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Corcept Therapeutics Inc. (NASDAQ:CORT)

Corporate Revenue Update

February 14, 2013 5:00 am ET

Executives

Charles E. Robb, Jr. – Chief Financial Officer

Joseph K. Belanoff – Chief Executive Officer and Director

Analysts

Roy Buchanan – Piper Jaffray

Operator

Welcome to the Corcept Therapeutics Fourth Quarter and Full Year Revenue Corporate Update Conference Call. My name is Larissa, and I'll be your operator for today's call. 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 Charlie Robb, CFO. Sir, you may begin.

Charles E. Robb, Jr.

Good afternoon. Thank you. My name is Charlie Robb, Corcept Therapeutics' Chief Financial Officer. Joining me today is Dr. Joseph Belanoff, our Chief Executive Officer.

Thank you for participating in this call. Earlier today, we issued a news release setting forth our estimated fourth quarter and 2012 revenue and year-end cash balance. These figures have not been audited, and are subject to change as the audit continues. Complete audited results will be available when we file our Annual Report on Form 10-K with the Securities and Exchange Commission.

To obtain a copy of this release, please go to our website at www.corcept.com and click on News & Events. Today’s call is being recorded. A replay will be available through February 26 at 1-888-842-7419 from the United States and 1-630-652-3042, internationally. The passcode is 34250159.

Before we begin, I would like to remind you that we will be making forward-looking statements, such statements include statements relating to Corcept’s estimated net revenue for the quarter and year-ended December 31, 2012. Estimated cash balance as of December 31, 2012. The company’s 2013 objectives, the magnitude or timing of Corcept’s future revenues, the pace of Korlym’s acceptance by physicians and patients, the reimbursement decisions of government or private insurers, the pace of enrollment in and the outcome of the company’s Phase 3 trial of mifepristone for the treatment of psychotic depression, the effects of rapid technological change and competition, and the cost, pace and success of Corcept’s product development efforts.

These statements are only predictions and involve known and unknown risks, uncertainties, including the risks outlined under Risk Factors and elsewhere in our filings with the Securities and Exchange Commission, which can be accessed at www.corcept.com or the SEC’s website SEC.gov.

Although, we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance or achievement. We are not under any duty to update forward-looking statements, unless required by law.

Before I turn the call over to Dr. Belanoff, I'll recap our estimated revenue for the third quarter and full year and our cash balance at year-end. We estimate that our revenue in the fourth quarter of 2012 was $1.4 million, compared to revenue in the third quarter of $1.1 million. We estimate that our 2012 revenue for the year was $3.3 million.

We estimate that the company’s cash balance as of December 31 was $93.0 million compared to $101.6 million at September 30, 2012, and $39.6 million at December 31, 2011. Please keep in mind that these figures are unaudited. Complete audited financials will be available when we file our Annual Report.

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

Joseph K. Belanoff

Thank you, Charlie. And thank you all for joining the call this afternoon. I’d like to provide some background to help everyone understand both our progress with the launch of our first product Korlym, and our work toward the company’s other key objectives. As many of you know, the FDA approved Korlym for the treatment of endogenous Cushing's syndrome in February 2012.

As the FDA stated in its news release, prior to FDA’s approval of Korlym, there were no approved medical therapies for the treatment of endogenous Cushing’s syndrome is the devastating life-threatening illness. It’s usually caused by a single tumor that produces too much cortisol or by a tumor that produces too much ACTH, which in turn stimulates the body to produce too much cortisol.

Cortisol is often referred to in the late press as the stress hormone and is essential for life. Unfortunately, in excess it causes severe and sometimes lethal illness. The morbidity and mortality of the condition almost always stems not from the tumor itself, but from the cortisol produces.

It is estimated that at least 80% of the tissues in the body have receptors for cortisol, which is why patient with Cushing’s syndrome have so many different symptoms. Because excess cortisol affects metabolism, Cushing’s patients often gain large amounts of fat, usually around their middle. Even as their body looses muscle mass and strength, they get heavy and they get weak. Patients often develop moon-shaped faces and fat deposits on their upper backs.

Cortisol readily crosses the blood brain barrier, so psychiatric symptoms, depression, anxiety and psychosis are common. In fact, psychiatric changes are often the first thing patients notice when they develop Cushing’s syndrome. Excess cortisol causes insensitivity to insulin, so most patients with Cushing’s syndrome have frank diabetes or glucose intolerance and eventually all the problems one sees with those conditions.

Korlym works by blocking one of the body’s receptors for cortisol with powerful results in many patients. Because we felt confident that Korlym would be approved by the FDA, we took the steps we prudently could to prepare for Korlym’s commercialization before the PDUFA date, including manufacturing the supply of Korlym tablets, establishing our specialty distribution network, and helping ensure that payers understood the benefits of Korlym and cover its use. Taking these steps, allowed us to make Korlym available to patients in April 2012 both private and public insurers covering patients' use of the medication promptly.

