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Corcept Therapeutics Incorporated (NASDAQ:CORT)

Sales Trading Statement Conference Call

January 30, 2014 5:00 PM ET

Executives

Charles Robb – Chief Financial Officer

Joseph K. Belanoff – President and Chief Executive Officer

Analysts

Charles C. Duncan – Piper Jaffray, Inc.

Juan F. Sanchez – Ladenburg Thalmann & Co., Inc.

Koon C. Ching – Credit Suisse Securities LLC

Christopher James – Brinson Patrick

Steve Byrne – Bank of America Merrill Lynch

Kim Lee – Janney Montgomery Scott LLC

Operator

Welcome to the Corcept Therapeutics Conference Call. My name is Cher 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 would now like to turn the call over to your host, Charlie Robb. Charlie, you may begin.

Charles Robb

Thank you. Good afternoon, everyone. I am 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 www.corcept.com and click on the Investors tab. Today’s call is being recorded. A replay will be available through February 13 at 1-888-843-7419 from United States and 1-630-652-3042 internationally. The pass code will be 36540064.

On this call, we will be making forward-looking statements. These include statements relating to our estimated net revenue for the quarter and year ended December 31, 2013, estimated cash balance as of December 31, 2013, anticipated net revenue for 2014 and our other 2014 objectives.

Forward-looking statements are subject to known and unknown risks and uncertainties that might cause actual results to differ materially, including completion of our financial closing procedures, final adjustments and other developments that may arise between now and the time the financial results are finalized.

There can be no assurances regarding the magnitude or timing of the company’s revenues, the pace of Korlym’s acceptance by physicians and patients, the pace of enrollment in or the outcome of the company’s study of mifepristone in the treatment of triple-negative breast cancer, the interim results of the company’s Phase 3 trial of mifepristone for the treatment of psychotic depression, the effects of technological change and 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 product development efforts. These and other risks are set forth in our SEC filings, all of which are available from Corcept’s website or the SEC’s website. We have no intention or duty to update forward-looking statements.

Before I turn the call over to Dr. Belanoff, I’ll recap our results for the quarter and full year. Our net revenue in the fourth quarter of 2013 was $4.1 million, an increase of 56% from the prior quarter. Revenue for all of 2013 was $10.4 million. Our cash balance on December 31 was $54.9 million, compared to $93 million on December 31, 2012. 2014 will be a pivotal year for Corcept with multiple clinical and regulatory milestones, as well as continued growth in sales of Korlym for Cushing’s syndrome.

We estimate that revenue for 2014 will be between $24 million and $28 million. Based on our current plans and expectations, we believe we will reach cash flow break-even without having to raise additional funds.

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

Joseph K. Belanoff

Thank you, Charlie, and thank all of you for joining us. Corcept has had a good fourth quarter and a good 2013 and we look forward to important developments this year. Revenue from the sale of Korlym increased 56% last quarter, following a 39% increase in the prior quarter. We expect Korlym sales to keep growing and estimate 2014 revenue to be between $24 million and $28 million.

Next quarter, we will report interim results in our Phase 3 study of mifepristone for the treatment of psychotic depression. If the result of this analysis is positive, we will submit an NDA for this program by the end of the year. Following encouraging results from study by University of Chicago investigators, we expect to begin enrolling patients in our trial of mifepristone for the treatment of triple-negative breast cancer, a particularly lethal form of breast cancer, in the next few days.

In the second half of 2014, we will advance two of our novel selective GR antagonists to the clinic. Those are the headlines, I’ll talk about each of them in more detail, and for those of you who are not familiar with Corcept, provide some background that will help you better understand the significance of these developments.

In February 2012, the FDA approved Korlym for the treatment of Cushing’s syndrome, the archetypal disease of cortisol excess. Cushing’s syndrome is caused by a tumor that produces cortisol or ACTH, which stimulates the body to produce cortisol. If the tumor can be removed surgically, the patient is cured. However, the tumor cannot be removed, the patient’s health risks are dire and the disease can be lethal.

Korlym was approved in 2012 to treat these patients. We have concluded another quarter of strong growth in Korlym sales, driven by increases in new prescriptions and more prescriptions from repeat prescribers. Compared to a year ago, we have a more refined understanding of who the target prescribers of Korlym are and have also improved our approach to explaining Korlym’s mechanism of action.

The FDA’s strong warning about the off-label use of ketoconazole to treat Cushing’s syndrome has reminded doctors of the risk associated with that drug, which up to now has been the most common medical treatment for Cushing’s syndrome. And our specialty pharmacy has provided patients with the attentive, personalized service that helps them remain adherent.

As always, the most reason for the increase in Korlym sales is simple; the medicine works. In addition to Cushing’s syndrome, we believe mifepristone is a potential treatment for psychotic depression, a severe episodic illness consisting of major depression coupled with illusions or hallucinations. People suffering from psychotic depression are 70 times more likely to commit suicide than those who do not have the disease.

