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Edited Transcript of CORT earnings conference call or presentation 25-Feb-19 10:00pm GMT

Q4 2018 Corcept Therapeutics Inc Earnings Call

MENLO PARK Mar 1, 2019 (Thomson StreetEvents) -- Edited Transcript of Corcept Therapeutics Inc earnings conference call or presentation Monday, February 25, 2019 at 10:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Gary Charles Robb

Corcept Therapeutics Incorporated - CFO & Secretary

* Joseph K. Belanoff

Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director

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Conference Call Participants

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* Adam Anderson Walsh

Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst

* David George Buck

B. Riley FBR, Inc., Research Division - Analyst

* Matthew Lee Kaplan

Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research

* Pete George Stavropoulos

Cantor Fitzgerald & Co., Research Division - Associate Analyst

* Alan Leong

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Presentation

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Operator [1]

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Good day, everyone, and welcome to the Corcept Therapeutics conference call. Today's call is being recorded. (Operator Instructions) At this time, I would like to turn the call over to Charlie Robb. Please go ahead, sir.

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Gary Charles Robb, Corcept Therapeutics Incorporated - CFO & Secretary [2]

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Good afternoon. Thanks everyone for joining us. Earlier today, we issued a press release announcing our fourth quarter and full year financial results and reviewing our clinical progress. A copy is available at corcept.com. Our full results will be available when we file our annual report on Form 10-K with the SEC. Today's call is being recorded. A replay will be available through March 11 at (888) 203-1112 from the United States and (719) 457-0820 internationally. Passcode 6598298.

Statements during this call, other than statements of historical fact, are forward-looking statements based on our plans and expectations and are subject to risks and uncertainties that might cause actual results to differ materially from those such statements expressed or imply. These risks and uncertainties include, but are not limited to, our ability to generate sufficient revenue to fund our commercial operations and development programs, the protections afforded by our intellectual property, the availability of competing treatments, including generic versions of Korlym, our ability to obtain acceptable prices or adequate insurance coverage and reimbursement for Korlym, and the scientific, regulatory, management and financial risks related to the development of our product candidates. These and other risks are set forth in our SEC filings, which are available at our website and the SEC's website.

On this call, forward-looking statements will include those concerning our 2019 revenue guidance and expected growth in 2019 and beyond; our stock repurchase program, position awareness of hypercortisolism and the selection of Korlym as the best medical treatment for many patients, the timing, cost and outcome of our lawsuit against Teva Pharmaceuticals USA and the recently instituted inter partes review. The clinical attributes of relacorilant, data from the dose-finding portion of our Phase I/II study of relacorilant plus Abraxane and the progress and results of our other research and development programs including the work of independent academic investigators, and our current and planned clinical trials of relacorilant CORT125281 and CORT118335. We disclaim any intention or duty to update forward-looking statements made on this call.

Now our I'll review our financial results. Corcept's revenue in the fourth quarter was $66.8 million, a 25% increase from the fourth quarter of 2017. The increase was due to broad-based organic growth, more physicians in every part of the country prescribing Korlym to more patients. We reiterate our 2019 revenue guidance of between $285 million and $315 million. Our GAAP net income in the fourth quarter was $22 million compared to $98.3 million in the fourth quarter of 2017. As you may recall, our fourth quarter 2017 results included a $76.7 million, one-time, noncash benefit from the recognition of deferred tax assets. Excluding this one-time noncash benefit as well as noncash expenses related to stock-based compensation, use of deferred tax assets, interest on our retired royalty financing obligation and related tax effects, our non-GAAP net income in the fourth quarter was $30.4 million compared to $24.7 million in the fourth quarter of 2017.

Our press release includes a reconciliation of GAAP to non-GAAP net income. Cash and investments were $206.8 million at December 31 compared to $104 million at the end of 2017.

We repurchased 1.1 million shares of our common stock in the fourth quarter at a total cost of $14.8 million. In all of 2018, we repurchased 1.8 million shares at a cost of $23.7 million. Under the currently authorized terms of our stock repurchase program, at December 31, $76.3 million remained available to acquire shares. The timing and size of any future repurchases will be based on market conditions, our stock price and other factors.

