Corcept Therapeutics Inc (CORT) 2016 Q2 法說會逐字稿

Welcome to the Corcept Therapeutics second-quarter conference call. My name is Adrian and I will be your operator for today's call. At this time all participants are in a listen only mode.

(Operator Instructions)

Please note, this conference is being recorded.

I will now turn the call over to Charlie Robb, Chief Financial Officer. Charlie Robb, you may begin.

Thank you. Good afternoon.

My name is Charlie Robb, 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 second-quarter 2016 financial results, a reaffirmation of our 2016 revenue guidance, 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 FTC.

Today's call is being recorded. A replay will be available through August 16 at 888-843-7419 from the United States and 630-652-3042 internationally. The passcode will be 42972085.

Before we begin, I want to remind you that any statements made during this call 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 2016 and beyond, the anticipated contributions of our sales organization, the cost, timing and results of preclinical and clinical trials, whether conducted by us or by independent investigators, the clinical attributes and advancement of our next-generation selective cortisol modulators including CORT125134, CORT118335, CORT125281 and CORT122928.

The protections afforded by Korlym's orphan drug designation for Cushing's syndrome or our other intellectual property rights, including the composition of matter patents covering our selective cortisol modulators and patents concerning the use of cortisol modulator to treat triple negative breast cancer, castration resistant prostate cancer and other indications. These and other risks are set forth in our SEC filings, which are available on our website, or from the SEC's website, SEC.gov. We disclaim any intention or duty to update any forward-looking statement made during this call.

Now I'll review our second-quarter financial results. Corcept's net revenue in the second quarter 2016 was $19.7 million, compared to $12 million in the second quarter of 2015, a 65% increase. We expect our growth to continue and reiterate our 2016 revenue guidance of $76 million to $81 million.

In the second quarter, we recorded GAAP net income of $1 million or $0.01 per share, compared to a net loss of $1.9 million, or $0.02 per share of the second quarter of last year. Excluding non-cash expenses related to stock-based compensation, and accreted interest on our capital royalty financing agreement, we generated non-GAAP net income of $3.2 million, or $0.03 per share, compared to a non-GAAP net income of $400,000 in the second quarter of last year. A reconciliation of our gap and non-GAAP calculations of net income and net loss is contained in our press release and form 10-Q.

Our cash balance at quarter end increased to $48.1 million up from $40.7 million at March 31. Our increase in cash is after payment of $3.3 million in principal and interest under our capital royalty financing arrangement. We expect like our final payment under that obligation in 2017.

As we have said in the past calls, we believe revenue from our Cushing's syndrome business together with our cash on hand will be sufficient to fund our planned activities, 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 sufficiently positive results, conducting a phrase three study. Conducting phase two studies of our proprietary selective cortisol modulator, CORT125134 in both Cushing's syndrome and solid tumor cancers, advancing to the clinic at least two more of our next generation cortisol modulators and repaying the balance of our capped royalty financing obligation.

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

Thank you Charlie and thank you all for joining us.

I will begin by reviewing the second quarter results of our Cushing's syndrome franchise and then briefly discuss progress as development of our cortisol modulation platform. As most of you know, our first product, the cortisol modulator Korlym, treats patients with endogenous Cushing's syndrome, the archetypal disease of cortisol excess.

Cushing's syndrome is caused by a tumor that produces either cortisol or ACTH, a hormone that causes the body to produce cortisol. It is a serious disorder, left untreated it can be deadly. There are about 20,000 patients with Cushing's syndrome in the United States, approximately half of them are cured by surgery. The rest are candidates for treatment with Korlym.

As Charlie just noted, our Cushing's syndrome franchise performed well in the second quarter, revenue grew 23% compared to last quarter and 65% compared to the second quarter of 2015. We earned a gap profit of $1 million. Excluding non-cash expenses, our profit on a non-GAAP basis was $3.2 million. Our cash balance rose even as we increased spending on the development of our next-generation selective cortisol modulators. One of the reasons for our strong performance in the second quarter is that the clinical specials we added to our sales force last year have now been in the field long enough to begin generating commercially meaningful results.