Unlike Cushing’s syndrome, psychotic depression is not an orphan illness. It is estimated to afflict 2 million to 3 million people in the United States. 300,000 to 400,000 people are hospitalized for psychotic depression every year. There is no FDA approved treatment for this disease. For patients and for Corcept, a potential new treatment is a true opportunity. We are conducting a Phase 3 trial to determine whether mifepristone administered a dose of 1,200 milligrams per day for seven days will lead to a rapid and sustained improvement in patient’s psychotic symptoms.

As I mentioned on last quarter’s call, we plan to undertake an interim analysis of the trial data and release results in the second quarter. If the results are positive, we expect to submit an NDA in the fourth quarter of this year. On our call last quarter, I said that investigators in the University of Chicago would soon be reporting the results of the first human study using mifepristone in combination with chemotherapy to treat triple-negative breast cancer, a deadly disease that afflicts approximately 40,000 women each year, and for which, there is no approved treatment.

As many of you know, on December 12, at the San Antonio Breast Cancer Symposium, the University of Chicago investigators reported successful findings in their clinical trial. We have licensed patent rights from the University of Chicago covering the use of competitive GR antagonists, including mifepristone in combination with anticancer agents to treat triple-negative breast cancer.

In the next few days, we expect to begin enrolling patients in our Phase 1 study, a study which has both safety and efficacy endpoints. We expect to report initial results from the study in the first half of 2015. Our study of mifepristone in triple-negative breast cancer is a result of just one of our many collaborations with academic researchers around the world working preclinical and clinical work with mifepristone.

Our strategy is to provide leading experts with mifepristone and our selective GR antagonists. so they can increase our scientific and clinical understanding of the role GR antagonists can play in the treatment of a wide range of diseases. While it is too early to know what these collaborations will result in new uses for our drugs, we are excited by the possibilities. While we explore mifepristone’s therapeutic potential, we are working hard to select drugs from our library, more than 300 proprietary selective GR antagonists.

Like Korlym, these next generation compounds competitively block the receptor for cortisol, but they do not block the progesterone receptor and say do not terminate pregnancy. We plan to advance two of these model deals to the clinic in the second half of the year. We’ve not yet decided which indications we plan to study. The Cushing’s syndrome, psychotic depression and triple-negative breast cancer are candidates as our other psychiatric, metabolic and oncologic illnesses.

To sum up, our Korlym revenues in the treatment of Cushing’s syndrome have had another quarter of strong growth. We have begun developing Korlym’s active ingredient, mifepristone in the treatment of a deadly form of breast cancer. We will report results of our Phase 3 study of mifepristone to treat psychotic depression in the second quarter of this year.

Our many active academic collaborations continue to explore the use of mifepristone as a potential treatment for a wide range of indications. Finally, compounds from our library of next generation selective GR antagonists are also being analyzed by academic investigators and the leading candidates will enter the clinic this year as potential treatments for an even wider range of illnesses.

Last quarter, I said that now was the time to start paying attention to Corcept. I suggest that you continue to do so. I’ll stop here and answer any questions.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Charles Duncan of Piper Jaffray.

Charles C. Duncan – Piper Jaffray, Inc.

Hi, guys. Thanks for taking my question and congratulations on a good couple of quarters and worthier results?

Joseph K. Belanoff

Thanks, Charles.

Charles C. Duncan – Piper Jaffray, Inc.

So Joe, first of all, can I touch on that interim results in psychotic depression in the second quarter, could you provide us a little bit more color on what’s driving that? Is there a certain number of patients and then what is the specific takeaway that you’re looking for on that interim?

Joseph K. Belanoff

Okay. so Charles, just to sort of refresh everyone’s memory, this is analysis of a study that – it’s ongoing with mifepristone 1,200 milligrams in psychotic depression and it basically uses the endpoints that we have always used, which is a rapid and sustained reduction in the psychotic symptoms of these patients. And the interim analysis is set up to look at the first half of the patients in the study and to remind you the full enrollment for this study was 450 patients. Obviously, maybe to map our half of them, and the idea is to see if that analysis reveals a positive result, if it does, that will end the study and study then will be in our [indiscernible] to send to the NDA as part of our NDA submission. As you know, much of the work around mifepristone for our Cushing’s syndromes program will be reused in this psychotic depression NDA, as well as the efficacy studies in the psychotic depression. So again, I think to sort of answer your question, if it’s an analysis, as the first half of the patients in the study can use the same endpoints that we’ve always used before and it uses essentially half of the total p value to get the statistical significance.

Charles C. Duncan – Piper Jaffray, Inc.

