Corcept Therapeutics Incorporated
Q4 2020 Earnings Call Transcript

Published: 8 Feb 2021

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the Corcept Therapeutics Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker for today, Charlie Robb, you may begin.

[Charlie Robb:]

Good afternoon. My name is Charlie Robb. I’m Corcept’s Chief Financial Officer. Today, we issued a press release announcing our fourth quarter and full year preliminary selected financial results and providing a corporate update. A copy is available at corcept.com. Complete results will be available when we file our Form 10-K with the SEC.

[Joseph Belanoff:]

Thank you, Charlie. Much in life is unknowable, but of one thing I am sure, last January, no company had the words COVID-19 in its business plan. The virus itself, the challenges posed by the pandemic have been unprecedented and persistent. In such a difficult environment, Corcept’s stable commercial business and lean operating model are especially valuable. We did not achieve all of the goals that we set for ourselves before the pandemic started, but we accomplished a lot. We generated more revenue, more net income, and more cash in 2020. The patent office ruled against Teva in full in Teva’s challenge to our 214 patent, which runs to 2037. We are more confident than ever in our intellectual property and added several more Orange Book patents over the course of the year. Our commercial team has adapted to pandemic conditions creatively. The obstacles they face and have faced since last March are significant. The diagnosis of Cushing’s syndrome requires extensive examination and repeated testing. This is obviously hampered by patients being reluctant to leave their homes and by physicians’ understandable concern about necessary follow-up. In addition, many medical practices have sharply limited in-person visits by commercial representatives, reducing educational opportunities for physicians who have not yet prescribed Korlym. The challenges posed by remote medicine make growing our business extremely difficult in 2020. We continued to enroll new patients and added to our roster of Korlym prescribers but more slowly.

[Operator:]

Thank you. Our first question comes from Tazeen Ahmad with Bank of America. Your line is open.

[Tazeen Ahmad:]

Hi. Good afternoon and thank you so much for taking my questions. One question on Korlym if I may. I wanted to get your thoughts on how you’re thinking about the ramp in sales for this year. You did talk extensively about potential headwinds from COVID and slower than expected vaccination rates as part of your prepared statements. But are you thinking that the piece of growth this year could accelerate more so in the second half of the year? And I guess, to the extent that you can talk about how you made your internal calculations about what you think the lower end of the range would be this year that would be helpful. Thank you.

[Joseph Belanoff:]

Good to talk to you Tazeen. I’m just going to switch you over to Sean Maduck, who you’ve all heard from – Sean is our Chief Commercial Officer and runs all of our commercial business in Cushing’s syndrome.

[Sean Maduck:]

Hi, Tazeen. Thanks for the question. So, in terms of 2021 revenue and scale up, I mean, obviously January 1 is not a lot different than December 31 of last year. But region by region, we are starting to see light at the end of the tunnel and conditions around the country have improved over the last few weeks. COVID cases are declining and based on our own research and expertise, patients are less fearful to visit their doctors in person. And for the most part, patient case loads have returned to pre-pandemic levels. And we’ve seen it on earlier calls and Joe mentioned in his statement, this is a disease that takes multiple physician visits and multiple tests to actually diagnose. So there’s increased patient visits, most of all for testing and diagnosis, which we believe will lead to more Korlym prescriptions. One other point just – of course, though specifically is it seems like a long time ago now, but as a reminder for everybody, we executed on a sales force expansion at the end of 2019, which was completed at the beginning of last year and then the pandemic started. So we’ve never really had the opportunity to experience the full effect of our expanded field. So they’ve been doing their best over the last year to meet physicians, both in person and virtually, they’ve been training and getting ready to hit the ground running when things open up. And I expect as the country opens up more and more and in-person interactions increase, we’ll see an increase in productivity. So things are definitely not going to change overnight. But again, conditions really have started to improve and we are optimistic for return of – some return to a semblance of normalcy this year.

[Tazeen Ahmad:]

Okay. That’s helpful. Maybe a related question on relacorilants. So as it relates to enrollment in your current studies, are you making the assumption that the delay of up to one year, what does that assume, I guess, in your internal assumptions about when you think that people are going to be vaccinated? I know there are estimates about when the U.S. can achieve herd immunity. Is that a major factor in determining the enrollment rate in your study? Or are there other things that you’re also taking into account?

[Joseph Belanoff:]

Two things Tazeen, first I want to give everyone a chance to hear Andreas Grauer. Again, Andreas is our Chief Medical Officer. And I reserve the right, but Andreas maybe add a comment or two when you’re done.