Cushing syndrome is a complex, rare disease. Physicians typically require five to seven visits from a Corcept clinical specialist before writing a first prescription. Further more, once a patient begins taking Korlym, it is often several months before the patient reaches a steady state dose, which is in most cases higher than the initial dose. As a result, the full impact of a new prescription on our revenue takes time to develop.

We began to feel that impact in the second quarter. We also benefited in the second quarter from continued refinement in the way we speak to endocrinologists about Cushing's syndrome and how Korlym can be used to treat it. Similarly, our patient advocates and specialty pharmacy continue to improve the support they offer patients. Steady incremental gains in these important areas help our expanded sales force be more productive.

It is important to note that we expect Korlym's sales to continue to grow significantly not just this year, but in coming years too. Korlym is an excellent medication. It has the potential to help many more patients with Cushing's syndrome than are currently being treated with it. It is our mission to reach those patients.

At present our commercial activities are focused entirely on the sale of Korlym, a very effective treatment for Cushing's syndrome. Korlym has a drawback, however, of modulating activity as a progesterone receptor, or PR, as well as a cortisol receptor, also called the glucocorticoid receptor or GR. Korlym's affinity for PR can in some women cause endometrial thickening and irregular vaginal bleeding. These side effects are not life-threatening and are manageable; however, if possible, patients and physicians would prefer to avoid them.

A key part of our plan to expand and extend our Cushing's syndrome franchise is to develop a compound that modulates cortisol as effectively as Korlym does, but without causing the side effects caused by Korlym's affinity for PR. We think that our lead candidate in this regard, CORT125134, fits the bill. It has just begun its phase two trial.

CORT125134 has shown great promise, like Korlym, it has potent affinity for GR. Unlike Korlym, it does not act as PR and so will not cause the side effects I have just described. In phase one, CORT125134 showed that it shares Korlym's ability to potently reverse the effects of excess activity of GR, the essential quality in treating Cushing's syndrome.

If these early clinical results are borne out in phase two and beyond, we believe that for many patients CORT125134 will prove to be superior to Korlym. CORT125134 phase two trial is open label and will enroll thirty patients at sites in the United States and Europe. Recruitment is underway.

I will now to turn to our progress in oncology. Before I discuss the specifics of our program, let me remind everyone of the reasons we believe cortisol modulation has such great therapeutic potential in this area. In some ontological indications, such as triple negative breast, ovarian and pancreatic cancer, activity at the cortisol receptor stimulates genes that retard apoptosis, the programmed cell death that many chemo therapies enhance. Adding a cortisol modulators such as Korlym, 125134 or one of the other proprietary compounds to a chemotherapy regimen should prevent the stimulation of these apoptosis suppressing genes and allow the chemotherapy to achieve its intended effect.

In addition, cortisol modulation appears to work through a second, more systemic mechanism. As you know, there is much work being done to develop therapies that stimulate the body's immune system to fight cancer. Cortisol suppresses the immune system and the psychological and physiological stress of cancer and its treatment raise cortisol activity.

Pre-clinical data suggest that cortisol modulators may counter this effect, making immunotherapy more effective. And cancers that are particularly susceptible to the body's immune response, such as melanoma, cortisol modulation may even prove to be useful without a companion agent.

With that as a background I will now highlight recent key developments in our efforts to advance cortisol modulation as a treatment for certain solid tumor cancers. At the American Society of clinical oncology conference last month, we presented preliminary efficacy results from our phase 1/2 trial of Korlym in combination with Eribulin to treat metastatic triple negative breast cancer. Eribulin is the generic name for Eisai's drug Halaven. The preliminary data that we presented was encouraging, particularly we noted that five of 21 patients with GR positive disease, had achieved progression free survival longer than the upper bound for progression free survival in a very similar population of patients receiving Eribulin monotherapy. The results of the previous trial were reported by Aogi et al. in the annals of oncology and 2012. Enrollment in our trial is now complete and we expect to have final results this year.