I'll now provide a brief legal update. As many of you know, Teva Pharmaceuticals notified us in February of last year that it was seeking approval to market a generic version of Korlym. In March, we sued Teva for infringement for 2 of our patents. Teva moved to dismiss our complaint. At the time, some speculated that Teva's motion was likely to be granted. That was not a realistic view. In October, Teva's motion was denied. In the 11 months since we filed the suit, we've added 4 patents to the litigation. We asserted the last 3 of these against Teva a few weeks ago in a separate lawsuit which, as we expected, the court consolidated with our original lawsuit.

The most recently issued of the patents we've asserted against Teva is the '214 patent, which covers the co-administration of Korlym with medications that are strong CYP3A inhibitors including antiviral, antibiotic, antifungal and antidepressant medications. The warnings and precautions, dosing and administration, drug interactions and clinical pharmacology sections of Korlym's label instruct doctors how to do this safely. The link between the '214 patent and the Korlym label is important. A generic version of Korlym would receive, for all practical purposes, a copy of Korlym's label. Because that label instructs physicians to practice the '214 patent, the generic manufacturer would be inducing patent infringement with every tablet it sells. The '214 patent expires in 2037.

Last Thursday, the court issued its first scheduling order. It extends to the end of this year at which time the parties will propose dates for a Markman hearing, the proceeding at which the judge will hear argument as to what any disputed terms in our patents mean. The timing of events in 2020 and beyond is not certain.

In a briskly moving case, trial would likely take place about a year after the Markman hearing, which here would mean the first quarter of 2021 with a verdict following shortly afterward. Any appeal would likely be resolved 6 months to 1 year after the verdict. Please remember, the timeline I have just described is merely a reasonable estimate. It is agnostic as to whether Corcept will win or lose which is, of course, a matter the court will decide. That being said, we are, for many reasons, confident in our legal position.

Finally, some of you may know that Neptune Generics, a subsidiary of the litigation finance firm, Burford Capital, an entity that does not, to our knowledge, manufacture, sell or distribute any medications, has requested an inter partes review of our '348 patent, 1 of the 4 we have asserted against Teva that concern methods of dosing Korlym. Recently, the Patent Trial and Appeal Board, or PTAB, agreed to let Neptune's IPR go forward. As is true with respect to Teva, we are confident in our legal position and will defend the '348 patent vigorously.

IPR challenges have a predictable schedule. The PTAB should reach its decision in 1 year, at which time the losing party may appeal to the Federal Circuit, which typically adds 6 to 12 months to the process. The earliest we expect final resolution of this IPR is the third quarter of 2020.

In closing, we believe our profits, together with our cash on hand, will be sufficient to fully fund our commercial business, complete development of relacorilant in Cushing’s Syndrome and solid tumors, CORT125281 in castration-resistant prostate cancer and CORT118335 in antipsychotic-induced weight gain and NASH, advance to the clinical and to the clinic additional proprietary selective cortisol modulators and fund our stock repurchase program.

I will now turn the call over to Dr. Joseph Belanoff, our Chief Executive Officer. Joe?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director [3]

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Thank you, Charlie, and thank you, everyone for joining us today. 2018 was a transformative year for Corcept. Our revenue increased by $92 million and our non-GAAP net income increased by $45 million. Our cash nearly doubled to $206.8 million even after we purchased 1.8 million shares of common stock.

Our commercial growth was built on a solid clinical foundation. The increasing number of physicians in all parts of the country who have identified patients with Cushing’s Syndrome and are treating them with Korlym. We expect the number of physicians prescribing Korlym to continue to grow. There are at least 10,000 patients with Cushing’s Syndrome in the United States. In fact, as I've mentioned before, there could be several time -- times that number of patients. Many who could benefit from Korlym have not yet received it.

We took important steps in 2018 to protect and extend our Cushing’s Syndrome franchise. Charlie mentioned the patent that was allowed in December, and which we recently included in our lawsuit against Teva, the '214 patent. I want to remind everyone that this patent is legally significant because it is medically significant. Patients taking Korlym can sometimes benefit from drugs covered by the '214 patent, which includes commonly prescribed antiviral, antifungal, antibiotic and antidepressant medications. The '214 patent and the corresponding instructions in Korlym's label tell physicians how to do this safely. For patients whose health depends on receiving both Korlym and one of these drugs, this is a meaningful medical advance. I'm proud our research made it possible.

