Corcept Therapeutics Incorporated (NASDAQ:CORT) Q4 2022 Earnings Call Transcript

Corcept Therapeutics Incorporated (NASDAQ:CORT) Q4 2022 Earnings Call Transcript February 28, 2023

Operator: Greetings, and welcome to the Corcept Therapeutics Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Atabak Mokari, CFO. Thank you. You may now begin.

Atabak Mokari: Good afternoon, and thank you for joining us. I’m Atabak Mokari, Corcept’s Chief Financial Officer. Today, we issued a press release announcing our financial results for the fourth quarter and providing a corporate update. A copy is available at corcept.com. Our complete financial results will be available when we file our Form 10-K with the SEC. Today’s call is being recorded. A replay will be available at the Investors Past Events tab of our website. Statements during this call other than statements of historical fact are forward-looking statements based on our plans and expectations that are subject to risks and uncertainties, which might cause actual results to differ materially from those such statements expressed or implied.

These forward-looking statements are described in today’s press release and the risks and uncertainties that may affect them are described in the press release and in our annual report on Form 10-K and our quarterly reports on Form 10-Q. Please refer to those documents for additional information. We disclaim any intention or duty to update forward-looking statements. Our revenue in the fourth quarter of 2022 was $103.1 million compared to $98.8 million in the fourth quarter of 2021. We expect our revenue growth to continue and have provided 2023 revenue guidance of $430 million to $450 million compared to 2022 revenue of $401.9 million. Net income was $16.6 million in the fourth quarter and $101.4 million for the full year 2022. Our cash and investments at December 31 was $436.6 million compared to $335.8 million at the end of the prior year.

I will now turn the call over to Charlie Robb, our Chief Business Officer, to provide a legal update. Charlie?

Charlie Robb: Thanks, Atabak. Since we last spoke, we have successfully terminated two lawsuits. On February 13, we announced that we had reached an agreement in principle settling all claims in the purported securities class action known as Melucci versus Corcept Therapeutics Incorporated. This lawsuit was brought by plaintiff’s attorneys in March 2019. Since then, our position has not wavered. We said in March 2019 that we were confident in the strength of our legal position. Having spent four years litigating, we are even more confident. I, and I know I speak for my colleagues as well, am proud of Corcept in the way we do business. Allegations such as those asserted in the Melucci lawsuit are repugnant. We have looked forward to our day in court where we can explain publicly the reasons for our pride in what we do and the way we do it.

That being said, litigation is a distraction for more important matters. Simply put, time spent preparing for trial is time not spent developing medications or helping patients. We presented with the chance to put the Melucci distraction behind us for an amount covered by our insurance; we felt compelled to accept. The second terminated case concerns Hikma Pharmaceuticals. In March 2021, we sued Hikma to prevent it from marketing generic Korlym in violation of our patents. As we announced in December, we have settled this case. Hikma to begin selling a generic version of Korlym in the United States beginning October 01, 2034, more than 11 years from now or earlier under circumstances customary for settlement agreements of this type. This is the same entry date as our previous settlement with Sun Pharmaceuticals.

Finally, there was a development yesterday in our lawsuit against Teva. In March 2018, we sued Teva to prevent it from marketing a generic version of Korlym in violation of our patents. In April 2021, we filed for summary judgment based on Teva’s infringement of our ‘214 patent. Teva, as expected, responded by filing its own motion for summary judgment. Summary judgment is a procedure whereby courts decide a case without holding a trial. Yesterday, the court denied both our motion and Teva’s motion without prejudice and ordered the parties to begin negotiating a schedule for pre-trial activities. No trial date has been set. It is important to note that this change in the procedural posture of our action against Teva has not changed our point of view.

We remain confident in the strength of our legal position and are very comfortable receiving the trial if necessary. I’ll now turn the call over to Dr. Joseph Belanoff, our Chief Executive Officer. Joe?

Joseph Belanoff: Thank you, Charlie. Our Cushing’s syndrome business is built on a solid foundation, a life-saving medication promoted by a commercial team that puts the interest of patients first. Leading endocrinologists increasingly believe that there are considerably more patients with Cushing’s syndrome than was once assumed. Korlym is an excellent treatment for patients with Cushing’s syndrome and there are many eligible patients who have yet to receive it. We are extremely optimistic about the growth potential of our Cushing’s syndrome business and are making substantial investments to improve the screening and treatment of these patients. We are providing 2023 revenue guidance of $430 million to $450 million. In addition to generating substantial cash in 2022, we significantly advanced the clinical development programs of our proprietary selective cortisol modulators, relacorilant, dazucorilant and miricorilant.

