercises to accelerate development of another promising compound, CORT 118335. In vitro and in vivo testing by Professor Otto Meyer at the Leiden University Medical Center in the Netherlands has shown that CORT 118335 is extremely promising in models of metabolic illness including non-alcoholic fatty liver disease, a serious condition that can cause swelling of the liver, cirrhosis and liver cancer or liver failure.

There is, at present, no approved treatment for fatty liver disease, and it is estimated that up to 25% of the US population suffers from some form of it.

To sum up, our revenue from Korlym for the treatment of Cushing's syndrome grew last quarter, and we believe growth will continue with our 2015 revenues being between $47 million and $53 million. We expect to reach cash flow breakeven without having to raise additional funds.

Our development work has brought us closer to realizing the potential of cortisol modulation as a therapy for many serious diseases. Our Phase 1/2 study of Korlym to treat GR positive triple-negative breast cancer will produce efficacy data by the end of this year. Its Phase 3 trial could be underway by early 2016.

In its Phase 1 study, CORT 125134 was shown to be well tolerated and, just as important, it appears likely to modulate cortisol activity in metabolic disease. It should enter Phase 2 for the treatment of Cushing's syndrome and an oncologic indication in the early part of next year.

Finally, in keeping with our desire to fully capitalize on our cortisol-modulating platform, we are beginning to advance CORT 118335, which has shown promise in a number of metabolic models including non-alcoholic fatty liver disease. It is beginning its pre-IND toxicology.

I'll stop here and answer any questions.

(Operator Instructions) Charles Duncan, Piper Jaffray.

Hi, guys, it's Roy in for Charles. Thanks for taking the question. I had a question on the TNBC Phase 2. What are you guys going to consider a positive result in order to proceed to Phase 3?

Right. So, again, I just want to repeat, or I've just (inaudible) for the whole audience exactly what this study is. We are now conducting a Phase 1/2 study. The Phase 1 study was about selecting the right dose, the Phase 2 study is a 20-patient open label study where we are looking at response rate to patients who received Korlym in combination with eribulin. That's the frame of the study.

Now, exactly what the response rate, which will cause us to move forward is not fully determined, but please keep in mind that the response rate to eribulin alone appears to be about 10%. So a response with greater than 10% is obviously of interest, and the greater it is past 10%, the higher the level of interest is, and we'll just have to see as those results come in.

Okay, that's great. There's been some evidence for efficacy from the checkpoint inhibitors recently in the setting. Does that change your thinking about the [effication] at all?

No, it really doesn't. In fact, I think that an interesting point is that we think that the GR modulation may be of utility with any other treatment, which is available for triple-negative breast cancer. And some evidence for that is that we've now seen testing of Korlym in combination with three different chemotherapies. One was Nab-Paclitaxel, the University of Chicago's original treatment. This now is with eribulin, and there's also a study going on at the University of Chicago with Gemcitabine and Cytoxan, and it seems, and these are early studies, to be equally effective with all this chemotherapy.

So -- I think in the end it may, in fact, be a useful treatment no matter what other beneficial treatment is provided for triple-negative breast cancer.

Okay. Any thoughts of combos with checkpoints? Everybody else is doing them.

It's certainly something to look as we go forward. Certainly, those kind of combinations are the way oncology is often treated. But we have our study in place right now, and we're going to go forward as it is.

Okay. And then last question -- what's [gating] for the Phase 2 start of 125134? Is it to find the indication? Do you need additional tox data?

We actually are in the midst of completing the final tox data. Of course, we have to put our package together and bring it to the FDA to get started just as a regulatory perspective, but, largely, it's kind of on its path to go from this point.

Christopher James, FBR & Company.

Hi, thanks for taking my questions and congrats on a great quarter. Can you just maybe expand on the Korlym launch what you're hearing from physicians and patients that may be different a year or two ago? And do you see any factor from your specialty distributors, [Infortel], do you see any contribution from that side of the business?

Chris, thanks for your question. I'd like to introduce Sean Maduck, who is our Vice President of Sales and Marketing, and let him answer the question. I think this is the first time you've heard from Sean, but you'll be hearing from him more frequently in the future.

Thanks, Joseph. One of the things that we've been working on over time is to continue to improve both our targeting as well as our ability to communicate the Korlym story with physicians. We continue, as Joseph has mentioned, to reach more physicians and more patients through the shifting and improvement upon that messaging.

Great, okay, and then just on the pipeline -- Phase 1 data with CORT 125 -- is it too early to assess the potential for some of the abortafacient qualities and uterine thickening? And then a quick follow-up to that, if I may.

Well, first, the answer to that question, the answer is yes. This is a molecule, which has no progesterone receptor activity, so one would not expect it to be an abortafacient or, of course, endometrial thickening at all. Now, obviously, we'll have to test that, over time, but our expectation is that will be just a flat zero in terms of activity.

Great. And then if you start the Phase 2 in 2016, how quickly do you think it could be approved for Cushing's syndrome, in particular?

Well, I can't say with certainty, but our goal, certainly, is to have it approved before 2019.

Great, great. And then maybe can you expand on the mechanism of action for the new compound, 118335 in non-alcoholic fatty liver disease? How do you suppose it, sort of, working there?

We're just beginning to really look at that mechanism. But, again, I just want to -- Chris, I think you know this, but just for the larger audience, 118335 is, like our other compounds, a GR antagonist, so it modulates cortisol's activity. It also doesn't have any activity at the progesterone receptors we just discussed.