[Andreas Grauer:]

Yes. Tazeen, thank you for the question. That’s obviously the million dollar question for all of us these days, and how do we assume, what kind of assumptions can we make for the pandemic. And keep in mind, this is a global trial. We have enrollment going on in the Western Canada and then the number of European countries and the dynamics of the vaccination is different in all of those. So there is no one fix that we base our assumption on. We’re actually working with each individual site. There are pockets in some of the countries that show signs of improvement, just like as a specific example, the City of Rome in Italy, they seem to be ahead of the curve in Italy, the rest of Italy, not so much. So we’re looking at this at a very granular level and have made sort of a site by site assessment on when we think they will be able to pick things up. Again, and that has led us with that assessment and also with the remaining uncertainty.

[Tazeen Ahmad:]

Okay. Thank you.

[Joseph Belanoff:]

Yes. Thank you, Tazeen.

[Operator:]

Thank you. Our next question comes from the line of Chris Howerton with Jefferies. Your line is open.

[Chris Howerton:]

Hey there, thanks so much for taking the questions. Appreciate it. So I guess, maybe just to follow up on the previous question in terms of revenue guidance for this year. So what I heard you say, Sean, was that essentially you’re expecting an increase in some point in this year and certainly an impact of your sales force expansion. But like what – is there any more color that you can give us with respect to specific factors that went into the revenue guidance? And maybe some things might specifically could be like increased compliance, new patient adds and price increase might be some things that investors could be interested in?

[Joseph Belanoff:]

Yes. Hey Chris, this is Joe Belanoff, I’ll answer at least part of your question here. Look, we would really like – probably everyone else in the world to know how soon this is going to be over from this point forward. I just have to reiterate what Andreas and Sean said, we are seeing things that weren’t happening two months ago happening right now. I don’t know if that’s going to continue, but certainly at this point, the trend at least, however, slight – really looks like it’s in an improving zone. And I think that the major thing I’ll just repeat from my comments earlier is that patients who are already on the medicine are doing fine on the medicine and they remain on the medicine as a group. The hard thing has been adding new patients. And so patient enrollment is really what we think is going to pick up over the course of the year – new patient enrollment over the course of the year. Obviously, we’ll see what happens as time goes on. But we have good reasons to think that actually we’ll be ending 2021 at a very different place than we ended 2020. And so of all of the things that you’ve mentioned, I think that’s probably the single biggest thing that will lead to growth over time and how quickly that is possible is really going to be the biggest factor in how our revenues increase over the next year. Basically based on what we saw sort of in the worst of the pandemic, that was the issue. And so that’s what we’re looking forward to. I wish we could give you kind of better timing. I will say, because it’s not really something that you wouldn’t assume. We are assuming improvement over the course of the year, although in some sense, not for awhile because it really – it’s not going to go all the way at once. But I think we’ll be looking at a different world nine months from now, six months from now than we...

[Chris Howerton:]

Well, I mean, I don’t think I speak alone that I completely agree with your sentiment, and I truly hope and believe that to be the case not only for Corcept, but more broadly absolutely. Maybe just another quick question on the ovarian cancer trial. I guess, as we’re getting closer to those data, what do you – what are the expectations or possibilities of attaining accelerated approval based upon the outcome of this trial? And if that weren’t to be the case, what are the specific learnings that you think you can achieve from this trial to design a successful Phase 3?

[Joseph Belanoff:]

Yes. Exactly the question I think about, it’s very good. This trial, just to give everyone a little bit of background who maybe has followed Corcept for a long is that, this is a Phase 2 study, based on a relatively small group of patients in Phase 1. So we look at this study as a really great opportunity to learn where the disease works, in which patients does better and really is set up as a designed – to help us design what we very much anticipate will be a Phase 3 program. I think the probability of the ovarian cancer study leading to an accelerated approval really is pretty small. I don’t think anybody should really go in with that kind of expectation now. That said, fingers crossed and rooting forward and so forth. But really, our internal thinking is this was the first opportunity to study a serious group patients in number about a 180 patients. And we really think we will both extend on the promise we saw in the Phase 1 study and learn a lot, so they can really design a program that will take us to a finish line. But you should anticipate that a large Phase 3 study is still to come.

[Chris Howerton:]

Okay, all right. Well, that’s very clear. Thank you. I appreciate the comments Joe, and thanks for your time.

[Joseph Belanoff:]

Yes.

[Operator:]

Thank you. Our next question comes from the line of Swayampakula Ramakanth with H.C. Wainwright. Your line is open.

