Corcept Therapeutics Incorporated
Q4 2014 Earnings Call Transcript

Published: 30 Jan 2015

[Operator:]

Welcome to the Corcept Therapeutics Conference Call. My name is Ashlee and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I’ll now turn the call over to Mr. Charlie Robb. Mr. Robb, you may begin.

[Charles Robb:]

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 fourth quarter and full year 2014 summary results. Complete results will be available when we file our annual report on Form 10-K with the SEC. To get a copy of this release, go to corcept.com and click on Investors tab. Today’s call is being recorded. A replay will be available through February 12 at 888-843-7419 from the United States and 630-652-3042 internationally. The pass code will be 38869004. Before we begin, I want to remind you that any statements during this call other than the statements of historical fact are forward-looking statements. These forward-looking statements such as statements regarding completion of our financial closing procedures, final adjustments and other developments that may arise between now and the time our financial results are finalized. Anticipated future revenues, the timing of clinical trials and clinical trial results and the advancement of additional compounds, are subject to known and unknown risks and uncertainties that might cause actual results to differ materially from those expressed or implied by such statements, including the pace of Korlym’s acceptance by physicians and patients, the reimbursement decisions of government or private insurers, the pace of enrollment and/or the outcome of the company’s Phase 1/2 study of Korlym and the treatment of triple negative breast cancer and of the Phase 1 study of its next-generation selected GR antagonists, CORT 125134. The effects of rapid technological change in competition, the protections afforded by Korlym’s orphan drug designation or by Corcept’s other intellectual property rights or the cost, pace and success of Corcept’s other product development efforts. These and other risks are set forth in our SEC filings, which are available on our website, or from the SEC’s website. We disclaim any intention or duty to update forward-looking statements made during this call. Now I’ll review our financial results. Corcept’s estimated net revenue in the fourth quarter was $9.0 million compared to $7.3 million in the third quarter, an increase of 24%. Our revenue for 2014 was $26.6 million compared to $10.4 million in 2013 an increase of 156%. As of December 31, 2014 we held cash and cash equivalents of $24.2 million. We anticipate that our business will continue to grow in 2015 generating revenue of between $47 million and $53 million. Based on our current plans and expectations which include fully funding our Cushing syndrome franchise, completing our Phase 1/2 study of Korlym for the treatment of triple-negative breast cancer and our Phase 1 study of CORT 125134 and advancing to the clinic at least one more of our next generation compounds, we believe we will reach cash flow breakeven without needing to raise additional funds. I will now turn the call over to Dr. Belanoff. Joe?

[Joseph Belanoff:]

