Corcept Therapeutics Inc (CORT) 2015 Q3 法說會逐字稿

Hello and welcome to the Corcept Therapeutics conference call.

(Operator Instructions)

Please note this conference is being recorded. I would now turn the call over to Charlie Robb, CFO. Charlie 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 third-quarter 2015 summary financial results and the 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 in our third-quarter 10-Q.

Today's call is being recorded. A replay will be available through November 19 at 1-888-843-7419 from the United States and 1-630-652-3642 internationally. The passcode is 41022099.

Before we begin I want to remind you that any statements during this goal other than statements of historical fact are forward-looking statements 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 our anticipated revenues and expenses for 2015 and beyond, the pace of Korlym's acceptance by physicians and patients, the anticipated contribution of our sales organization to our revenue growth and earnings, the cost and timing of preclinical and clinical trials and the results of such trials, the clinical attributes and advancement of our next-generation selective cortisol modulators, the protections afforded by Korlym's orphan drug designation for Cushing's syndrome or other intellectual property rights including our patent concerning the use of glucocorticoid receptor antagonists to treat triple negative breast cancer or the cost, pace and success of our product and development efforts.

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

Now I will review our third-quarter financial results. Corcept's net revenue in the third quarter was $13.3 million compared to $7.3 million in the third quarter of 2014, an 82% increase. We are reiterating our 2015 full-year revenue guidance of $49 million to $53 million.

Our GAAP net loss in the third quarter was $600,000, or $0.01 per share compared to $6 million or $0.06 per share in the third quarter of 2014. The third quarters of 2015 and 2014 included non-cash expenses of $2.2 million and $2.1 million respectively.

Excluding these non-cash items we generated net income on a non-GAAP basis of $1.6 million in the third quarter of 2015 compared to a non-GAAP net loss of $3.9 million in the same period last year. A reconciliation of GAAP to non-GAAP income and losses is provided in our press release.

Our cash balance on September 30, 2015 was $36.5 million compared to $37 million one quarter ago. The reduction in our cash balance includes the repayment of $1.8 million in principal under our capped royalty financing arrangement. We expect to make our final payment under that arrangement sometime in 2017.

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 if that study produces positive results conducting a Phase 3 study, advancing CORT125134 to Phase 2 studies in both Cushing's syndrome and in on oncology indication, advancing to the clinic at least one more of our next-generation compounds and repaying the balance of our capped royalty financing obligation 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 is the leader in developing and commercializing medications that modulate the effects of cortisol, widely known as the stress hormone. Our research and research carried out by the dozens of academic investigators with whom we collaborate has shown that cortisol modulation has therapeutic potential in many serious illnesses including oncologic indications such as triple negative breast cancer, ovarian cancer, and castrate resistant prostate cancer, psychiatric indications such as alcohol and cocaine dependence, metabolic indications such as antipsychotic induced weight gain and non-alcohol fatty liver disease and of course Cushing's syndrome which our first commercial medication Korlym has been approved to treat.

We are taking significant steps to develop our cortisol modulation platform. We will present initial efficacy data from our Phase 1/2 study trial of Korlym for the treatment of triple negative breast cancer at the San Antonio Breast Cancer Symposium on December 10.

We plan to enter our lead next-generation cortisol modulator, CORT125134, in two Phase 2 trials: one treating patients with Cushing's syndrome and another treating patients with oncologic indications. We are advancing more next-generation compounds towards the clinic, including CORT118335, a molecule I've mentioned before that has shown promise in both in vitro and mouse models of non-alcohol fatty liver disease and CORT125281 which looks headed towards an oncology indication. Most important our Cushing's syndrome franchise continues to grow and to generate the cash required to sustain itself and fund our growing preclinical and clinical programs.

To enable us to achieve our preclinical and clinical goals we recently made an important addition to Corcept's leadership team. Dr. Robert Fishman recently joined us as our Chief Medical Officer. I want to take a moment to introduce Bob.

Bob brings to Corcept 19 years of product development experience. Before it was acquired by Roche Holdings he was Senior Vice President of clinical development at InterMune where he led the pivotal clinical trial of pirfenidone for the treatment of idiopathic pulmonary fibrosis and managed the effort that led to the FDA's approval of that medication in October 2014, actually before its PDUFA date.

Prior to InterMune Bob was vice president of clinical development at Alexza Pharmaceuticals where he led the development of inhaled loxapine leading to its approval by the FDA in 2012 and the EMA in 2013. Before that he held positions of increasing responsibility at Heartport, Aerogen, and Anthera Pharmaceuticals.