[Swayampakula Ramakanth:]

Thank you. This is RK from H.C. Wainwright. Good afternoon, Joe and Charlie. So to start off, I understand you’ve tried to help us have a certain idea of 2021 in terms of Korlym revenues. I just want to see if you can give us a little bit of an idea of what happened in the fourth quarter, certainly, you walked into fourth quarter with a lower of the guidance – lowering of the guidance. And still, there was an impact. And is there a way for you to give us an idea of what sort of an impact that was? And maybe that’s kind of – that will give us an idea of what you’re concerned about for 2021?

[Joseph Belanoff:]

I apologize, RK, I had a little trouble hearing you, but I think I got the gist of your question. And in some ways, it’s probably a pretty simple unsatisfying answer, which is simply that these got worse in a lot of parts of the United States in post-Thanksgiving. And everyone kind of experienced that. And it really allowed for much less opportunity for doctors to be seen for patients – for doctors to see their patients. And so that’s really the single biggest factor. And I think that as we move forward and that begins to abate, we will – that trend will reverse. And again, I wish I could give you more detail on sort of exactly how that’s going to become. But really, in some sense, the answer to your question is simple and a progress is to be made, it’s going to be simple. It’s going to be completely related to how much sort of the world opens up, because as I said before, our existing patients taking the medicine really remain well treated and so forth. But getting the information to doctors and having the doctors be able to care of their patients optimally, it’s very difficult for new patients in the COVID environment.

[Swayampakula Ramakanth:]

Okay. Thank you for that. Regarding the Hikma challenge, how different is it from what Teva and Sun – I mean what patents Teva and Sun are challenging? Or is it the same set of patents?

[Joseph Belanoff:]

I’m going to pass you to Charlie for that question, RK.

[Charlie Robb:]

Hey RK.

[Swayampakula Ramakanth:]

Hey.

[Charlie Robb:]

Just because this is really so arcane. Let me just take a minute to give folks some background just everyone’s oriented here. The way these challenges work is it’s – there’s a legal scheme, whereby a would be generic manufacturer provides us notice that they plan to seek approval to be a generic manufacturer. And that gives us time to decide if we – to sue them in District court for violation of our patents. And then litigation goes from there. If we sue them, there will be a 30-month stay of any FDA approval of their proposed medication while we litigate the issues. That’s what happened with Teva. That’s what happened with Sun. And we’ll see how things exactly proceed with Hikma, but we received their notice a week ago. From what we received in the notice, there’s really nothing new, nothing about this is any different than anything we’ve seen before with respect to our other litigants. I guess I would say that the other thing to appreciate is this is very standard course of events for disputes like this. An initial generic manufacturer steps forward in this case, it was Teva, litigation with them and sues and is very common for second and third and fourth would be manufacturers to hang back, file – attempt to seek approval later. Just in the hope that if the initial mover, Teva is able to secure anything, they’ll be able to secure something in form of a settlement. Not as good as that, but the initial filer secures, but something secured at a much lower cost, they just kind of tag along. I don’t know exactly what Hikma’s strategy is going to be. It’s obviously much too early to know. But this is exactly the course of events you’d expect to see. So I think the important point really is – or two, as you asked, nothing really new. And secondly, certainly nothing that makes us any less confident in the protective power of our intellectual property. So we’ll see exactly what happens, but it is nothing unsettling or unusual.

[Swayampakula Ramakanth:]

Thank you. And then regarding the clinical data that is anticipated in the first half of this year, is there a venue that you’re thinking of? Or is this going to be just a press release over the time?

[Charlie Robb:]

Yes. My guess is that it will initially be a press release because it will, in all likelihood, can’t imagine not being material information. And then we will do conference presentations. I don’t know if Andreas has any color on that yet. But over time, we will – we’re all sort of recovering academics. So we’ll be at more than one mask.

[Andreas Grauer:]

Yes. That’s exactly the plan. We’re going to like time line-wise, we’re going to miss the ASCO deadlines. And so therefore, it will be exactly, as Joe has outlined it.

[Swayampakula Ramakanth:]

Okay, perfect. Waiting to see it. Thank you very much, gentlemen. Appreciate, guys.

[Joseph Belanoff:]

Thank you, RK. Good to talk to you.

[Operator:]

Thank you. Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann. Your line is open.

[Matt Kaplan:]

Thank you. Hi guys, thanks for taking the questions. Just wanted to dig in a little bit more in terms of the implications of the PTAB affirmation of the validity of the 214 patents with, I guess, term out to 2037. What are the implications for the Teva litigation and potentially, I guess, Sun Pharma and Hikma?