Of course, these legal matters should not to obscure the progress we made in 2018 advancing our planned successor for Korlym , relacorilant. As many of you know, Cushing’s Syndrome is caused by a tumor that either produces cortisol or causes the body to produce cortisol. Cortisol is essential for life. There're receptors for it -- glucocorticoid receptors or GR for short, in nearly every tissue type. In a healthy person, cortisol follows a diurnal rhythm falling during the day and into the evening, then rising again as morning approaches. The tumors that cause Cushing’s Syndrome destroy this rhythm. The cortisol they create also overstimulates GR, causing a wide range of serious signs and symptoms that constitute Cushing’s Syndrome.

Korlym treats patients with Cushing’s Syndrome by competitively binding to GR and modulating or turning down the excess cortisol activity that is harming them. Korlym's pivotal SEISMIC study showed that cortisol modulation is very effective. 87% of patients in SEISMIC, as adjudicated by an outside panel of expert endocrinologists, demonstrated significant clinical benefit. Relacorilant shares Korlym's mechanism of action and in its Phase II trial generated comparable efficacy data, results that we are seeking to confirm in Phase III.

Today, we released the summary of the complete Phase II data. We plan to submit these results for presentation at the American Association of Clinical Endocrinologist, AACE meeting, this April. And we're also preparing a paper for publication in a peer-reviewed scientific journal.

I'll briefly describe our results. Relacorilant's Phase II trial enrolled 35 patients at sites in the United States and Europe. The protocol called for each patient to receive a daily dose of relacorilant that increase in 50-milligram increments every 4 weeks. The first 17 patients, the "low-dose cohort," started at a daily dose of 100 milligrams per day then increased, as tolerable, to 150 milligrams and finally 200 milligrams per day. The next 18 patients, the "high-dose cohort," started at 250 milligrams per day, increasing their dose, as tolerable, to 300 milligrams and 350 milligrams, and finally 400 milligrams per day. The data we released today measured patient response using the endpoints for clinical benefit that we're applying in relacorilant's Phase II trial. For comparison, we also applied these endpoints to patients after 16 weeks of treatment in Korlym's SEISMIC study, at which point they were receiving the maximum Korlym dose of 1,200 milligrams per day. Patients in relacorilant's Phase II trial high-dose cohort clearly benefited. 50% of patients with hyperglycemia achieved improved glucose control. 64% of patients with uncontrolled hypertension achieved a meaningful drop in blood pressure. Patients in the high-dose cohort also demonstrated significant improvement along a wide range of other symptoms, including hypercoagulopathy, liver function, insulin resistance, cognition and mood.

The Phase II data demonstrated several of relacorilant's important safety benefits. Some of these were no surprise. As most of you know, Korlym binds to the progesterone receptor, PR for short, giving rise to significant off-target effects, the most notorious of which is termination of pregnancy. In addition, PR affinity causes many women who take Korlym to experience endometrial thickening and vaginal bleeding, adverse events that are manageable, but can be debilitating and cause some physicians and patients to avoid Korlym. As was our intent when we designed the compound, relacorilant does not bind to PR and so does not cause the adverse events arising from PR affinity. In relacorilant's entire course of development, as expected, we have seen none while administering the drug to a significant number of women. 16 of the 18 patients in the Phase II trial high-dose group were women and several of them had previously discontinued Korlym because of its anti-progesterone related side effects.

Relacorilant's Phase II data also demonstrated an additional safety benefit. Relacorilant does not appear to cause any of Korlym's significant off-target effects, hypokalemia, which means low potassium. In many patients Korlym causes cortisol levels to rise sharply. Sometimes the level is sufficient to activate the mineral corticoid receptor, which causes the body to shed potassium. Hypokalemia can cause muscle weakness and change in heart rhythm and can be quite dangerous if not managed properly. Physicians prescribing Korlym must monitor their patients closely for hypokalemia, which occurs relatively frequently. 44% of the patients in SEISMIC experienced. Today, it is a leading cause of patients discontinuing Korlym. Because relacorilant does not elevate cortisol levels to nearly the extent Korlym does, it does not cause hypokalemia.