At Corcept Bob is responsible for all of our clinical programs including the extension of the Korlym label to treat triple negative breast cancer and the Phase 2 studies of CORT125134 which we will begin next year. We couldn't be more excited that Bob has joined the Corcept team.

Before I discuss Corcept's key programs I want to take a minute as I did last quarter to highlight Corcept's financial performance. Excluding non-cash expenses our non-GAAP net income grew to $1.6 million in the third quarter. Our second consecutive non-GAAP quarterly profit is further proof that our Cushing's syndrome business can support itself even as it funds our expanding development activities and covers payments on our royalty debt, the principle of which we pay every quarter and which we expect to retire in full in 2017.

I'll briefly review our key programs then stop to answer your questions. Our business marketing Korlym for the treatment of patients with Cushing's syndrome continues to grow. We expect that growth to continue in the future.

As Charlie mentioned our revenue guidance for 2015 remains $49 million to $53 million which is roughly double our total for 2014. We added both new prescribers and new Cushing's syndrome patients in the third quarter but the vast majority of the 10,000 or more patients who could benefit from Korlym still have yet to use the drug. The clinical specialists we hired early this year have begun their work of educating physicians about Korlym and the benefits cortisol modulation can provide their patients.

As I have pointed out before this education takes time. Endocrinologists are a cautious and busy group of doctors. Treating Cushing's syndrome by modulating cortisol's activity at the receptor (technical difficulty) the powerful but novel approach.

We found that prompting a doctor's first Korlym prescription often requires a clinical specialist to make five or more visits to the doctor's office. We're just beginning to see the contributions of our new sales representatives as they take physicians from an initial introduction to a first Korlym prescription.

For all of its power as a treatment for Cushing's syndrome Korlym has certain drawbacks, the chief being that it blocks the progesterone receptor and terminates pregnancy. In some nonpregnant women progesterone receptor blockade (technical difficulty) endometrial thickening and irregular vaginal bleeding. Non-life-threatening, manageable side effects but one that patients and their physicians would clearly prefer to avoid.

But more than 300 compounds in our portfolio of next-generation molecules do not cause these problems. They all bind to the glucocorticoid receptor and therefore share Korlym's ability to modulate cortisol but they are not active at the progesterone receptor, so do not terminate pregnancy or cause endometrial thickening.

Korlym is an excellent medication. Our new compounds have the potential to be even better.

As I've mentioned before we plan to advance our lead next-generation molecule, CORT125134, to Phase 2 as a treatment for Cushing's syndrome and an oncology indication in the first quarter of next year. Its Phase 1 data show that CORT125134 appears to share Korlym's ability to potently reverse the effects of excess cortisol activity, the essential quality in treating Cushing's syndrome. It also appears to be even more potent than mifepristone, Korlym, in rodent models with triple negative breast cancer and castrate resistant prostate cancer.

Our overall oncology program continues to advance. At the San Antonio breast Cancer symposium on December 10 we will present initial efficacy results in our Phase 1/2 trial of Korlym to treat metastatic triple negative breast cancer.

As you may recall the efficacy portion of our trial is designed to enroll 20 women, administering to each of them 600 milligrams of Korlym every day and 1.1 milligram per meter squared of Halavan on a 21-day cycle. To remind you Halavan is Eisai's brand-name for eribulin.

For those of you who are not familiar with triple negative breast cancer, let me provide some background. 40,000 women in the United States are diagnosed with the disease every year. There is no FDA approved treatment for triple negative breast cancer and patients with metastatic disease have a dire course.

In our trial some patients who enrolled sadly died before they could even receive their first dose of medicine. Triple negative breast cancer patients have tumors that do not express the three receptors, estrogen, progesterone, and HER2, to which medications like tamoxifen or Herceptin bind which means those medications cannot treat the disease. The great majority of triple negative breast cancer tumors do, however, express the glucocorticoid receptor, GR for short, to which cortisol binds.

This is important because cortisol's activity at GR appears to suppress the body's immune response and stimulate the tumor's growth. Our triple negative breast cancer program is built upon the observation that cortisol modulators like Korlym and CORT125134 seem to reverse cortisol's tumor protective effects, allowing chemotherapy to work better.

Our work builds on extensive in vitro animal and human data generated by researchers at the University of Chicago. And with the exceptionally positive data the University of Chicago team presented at the 2013 San Antonio Breast Cancer Symposium from their clinical trial of Korlym in combination with nab-paclitaxel to treat metastatic triple negative breast cancer that prompted us to begin our own clinical trials.