Thank you, Charlie, and thank you all for joining us. Corcept develops and commercializes medications that modulate the effects of cortisol widely known as the stress hormone. We market our first generation cortisol modulator Korlym for the treatment of Cushing syndrome, a life threatening disease that affects approximately 20,000 patients in the United States. I'll speak more about our Cushing syndrome business in a moment. To help you better understand Corcept's activities in 2014 and our plans for 2015 beyond let me first briefly describe our medical and scientific environment. Corcept's research and the work of independent investigators around the world have shown that cortisol modulation has great therapeutic potential. Cortisol is essential for life; there are receptors for cortisol in nearly every tissue of the body. However excessive cortisol activity even activity that is only moderately excessive and cause severe illness and sometimes death. In addition to Cushing syndrome therapeutics targets for medication and modulate cortisol's activity include metabolic, psychiatric, optima logic and oncologic diseases. Clinical or preclinical studies are taking place in each of these areas. Korlym is currently being used in clinical studies, a triple negative breast cancer, castrate-resistant prostate cancer, alcohol dependence, post-traumatic stress disorder and central serous retinopathy. Korlym's development for these and other indications has the advantage of being able to proceed relatively rapidly and inexpensively because any new approval is a label extension utilizing a toxicology, carcinogenicity and CMC work that is already been completed and accepted by the FDA. Most immediately our Phase 1, 2 trial of Korlym in combination with chemotherapy for the treatment of triple negative breast cancer is enduring its efficacy phase and will produce data this year if its results are positive but we expect that its phase 3 trial begin in early 2016. In addition as many of you know we have developed a large portfolio of proprietary next generation GR antagonist that unlike Korlym do not lock the progesterone receptor and to do not terminate pregnancy. Well none of these compounds are [board of passions] [ph] they are not precisely identical to Korlym. Some for instance appear to be more tissue specific and some perform even better than Korlym in animal models of various human diseases including, for instance triple negative breast cancer and fatty liver disease. This year we plan to transform the therapeutic potential of our pipeline into actively developed medications. Core 125, 134 one of our lead next-generation compounds will complete phase 1 in the second quarter and move if the outcome is positive to phase 2 by year end. Before I talk about our recent clinical progress and upcoming development milestones let me discuss our Cushing syndrome business which has just produced another quarter and year of substantial growth. As many of you know Cushing syndrome is a disease of cortisol excess and a natural target for medication like Korlym which modulate cortisol's effect. Cushing syndrome is caused by a tumor produce cortisol or tumor that produces ACTH which in turn stimulates the body to produce cortisol. If this tumor cannot be removed the excess cortisol creates makes the patient extremely ill and can be lethal. Korlym treats Cushing's syndrome by competitively blocking cortisol, a GR one of its two receptors. Our Cushing syndrome revenues have grown steadily since we first made Korlym available in April 2012. They were 3.3 million for a nine months of commercial activities in 2012, 10.3 million in 2013 and 26.6 million in 2014. As Charlie just said we expect $47 million to $53 million in revenue this year. Despite our growth to date it's important to note that there are more than 10,000 with Cushing syndrome who could benefit of Korlym and only a small percentage of them have been treated with it. There is great growth potential for Korlym in this population. I am also pleased to report that we have completed the dose finding phase of our phase 1,2 study of Korlym in combination with the chemotherapy drug, eribulin, for the treatment of relapsed metastatic triple-negative breast cancer. This month we began recruiting 20 patients who will participate in the study's efficacy phase. These patients will all receive 1300 milligram Korlym tablet each day combined with [a regulative] [ph] administered on days one and eight of the 21 days cycle. We expect to have results by the end of this year. Let me some provide some backgrounds so you can better understand the significance of this clinical milestone. 40,000 women each in the United States have triple-negative breast cancer. Triple-negative means that these patients have tumors that do not express estrogen, progesterone or HER-2 receptors, so targeted treatments like tamoxifen or herceptin have no targets and are ineffective. There is no FDA approved treatment for the disease and the prognosis patients for poor. However our research indicates that substantially more than half of these women have tumors that express GR a receptor to which korlym competitively binds. The high rate of GR expression in triple-negative breast cancer tumors is important because they are substantial in-vitro and vivo and clinical evidence suggesting that it is cortisols binding to GR that allows the tumor cells to escape chemotherapy. At the December 2013 San Antonio Breast Cancer Symposium the investigators from the University of Chicago who pioneered this area of research reported the successful findings from their own clinical study of korlym in combination with chemotherapy to treat triple-negative breast cancer and patients with relapsed metastatic disease. Of the six patients in their study whose tumors were GR positive, two had a complete response to treatment, two had a partial response and one had stable disease. Even allowing for the small sample size these are extraordinary results. All of these women had previously failed at least one course of taxane-based chemotherapy and yet five of the six appeared to benefit when korlym was added to their taxane-based treatment. Had there been even one responder then the research would have continued. The University of Chicago was currently following up their first study with the study of korlym in combination with a separate chemotherapy regimen to treat both women with triple-negative breast cancer and women with ovarian cancer. Corcept licensed [indiscernible] intellectual property for this work more than a year-ago. Because the dose binding phase of our study was designed to assess only safety and tolerability it did not restrict enrollment to patients with GR-positive triple-negative breast cancer, nonetheless a bit of interesting efficacy data were produced. Of the six patients in that phase who received the selected dose, three had triple-negative breast cancer, the only patient known to have GR-positive triple-negative breast cancer exhibited a partial response that bind us 30% or greater reduction in tumor size and has been on therapy for nine cycles. In contrast the only patient known to have GR-negative triple-negative breast cancer suffered progression of disease. The third patient with triple-negative breast cancer began treatment recently. Her GR status and response to therapy is not yet known. The efficacy phase of our own study will recruit only women with GR-positive metastatic triple-negative breast cancer. We will determine GR-positivity using our proprietary CLIA-validated assay. This assay is an important part of our oncology program because it will allow us to target treatment for the patients who are most likely to benefit. When we seek approval of korlym for one of our selective GR antagonist to treat triple-negative breast cancer we will include use of this assay in our requested label. I have also spoken before about Corcept’s portfolio of more than 300 next generation selected GR antagonists, like korlym these compounds modulate cortisol. Unlike korlym they do not bind to the progesterone receptor and so are not [indiscernible] an important advantage. These compounds also have the valuable characteristic of behaving differently from one another in important respects. Some get into the brain, some do not, some have potent metabolic effects, others are even more potent in korlym in animal models of oncologic disorders. That last point bears elaboration, some of our proprietary molecules performed better than korlym in animal models of triple-negative breast cancer, the disease by which we are advancing korlym. We planned to move korlym to Phase 3 quickly if results from our current trial are positive we have follow on compounds in our pipeline that may also prove effective in triple-negative breast cancer and importantly other solid tumor human cancers. In September we began dosing patients with our next generation selective GR antagonists CORT 125134 in a Phase 1 study. That study has progressed smoothly so far and will conclude in the second quarter of this year. Our expectation is that we will advance this molecule to Phase 2 for both on oncology indication and Cushing syndrome early next year. To sum up, our revenue from korlym for the treat of Cushing syndrome will again grew significantly last quarter and last year and we believe growth will continue. Our forecast is for revenue between $47 million and $53 million this year. We expect to reach cash flow breakeven without having to raise additional funds. Our own work and the research of many of our academic collaborators have shown the cortisol modulation is a potential treatment for many serious and underserved diseases. This year we plan to take important steps towards realizing that potential. Our Phase1/2 study of Korlym to treat GR-positive triple negative breast cancer will produce efficacy data. Korlym could be in Phase 3 for this indication by early 2016. Our proprietary companion diagnostic kit will allow us to target therapy to the patients most likely to benefit and avoid unnecessary treatment for patients unlikely to respond. The lead compound from our library of next generation selective GR antagonists will complete Phase 1 in the second quarter. We hope to advance it to Phase 2 for an oncology indication of Cushing syndrome early next year. 2015 will truly be a transformative year for Corcept. I’ll stop here and answer any questions.