In addition to our trials of Korlym as a potential therapy for patients with triple negative breast cancer, investigators at the University of Chicago are leading two important additional studies exploring cortisol modulation's potential in oncology. One is a double-blind placebo controlled multi center phase two study of Korlym in combination with nab-paclitaxel, Celgene's drug Abraxane, to treat 64 patients with advanced, GR positive, triple negative breast cancer. Celgene Corporation will provide Abraxane and pay the trial study costs. We will provide Korlym.

University of Chicago investigators are also leading a randomized multi center phase two study of Korlym combined with enzalutamide, Medivation's drug XTANDI, versus enzalutamide monotherapy to treat 84 patients with metastatic castration-resistant prostate cancer. The investigators hypothesis, which has extensive support from preclinical studies, is that adding cortisol modulation to androgen deprivation therapy will better suppress tumor growth. The trial is being funded by the Department of Defense and the Prostate Cancer Movember Foundation. We are providing Korlym.

Several years ago, we licensed patents from the University of Chicago covering the use of cortisol modulators in combination with anti cancer agents to treat both triple negative breast cancer and castration resistant prostate cancer. The data from these controlled University of Chicago led trials will advance our oncology program significantly. More details about both trials are available at clinicaltrials.gov.

In addition to the studies underway involving Korlym, we are excited to report that we have begun enrolling patients in a phase 1/2 study of our lead selective cortisol modulator CORT125134 in combination with nab-paclitaxel, The first phase of this study will determine the maximum tolerated dose in patients with any solid tumor cancer appropriate for treatment with nab-paclitaxel.

Once the maximum tolerated dose is identified, we plan to open expansion cohorts, 20 patients each, to test the combination's efficacy in one or more of the solid tumor cancer studied in the dose-finding phase. Possible target indications include triple negative breast cancer, castration-resistant prostate cancer, ovarian cancer, pancreatic cancer, and sarcoma. We are also considering studying CORT25134 in combination with other companion therapeutic agents, including checkpoint inhibitors.

Cortisol modulation is a broad, vibrant platform. And briefly, I would like to remind you about other areas of exploration beyond Cushing's syndrome and oncology. As many of you know we have created proprietary portfolio of more than 300 selective cortisol modulators. All of these compounds are active at GR, but none of them bind to PR and so will not cause the side effects associated with PR modulation.

As I explained earlier, this is an important medical benefit. Just as important, from a commercial perspective, is that these contents appear to behave somewhat differently from one another in medically significant ways. Some cross the blood brain barrier, for example, and others do not, some appear very active in oncologic indications, others less so. This variability should allow us to develop compounds that target specific indications. For instance, CORT118335, which we expect to enter phase one next year, is particularly potent in animal models with fatty liver disease, an illness suffered by millions of Americans. The differentiated quality of our proprietary compounds will allow us to develop medications for both relatively common disorders and orphan disorders such as Cushing's syndrome. Compounds CORT118335, CORT122928 and CORT125281 continue to progress. We plan to begin testing them in people early next year.

To sum up, we had a very productive second quarter. Revenue from our Cushing's syndrome business reached $19.7 million, a 65% increase from the same period last year and a 23% increase from the first quarter. As has been the case for some time, cash generated by our Cushing's syndrome business has and will fully fund our planned development activities. In this quarter, we began our phase two study in patients with Cushing's syndrome with CORT125134, a compound which may offer a Korlym's benefits but without the side effects associated with Korlym's affinity for the progesterone receptor. We think the CORT125134 will enable us to both expand and significantly extend our hold on the Cushing's syndrome market in coming years.

Our oncology program has also broadened significantly. Enrollment in our study of Korlym combined with Eribulin to treat patients with triple negative breast cancer is now complete. Celgene is sponsoring a multi sensor controlled study of Korlym and Abraxane in triple negative breast cancer. The Department of Defense and the Prostate Cancer Movember Foundation are sponsoring a multi center controlled study of Korlym and XTANDI in castration-resistant prostate cancer. CORT125134, a proprietary selective cortisol modulator, has entered its phase 1/2 trial in solid tumor cancers.