Our goal now is to confirm relacorilant's benefits in its Phase III trial, which goes by the acronym GRACE, G-R-A-C-E. We plan to enroll 130 patients at 60 sites in the United States, Canada, Europe and Israel. GRACE has a 2-phase design. In the initial open-label portion, all patients will receive relacorilant for 22 weeks. Daily doses will start at 100 milligrams, then increase in 100 milligrams increments as clinically indicated to a maximum daily dose of 400 milligrams. After 22 weeks, patients who exhibit prespecified improvements in glucose tolerance or hypertension will enter a double-blind, placebo-controlled, randomized withdrawal phase, lasting 12 weeks. Half of these patients will continue to receive relacorilant, the rest will be switched to placebo.

The rate and degree of relapse in patients receiving placebo will be measured against the rate and degree of relapse in those continuing medicine.

I will now turn to our oncology program, which in January opened its first Phase II trial. I'll start with some background. In cancers where the tumors express GR, such as ovarian, pancreatic and triple-negative breast cancer, cortisol stimulates genes that prevent apoptosis, the cell death that chemotherapies are meant to provoke. Preclinical and early clinical data suggests that the addition of a cortisol modulator to a chemotherapeutic regimen can cause the chemotherapy drug to achieve its full potential.

As many of you know, we have been testing this mechanism in a Phase I/II trial of relacorilant combined with Celgene's drug Abraxane in patients with solid tumors. Last year at ASCO, we reported that of 7 patients with metastatic ovarian cancer, 4 exhibited durable disease control, including 1 patient with a complete response. As these patients continued in the study, the shortest period of disease control among them reached 8 months, with a patient who exhibited a complete response continuing to do so 13 months after starting treatment. As a reminder, all of these patients have previously failed taxane-based therapy suggesting that the addition of relacorilant had restored the potency of taxane such as Abraxane in treating their illness.

These are highly encouraging results in a disease where there are few good treatment options. Late last year, our investigators voted that sufficient results had emerged to prompt the progression of relacorilant plus Abraxane to further clinical study. In January, we opened a controlled Phase II trial in patients with platinum-resistant ovarian cancer with plans to enroll 180 patients at 30 sites in the United States, Canada and Europe. We'll further -- we'll release further results of the Phase I/II study at the time of the ASCO Meeting this June.

Our Phase I/II trial has also produced encouraging data in metastatic pancreatic cancer. Last year, we reported that 4 of 9 patients had exhibited durable disease control. These are outstanding results in patients with aggressive metastatic disease, all of them have progressed on one or more prior taxane-based treatments. We have enrolled additional patients with the disease and plan to report data and the next steps of our development program a few months from now at the time of ASCO.

Finally, we are also exploring the use of cortisol modulators to treat castration-resistant prostate cancer. Androgens stimulate growth in tumors of the prostate, which is why androgen-deprivation and androgen synthesis inhibition are common treatments. Unfortunately, patients treated with an androgen receptor blocker, such as Pfizer's drug XTANDI, eventually develop tumors that express GR and cortisol becomes the tumors' primary growth factor. Our Phase I/II trial is evaluating whether combining our selective cortisol modulator, CORT125281 with XTANDI, can block this escape route in patients with metastatic disease. We expect to select a dose this year and advance our program to Phase II.

One of our most promising compounds, CORT118335, will enter the clinic next quarter. CORT118335, has shown promise as a treatment for 2 serious and widespread disorders: antipsychotic-induced weight gain and nonalcoholic steatohepatitis, a form of liver inflammation, commonly referred to as NASH that is often a precursor of cirrhosis. At present, there are no good treatments for either indication. Millions of people rely on antipsychotic medications such as Zyprexa and Risperdal to treat psychosis.