[Operator:]

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

[Christopher James:]

You mentioned that some of the second generation compounds look better than mifepristone in triple negative breast. How did CORT 125 look relative to mifepristone in preclinical assays of triple negative breast if you’ve looked at that?

[Joseph Belanoff:]

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

[Christopher James:]

Okay, great. And then just a couple of questions on mifepristone in the triple negative breast or the oncology study, maybe could you talk a little bit about the base line characteristics of the patient with the partial response, does this patient look similar to the patients in the University of Chicago study who have had a similar response with respect to progression of disease?

[Joseph Belanoff:]

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

[Christopher James:]

Okay. And then on dose, do you think there is a possibility to dose significantly above the 300 mg per day dose and maybe potentially even lower the regular dose?

[Joseph Belanoff:]

Well what I can say at this point is that the dose finding study we did led us to the dose we described 300 milligrams of mifepristone 1.1 of eribulin and that’s what we are going with it at this point in time. Can’t really answer your question directly but I can tell you I think internally, I sort of joke kind of the chutes and ladders system that you used to get the dose led to this dose.

[Christopher James:]

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

[Joseph Belanoff:]

It’s an interesting story in some respect, just to harken back to many years ago when we first approved, mifepristone worked exceedingly well in the 50 patient open label study that we ran to get approval, to a degree where it was approved on a 50 patient study without an advisory on its PDUFA date and now it’s terrific. A disadvantage of that was at that point in time 17 physicians had used mifepristone in Cushing syndrome and I think we really understood that with this new mechanism of action that it was really going to take significant detailing of scientific explanation to get physicians comfortable and ready to use the medications and that has grown overtime in a very significant way. I outlined our growth intentionally, it's grown each year and each quarter and we anticipate that that growth will continue going forward. Now specifically I think that really requires making sure that the doctors understand the story and as endocrinologists as a group of relatively conservative often takes talking to them several times it takes talking them with clinical specialist a medical science liaison who can adequately express the story and it takes having the geographic coverage to make sure that all the potential patients who could be treated get to hear about it and that’s all taking place. Now one of the things that’s very important is that we have established 25 sales territories across the country are the right number and at this point have representatives it's covering 17 of them. The next time we'll talk, we'll have representatives in all 25 very, very selective base on what we've learned about who are the likely people who are sophisticated enough to be able to develop the appropriate messages for physicians to feel comfortable using the medication. We've also gotten better at targeting these patients, unfortunately many have been unfortunately failed by the medical system and they sort of scatter to the wind. So actually locating those patients has taken a real effort and I think we've got a better handle on how to do that and really can now approach they in a way which can be productive for the patient.