The reasons that we don't fully understand at this point, it is an extremely potent metabolic compound. For instance, and I know this is not news to you, we often look at a model, anti-psychotic induced weight gain, which is a very interesting area we hope to explore in the future. And 118335 on a per-milligram basis, about 60 times more potent than Korlym, and Korlym itself is quite effective as it was shown in both animal and in human models. So it is a GR antagonist. We think that's its main cause of action. We think it causes lots of insulin sensitivity, and we think that that's helpful, but we're really, at this point, at the beginnings and I think several academic groups are very interested in studying it, really elucidating what all of its mechanisms are.

Again, it's prominent mechanism is the same as our other compounds, GR antagonism, but as I pointed out, what's very interesting about these compounds is they all work by binding to a nuclear receptor. They sit on the DNA in slightly different ways, one to the next. They bring in different co-factors in the nucleus of different cells. As a consequence, they change gene expression and protein production differently.

And, as I said, we're going to get to the bottom of exactly how it's working, but it has highly reproduceable results in metabolic disease, especially fatty liver disease.

Great, thanks, Joseph. That's really helpful. I really look forward to seeing the data on that being generated.

Good, thank you.

Tazeen Ahmad, Bank of America, please go ahead.

Joseph, I just wanted to elaborate a little bit more on Korlym and where you're getting most of your [juice]. Initially, I think you have thought that most of the patients would be found more at academic centers, and has that turned out to be the case? And, if not, where have you found that you've been getting the biggest traction and getting patients?

Well, that really was an interesting learning for us because I know, Tazeen, as you know, our studies were primarily at academic centers and our anticipation was, in fact, that most of the patients would be at academic centers.

What we really found out quickly and confirmatively, over time, was that while many of these patients go to academic centers for their initial surgery, if they're going to have it, they'd then return to wherever they lived before. And if the surgery is successful, that's great, they're cured. But if it isn't successful, they become treated by their local endocrinologist. So a person who got their surgery at Mass General Hospital, there's a very fine surgeon there, he may return to Elmyra, New York or Scranton, Pennsylvania. If his surgery, unfortunately doesn't succeed, they end up getting treated there.

So these patients are widely scattered. That was a real learning for us, and I think we've moved quickly to try to adjust to that. And as I mentioned myself, and it was mentioned in the press release, we now have geared up to cover all of those patients or on our way to 25 fully covered territories, and we think that in the future that will really be a significant factor in our revenues.

Can you just remind me of how many endocrinologists there are practicing in the US? And given the fact that this is a rare disease, do you think that each endocrinologist would really only be treating one or two patients?

Yes, we think that there is -- the general group of endocrinologists that we're targeting is about 3,000 and about 1,500, about half of them, are what we consider top-tier for Cushing's syndrome. That's kind of interesting about that is you're absolutely right. There are many, kind of, ones and twos out there, although I think it's often endocrinologists have fairly large practices, and they discover, with some prompting, that there are patients who have Cushing's syndrome who are, sort of, undertreated in their practice or unrecognized. And so ones and twos sometimes turns into three, fours, and fives.

That said, there are also some -- a subset of them, some endocrinologists, who just have a particular interest in Cushing's syndrome and are known in their community for having that interest and so get referrals beyond that. And so there are a few larger prescribers than that.

And, frankly, we want to treat every patient with Cushing's syndrome who might benefit from the medication, and our goal is really to target any physician who has a patient with the disease.

Okay, and then one more on Korlym. What's proportion of your patients that are on drug have Cushing's syndrome as opposed to Cushing's disease?

Okay, I just want to set the context for everybody in the audience.. That's a very sophisticated question. Cushing's syndrome is an illness caused by excess cortisol activity. Excess cortisol activity can come from adrenal glands producing too much cortisol, or it can come from an ACTH-producing tumor in the pituitary gland. And so ACTH-producing tumors in the pituitary gland have the specific name of Cushing's disease.

In the population, as a whole, about -- it's estimated that about 70% of the patients who have Cushing's syndrome have Cushing's disease. So pituitary-producing tumors. I do not know the exact count in our group of patients, but we certainly have patients with all forms of Cushing's syndrome.

One thing I would like to point out is that while Cushing's disease is often recognized, it's essentially a tumor in the vicinity of the brain, people get it. Adrenal Cushing's syndrome is less well recognized, and we think this is an area of the market that has both been undertreated and underrecognized, and we're really making an effort to make sure patients with that form of Cushing's syndrome are really to get to adequate treatment.

Great, thanks for all the color. And then one question on 118335. I'm sorry if I missed this answer already, but when are you expecting to have data in humans in non-alcoholic fatty liver disease?

This is a compound, which is very exciting in its pre-clinical studies including live animal studies, but it's some distance away from human studies. I would say that you would not be able to expect an IND for about 18 months.

Charles Duncan, Piper Jaffray.

Just a follow-up on the mechanism of the second gen compound. It wasn't totally clear to me, but -- so are you talking about differential activity on the glucocorticoid receptor? Or are you talking about activity on different nuclear receptors?

Yes, let me make sure that everyone is clear about this. These are all GR antagonists, so they're all competitive GR antagonists, and the nuclear receptor I'm referring to is the GR receptor.

Got it, thank you.

Okay. All right, well, listen, thank you very much. I look forward to talking to you in another quarter and seeing you on the road. Bye-bye.

Bye.

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