Okay. So then there will be a second half, but you’re going to file on the basis of this interim, correct?

Joseph K. Belanoff

No, specifically the study will end if that result is positive…

Charles C. Duncan – Piper Jaffray, Inc.

Okay. Yes.

Joseph K. Belanoff

But it’s a small point, but just if you’re asking me technically, what will happen is the patients who have continued to enroll in the study and they enroll every week until those results are available, will then be analyzed with the first half of the group as a total result and we assume that if the result in the first half is positive, this group in that one on patients will be as well, but of course, that remains to be seen too.

Charles C. Duncan – Piper Jaffray, Inc.

Now to be clear, when you say positive, you mean positive to some statistically significant level or some delta between the controlled arms. so if you don’t start the study, that doesn’t mean it’s negative, correct?

Joseph K. Belanoff

That’s right. In fact, that’s correct, precisely right, Charles, so the results that are Data Monitoring Board will come back with will be either – in terms of set the pretty curves. They’ll either stop for reason of efficacy, continue or the study’s futile yield never succeed, and that’s what we’ll get back to that point.

Charles C. Duncan – Piper Jaffray, Inc.

Okay, sounds good. That’s helpful. and then if we could ask you a question about the triple-negative breast cancer study in the Phase 1 study with mifepristone, can you give me a little bit more color on the design, is that a – is there like a two stage Simon design or something?

Joseph K. Belanoff

It’s basically a Phase 1 study in which the first portion of it is a dose-finding study.

Charles C. Duncan – Piper Jaffray, Inc.

Yes.

Joseph K. Belanoff

And then the second half of this is an expansion study once the dose has been found. and so the first half of this study can enroll up to, but probably not if the dose is found before that 20 patients and the dose expansion study will be 20 patients once that dose is found.

Charles C. Duncan – Piper Jaffray, Inc.

And definition of the dose is due to – I guess tolerability or are you looking for some kind of…

Joseph K. Belanoff

Tolerability.

Charles C. Duncan – Piper Jaffray, Inc.

Okay, okay. And then finally on the driver to 2014 guidance, which is good and we know TEVAR [ph] model, which is interesting, is that – you mentioned the breadth and the depth of the prescribing behavior within your physicians, can you provide a little bit more information on the number of prescribers right now and then those that are prescribed in for more than one or call it handful of patients?

Joseph K. Belanoff

Yes, we have not disclosed the specific numbers, but I can tell you in general, there are members of each of those groups. We have many new prescribers and we also have prescribers who were prescribing more than – for more than one patient. I would tell you this that of course; the universe of people who have not yet prescribed is large. so the number of first time prescribers continues to grow on, but each is a substantial portion of our group.

Charles C. Duncan – Piper Jaffray, Inc.

Okay. and the key driver to the guidance is the number of prescribers, there is – is there any pricing change or anything?

Joseph K. Belanoff

Just I can in deed get Charlie involved in the conversation, I’ll let him answer that.

Charles Robb

Hi, Charles.

Charles C. Duncan – Piper Jaffray, Inc.

Hi, Charles.

Charles Robb

We look at, there are a number of revenue drivers in this business, including the things you mentioned, the dose of the patients and the enrollment rates, adherence and other and everything else and we really look at the totality of that in determining our range. So they were all considered.

Charles C. Duncan – Piper Jaffray, Inc.

Okay, thanks. Thanks for the added color. I’ll hop back in queue.

Joseph K. Belanoff

Thanks, Charles.

Charles Robb

Thanks.

Operator

Thank you. our next question comes from Juan Sanchez of Ladenburg.

Juan F. Sanchez – Ladenburg Thalmann & Co., Inc.

Good evening, guys. On Korlym, just one question on price, have you had any price increases?

Joseph K. Belanoff

Hand to Charlie.

Charles Robb

We have raised the price equivalents since we came out, yes.

Juan F. Sanchez – Ladenburg Thalmann & Co., Inc.

Well, how much are you charging per milligram right now?

Charles Robb

So our price per milligram right now is $0.74 per milligram.

Juan F. Sanchez – Ladenburg Thalmann & Co., Inc.

And the other question on the PMD trial, if you had to complete the trial for which more than 50 patients, when do you think we will have results from that study?

Joseph K. Belanoff

Thank you, Juan. I understand the question, the answer is that and I just want to reflect back on previous course, if the enrollment, once all the studies were up, went briskly, and if you remember, we actually reduced by one quarter, when we would have these results. So we haven’t given a specific answer for that, but it’s – the answer is roughly a year after these results, roughly.

Juan F. Sanchez – Ladenburg Thalmann & Co., Inc.

So the required p value for both events will be 0.25, right?

Joseph K. Belanoff

So actually, the way this analysis is done and for those of you are on a statistical fence it’s called Pocock analysis and it actually gives you a little bit more p value in that, slightly underpinned to illustrate for [indiscernible].