The therapeutic potential of cortisol modulation is not confined to triple negative breast cancer. For instance, the University of Chicago investigators are conducting a follow-up study of Korlym in combination with a different chemotherapeutic regimen, gemcitabine and carboplatin, to treat patients with ovarian cancer as well as patients with triple negative breast cancer.

A separate team at the University of Chicago is conducting a 108 patient Phase 1/2 trial that combines Korlym with enzalutamide to treat castrate resistant prostate cancer. Extensive in vitro and in vivo work from their group and others shows that in that disease cortisol activation of GR stimulates tumor growth. Accordingly GR modulation by Korlym, CORT125134 or another of our selective or GR antagonists when used in combination with a androgen deprivation agent such as enzalutamide could be a potent treatment.

Extending Korlym's label to include triple negative breast cancer is only part of our oncology efforts. As I've said before we plan in the first quarter of next year to begin a Phase 2 trial of CORT125134 in combination with chemotherapy to treat solid tumor cancers.

Another of our next-generation compounds, CORT125281, is completing preclinical testing and is a candidate for the treatment of triple negative breast cancer, ovarian cancer, castrate resistant prostate cancer and perhaps other oncologic diseases. Our research has shown that many, although not all, solid tumor types express GR and may respond to cortisol modulation therapy. We are reviewing candidate indications and will make our development decisions regarding CORT125134 and CORT125281 soon using our own data and data generated by our academic collaborators.

I want to return to the topic of cortisol modulation's broad therapeutic potential. Because there are receptors for cortisol in nearly every tissue of the body excessive or disordered cortisol activity causes or aggravates many serious diseases.

I've talked about our work in Cushing's syndrome and oncology because it is the most advanced. But it is just the start.

In addition to cancer we and our academic collaborators have explored the use of Korlym and our next-generation compounds as potential treatments for a wide range of illnesses including non-alcoholic fatty liver disease, antipsychotic induced weight gain, post-traumatic stress disorder, alcohol dependence, ALS, Alzheimer's disease and central serous retinopathy. We're advancing additional compounds towards the clinic.

In past calls I have discussed one such compound, CORT118335, that in animal models prevents and reverses non-alcoholic fatty liver disease. Today I've mentioned another, CORT125281, that we are beginning to advance as a potential treatment for solid tumor cancers. As these and our other compounds progress we will match them to specific therapeutic targets suggested by our own research and the work of our collaborators and advance the most promising candidates to clinical study.

To sum up our Cushing's syndrome business grew again last quarter as it has every quarter since Korlym's launch. On a non-GAAP basis we once again generated a profit. We expect this growth to continue and to be able to reach cash flow breakeven, including repayment of our royalty obligations, without having to raise additional funds.

In vitro and early clinical data suggest that CORT125134 may treat Cushing's syndrome, Korlym's efficacy but without the side effects associated with progesterone antagonism. The compound's Phase 2 study for the treatment of Cushing's syndrome should start early next year.

Our oncology program continues to advance. At the San Antonio Breast Cancer Symposium this December we will present initial efficacy results in our Phase 1/2 trial of Korlym in combination with chemotherapy to treat triple negative breast cancer.

CORT125134 should enter Phase 2 for an oncology indication by early 2016. CORT125281 is completing its preclinical testing and other next-generation compounds are advancing towards the clinic.

I will stop here and answer any questions.

(Operator Instructions) Charles Duncan, Piper Jaffray.

Hi, thanks, this is Sarah Weber on for Charles. Congratulations on the progress today.

I had one question about timing with the triple negative breast. When will the decision be made about moving forward into Phase 3? And if you do decide to do that when could we see a trial up and running?

Thank you very much for the question. And I'm glad to give you the guidance we can give you right now. As you said our initial results will be able to be presented at the San Antonio Breast Cancer Meeting in December and as you can tell when you look us up on clinicaltrials.gov we're still actually enrolling patients in that study and that study has a bit of time still to run.

We'll make a decision about going to Phase 3 when we have all of our results in hand, which we expect actually to be in the very early part of next year. So we'll see where that goes. I can give you a definitive date but we expect results to be full enough in the not so distant future to be able to make that decision.

Okay thanks. That's helpful. And then in terms of all the different academic cooperations that you have going on, what's some of the next data that we could see from those?

We think that actually a lot of data will emerge in the next 12 to 18 months and I appreciate that you're following that. So for instance one of the things I mentioned already was the trials which are being run at the University of Chicago in ovarian cancer and in prostate cancer.