The metabolic side effects of these drugs, which include weight gain, hyperglycemia and hyperlipidemia, substantially diminish and likely shorten the lives of many patients. We have demonstrated in the placebo-controlled clinical trials in healthy human subjects that cortisol modulation with Korlym significantly mitigates the metabolic side effects caused by Zyprexa and Risperdal. Unfortunately, Korlym's qualities as an [abortive] fashion have prevented its development and commercialization as a treatment for such a prevalent disorder. Fortunately, CORT118335 is a selective cortisol modulator with no affinity for PR. Because it is not the abortion pill, it can be developed, and if approved, distributed to the millions of patients who could benefit. We are planning 3 placebo-controlled trials of CORT118335 in this indication. We plan to open the first trial next quarter to study the prevention of antipsychotic-induced weight gain in healthy subjects using essentially the same protocols we previously used to test Korlym. The next 2 trials will be in-patients: one will evaluate whether CORT118335 can reverse recent weight gain; the other will study whether it can reverse long-standing weight gain. We will start these trials in the second half of the year as soon as we complete formulation work on the larger tablet sizes these studies will require.

We are also planning a placebo-controlled Phase II trial of CORT118335 as a treatment for NASH. We know cortisol modulation may offer a treatment for NASH. We observed Korlym reversing fatty liver disease in patients with Cushing’s Syndrome. CORT118335 is more potent than Korlym in animal models of fatty liver and fibrosis. We plan to start our trial in the second half of the year, once required tablet formulation work is complete.

This has been a remarkable year for Corcept. We significantly increased our revenue, non-GAAP profits and cash balance. We began repurchasing our common stock. The intellectual property surrounding Korlym is stronger than it has ever been, and our intended replacement for Korlym, relacorilant, generated very promising efficacy and safety data in Phase II and has entered Phase III. The future of our Cushing’s Syndrome franchise has never looked brighter. Our clinical programs have taken significant steps forward.

In addition to relacorilant's Phase III trial in Cushing’s Syndrome, we have opened a controlled Phase II trial in metastatic ovarian cancer and will be in a position very soon to determine our plans in pancreatic cancer. CORT118335 will enter the clinic next quarter as a potential treatment for antipsychotic-induced weight gain, with 2 additional placebo-controlled Phase II trials planned to start later in the year when we also plan to open a placebo-controlled Phase II trial to treat patients with NASH. I'll stop here to answer questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We'll go first to Adam Walsh with Stifel.

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Adam Anderson Walsh, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [2]

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So the first question is just on the article that came out that was kind of negative on Korlym, and I thought you guys did a nice job in refuting that in an 8-K that you put out. And I'm just curious to know when some of that -- some of the allegations were kind of harsh and directed at physicians. Have you seen or heard of any kind of change in Korlym prescribing behavior based on kind of some of the allegations in the report? That's the first question. Then the second question is, just are you aware of any other companies working toward a generic Korlym at this time?

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Gary Charles Robb, Corcept Therapeutics Incorporated - CFO & Secretary [3]

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Sure. So first of all, I really do appreciate the question, even though, of course, obviously, the basis of it is something that is -- I just sort of -- beyond unfair, both to Corcept and more importantly really to the physicians that we have been working with. So the answer is, although it is never pleasant to have someone cast aspersions on your character in print, even if it's in a sort of one-man band, foundation/blog, the answer is, our physicians have not, to my knowledge, been deterred. They continue to prescribe Korlym because for the reasons they prescribed Korlym all along, they thought it was to the benefit of their patients. So no, I haven't seen any impact of it, other than irritation and having one's good name dragged through the mud for no good reason whatsoever. So if I have a little bit of energy behind that, it's because it's just outrageous. So that's the answer to that question. As for another generic entry, no. I mean we would -- first of all, if we had any material news, we will disclose it, but I'm aware of nothing.

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Operator [4]

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We'll go next to David Buck with B. Riley FBR.