Finally, three additional next-generation cortisol modulators continue to advance and should enter the clinic early next year. We are particularly excited about CORT118335, an extremely metabolically potent compound, that may potentially be of use in treating fatty liver disease.

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

(Operator Instructions)

Charles Duncan with Piper Jaffray

Hello guys. First of all, thanks for taking the question and thanks for the good overview on the platform, Joe.

You are welcome Charles, good to talk to you.

Yes. So I just had a couple of questions, one is somewhat mundane, but it's regarding the Korlym business, nice growth in the quarter. I am wondering if you or Charles could talk about your guidance assumptions or the assumptions behind guidance and the range, what do you need to do to get to that upper end?

I think Charles, as you know, as someone that's followed the company for a very long time, our communication strategy is really to be right down the middle of the road. And we obviously analyze our guidance every time we make a public statement and we're going to continue to look at it as the quarter progresses, we are obviously very pleased with the second quarter results, but we'll continue that evaluation as we go forward and obviously make an adjustment if we feel like it is material to do so.

Okay. What do you attribute the drivers, is there one or two things? I know that you spoke to increasing the size of the sales force and then getting traction, but is there anything with regard to experience-base of the prescribers that you want to point to, to be encouraged about the uptick of Korlym?

Charles, I just want to [play on a point], for some people who don't know him, Sean Maduck who runs our Cushing's Syndrome franchise, and is our Senior Vice President in charge of commercial to answer that question.

Charles, Thank you for the question. The first point that Joe brought up in the comments around increasing the sales force, that really has been a big contributor to the uptick in sales this quarter. We expanded from, if you recall last year, from 17 to 25 clinical specialists, and it does take time for individuals to become productive in the field commercially. And we really saw that come to fruition over the last few months and as well as patients taking some time to get to their optimal dose, those two factors combined have really driven revenue. But, to your question around the experience of the physician base, over the last few years we have obviously spent a lot of time working with our physicians and working to move them along the adoption continuum. And we continue to see new prescribers being added on a quarterly basis and we also continue to see an increase in our multi-prescribers. As Joe stated in the opening statement, Korlym is a very effective treatment for patients with Cushing's Syndrome who have failed surgery or are otherwise ineligible. And when doctors see the benefit that they have, they then look to other potential patients to prescribe the product.

Yes, and Charles, the only thing I would like to add to that this is really a science based sale, it takes us time to train our clinical specialists, not every clinical specialist, frankly, has really the potential to do it, so we select very carefully. We are not done expanding. But, we really do this in a way that we think we can really add value with every clinical specialist who we had, and this is really a very nice confirmation that, done correctly, we really can get to more patients and our early business can grow in a purely organic way, which is what happened in this quarter.

That is helpful. Thank you for the added color. I would like to just, if we could ask a couple quick questions, move on to what is more important to longer-term pieces and perspective on the Company's potential, the pipeline. That is, regarding the triple negative breast cancer results that could come out towards the end of the year. With Korlym, what would be a win in your view in terms of response rates and durability? We have seen, obviously with this very tough to treat disease, something on the order of 20% response rate could be not a bad thing.

Yes. I think that what is really striking about these results is one, this is a very difficult patient population to treat, and we think it has really moved in -- with the results, we've seen it really move this in a direction to thinking the cortisol modulation has the potential, really, to have efficacy in this very difficult group to treat.

Now, I think the really critical thing, and it got lost a little bit in all of the news around ASCO is that Celgene is now paying for a controlled study, which I think will really tell us, what is the effect of our medicine as opposed to what is in the background medicine. The last thing that I can really say and I will point to it again, is what really stepped out to us and the consultants and investigators that we have shown it to is we now have a group of patients whose progression free survival has extended well beyond what was previously noted in a trial of Eribulin monotherapy. The study is still running and there are patients so going on right now, we don't have the final results and we'll have to take that all in. But, in this very difficult group of patients to treat, I think we really have seen encouraging data and for whatever it is worth, have gotten the validation of a very large player in the oncologic field.