We expect to make further progress in the next 12 months with the submission of relacorilant’s NDA in Cushing’s syndrome and enrollment of our confirmatory Phase 3 trial of relacorilant in platinum-resistant ovarian cancer, Phase 2 trial of dazucorilant in ALS, and Phase 2 trial of miricorilant in NASH. Since inception, our research and development efforts have built upon the hypothesis the cortisol modulation can be a powerful therapeutic mechanism in many serious disorders. Our proprietary compounds modulate cortisol’s effects by binding to the glucocorticoid receptor, or GR. They do not bind to the progesterone receptor, so it don’t cause some of Korlym’s, our approved product’s, most serious off-target effects. Interestingly, while our compounds modulate cortisol’s activity without modulating progesterone’s activity, they are not identical.

Some cross the blood-brain barrier, others do not. Some perform best in models of solid tumors, others are more potent in models of metabolic disease. Some appear to be tissue-specific, others have more global effects. These diverse qualities allow us to study a wide variety of disorders. Currently, we are conducting programs in ovarian, adrenal and prostate cancer, ALS, NASH and, of course, Cushing’s syndrome. We are investigating cortisol modulation’s role in other diseases and have additional compounds in clinical and preclinical development. Our Cushing’s syndrome business has funded all of these activities and will continue to do so. As most of you know, we are evaluating relacorilant for the treatment of hypercortisolism in two Phase 3 trials: GRACE and GRADIENT.

Photo by Hal Gatewood on Unsplash

Relacorilant is a selective cortisol modulator. Like Korlym, it achieves its effect by competing with cortisol at the glucocorticoid receptor. Unlike Korlym, it does not bind to the progesterone receptor, PR for short, and so does not cause PR-related side effects, including termination of pregnancy, endometrial thickening and vaginal bleeding. By a different mechanism, relacorilant also does not appear to cause hypokalemia, low potassium, a serious side effect experienced by 44% of patients in Korlym’s pivotal trial. Korlym-induced hypokalemia is a leading cause of Korlym discontinuation. Relacorilant’s Phase 2 efficacy and safety data were compelling. Patients experienced meaningful improvements in hypertension and glucose control, as well as in a variety of other signs and symptoms of Cushing’s syndrome.

There were no relacorilant-induced instances of endometrial thickening or vaginal bleeding and no drug-induced hypokalemia. The trial results were published in Frontiers in Endocrinology in July 2021. We are pleased to announce that we believe that we have enough patients and screening in our GRACE trial to complete enrollment in the coming weeks. We expect GRACE to serve as the basis for our NDA submission in Cushing’s syndrome, which we plan to submit in the first quarter of 2024. Our second Phase 3 trial in hypercortisolism, GRADIENT, is studying relacorilant’s effects in patients whose Cushing’s syndrome is caused by an adrenal adenoma or adrenal hyperplasia. Patients with this etiology of Cushing’s syndrome often experience a less rapid decline, but their health outcomes are poor.

While we do not expect our NDA in Cushing’s syndrome to depend on data from GRADIENT, we do expect that its findings will improve the care of these patients. Finally, we plan to initiate a randomized double-blind placebo-controlled Phase 4 study in Korlym this quarter. We have named the study CATALYST. CATALYST will examine the prevalence of hypercortisolism in patients with difficult to control type 2 diabetes and treat the patients determined to have hypercortisolism with Korlym. Planned enrollment is 1,000 patients, which we expect to complete by the end of this year. The most prominent diabetologists in the country helped design and are participating in this study. Our oncology program is testing three anti-cancer mechanisms first postulated by investigators at the University of Chicago and later confirmed by other prominent researchers.

One mechanism is increasing apoptosis, the programmed cell death that chemotherapy is meant to induce in solid tumors. Cortisol works against the beneficial effect of chemotherapy by suppressing apoptosis. In our successful controlled Phase 2 trial in women with platinum-resistant ovarian cancer, the addition of a selective cortisol modulator, relacorilant, enhanced the effect of chemotherapy, likely by blending cortisol’s anti-apoptotic effect. Relacorilant provided meaningful benefit to many of the women in our study. While these women’s disease had progressed on two or more previous lines of treatment, including previous taxanes, relacorilant appeared to resensitize the disease to chemotherapy’s beneficial effects in some women. Those who received relacorilant intermittently, the day before, the day of and the day after they received nab-paclitaxel, exhibited a statistically significant improvement in progression-free survival and duration of response compared to the group who received nab-paclitaxel monotherapy.