[Joseph Belanoff:]

Sure, Matt, happy to answer that. And again, I’ll just going to give everybody a little bit of a brief ted talk on legal process before I answer your question directly. These patent litigation in the United States and these sort of Hatch-Waxman litigations were under involved in now can follow a parallel course, meaning 2018, which Teva announced they wanted to enter the Korlym market. We sued them in Federal District Court. And a year after that, when Sun – so they wanted to the market we sued them in Federal District Court. And those cases have been proceeding, especially Teva case, doing all the normal things you do in litigation with discovery and motion and expert and all that stuff. It’s just been moving along ever since. Now, in parallel, you can also litigate patents in front of the patent office in a sort of quasi judicial administrative type of proceeding. And so after we asserted our patents against Teva, including eventually this 214 patent, Teva went to the patent office and said, look, with respect to this 214 patent, we think it’s invalid. It never should have been issued, and we want you to look at it again. And the patent office agreed to do that in a procedure called a post grant review. And then after a year of back and forth in front of the patent office, we presented our arguments and evidence and witnesses and Teva presented their arguments and evidence and witnesses. The patent office decided in our favor. They rule that every claim of the 214 patent was valid, and that’s where we stand right now. So the question yes, that we have a valid patent Teva’s challenge failed. They, by the way, have the right to appeal that loss, which they have filed notice saying they plan to do, and their filing is due no later than March 12, so we’ll see what happens if they do that. If they do file an appeal, it will be to the Federal Circuit Court of Appeals, those take about a year to 16 months to resolve, which is why we say the issue won’t be fully settled until this time next year basically or a little bit after that. But until then, the patent is valid and in place. And the question then is, what does that mean for the parallel District court dispute that litigation? And the answer is that the law is designed to keep litigants from having sort of what they call it one more bite at the apple. So having chosen to challenge the validity of our 214 patent before the patent office, and lost, Teva is now barred from challenging the ability of that patent. You see any argument at raise or could have raised at the patent office, which I think in this case, is a pretty comprehensive list of arguments. So for all intents and purposes, Teva is now barred from challenging the validity of that patent in District court. As this dispute goes along, they are faced with a concededly valid patent, and they’re only recourse with respect to it just to argue that they would not – their product were not infringed. It’s a difficult argument for them to make. So the consequence is that Teva’s options are drastically narrowed with respect to that patent. And you recall, in these cases, the patent owner has to only prevail on one patent to prevail overall. So Teva has really put themselves in a very, very tough spot. That’s the implication for Teva. Every litigant is different. Sun would have the right challenge to patent. Hikmet, we – it gets into litigation with them would have the right to challenge the patent’s validity. But they will all face the difficulty – sort of the difficult fact that the patent office has now both issued the patent and examine it essentially a second time and a quasi judicial proceeding and reaffirm the validity of it. So all of our challenges are in a tough spot, especially Teva, which is not to lose the import of all this in my sort of exposition of legal process. Very good news for us.

[Matt Kaplan:]

That’s – that’s very helpful, Charlie. Thank you for the additional color and clarity. Another question in terms of your clinical development programs, there seems to be a bit of a dichotomy at least for me in terms of what you’re saying about the return to growth for Korlym later this year and the extension potentially for at least another year of the timing for the GRACE results and filing of the NDA potentially up to second quarter of 2022 now. Help me understand, maybe you guys can give us some more detail in terms of the current status of the great study and where that is and why you’re thinking based on the other inputs that it could be delayed by as much as a year.

[Joseph Belanoff:]

Well, Matt, I really understand the nuance of the question and try to kind of walk you through as best they can. But I think the most important thing to understand is that while the pandemic affected almost everything didn’t affect everything identically. So for instance, I’ll give you an example of that. Doctors who work in their own office in the community, as an example, they’re living depends on seeing patients, particularly patients in person. And as a consequence, I think they have been more – we’ve seen it in the last weeks or so, more aggressive in sort of getting back to work. So that’s an effect which we see primarily in our commercial business. On the other hand, major medical centers, particularly those medical centers, which are in their countries that are treating COVID have basically said for non-acute purposes, our resources are really diverted to that business. And so when things get better, you’re going to get better all around, but not necessarily at the same pace. And so we don’t have a great prediction as to particularly the latter because that’s what you’re really asking about in terms of trial enrollment. So a little bit harder for us to really visualize since we’ve never been in this circumstance, how fast those places reopen, when, obviously, we hope they will test as quickly as they can, so we can really get moving on it. But I just want to point out that these situations are not exactly the same in commercial and they are in clinical and even within the clinical development program, as I pointed out, they’re not identical either. For instance, the pancreatic and ovarian cancer studies actually came in a couple of months ahead of where they thought they would. There’s a very ill patients. They have to go to the hospital anyway, so to continue them in a clinical trial, enter them in a clinical trial, didn’t – wasn’t distracted much by the pandemic. On the other hand, you have diseases where tomorrow or the next day or the next week, don’t seem to be as critical. It’s more easy for patients to avoid those studies were for doctors to not be as active in this study. So I just point this out because it’s obviously a new learning for all of us as we went through the pandemic. I’ll just sort of repeat where I started. The pandemic affected everybody or almost everybody, but just to different degrees. And we’ll see how it plays out. Obviously, if – in fact, major medical open quicker to clinical trials like ours, we’ll get done quicker. It’s really as simple as that. And if they go slowly, then there’s not much we can do except continue to be ready for when they move less slowly.