Absolutely. And then my last question is 134, and the second-generation or third-generation compounds. I am wondering if you could share with us the IP there, and is it possible that the GR activity in the absence of PR activity could result in really some different distribution or loss of restrictions, removal of restrictions in terms of the distribution of that class of compounds relative to Korlym?

All right Charles, just to give everyone in the call a little context for that, I will start with the end of your statement. I think as many of you know and some who are new may not, Korlym's active ingredient, is the same active mifepristone ingredient in what used to be called RU-46 or the drug which is used to terminate early pregnancy. It has got a specific purpose, which is to terminate early pregnancy, and that quality comes from its blockade of the progesterone receptor.

We do think that taking away that activity may potentially allow this group of medications, if they prove to be efficacious, to be available in a much wider group of patients than is currently available then with what we can do with Korlym. So I think it is very exciting both from a medical perspective and eventually if it pans out, from a commercial perspective. I think the other thing that is interesting about and I want to reiterate [any points that are] going backwards is that we have a variety of compounds, it is not a single GR antagonist. Some of these compounds may be organ specific in ways that Korlym is not and may allow us to develop drugs for different disorders very specifically.

The last, and going back to your first question, but I think it is very important, I don't want the audience to lose sight of this, is that we are not done fully fleshing out what we can do with Cushing's Syndrome. Not only do we think that Korlym has a lot of room to grow, we think that if we can get CORT125134 to the market, and eventually we will have a name and not just numbers, it will broaden the market even beyond that, because there are doctors who we know for a fact, in fact I visited one just a couple of weeks ago, who prescribed in men and not prescribed in women, for reasons of their choice. And I think that issue will go away with CORT125134's successful entry into the market. Last was, how long does the intellectual property go? Well these are composition of matter patents to go well into the 2030s for the new compounds.

Fabulous. Thank you for the added information, Joe. (Inaudible).

Christopher James from FBR Company

Hi there, thanks for taking the questions, and congratulations on a very successful quarter. Specifically with the expanded sales force, I think you guys are doing a fabulous job, obviously. Joe, I think you mentioned that you are not done with expanding the sales force, how should we think about the further expansion of the sales force in Cushing's Syndrome, specifically given that CORT125 could be in phase 3 in a relatively short time.

Chris, I'm just going to turn you over to Sean, here.

Hi Chris, this is Sean again, thanks for the question. Last year, again, we announced that we would expand up to 25. We have been very opportunistic in our expansion, we have never set forth a cap number of how big we would go. It's where we realize we have a viable territory on its own and we have the right talent that can sell Korlym and just go to the challenges in that and the type of person it takes, we will carve out another territory and expand. So we recently have expanded to 30 territories and are in the process of filling those. And just to add a little more color, one of the changes that we made this quarter was to put a national sales director in place and to expand to five region managers, we previously had four. Those five regions now give us the infrastructure to, again, to be opportunistic and grow where we feel is appropriate and where we feel we can add incremental value to the organization. But, what we won't do is just add to again, it requires the right individual and a territory that we believe can be viable.

Right, that makes sense. And then, just to follow-up to the previous question, can you remind us of the IP on CORT125, and do you think there is a opportunity to extend the IP with Abraxane combination?

Just a couple of things. First, and I think it is the easiest patent to understand, is on all of our new compounds we have composition of matter patents, and they run out over an extended period of time, as I said, into the mid-2030s, so they had their core issue. We also had a patent, as an example, with the whole class of GR modulators with chemotherapy, like Abraxane, that is a licensed patent that we have, one for triple negative breast cancer, another for castration resistant prostate cancer, that before this whole program that going we licensed from the University of Chicago. So, we're always looking to extend our intellectual property portfolio, for a company of our size I think it is actually quite extensive and we think that, it's the right thing to do on a variety of levels and one we think it is a real statement of discovery and the other that it provides commercial protection beyond, in time, in many cases, what the actual other protections like orphan protection, or composition of matter protection might be.