Juan F. Sanchez – Ladenburg Thalmann & Co., Inc.

Just so a couple of questions on the PMD market, you said that the 1,000 patients had been hospitalized, but what kind of organization within it takes to tackle these markets and [indiscernible]?

Charles Robb

Yes. so again, this really has been a bit of opportunity to talk a little bit about the disease, I think everyone on the line is familiar with depressions, psychotic depression is both by definition and in actuality, a very severe form of depression and it isn’t treated by most psychiatrists and I could speak from my own personal experience, I mean it’s a really much, much smaller subgroup of psychopharmacologists as all of these patients are treated with medication or electric shock therapy who actually treats this group and our estimate is there’s about 3,500 doctors who in fact are treaters of this illness.

So again, sometimes people will next ask about commercialization of the drug, we don’t know whether that 50 reps that need to get or 70 reps or 30 reps, it’s sort of in that order of magnitude. we think again, going back to sort of the key point. the target group of physicians is about 3,500.

Juan F. Sanchez – Ladenburg Thalmann & Co., Inc.

Thank you, guys.

Charles Robb

Thank you, Juan.

Operator

Thank you. Our next question is from Ravi Mehrotra of Credit Suisse.

Koon C. Ching – Credit Suisse Securities LLC

Hi, this is actually Koon, asking question on behalf of Ravi. So just a few questions, the first could you provide any further metrics on the Korlym launch and the second one is, of the triple-negative breast cancer patients, how many are actually GR-positive and in your guidance for cash flow break even, did you include psychotic depression launch in your assumptions? Thank you.

Joseph K. Belanoff

So, you’ve asked three pretty diverse questions. I’ll start with the middle one first because I think scientifically it’s a very interesting one and maybe first time I had really a chance to talk about it. So triple negative breast cancer refers to patients whose tumors don’t have estrogen receptors or progesterone receptors or HER-2 receptors. And let’s think most of you know there has been great progress on fortunately in the treatment of receptor positive breast cancer because they are drugs with block, the effect of those receptors which are essentially growth factors for the tumor. And triple negative breast cancer don’t have those particular receptors and therefore those drugs are not affected in treating them, okay.

Now, your specific question was the percentage of those cells which impact our GR positive and the importance of that question is, there is no reason to think that if these tumors are not also presenting with GR receptors other than that GR antagonist would have an utility and I think that is actually correct. Now, it’s new in this field and it’s not known exactly what the percentage of those tumors are. It’s a substantial percentage of those tumors I do not know a majority of those tumors. So it is a subgroup of people with triple negative breast cancer, but a substantial subgroup.

Again, I’ll make sure I get all of your questions. I think the first one was about other metrics about the Korlym launch and the answer is, I think that given all that we have to tell you about that at this point, we have not disclosed specific number of patients or specific number of physician, so I think you have all you have. And please remind me of your third question.

Koon C. Ching – Credit Suisse Securities LLC

Yes. On your cash flow break even guidance, I guess, does that incorporate a psychotic depression launch?

Joseph K. Belanoff

Charlie?

Charles Robb

The cash flow break even calculation does – we have not completely cost that out, but we think the commercial launch of PND [ph] would look like. But in fact the break – the calculation does include expenses for a launch.

Koon C. Ching – Credit Suisse Securities LLC

Okay, thank you very much.

Operator

Thank you. Our next question is from Christopher James of Brinson Patrick.

Christopher James – Brinson Patrick

Hi, thanks for taking my questions and let me add my congratulations for a strong quarter. I guess starting with Korlym obviously you’re saying strong growth. Have you seen any changes in the – or could you reveal the average daily dose or number of dosage per day?

Joseph K. Belanoff

The answer is, again, we previously given out from what we knew from a long-term is the average dose which is about 750 milligrams. Now, as you remember, I think Korlym is a little bit different in the sense that to medication that has to be titrated to efficacy and people tend to start at the lowest available dose which is 300 milligrams. So as you add new patients, there is a pull of that point since the market is not yet – the medical market is not yet stable to pull for a lower average dose. So the dose is in fact lower than what we saw in our long-term users at this point. As the market matures and we certainly see this as patients remain on medicine for a long period of time, their dose then begins to approach the long-term use that we saw in our clinical trial.

Christopher James – Brinson Patrick

Great, thanks for the color, Joe. Moving on to the question, I guess based on your previous publications in psychotic depression, it looks like there is a strong correlation between efficacy mifepristone plasma concentration and I also see that that’s also one of your secondary endpoints. Is there anyway to predict which patients will achieve an adequate plasma concentration or is there something built into exclude certain agents that built to achieve a high plasma concentration?