Women in the intermittent relacorilant group also live longer than those in the comparator arm, with a p-value that approached statistical significance. Our analysis to date indicates that 29% of the patients who took intermittent relacorilant were alive two years after study start versus only 14% who took nab-paclitaxel alone. 13% of patients who took intermittent relacorilant are alive three years after study start compared to none who took nab-paclitaxel alone. Perhaps even more important, the women who received relacorilant plus nab-paclitaxel experienced no additional side effect burden compared to those who received nab-paclitaxel alone. The results from the study were featured in podium presentations at the 2021 and 2022 European Society for Medical Oncology, ESMO, meetings, and at the 2022 American Society of Clinical Oncology, ASCO, Annual Meeting.

ROSELLA, our pivotal Phase 3 trial in platinum-resistant ovarian cancer, is active and enrolling patients. ROSELLA’s design closely tracks our Phase 2 study with planned enrollment of 360 women, randomized one-to-one to receive either relacorilant plus nab-paclitaxel or nab-paclitaxel alone. The primary endpoint will be progression-free survival with overall survival a key secondary endpoint. We are conducting the study in collaboration with leading clinicians from the Gynecologic Oncology Group in the United States and the European Network of Gynecological Oncology Trial groups in Europe. Our goal in Phase 3 is simply to replicate our positive Phase 2 results. Leading gynecological oncologists have told this that in their view, relacorilant’s potential benefit, improved survival without increased side effect burden, would constitute an important medical advance, and relacorilant plus nab-paclitaxel has the potential to become a new standard of care in women with platinum-resistant ovarian cancer.

A second mechanism by which cortisol modulation may prove useful is by blocking an important tumor growth pathway. Cortisol stimulation is a major reason why patients with prostate cancer treated with the widely prescribed androgen receptor antagonist, enzalutamide, eventually experience resurgent disease. Deprived of androgen stimulation, their tumor switch to cortisol activity to stimulate growth. Our hypothesis is that adding a cortisol modulator to androgen deprivation therapy will close this tumor escape route. By midyear, our collaborators at the University of Chicago plan to begin a randomized placebo-controlled Phase 2 trial of relacorilant plus enzalutamide in patients with prostate cancer before these patients have had an initial prostatectomy.

A third therapeutic mechanism seeks to treat tumors by enhancing the body’s immune response. Cortisol suppresses the immune system, which may blunt the effectiveness of cortisol — of cancer therapies intended to stimulate the immune system. Our hypothesis is that adding a cortisol modulator to immunotherapies, such as checkpoint inhibitors, may enhance the effectiveness of these therapies. We are conducting a Phase 1b trial of relacorilant plus the PD-1 checkpoint inhibitor, pembrolizumab, Merck’s drug KEYTRUDA, in patients with advanced adrenal cancer whose tumors produce excess cortisol. These patients suffer the effects of adrenal cancer and Cushing’s syndrome, a usually quickly lethal combination. Pembrolizumab is rarely effective in treating this form of adrenal cancer.

Our trial is evaluating whether relacorilant can treat these patients’ Cushing’s syndrome by reducing excess cortisol and by reversing cortisol-induced immune suppression, allow pembrolizumab to achieve its full cancer killing effect. The primary endpoint of the study is objective response rate, with secondary endpoints including progression-free survival, duration of response and overall survival. ALS, commonly known as Lou Gehrig’s disease, is a devastating illness with an urgent need for better treatment. DAZALS, our 198-patient randomized double-blind placebo-controlled Phase 2 trial of dazucorilant in patients with ALS, has begun enrolling patients. Dazucorilant is selective cortisol modulator and has shown great promise in animal models of ALS, improving motor performance and reducing neural inflammation and muscular atrophy.