Got it. Thank you. That is very helpful. Finally, can you remind us, I know the data with the prostate [temp is an IST], maybe can you speak to potentially when those data could be available and maybe can you just give us a very brief, can you maybe speak to the scientific rationale behind that?

Yes, in fact, let me do that first. It's a really interesting scientific rationale. I think for those of you who follow prostate cancer, prostate cancer for many men is either a disease that will kill them when they get to be 130 or is easily treatable, but for younger men who end up with metastatic disease, it really is a very bad disease. And unfortunately, until relatively recently there really weren't good treatments for when it became what was called castration resistant.

Enzalutamide, Medivation's drug, is an excellent drug in that regard, it is a potent androgen receptor antagonist. But one of the things, the really important latch that Sloan Kettering showed, was that really, within hours of giving enzalutamide, you begin to select for colonies of cells for which androgen is no longer the growth factor, but cortisol is. There is a real scientific underpinning now shown in transgenic animal models and so forth that the combination of either surgical or chemical castration with a drug like androgen deprivation, better said, with the drug like enzalutamide plus a GR antagonist like mifepristone, like CORT125134, can really enhance the treatment. It's, I think, a very promising idea, we'll really find out what happens in this controlled study. And to your first question that you asked a little while ago, we expect results of that study, again, it's an IST, but in 2018

Got it. Thank you so much, thanks for taking the questions. Congrats on a great quarter, I will jump back in the queue.

Thank you.

Roy Buchanan from Janney Montgomery Scott.

Thanks for taking my question. Very good quarter on the top and bottom lines, I had a follow-on for Sean. First if there were any price increases in the quarter in any plan for the year?

Hey, just to spread the questions around a little bit, I'm going to give you to Charlie Robb, our Chief Financial Officer, Ray.

Hi Roy, no, we didn't raise prices this quarter. We had a price increase last quarter, February 1, nothing this quarter.

And, then I wonder if you could elaborate a little bit on Joe's comment that added support from patient advocates and specialty pharmacy, can you tell us a little bit more what that means?

I am going to give that one back over to Sean.

Thanks Roy. One of the challenges in orphan disease space and the nature of this condition is that these patients need support along the way. It's taken a long time to get to a place of being diagnosed and treated and then helping them along their patient journey. We have a patient advocate team here that offers support for patients from disease onset all the way through the lifecycle of their treatment and the ways of helping them manage side effects and manage the comorbidities associated with their disease. It's an opt-in program, those patients have to consent to be involved in that, but our patient advocate team has grown over time and has become very involved with those patients. Also, pharmacy side of course, there's a pharmacist with our specialty pharmacy and our case handlers that work very closely with those patients as well on a monthly basis as they are coming up for new shipments. So they were closely with them if there are challenges or questions that they may have.

And Roy, the only color that I would really like to add to this, and it's something that really struck us from the beginning of our commercial on, is when we began to talk to patients, we found that these are often patients because it is a rare disease, that been bounced around, it had taken a long time to get to diagnosis, often felt as if they had not been treated well in the medical system. And we really felt that by helping to guide their journey, we really could improve their medical care optimally. And I actually think that our patient advocates are very large part of it, they are trained nurses and so forth and they really can help, of course with the patient's consent, their pathway through. Additionally, and I will just point to this separately, from the time that we launched we actually stated and we have never violated, every patient who gets a prescription gets the medicine, and we work very, very hard to make sure that happens as that expeditiously as possible. They can help with that as well.

Great. Very helpful. And, then a follow-up for Chris' questions about data timing, do you guys have any sense on timing for the phase two for 125134 in Cushing's? Could we see anything in ESMO? And can you remind me if the Eribulin and Korlym phase two is event driven, when can we see data from that? Thanks.