[Operator:]

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

[Charles Duncan:]

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

[Joseph Belanoff:]

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

[Charles Duncan:]

Okay that’s helpful and consistent with what I would have hoped here. The second question I had regarding Korlym is really what are the key determinates of use relative to say [indiscernible] Cortisol or frankly are you seeing the [indiscernible] make any inroads? I mean what are this kind of feedback point of feedback that you're getting that really highlights the potential for Korlym growth?

[Joseph Belanoff:]

Well I think that a real critical thing to understand about Korlym is that it works in all forms of Cushing syndrome. And Cushing syndrome [indiscernible] an end organ disease caused by excessive cortisol activity. Just specifically mentioned [indiscernible] it's specifically for ACTH producing tumors which are found in the pituitary, so that is niche, ours is just quite different and is broader because of the mechanism of action. Now this is a new mechanism of action prior to our approval the idea of modulating cortisol with competitive antagonism but there is nothing approved for that and as you know [indiscernible] cortisol doesn’t work in that way more frankly [indiscernible] cortisol actually in an proved medication. But from a scientific point of view what [indiscernible] cortisol does is by poisoning the production of cortisol it generally lowers cortisol levels and can in fact bring cortisol levels over a full 24 hour period to a normal level. [Indiscernible] does something very different; by modulating cortisol it allows the normal rhythm of cortisol activity which is higher in the morning, lower in the afternoon, high in the morning still continuing to take place. And we suspect that that's part of the reason that we have patients who have taken [indiscernible] cortisol not done so well on it, switched to Korlym and really, really talk about feeling much better. It’s really a completely different mechanism of action and I think the major thing is really what we talked about in your first question getting physicians to give it a try at the beginning, unfortunately for many of these patients that have really done quite poorly and very difficult to treat. And we now both in our own clinical trial and in our post-trial experience been able to really show both patients and physicians that not just a somewhat better life is possible but a much better life is possible and that’s really what we -- that’s really the message we want to get to physicians as we progress.

[Unidentified Analyst:]

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

[Joseph Belanoff:]

I am going to ask -- answer your second question first. So again let me just -- I know you are familiar with it Charles, but let me just say for the larger audience. The triple-negative breast cancer are tumors -- breast cancer tumors where usual targeted treatment is ineffective because the receptors that are targeted are on the tumors. There are no estrogen receptors, there are no progesterone receptors there are no HER-2 receptors and I think as all of you know for those tumors that are positive for those great strides have been made in the last decade with the treatment really is a completely different picture, unfortunately for the women who have tumors that are triple-negative none of those treatments are really -- none of the things are effective and they really have a dire course once the disease becomes metastatic, and that’s a big issue. Now GR, the cortisol receptor appears to act as a growth factor for those tumors, that’s what the University of Chicago's work preclinical work showed, and now their translation work in women shows. Now you asked the question about the continuum. Yes there is definitely a continuum in terms of the degree of positivity but it’s our experience so far that if a tumor is positive for GR it's likely to respond to GR modulation and the target -- amount of cells in the tumor that are GR-positive that's going to are cut off, is 10% because we have seen it the medicine has been affected in that population. So yes, there probably is a lower bound, we don’t know what it is but above 10% we feel confident that we are going sufficient GR modulation to change the course of the disease. Now just like [indiscernible] because I have a person in the room who [indiscernible] and not want to get ahead of ourselves I have not introduced to you before and that’s Jackie Walling. Jackie runs our oncology program, she has been responsible at least part of the team that got both [indiscernible] approved and [indiscernible] approved came to us from previously she was the Vice President of Clinical Development at BioMarin and she will answer your question because she is really responsible for where our data goes next to ASCO and San Antonio Breast Cancer. Jackie?

[Unidentified Company Representative:]

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

[Unidentified Analyst:]

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

[Unidentified Company Representative:]

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

[Operator:]

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

[Steve Byrne:]

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

[Joseph Belanoff:]

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

[Unidentified Analyst:]

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

[Joseph Belanoff:]

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

[Unidentified Analyst:]

And can you talk any about the average duration that you’re seeing so far with Korlym in these patients?

[Joseph Belanoff:]

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

[Unidentified Analyst:]

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

[Joseph Belanoff:]

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

[Unidentified Analyst:]

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

[Joseph Belanoff:]

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

[Unidentified Analyst:]

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

[Joseph Belanoff:]

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

[Joseph Belanoff:]

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

[Operator:]

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