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David George Buck, B. Riley FBR, Inc., Research Division - Analyst [5]

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Just -- I know you reiterated the guidance for 2019 which, obviously, coming off a strong 2018 does imply some slowdown in revenue growth year-over-year as we're in 2019. Can you talk a little bit about the impact, if there is any, of patients enrolling in relacorilant trials or competitive trials in Cushing that might be affecting some of the patient counts? And how do you see the dynamic for Korlym this year? There -- are you gaining share? Are you losing share, perhaps to patients that might be on free drug, research drug? And what -- I know you hadn't taken any pricing action earlier in January. Is that sort of the decision for the year? Or would you reevaluate that going into the second half?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director [6]

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Thanks, David. I think I follow your questions in there. And so, just, I want to make sure your -- I can get -- the whole audience understands really what you're asking, which is that we now, obviously, have an ongoing study with relacorilant, at the same time we have our first generation commercial product available to patients. So a couple of things to point out. First is this, the relacorilant study is both in the United States and in Europe. And in fact, in the Phase II study, I think, because Korlym is not available in Europe, enrollment was about 70% at the European sites. I don't know if that will be true in the Phase III study, but certainly they will have a fair proportion of it. Nonetheless, you make a good point. There are places where in fact a patient could in fact -- could have gone on Korlym, could in fact enter the relacorilant study. That certainly is a possibility. Obviously, hard to know in advance how much that happens. But we try to make our best estimate of that in putting together our revenue guidance. So our revenue guidance takes into account that possible phenomenon. I -- was there a second question?

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David George Buck, B. Riley FBR, Inc., Research Division - Analyst [7]

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Yes. So I was just -- about pricing, pricing decision.

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director [8]

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You're right. To date, this year, we have not taken a price increase, which is something that we really look at every quarter. And all I can say is the same answer we've always given you, which is that it's always something we're examining, and obviously, we will announce if there is such a change. But to date, we have not made one, but we analyze that on quarter by quarter basis.

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David George Buck, B. Riley FBR, Inc., Research Division - Analyst [9]

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Right. And maybe if I can sneak one in as well. Joe, when you switched specialty pharmacies, and this is, obviously, brought up not by the same one-man band or blog, but there's some conjecture about the change in specialty pharmacy to Optime and how that might have benefited revenue. Can you maybe give a review of what led to the decision to change specialty pharmacies and what services are being provided that might not have been provided by the old one?

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Gary Charles Robb, Corcept Therapeutics Incorporated - CFO & Secretary [10]

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Yes, David. This is Charlie Robb. I'll answer that one and the answer is, we switched pharmacies because we thought we knew the team that established Optime and we thought they would do the best job working with physicians and patients to get our drug out there and get into the patients' hands who had been prescribed it. That was the motivation for the change. What is the sort of -- I think the implication of -- sort of not your question, but the folks who sort of ask about that switch is that somehow we're using our pharmacy to stuff the channel, so to speak, or somehow inflate or manipulate our revenues. And there are a number of problems with that argument. The fundamental one is, both at Dohmen, our predecessor pharmacy, and at this pharmacy, we sell directly to patients. So there is no channel. Every month as a patient requires Korlym, we ship it to them, we're paid. There is no pharmacy purchasing drug from us that we would dump revenue into. So that's -- first of all our revenue and the transparent -- the pharmacy is sort of a completely transparent. It has no impact on our revenue whatsoever. And separately, to the extent one wonders whether Optime, or Dohmen before it -- or in this case, let's just focus on Optime, is an independent entity. Obviously, our pharmacy is an important relationship for us. And for that reason, it is a matter for our annual audit, by our auditors who look very closely at our relationship to Optime, to ensure that we are independent -- which we are in every sense, legal, financial and otherwise. Does that answer your question?

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Operator [11]

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We'll go next to Charles Duncan with Cantor Fitzgerald.

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Pete George Stavropoulos, Cantor Fitzgerald & Co., Research Division - Associate Analyst [12]

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This is Pete on for Charles. I have a couple of questions on the Phase III GRACE study. I don't know if you can give us a little bit of information about how many sites have been activated? And whether you have identified patients?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director [13]

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Okay. So I think that's an important point too, and I'm glad you give me an opportunity to answer it. Yes, we're really at the very beginning of the study. The U.S. studies are just coming up right now. We're not -- we're going to do that over time and sort of not identify the specific sites which have come up, as they've come up, cause us to keep updating it. The European sites are not yet up. They will expect them to be up in the second quarter, and we will go from there.