We are conducting this important study in collaboration with TRICALS, the leading ALS academic consortium in Europe. Finally, I’ll turn to our program in NASH, a serious liver disorder that affects millions of patients in the United States. Miricorilant, an oral medication, continues to demonstrate great promise as a treatment for NASH. In our prior NASH study, patients who received miricorilant exhibited large rapid reductions in liver fat, but also substantial, albeit transient, elevations of liver enzymes ALT and AST. The improvement in liver fat in these patients was greater and occurred much more rapidly than we had expected and is rarely seen over any period of treatment. Our Phase 1b dose-finding study has identified a range of doses, all substantially lower than our originally-tested doses that appear to cause substantial reductions in liver fat without causing excessive liver irritation.

We expect to share results from this study by midyear and plan to start a Phase 2 trial later this year. In conclusion, we are extremely optimistic about the growth potential of our Cushing’s syndrome business and are making significant investments to improve the screening and treatment of these patients. In the meantime, the business continues to generate substantial profits even after funding all of our development programs. Our development programs continue to generate evidence validating our long-held belief that cortisol modulation has the potential to treat a wide range of diseases. Reducing cortisol activity is a straightforward and effective way to treat Cushing’s syndrome. It is also clear that cortisol modulation can offer substantial benefits for many other serious disorders.

Ovarian cancer, ALS and NASH are prime examples, but there will be others. And in addition to relacorilant, dazucorilant and miricorilant, we have many other cortisol modulators in our portfolio with potential — potentially different and valuable clinical attributes. Corcept continues to advance across multiple fronts. I thank our dedicated creative employees and loyal investors for making this possible. I’ll stop here for questions.

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Q&A Session

Operator: Thank you. At this time, we’ll now be conducting a question-and-answer session. Thank you. Our first question is from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.

Raymond Wu: Hi, guys. This is Raymond in for Matt. Thanks for taking our question today. Congrats on all the progress. I just wanted to ask perhaps on the ALS program. Specifically, kind of what endpoints are you kind of looking for in the study? Is it ALSFRS? And do you have any specific guidance from the FDA if the study could serve as the basis for the NDA pilot? Thanks. And I have one more question. Thanks.

Joseph Belanoff: Yes, (ph). I wanted to reintroduce you to Bill Guyer, who is our Chief Development Officer. Bill will address that question.

Bill Guyer: Great. Thank you. Appreciate the question. So, again, DAZALS is like Phase 2 randomized double-blind, placebo-controlled trial, evaluating the safety and efficacy of dazucorilant in patients with ALS. In this Phase 2 trial, we’re going to look at 198 patients. The primary endpoint is a 24-week endpoint where we’re going to be evaluating those patients related to placebo. And we’re going to look at the efficacy and change from baseline for the ALS functional rating scale, and that is a validated FDA endpoint, as well as other primary endpoints of safety to assess the safety and efficacy — or the safety of dazucorilant patients with ALS. And these are all validated endpoints with the FDA. And if we complete this trial and we see positive results, this could end up with an NDA.

Raymond Wu: So, appreciate the color. And I guess, maybe just for the NASH program, what would you like to see from the Phase 1b that is kind of increase your confidence as you enter the Phase 2 study? And is it possible you would try multiple dosing regimens? Thanks.

Joseph Belanoff: Yes, that is the goal. That’s a great question. Since, this is an open label trial, we’re evaluating all the various different dose. And our goal has been to find the right dose or dosing regimen where we get a progressive fat loss over time with then no ALT rises, and hopefully, we see ALT improvements. We believe we’ve identified multiple doses or dosing regimens to move into Phase 2, (ph) we’ve seen that progressive fat loss over time and no ALT rises. And so yes, our plan is to move to Phase 2 in the fourth quarter of this year.

Raymond Wu: Okay. Appreciate that. Thanks. And I’ll hop back in the queue.

Operator: Our next question is from the line of Dennis Ding with Jefferies. Please proceed with your questions.

Dennis Ding: Hi, guys. Thanks for taking my questions. I just have one around the base business. Maybe talk about the pushes and pulls on 2023 revenue in terms of what can get you towards the high end versus the low end of your guidance? And perhaps what are some of the different assumptions for you to get there? And as a follow-up, maybe remind us of the seasonality issue for Q1? And when might we get better visibility towards growth acceleration in 2023? Thank you.

Joseph Belanoff: Good, Dennis. Thank you for those questions. I want to again reintroduce you to Sean Maduck, who is the President of the Endocrinology division. And Sean is responsible for all of our business in Cushing’s syndrome. He’ll be glad to answer that question.