Joseph K. Belanoff

So that’s a sophisticated question. and I know that you’ve read all the articles Chris, but I just wanted to explain to kind of the audience as a whole. So one of the things that we found over the course of studies both initially retrospectively and then prospectively is that the plasma level of mifepristone in patients with psychotic depression was highly correlated their level of response and really what have met with that and what they got about the certain plasma level of drug, they really didn’t do any better than placebo. But above that level, they not did better than placebo, they did better with statistical significance and the higher they got the get better they did.

So what Chris really asking was is that, is there a way that we exclude or is there a reason why their some patients who don’t get to that level and it’s a – the answer is we don’t really know a priori wise some patients get there and some patients don’t. I think it really has to deal with their own individual physiology. and what we do know is that a dose of 1,200 milligrams over 80% of the patients got to what we thought with the effect of plasma level in previous studies, and that’s how we got to the dose of 1,200 milligrams.

so I think the bottom line is that we pick a high enough dose that we think that it will carry the study, even though we think that their user group of patients in the study do unfortunately by virtue of not having high enough plasma level, will be predictably no better than placebo, that is the small number of patients in the study. And I think that one of the interesting things I said in our previous studies, as you know mifepristone often beat placebo, but not with statistical significance and I think the reason for the lower effect size of many cases, unless because you have fewer patients who actually got over the plasma threshold.

Christopher James – Brinson Patrick

Great. thanks for the additional color, and congrats again.

Joseph K. Belanoff

Thank you

Operator

Thank you. our next question comes from Steve Byrne of Bank of America.

Steve Byrne – Bank of America Merrill Lynch

So Charlie, when are you thinking you might hit to that cash flow break-even point and what are you looking at in terms of R&D and SG&A expense for 2014 relative to where they are as you exit 2013?

Charles Robb

So the – we have not disclosed the point at which we expect to reach cash flow break-even. so I can’t comment on that. We’ve said in the past and I think this will continue to be true in 2014 that we can run the business including all the activities we’ve been talking about here for between and $11 million and $13 million a quarter about $12 million a quarter on average and we expect that to continue to be true for the foreseeable future.

Steve Byrne – Bank of America Merrill Lynch

Okay. and Joe, these patients that have psychotic depression, how variable are the depressive symptoms and is it a challenge to enroll a patient when they – there is a surge of psychosis that you would expect to be able to see efficacy with an active drug?

Joseph K. Belanoff

Yes. so again, Steve, but thanks for the question and I just want to enlarge the conversation again, for people who aren’t as familiar with the illness as you are. so a psychotic depression is a pharma depression that by definition involves severe depression. so all the patients have had psychotic depression, have severe depression and not all patients with severe depression develop psychotic symptoms, there’s a subgroup of them estimated of those who have depression is probably 15% to 20%, who also develop hallucinations or illusions at the time when they are depressed, but not at any other time. They’re not normally psychotic, but they are in that case. Now the answer is for trained psychiatrists, I mean not to be glue with that, you can’t pass your boards without being able to make the diagnosis of psychosis or not in this group of patients.

Interestingly, there are a group of patients who are so sick, but they can’t actually consent to be in a study for instance and we actively – although we could have supposed gotten third-party consent, we actively made a decision to not have those patients to be in our study. So there’s a group of patients we didn’t study, but in some sense, we think we’d maybe the earliest adopters of the medication, which our patients who had the most severe illness.

For a psychiatric – the designation between psychotic depression and non-psychotic depression is a fairly easy one to make. It is a more difficult diagnosis for somebody who has seven or 10 minutes in emergency room and isn’t really trained to do that. So I think there is some sophistication, but psychiatrists have no trouble doing that and I can tell you that in our study, which was of course, all psychiatrists, once they saw the study sites were up and running, there really was not a big problem in terms of bringing in patients who had psychotic depression, which is why we remain basically on target for where we thought that enrollment would be at any point in time.

Steve Byrne – Bank of America Merrill Lynch

And the seven days of treatment, is that sufficiently long in your view to capture enough of that psychotic symptom period that that seems to kind of ebb and flow for these people?

Joseph K. Belanoff

Yes. It’s a good question and I appreciate your skepticism, because as you know, there is no other psychiatric medication particularly for depression or a psychosis that works in that sort of timeframe. In fact with mifepristone, the biological effect you see in altering cortisol activity happens in the first 48 hours and we see if the drug is successful enough, obviously I saw it personally as a physician before I started Corcept, and we see with successfully treated patients in the study that you really do get this very rapid improvement in psychosis, people think much more clearly, they can report it, they’ll say things like on day two at 7 p.m., the radio in my head went off referring to the psychotic symptoms stopping, we really do see that and the interesting thing about that is it seems as if this biological perturbation causes a resetting biologically of their cortisol access that is sustained over a period of time. So all of our studies in fact involve seven days of treatment and then at the end of that, people have to remain better without any other mifepristone for a period out to eight weeks.