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Pete George Stavropoulos, Cantor Fitzgerald & Co., Research Division - Associate Analyst [14]

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Okay. And for the randomized controlled portion of the study, how many patients do you believe is like minimally required in order to be properly powered?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director [15]

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Yes. So the answer is somewhere between 65 and 70.

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Operator [16]

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We'll go next to Matt Kaplan we Ladenburg Thalmann.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [17]

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I wanted to focus on -- I wanted focus in on the Teva litigation a little bit. And specifically, what the 2 -- the newly issued '214 patent kind of gets you in terms of that litigation beyond the, I guess, the 2 initial patents and the 3 other patents that are involved in that litigation?

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Gary Charles Robb, Corcept Therapeutics Incorporated - CFO & Secretary [18]

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Well, this is Charlie, Matt. I'll answer that. So without commenting on the other patents, right. I think that the difference -- the one quality the '214 patent has, that the other patents do not, is a direct read on the Korlym label. And that is considered by many people to be an especially powerful thing and that's really the difference. It's the first of our patents that has that express connection. And that's really about all I can say.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [19]

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Okay. And then in terms of the sequence of the next steps in that litigation, you mentioned the Markman hearing. When do you think that will occur? And then, I guess I missed the timing of the potential trial, if that happens.

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Gary Charles Robb, Corcept Therapeutics Incorporated - CFO & Secretary [20]

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Sure. Well, the schedule only goes to the Markman hearing, which is -- so, and doesn't go to the Markman hearing, rather. The schedule ends at December 30 of this year, at which date, we and Teva have to propose our dates for the Markman hearing. Now, so after that, if timing after that, the best we can give is sort of typical timing. So with the proposed dates submitted at the end of the year, typically, the hearing would be held not too long after that. So it would not be unusual, for example, for it to be in January, perhaps February. And then, again, just speaking typically, trial would take place about 1 year after the hearing, which is why -- so we're talking January or so of 2021.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [21]

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And just to dig into your pipeline and the timing of the GRACE study, I guess it's early on in that study, but I guess you had mentioned previously that it would take you, roughly, 2 years to complete that study. Is that still what your thoughts are?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director [22]

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Yes. I mean, again, I'll just sort of run the numbers for you, Matt, just to make people aware. So I said, we had 60 sites that we expect to come up for the study. It's about 130 patients. So it's essentially 2 patients per site. The period of study really in total is approximately 9 months. And so that's our best estimate at this point. Obviously, we're at the very beginning of that. We'll know better as it's going along, but we have the SEISMIC study and the Phase II study from which to base our information. But I can just tell you, we just finished an investigator's meeting. There's a lot of enthusiasm. So a lot of it is based on what we saw in the Phase II study. So we're going to work as hard as we can to make that go as quickly as we can because we really do think that relacorilant has some significant advantages that Korlym doesn't. And we're really anxious to bring the medicine to the market as quickly as we can.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [23]

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Right. And then just a question on your pipeline and, I guess, specifically thinking about the Phase I/II data that we -- you're anticipating at the upcoming ASCO meeting. What should we look for at that data in terms of an update, incremental information from prior ASCO?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director [24]

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Yes, essentially, it's the information, which has been added since last year. Now some of it, in some sense, got kind of given away because the investigators from the ovarian cancer study have already voted based on that data to proceed to the Phase II study. So obviously, they saw sufficient information to think that it controls really substantial study -- 180-patient study was warranted and that study has begun. But yes, the specific answer is essentially the update in information in that Phase I/II study.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [25]

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Okay. Fair enough. And that would drive the decision in terms of initiating additional work in the pancreatic setting?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director [26]