[Matt Kaplan:]

That’s good added color. Thank you for walking through.

[Joseph Belanoff:]

Okay, sure.

[Operator:]

Thank you. Our next question comes from the line of Alan Leong with BioWatch News. Your line is open.

[Alan Leong:]

Congratulation to the team. It may be moving slower, but the story looks like it’s unfolding, as you outlined before.

[Joseph Belanoff:]

Thank you, Alan.

[Alan Leong:]

Congratulations. First, we noticed that bipolar patients were added to the GRATITUDE trial, can we hear your thinking on this, like, for example, are you creating a setting for potentially adding bipolar patients to the eventual label? Or strengthening the argument for any non short-term use antipsychotic from weight gain.

[Andreas Grauer:]

That’s a great question and a great observation. Yes, indeed, we have added bipolar patients to the original GRATITUDE study. I mean, first of all, we believe that the nature of weight gain of antipsychotic-induced weight gain is very similar in schizophrenics and bipolar patients. And therefore, it allows us to broaden our base and hopefully, facilitate in a moment. On the other hand, we see consistent results, which we hope that it may have label implications downstream. Let me remind you, we’re still in Phase 2 at this point. And whatever we find will have to be confirmed in a Phase 3 trial. But we learn as much as we can and that’s certainly important insight that we’re looking forward to have.

[Joseph Belanoff:]

And just let me sort of sum it up in a sense for you, Alan, because I agree with everything that Andreas said. The bottom line is this, what causes the weight gain is not the diagnosis. It’s the medicine. And so patients with bipolar disorder and schizophrenia can be equally prone to having the metabolic issues from these medications. It’s important to study them because they’re both very large groups of people.

[Alan Leong:]

Congratulations on the CYP inhibition publication. Relacorilant’s profile for drug-drug interactions, it isn’t as bad as perhaps once feared. Can you provide any light? It seems that only mild dose adjustments are required with Abraxane and perhaps also with enzalutamide. So anything you could provide would be helpful.

[Joseph Belanoff:]

Well, as you often do, Alan, you actually read our papers. We don’t even pay you to do that. So I wish more people would read them. But you’re absolutely right. The drug-drug interactions related to relacorilant when we actually tested them in people in rigorous drug-drug interaction studies proved to be much more limited than some people thought they might be. It’s really as simple as that. And it really makes it the interaction, for instance, with nab-paclitaxel was really quite manageable with a relatively small dose reduction in nab-paclitaxel getting to the right depth. So in some sense, no surprise to us, we’ve had that data. We’ve talked about it as we want to do, but now it’s been peer reviewed and published. And for people who really do want to read about in detail, please come to our website and you can find out the site.

[Alan Leong:]

And a real quick bonus question. I noticed there’s a new drug in clinical trials. I noticed it’s in a liquid capsule form. Can you provide any additional light on that matter at this time?

[Joseph Belanoff:]

Yes. Alan, I’m not positive. We often use – I think maybe you’re referring to the soft gel capsules for relacorilant. We’ve switched that because we felt like it was easier to manufacturer and was going to produce more reliable plasma levels. We’re not the only people who have actually done that earlier in development. It was just easier to do this hard gel capsules, and we just think this is better. So I think that’s what you’re referring to. And that’s the reasons we did it. We found a really sound manufacturer, who could produce very reproducible levels when they tested the drug.

[Alan Leong:]

And so you just relabeled it as CORT 125329?

[Joseph Belanoff:]

Different question. CORT 125329 is a compound in Phase 1 studies where that is also the case. That’s right.

[Alan Leong:]

Awesome. Thanks.

[Joseph Belanoff:]

But in general, that’s a direction that we would choose to move when manufacturing makes it possible. All right. Well, thank you guys very much post Super Bowl, and on a cold day in New York. Thanks for listening in and we’ll be back to you next quarter and fingers crossed that there’ll be a lighter pandemic conversation by that period of time.

[Operator:]

Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.