Now interesting thing I think just to now about the illness is that unlike a disease like schizophrenia, which I think, all of you are familiar with, where people get sick when they’re 17, 18 years old, and they are pretty much sick for the rest of their life. It’s a – it really is a chronic illness, there’s waxing and waning, but there it’s never well – but they’re never really well. Patients with psychotic depression have a severe illness, but it is an episodic illness. We’re meeting a number of episodes of people who have more one, it’s considered – it’s estimated they have three to five over the period of their life.

So it’s a severe episodic illness and a treatment like this, which works quickly and hopefully effectively, actually does sustain people for a long period of time. So that’s what we’re testing, that’s what we tested before, and I think that it, in fact, proves to be true. It really is a breakthrough in psychiatry. It’s much more antibiotic model, where if you had strep throat, Steve, and I wanted to treat you with penicillin, I’d expect you to be better at the end of a week, at the end of a month, at the end of two months, but if 10 years from now, you had strep throat again, I’d treat you again with penicillin. It’s much more that model than the standard pharmaceutical model of keeping people on medicine forever.

Steve Byrne – Bank of America Merrill Lynch

And so for those patients that would have a benefit here, how long would you say they would be on drug and would there be value in keeping them on it chronically?

Joseph K. Belanoff

Well, the answer is, again, it’s a seven day treatment course and we do not think there is value in keeping them on it chronically. We think that their – biologically their cortisol access has been reset and it will remain that way for, what could be a very expensive period of time, and I having studied the drug for a very long period of time, I can tell you it can be years. I remember the very first patient that we treated was seven years between the episodes and then he was retreated successfully at that time as well. So it can be a long period of time and hopefully that will be true as physicians use the drug if it were approved outside our clinical trials.

Steve Byrne – Bank of America Merrill Lynch

Okay. And then, I just have one last one and that is, is Novartis out there raising the awareness level on Cushing’s is that a net positive for you?

Joseph K. Belanoff

Well, renal response that it would be, but I honestly can’t tell you a whole lot about what Novartis is doing and I am not sure of that. I know they are out there in the field, and I think that whether it’s Novartis or anybody else making people more aware of Cushing’s syndrome is a good thing for patients. For everyone who has talked to patients who’ve had Cushing’s syndrome, it’s often many, many years before they come to diagnosis. They often are very discomforted with the medical system, because their symptoms, which run across other diseases are ignored. As you know that the kind of physiologic type is overweight, hypertensive, diabetic people, but a lot of people who have that and don’t have Cushing’s syndrome. So those who do often get – really kind of not the look that they need to look. So I’m going just speculate that unbalance having Novartis out is better than not. I think it makes people aware of the disease, but I don’t really know that with any certainty.

Steve Byrne – Bank of America Merrill Lynch

All right. Thank you.

Joseph K. Belanoff

Thank you, Steve.

Operator

Our next question comes from Alan Vuong [ph] of FireWatch LLC.

Unidentified Analyst

Yeah, it’s indeed Alan Vuong and I now with FireWatch News. Thanks for taking my question and congratulations on a great quarter, Joe.

Joseph K. Belanoff

Thank you, Alan.

Unidentified Analyst

Yeah, can – I want to go back to the first caller, you did great job answering, but I just want to tease out a little bit more on the Cushing’s patients being seen, especially what’s driving your stronger uptick, the endocrinologists seeing milder patients like I know you take me to the woodshed, with the so-called the clinical Cushing’s or is it mostly driven by deeper penetration into the endocrinologist community?

Joseph K. Belanoff

Well, I think that our community are endocrinologist, but you raised sort of an interesting point, which is that you know like, I guess, all illnesses, there is a range of severity. I can tell you at the beginning of our clinical trial, just to have a sort of a starting point; we got every doctor’s biggest train wreck, and I think I kind of understood that because you know, they feel what the heck, some of the medication nothing else is working, let’s give it a try. I do think that overtime patients who have, I don’t think really impact anybody and [indiscernible] really have sub clinical Cushing’s syndrome. I mean anyone with Cushing’s syndrome has a bad disease, but there are people who are not as morbidly ill as we saw at the very beginning.

So I think that we are capturing patients on both at the severe end of the spectrum, where you might have expected, but the market is broadening as it’s become more and more recognized that any symptoms of Cushing’s syndrome, of diagnosed Cushing’s syndrome are potentially life shortening, certainly in terms of the way people’s quality of life is much worse and we are seeing a growth in that area. I think one of the areas of growth to look from 2014. So there’s a group of patients who have a particular type of Cushing’s syndrome caused by what’s called adrenal adenoma. They’re non-cancerous tumors of the adrenal gland that are often found incidentally on MRI with other – when they’re looking for other things. What’s really been found over the last 10 to 15 years is that, previously this was considered sort of a non-diagnosis and then it became something people that are little nervous. I think there is more and more of a recognition among doctors that this is a serious illness and it should be treated.