Now one of the issues with investigator studies is that we at the Company don't control their exact timing and when their readouts are. But based on our expectations those are two important studies which are going to produce results in the next 12 to 18 months. So that's really an important set of data.

Just to mention a couple of the others, we expect that we will see results from our alcohol dependence study that's being run by the group at Scripts and we expect that the posttraumatic stress disorder study, which is being run as a VA Consortium study, will also produce at least preliminary results on that timeframe.

In the next 12 to 18 months in other words?

Yes, although again I just want to point out that unlike a Corcept study we have less control about the ultimate release date for that information. But based on our observation of how they are doing we think that that medium-term timeframe is about correct.

Okay and then just one more if I might. You mentioned that the 125134 might have superior potency in oncology. Is there any chance that you would switch over to that compound to pursue in triple negative breast?

The answer to that is we're first waiting to see our results from our Korlym study but our expectation, you know that's a drug that we know a lot about, and our expectation is that we will actually advance those programs in parallel. We obviously know lots and lots about Korlym. We have good preliminary results from the first University of Chicago study and we're very optimistic about CORT125134 but we haven't yet treated it in a patient who actually has cancer.

So we'll have to see where those go as we go along. But I think it's very important for you and the whole audience to know is that the Korlym study in triple negative breast cancer is not a proof-of-concept study. It really is a study with the intent to extend our label of Korlym into that disease.

Great, thanks for taking the question.

Tazeen Ahmad, Bank of America.

Hi, thanks for taking my question. Just on the mifepristone data that you are expecting at San Antonio breast, how many patients total do you expect to enroll in the trial and how many patients should we expect to see data for in December, on December 10?

As we mentioned before we expect to have 20 patients in total in the study and we haven't yet said how many patients you'll see data on in December. So I guess the best I can tell you is you will have to wait and see the poster.

Okay, and then I guess based on your experience thus far, how long would you expect the Phase 3 trial to enroll? Like you said there's nothing available FDA approved so there shouldn't be trouble finding patients to enroll but just in terms of logistics how many patients do you think you would need in a Phase 3 trial? And how long do you think it would be to enroll that?

Well this is of course all preliminary information based on results we expect to see and obviously the powering of the study is going to be the results we see in the Phase 2 study will have strong bearing on that. But our general expectation is that this is a study that's probably going to be on the order of 300 to 350 patients.

Now how long will it take to run? Those are always a little tougher guesses to make but I'm guessing, and it really is just considered speculation at this point, that start to finish first patient into last patient out is on the order of a couple of years.

Okay. And so what kind of data would you consider to be positive data in San Antonio in a couple of weeks?

You know I'm just going to take an opportunity only because you'll be hearing a lot from him in the future to introduce you to Robert Fishman who is our Chief Medical Officer and let him answer that question for you. So first time you've heard from Bob, but pleased to introduce him.

Hi, good afternoon. Thanks so much for your question.

So to put it in context as you know these are very sick patients who had at least two prior rounds of chemotherapy and as you know as well we'll be evaluating patients in two main ways as Joe mentioned. The first is the standard resist criteria as well as objectively, in other words do they feel better. And so we're continuing to collect data on all the patients and we'll make the decisions about the next steps as all of the outcome adjudications are collected which is going on now and continuing.

I guess maybe just to delve a little bit further, because there is no therapy available would you consider the bar for what you would need to see to advance this trial forward would be low? Are you looking for increase in survival? What is it that you're really looking for here?

Yes, let me answer that question. So I do want to confirm what you said. This is a very sick group of patients and unfortunately their clinical path is often like a falling knife.

The literature really indicates that the average length of time between metastases and death is close to six months for these patients. They are very, very ill. And so as a consequence I do think other than separate from other diseases the bar for showing an improvement is lower than many other diseases because in fact these patients are so sick.

So in some sense the course that people are expecting is a rapidly progressing disease and obviously anything we do which prevents that from happening or any medicine that prevents that from happening is a beneficial thing and in some sense the more the better. If you can actually make the tumors decline in size or go away entirely that probably is at least somewhat indicative of being able to extend people's life.

But at this point in time we expect that for a Phase 3 trial the endpoint would be progression-free survival. I think that's what the FDA would be looking for.

Okay, all right, thanks very much.

(Operator Instructions) Go ahead.

I was just going to say it looks like we've exhausted our questions. So I wanted to thank everyone for dialing in and look forward to speaking to you next quarter. And hoping that you will read all of our releases between now and the next quarter.

Thank you. Ladies and gentlemen, this concludes the Corcept Therapeutics conference call.

Thank you all for participating. You may now disconnect.