Two questions. We are now just beginning the phase 2 study for CORT125134 in Cushing's syndrome and we think that phase 2 study will take about a year. So, I am hoping by the time we have this call next year, fingers crossed, we will have all of the results that we need to show you by that point in time. Then as you know, in oncology studies, it is not like you have an eight week observation period. We're going to run the study until patients have progressed. This is, again, the Korlym and Eribulin study. Now you know the nature of this disease, these are highly pretreated patients with metastatic illness, in many cases, unfortunately, that time is not long. So, we expect to report those results at San Antonio breast cancer meeting, but we will report them as soon as we really possibly can and it's fully baked.

Okay. Very good. Thanks guys.

Tazeen Ahmad from Bank of America

Hi, good afternoon. Thanks for taking my question. The first one on triple negative breast cancer, I had thought that for the Eribulin combo study you had been expecting results from the study midyear, but has that timeline as of today, as of the call today, been pushed out to the end of the year and if so, what is the delay?

Patients are still on study.

Should we assume that that means that they are not progressing?

Well, we presented the results, as I said, at ASCO, and I think that is really the last material update that we are going to provide for everybody. But I really can still tell you that patients are on study and when they are not, we will have our final results.

Okay. Then to just drill a little bit into what the opportunity could be here, taking into account the typical neg is a tough disease with limited options for patients, if you combined your drug with Eribulin that would certainly not be an inexpensive combo treatment. Based on the three patients that you reported back at ASCO that had a partial response out of 21 GR positive and two patients with unknown status, do you think a 13% or 14% response rate in a combo would be considered clinically meaningful?

Well I think there are really two things to look at, one is the overall response rate, as you have described. And I think that this is a difficult disease, and the response rate really from any condition is, by standards in other diseases, pretty low. I think what is really striking to us, and we'll have to see if it is also provable in a controlled study, is that there is a group of patients, and it's similar to what I think people see in immunotherapy, who seem to really respond for a much longer period of time than would otherwise have been expected. About one-quarter of our patients are now beyond what was the 95% confidence level in a pretreated group of Eribulin only patients. But again, I caution everybody that the previous study was an open label study, ours is an open label study, the real passive test is in the controlled study. But it is a striking result that there really are, and I use this term with some trepidation, but it's just what some people say, some super responders. I don't know really why that is the case, we cannot prove at this point that it's not just random, but it's really has been striking to everyone we have shown it to and I think really worthy of further exploration.

Okay. Then maybe moving on to Korlym, can you give us an idea of how much of the use is coming from the higher dose and how long it usually takes a patient to titrate up?

Yes. I think I can really answer your question, but I really, again, want to provide a little context for this. In our study for approval, our pivotal study, the median dose was about 750 mg and actually, the median dose was about 900 mg. So, and in that sort of study, titration took place pretty quickly because it was part of the protocol, where is in the real world, titration takes a little slower because people don't come to the clinic every week or two weeks. Now what's interesting that our average dose has increased over time but it still, rough for round numbers, around 600 mg and not 750 mg. So we think that actually it could go further, because we think that patients optimized treatment is a little bit further.

I think that what we're really going for and what we're really helping our doctors with is that patients get to their optimal therapy, because we think at the optimal therapy pretty nearly every patient should see a substantial response. That's true for some patients right now, but not all of them, but we hope to move the dial in that direction as time goes along. And clearly, although it is a secondary thing, there is more economic benefit for getting people at the optimum dose.

Okay. Then a last question maybe for Charlie, can you talk us through how you record sales? Do you record sales once you ship? Because I noticed that you do have a top-up in trade receivables this quarter versus last.

Yes. So we record the vast bulk of our sales, we sell, actually, directly to patients. So we record sales upon delivery to the patients. A very small portion of our sales is through a distributor who sells to hospital pharmacies, that's not really needs to be a material part of your calculation. So the vast majority of sales directly to patients and it's upon delivery that they are recorded. I think the reason you see receivables pop-up is that we had a very strong quarter and just we have not had time to collect everything yet. But there's been no real change in the financial terms of our business over the quarter.