But making Korlym available was only the first step in our commercial development. To conserve funds, we postponed building much of the promotional capabilities we require until after Korlym’s approval. For instance, we did not begin hiring and training our team of medical science liaisons until late spring in summer. When we learned that a significant number of Cushing’s syndrome patients are treated by community endocrinologists we deployed a team of experienced sales representatives to be calling on doctors – in the fourth quarter of 2012. Now 15 in number these sales reps are working with our MSLs to reach our larger than anticipated prescriber group.

As the launch continues we know that we will learn more and we will continue to adopt. Our Phase 3 trial for Cushing syndrome had led us to expect that our biggest challenge would be getting endocrinologists to write their first prescriptions for Korlym. By blocking a receptor for cortisol the receptors commonly called GR, GR-II. Korlym treats a complex life-threatening illness in a fundamentally new way. Some of its potential side effects, such as endometrial thickening in premenopausal women, which can result in irregular vaginal bleeding, are manageable, but not ones endocrinologists typically face.

Just as we saw in our clinical trial, we expected doctors to take conservative approach, putting their sickest patients on the medication and then waiting for results. As was the case with the study, we expected that positive outcomes would lead to second and third prescriptions from the same doctors for less ill patients, and from the colleagues of doctors who would successfully use the drug and they have.

Our most powerful promotional tool is simple, Korlym works. You can hear from one of our patients yourself at korlym.com in the coming months we will add more patient stories to the site.

I want to address briefly Corcept’s two other strategic priorities, our ongoing Phase 3 study of mifepristone for the treatment of psychotic depression, and the development of our next-generation selective cortisol antagonists. In 2012, we’ve raised $89 million to fund these priorities fully, even as we commercialize Korlym in Cushing syndrome.

I’ll begin by addressing our Phase 3 trial for the use of Korlym in the treatment of psychotic depression. As its name suggests, psychotic depression consists of major depression, coupled with psychosis, which means delusions and/or hallucinations. Unlike in patients with schizophrenia, patients with psychotic depression develop psychosis only when depressed. It is a several episodic illness.

Psychotic depression afflicts approximately 2 million to 3 million people in the United States, and it’s a highly morbid illness. Suffers of this serious illness are 70 times more likely to commit suicide than those who do not have the disease and there is no FDA approved treatment.

Our current Phase 3 trial is investigating with a Korlym administered dose of 1,200 milligrams per day for seven days will lead to a rapid and sustained improvement in these patients’ psychoses. This summer, we began increasing the number of sites in the trial with the goal of enrolling sufficient patients by the end of 2013 to permit a successful interim analysis of the study with an NDA filing shortly thereafter. We believe that the study of successful is the gating item for the NDA. I’d also like to update you on a progress in our drug discovery program.

Evidence in the scientific literature suggested cortisol antagonism, may have utility in treating many conditions, including weight gain caused by atypical antipsychotic medications, post-traumatic stress disorder, mild cognitive impairment, Alzheimer’s disease, alcoholism, breast and ovarian cancer and psychotic depression. Research into this mechanism continues to make rapid advances on many fronts. This October we brought researchers from around the world to a conference and half of them being in California to report their findings and share ideas. What we heard was exciting.

Of course, much work must be done before we know whether the promising outcomes we have seen in early models and pilot studies will result in effective treatments. Work continues in labs and clinics around the world. We are very excited to be the leading company in this field.

Our research has produced to elaborate more than 300 proprietary next-generation selective GR-II antagonists, Like Korlym potently block the receptor for cortisol, but do not block the progesterone receptor and therefore do not terminate pregnancy. If shown to be safe and effective, these molecules could be marketed for conditions for which Korlym is not ideal. We’ve begun advancing several of the most promising of these compounds to the clinic in parallel. Our first objective is to find a follow-on compound for Korlym and Cushing's syndrome.

Interestingly, some of our next-generation compounds behave differently from both Korlym mifepristone, and from one another in important ways. For instance, some of these compounds get into the brain, some do not. Some appear better in preventing antipsychotic induced weight gain; some are better in increasing insulin sensitivity. We hope that our efforts will yield several new and important medications.

To sum up, we are pleased to see how well patients taking Korlym are doing and how the launch of Korlym for endogenous Cushing’s syndrome is progressing. Coverage for Korlym has been prompt and universal. Many doctors who prescribed Korlym for one patient are now prescribing it for second or third. We have received prescriptions from an even more diverse group of physicians than we expected including our study investigators, other Cushing’s syndrome specialists and community endocrinologists, and we’ve adopted our plans accordingly.

In addition and importantly, we are effectively using the funds we raised this summer to complete our Phase III trial of Korlym for psychotic depression and to advance to the clinic in parallel, several of our next-generation compounds.

I'll be glad to stop here and answer any questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions)

Joseph K. Belanoff

First question?

Operator

Roy Buchanan from Piper Jaffray is online with questions.

Joseph K. Belanoff

Yes.