In fact, you may remember Alan [ph], I know you’re a big journal reader that there was an article from England about patients treated with mifepristone with this form of Cushing’s syndrome and not surprisingly, they do just as well as patients with the patients who had more severe Cushing’s syndrome. and this is a much larger group of patients, not beyond the often limits of course, but it is still a much larger group than the patients with severe illness. We want doctors to be aware that this is an illness that can be treated with our medication and in of course, 2014 really hope to get that message out.

Unidentified Analyst

One more question to address a rumor that’s out there. I want to address the question about the composition of patients in the psychotic depression trial. Did you stick with those indications or are we talking a wider set here? If you talk to people, they are thinking that the drug is only being positioned for severe inpatients versus your aspiration for Korlym to be a general treatment for psychotic depression rather than just restricted to the very worst?

Joseph K. Belanoff

It’s not all a treatment, just for hospitalized patients with psychotic depression, although the patients with psychotic depression are disproportionately hospitalized relative to all patients with depression. Our clinical trial required people to be in the hospital for the first – I believe three days of the study and some of them were already in the hospital, but some were not.

Now, this is kind of an interesting thing of slightly tangent answer to your question, 30 years ago, even higher percentage of patients with psychotic depression were hospitalized and for longer periods of time frankly, but the healthcare system has really pushed those patients out of the hospital. and so there are many, what I’ll describe as walking wounded patients with psychotic depression who are not in the hospital and we very much hope to serve those patients as well if the medicine is approved.

Unidentified Analyst

Thank you very much. Great quarter.

Joseph K. Belanoff

Thank you.

Operator

Thank you. Our next question is from Annabel Samimy of Stifel.

Unidentified Analyst

Hi. This is Josh in for Annabel. I was hoping you can give us an update on the filing and the EU that was expected, I guess this quarter?

Joseph K. Belanoff

Yes and that occurred. So that’s in and it’s now – we are now in that zone of waiting for the 120-day response. So we don’t have any more news for you, but will as the year progresses.

Unidentified Analyst

Okay. and then my final one, in terms of ketoconazole, you guys have been noticing a severe drop post-FDA guidelines?

Joseph K. Belanoff

It’s not something that we really could track, but we do know that when our field force is in the office, it is a topic of interest, if the physicians already know about it and even greater interest if they don’t know about it and we tell them about it, because essentially, for those of you who worked at that warning, it’s not a whole lot of medical information in it that’s new. but one of the things that it specifies is a – I don’t know, even recommendation is a strong enough word, but I’ll call it a recommendation that these patients have their liver function test followed weekly. and that is absolutely not the standard of care for patients who had ketoconazole to this date. so it is a real issue on, I think, for endocrinologists look lingerie as to what you give and a topic of conversation on for our company when we’re there.

As to what the overall uses, I don’t even know essentially how to track that, but I know that prior to our entering into the market, ketoconazole was the most widely used medication, even though it was an off-label medication, and I think that people now have a reason to consider whether that’s the best course of treatment, particularly now that there is an approved medication.

Unidentified Analyst

Okay, thanks.

Operator

Thank you. Our next question comes from Kin Lee of Janney Capital.

Kim Lee – Janney Montgomery Scott LLC

Good afternoon and congrats on a good quarter. I apologize if you addressed this as I jumped on the call a little late, but can you provide us some; I guess, background for going into triple-negative breast cancer? And what kind of data have you seen so far that made you to believe that this drug could have utility in this indication? Thanks.

Joseph K. Belanoff

Okay. Well, Kim, that was not a question asked before. so I’m glad to respond to it. And it has an interesting story behind it, which is that, as I think many of your analysts know that there has been great progress in receptor positive breast cancer, but not much at all sadly in receptor triple-negative – in receptor breast cancer. And just for people who kind – in most of demographics, it’s about 80% have receptor positive breast cancer and about 20% have triple-negative receptor – receptor negative breast cancer.

So it’s a large group of women. it’s probably about 40,000 new diagnoses per year. Now it’s really interesting. I mean, important part of our story is that we have expensive academic collaboration, one of which is with the University of Chicago and what – it’s really very stood investigators noted there as when they gave women with triple-negative breast cancer essentially cortisol agonist. so synthetic cortisol and terms like that [indiscernible] for other reasons, like emesis or swelling in their brain; it actually made their cancer worse. so they went back to the laboratory and began to look at triple-negative breast cancer tumor cells and found that some of them in fact, as we talked about earlier in the call, do express the GR receptor and postulated that if you gave them a GR receptor antagonist, you might be able to actually on cause great apoptosis in combination with chemotherapy.