Okay. Great. Thank you.

Alan Leong from Biowatch News

Thanks for taking my questions. I have a couple of them. Joe, you have a number of drugs that clearly impact metabolic markers, you have of Korlym and CORT125134 that have gone through or will go through a proof of concept on Cushing's Syndrome. I share the excitement around CORT118335, what makes it so interesting from the [ammo models], what makes it so unique for metabolic syndrome?

What's interesting, and I have to be completely honest with you, Alan, we look at these things empirically, we would love to know what CORT118335 is so potent. But I can tell you, it's about, even though Korlym really moves everything in the right metabolic direction, sometimes fairly substantially, on a per milligram basis CORT118335 is probably 60 times more potent. And it seems to be particularly potent in diseases where the liver is very heavily involved, so fatty liver disease, antipsychotic induced weight gain, insert insulin sensitivity around those levels.

Now it's still fairly early in its pathway, it's just had animal studies, but the animal studies are being replicated in many different sites and there really is something going on with this medication that we don't fully understand, although I know you are sort of a scholar about these things, there was an interesting article published in PNAS about the cofactors which were involved with 118335 and they may give you some idea as to perhaps why this compound empirically is more effective. We'll see if that translates to humans next year.

I have yet another question about sales for you and Sean, but hopefully it will be more of a conversation, I will try to give another tact on it. Korlym is [typed] so high that new lives just have to account for very few new prescriptions a year for Corcept to generate profits. At the same time you're getting past your first tier, your physicians and patients are getting increasingly dispersed. And Sean, you talked about opening new areas organically, but if I read this right over time, even though you are opening organically, you really do not need a lot of patients in an area to signal the need for opening a new area. Did I get the package right or could you provide some color on it?

I think I'm gong to hand it over to Sean in a second, but I think that the most important thing, and I know it is an unstated assumption for us, but I just want to make sure that everyone on the call gets it, is that Korlym is a very effective medication. And in the pivotal trial, the overall percentage of people who had significant clinical improvement was 87% which really meant that it was pretty nearly 100% if it takes its dose correctly. And I think that's a very important starting point.

We think that there are many patients in the country who have not found their way to optimal treatment and so we get, and we really noticed the early on and had to adjust for, these patients exist in medical practices in all 50 states and rural areas and urban areas and so forth. So, that's the lay of the land. Now, I will let Sean answer your specific question.

So back to reiterate the specific question was just around the incremental enrollments that come in and what is required from a headcount standpoint. We really try to understand, what does it take to grow? What does it take to add-on incrementally to grow our business? And one of the things is this is a drug in the orphan space, we have patients across multiple etiologies, they have different retention factors associated, we have very [ectopic] patients that come in that are very, very sick and unfortunately they pass away on the product over time. These are not -- we're not building upon the same base on a month by month basis, so we need to continually, obviously, add patients.

I think given the long sales cycle associated with this, we really need to make sure that it does make sense to put in additional headcount from a cost standpoint into a specific territory to grow the business or is that something that could be covered by an individual that is already there. So, again, we are very careful about where we think it makes sense to add but, to your point, given the drug and the price of the drug, if we find an opportunity where we believe that there are patients were not being reached because of inadequate touch, then we will expand our field to reach those patients.

And Alan, it's something I said before, but I just want to repeat this, the controlling variable is really finding the right clinical specialist. Because, we really do think that the right clinical specialist in a territory which has previously not been productive for us, where patients haven't been treated, will succeed. So all of the things that Sean said are true and really this decision is very, very important, but what we really look is the front end, and we've learned what the front end really looks like. Can we get the right person, can we train them correctly? Because if we think that we can, we place them in the right territory they will be productive in the timeline that we have talked about.

I appreciate that. Thanks.

We have no further comments at this time, I'll turn the call back over for final remarks.

Thank you very much, on a summer afternoon, late in a summer afternoon for all listening in. We look forward to talking to you in another quarter. Thanks very much.

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