Roy Buchanan – Piper Jaffray

Hi, Joe can you tell us how many patients are on drug at the end of the quarter, and if you’ve had any patients drop-off since launch and if why?

Joseph K. Belanoff

Yes Roy. Good to talk to you. At this point are not disclosing the number of patients who are taking Korlym. We examine that. We'll consider that as we go forward, but at this point we are not disclosing that information. And I think your second was have any patients who took Korlym at the beginning after commercialization come off the medication. And the answer to that is yes, there are certainly patients who took Korlym who have since moved on for a variety of reasons. Sometimes their illness has progressed and they died, there are other reasons as well. So yes, not all the patients who have taken Korlym remain on it.

Roy Buchanan – Piper Jaffray

Okay. And I don’t suppose you want to give a percentage roughly, no.

Joseph K. Belanoff

No.

Roy Buchanan – Piper Jaffray

Okay. Do you have any indications on how Novartis is preparing for the Signifor launch and can you characterize how you guys are preparing for that.

Joseph K. Belanoff

Really I – again two questions, I really don’t know what they are doing internally of course. It’s really kind of their story to tell. I will tell you this and we will look very carefully at exactly what their data is what the studies they’ve done show, we've talked to many physicians who have been participants in study of their drug, and I think we have a pretty good sense of how their medication works. How they intend to market it is something that we really don’t know, and I guess we will probably find about when you do.

Roy Buchanan – Piper Jaffray

Okay, great. Thank you.

Joseph K. Belanoff

Sure. Thank you. Roy.

Operator

Steve Byrne from Bank of America.

Joseph K. Belanoff

Hello Steve, Happy New Year.

Unidentified Analyst

Hi, this is actually (inaudible) for Steve.

Joseph K. Belanoff

Okay.

Unidentified Analyst

And I’ve got quick question, following on [Signifor] drug. Do you have any specific outlook for I think what your patients or anything like that that you could share?

Joseph K. Belanoff

Well I think the specific thing I can tell you is that the drug is approved for Cushing’s disease which is a subset of patients with Cushing’s syndrome, but we estimate about 70%. I think that the thing would just to maybe point you in the right direction and I actually don’t know the answer for this myself, but you might want to investigate how their drug has been selling in Europe where it’s been available for the last eight months.

Unidentified Analyst

Thank you.

Operator

(Operator Instructions)

Joseph K. Belanoff

[Juan], please go ahead.

Unidentified Analyst

Hi guys, how are you?

Joseph K. Belanoff

Good, Juan, how are you?

Unidentified Analyst

Yeah, one question on the risks that you might be taking by doing an interim analysis, that is on the psychosis trial. What’s the goal of the trial in terms of number of patients and how many patients are you going to have when you do the interim analysis and why not – why don’t you have all the patients?

Joseph K. Belanoff

Okay, so, several questions here Juan, let me try to address them as I best heard them. As we said to people that the full size of the study that we’ve talked about now, this one which is running is 450 patients. And this study in many respects replicates studies that we’ve done previously. But there is an important difference in this study.

Important difference is that, because the technology became available, we are now using centralized rating, those you file; of course for a while you probably remember that the company that we’re using is one called MedAvante. MedAvante is a group of expert raters. Originally, many came from Columbia University and they set up their company to essentially see if they could reduce a lot of the noise which is in psychiatrics and nobody’s problem, it’s not just endemic to our studies, but to all psychiatric studies.

And by employing expert raters who essentially look at every patient whether they are in the Western, Central or Eastern part of the country, we think that they have a chance of really enriching the sample by making sure that all the patients who were studied actually have psychotic depression as opposed to an alternative diagnosis and are appropriately rated as per their severity of illness. So, that’s really the reason why we think that an interim analysis has a chance to be quite successful.

Now, I will tell you at this point, we haven’t decided exactly how many patients to do that interim analysis, we’re still in the process of doing that research or exactly when that will occur, but it is something we’re really taking a serious look at. And the reason for it is that we think that with the addition of MedAvante, the appropriate power of the study is potentially lower than the original 450 patients that we put in the study and we would like to provide a successful study, at the same time we bring the drug to market as quickly as we can.

Roy, I see you have on the other question.

Roy Buchanan – Piper Jaffray

I have follow up on the MedAvante. Given the idea, I think the Acadia used centralized raters in their trail. Is this the same group that Acadia used for their Phase 3?

Joseph K. Belanoff

I don’t know who the Acadia used. I apologize, I’m not sure.

Roy Buchanan – Piper Jaffray

Okay. I should know, not you. So, thanks.

Joseph K. Belanoff

Okay, no problem. All right, I see that we have no other questions. So I want to thank everyone for calling in and looking forward to talking to all of you in the future.

Operator

Thank you ladies and gentleman, this concludes this conference. Thank you for participating, you may now disconnect.

This concludes the Corcept Therapeutics fourth quarter and full-year revenue corporate update conference call. Thank you for participating in this program.

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