And in very [indiscernible] publish at this point in a very stepwise progression first in cell culture, then in transgenic animals. They were able to show that that was in fact the case that GR antagonism substantially increased the killer rate of these cells in combination with chemotherapy.

So that it ended again, in collaboration with us, as a human study and those were the results that were released in December. And as you know, there are many cancers sadly we’ve cured in animals, but we can’t cure in people, so the results are not always translatable. But in this initial study, they really seemed that if they were, and in fact, I think that we would have been pleased if we had seen the one or two patients who have gotten the response out of the age group, who they studied, in fact, despite two of them had complete responses.

And I don’t know when we look back on this whether it’s going to be that is – in spite out of 800 or 500 out of 800, that’s what we’re going to find out. But I think the really important takeaway message is this was not a random shot in the dark. There really was a very good scientific rationale and a lot of lead up research by very good researchers to get to this point and I think it really has a – I’ll bet a better than average chance of being successful as we move forward.

Kim Lee – Janney Montgomery Scott LLC

Great. I appreciate that color. Thanks.

Joseph K. Belanoff

Sure.

Operator

And our final question comes as a follow up from Charles Duncan of Piper Jaffray.

Charles C. Duncan – Piper Jaffray, Inc.

Thanks guys for taking the follow-up. I wanted to touch on the selective GR antagonist. You mentioned a couple of INDs coming up and you mentioned a list of potential indications. I’m wondering if you can either tell us what they are or at least tell us how to characterize some of them are – some of them potentially orphan disease indications or how do we think about what you’re going to do next steps with your – in that front?

Joseph K. Belanoff

Thanks for the question. and I haven’t addressed that, so please – and Charles, I’m also pleased you’re still there. I gave you the first question, so you could go home early. but anyway I’m glad to answer this question. The answer is, in some sense the first thing of course, is need to be obvious answer, which is, we will bring – we have approval in Cushing’s syndrome. we hope to have an approval in psychotic depression and eventually, an approval triple-negative breast cancer.

So coming up with successor compounds for those, for mifepristone in those illnesses is always on our mind, mifepristone is a terrific drug, but it is a more general drug than our selective antagonist. it has the quality of progesterone antagonism, which makes both in a broader fashion, and create a series of side effects that we rather avoid.

So those are certainly possibilities, but I think the real answer to your question is that 20 years ago when I was studying this, I felt like I was one of the handful of people with great interest into cortisol activity to disease. In the last 10 to 15 years, this interest has really mushroomed and there’s a lot of interest in both metabolic illnesses, oncologic illnesses beyond triple-negative breast cancer, ovarian cancer and androgen resistant prostate cancer and psychiatric illnesses. As you know, there is a good work in post-traumatic stress disorder, early Alzheime’s disease. So I think that significantly more than the first three indications that we’re thinking about.

Now some of it is actually driven by what the medication to do when we actually bring them through preclinical and then clinical studies. one of the things that’s really been interesting to us is that although all of these medications were designed to be pure cortisol antagonists and they are. they don’t and will act the same and that’s been the very interesting thing to see in the lab, some seem to better at creating insulin sensitivity, some seem to be better at creating weight loss, some get into the brain, some don’t get into the brain and I think you really don’t know what you have exactly until you test it in humans. So I think that broadly and sort of simply, the answer to your question is oncology, metabolic and psychiatric illnesses build up in them are really going to try to match the best fit for each compound.

Charles C. Duncan – Piper Jaffray, Inc.

And is there anything that distinguishes the two as you are looking at as simply put as one enter the brain, one does not, one has different PK. What is the key distinguishing feature that you’re taking to that?

Joseph K. Belanoff

One of the things okay – it’s an interesting question, yes, the first thing we’re really looking at is a compound with potent metabolic effects that would be a fit in a disease like Cushing’s syndrome or anything that’s related to glucose insensitivity. So I think that’s the portion of it, but yeah, I’m highly interested in two other things, one a drug which is as potent in terms of the early oncological studies as a possibility and the other is drugs, which get into the brain. I think that probably all of the listeners now, I’m a psychiatrist by training it’s a longstanding interest in medical research and we do have some compounds, which are potency in those drugs. I think that some of you, who filed the literature, saw the literature in PNAS journal on CORT 108297. We have similar drugs like that. so I have a particular interest in developing one which is centrally acting.

Charles C. Duncan – Piper Jaffray, Inc.

Okay. good deal, thanks for the added color.

Joseph K. Belanoff

Thank you, Charles.

Charles C. Duncan – Piper Jaffray, Inc.

Now, I can get home.

Joseph K. Belanoff

Good, go forward, okay. All right, well, listen, thank you, I’m told you were still out there, really appreciate it and look-forward to talking to you next quarter.

Operator

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

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