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Yes. As I said, in ovarian cancer, it was very clear. We still are collecting the last data in patients with pancreatic cancer. But maybe it's worth just -- if you're interested, just a little bit of detail on that. Basically, this -- the information we've seen so far have been very potent responses in individual patients. That does not prove that the drug works. I mean that's great for those individuals, but there's no comparator group with that. Ovarian cancer, it's easy to form a comparator group, that there's known sort of what late line therapy might look like and adding our drug to it or not is actually -- produces a distinct result. It's a little tougher in metastatic pancreatic cancer because sort of sadly sort of end-stage, nothing really works. And basically the patients who are -- entered into our study, their choices were essentially hospice or our study. There wasn't much else for them to offer. And in order for the data to be good enough to really proceed to a study that really would be our pivotal study is a big goal. And that's really what we're analyzing right now. The last few patients are in that. We, obviously, will take a look at that with a hard eye and see where we are. But it isn't that stage and these are cancers -- these are particular cancers are one where, unfortunately, there isn't a lot else for these patients and that's a factor in decision as to what we do.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [27]

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Okay. Great. Fair enough. And then last question in terms of the Phase I/II of 281 plus XTANDI in the prostate cancer setting. When can we see some initial data from that?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director [28]

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Well, we're hoping that we'll actually be able to determine the dose. That's really the portion of the study right now and then enter Phase II later in the year. So I can't tell you because it's not done yet. But I'm itching to see all those results myself and getting on to the next portion of the study.

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Operator [29]

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We'll go next to Alan Leong with BioWatch News.

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Alan Leong, [30]

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I wanted to ask a couple of questions about the antipsychotic-induced weight gain. And it's exciting that you positioned 3 differentiated Phase II trials. Joe, it's been difficult for previous drugs to get traction here and they too looked at the same 3 conditions; one, weight gain reversal; two, prevention; and three, over an array of atypical antipsychotics. Here's my question, can you comment where it's been particularly difficult to achieve treatment effects?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director [31]

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Alan, I apologize if I didn't hear everything you said, but is it why other drugs have not worked so well? Is that the question?

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Alan Leong, [32]

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Yes. Especially looking at -- they're trying to achieve reversal, prevention and do it over a range of antipsychotics. Where have they fallen short?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director [33]

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I think I understand the question. Yes. Well, just to back up a little bit for context. I mean this really is a thorny problem. I think that many of you know -- and I know, Alan, you know, that I'm a psychiatrist by training. I actually still see the occasional patient and these medications, while they are terrific in terms of reducing psychosis, all have this metabolic Achilles heel where they cause substantial weight gain, insulin insensitivity and really I think a very diminished or shortened life for these patients and these patients must take the medication. So it's really is a dilemma. And we've been working on this frankly for a very long time. And one of my greatest disappointments frankly at Corcept was that as well as Korlym worked, there was no path forward for it because of the notoriety of the drug as the abortion pill and that was really a very frustrating thing. As you know, we published all of that information. It's in peer-reviewed journals, but there just wasn't a path forward for Korlym. And we thought that GR antagonism, GR modulation, really was an effective treatment. We saw it in in animals. We saw it in the first studies in humans, but it really took getting to the second generation of molecules that weren't the abortion pill to really go forward. Now as to why other people's drugs haven't worked so well, I don't really know that. I don't really know the answer to that, but I will second what you've said. It's been unfortunate as a practitioner to see that the other drugs have not worked very well. And so just in all fairness, what we have so far are really 2 important things. One, we have the actual human data in controlled studies with Korlym indicating a significant effect size and a significant clinical effect. And two, I can tell you that in the animal models, CORT118335 is an immensely potent compound, significantly more potent than Korlym and that's a good sign. We don't have information in humans yet. We'll be getting that as the year goes along and then on to next year, and my hope is that we will be able to reproduce what we've seen in animals and what we've seen with Korlym, but only time will tell that. We have not yet treated the first patient with antipsychotic-induced weight gain with this medication.

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Alan Leong, [34]

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How would an FDA label -- and really, how does the FDA overall view look? Would it differentiate reversal versus prevention? Or is it just plain overall mitigation? Or are we really too early in the ball game for the FDA to have a view?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO, & Director [35]

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Well, the answer is that -- before I answer that specifically, let me sort of differentiate things because I think this is an important thing people need to think about. This is very different than a weight gain prevention program or weight gain or loss program that's essentially in the general population. This is really for essentially something that physicians have induced by giving another medication, which their patients are required to take. And I think the FDA really looks at that in a very different way. Now, I think that it would be wonderful if the way the medication worked would be to not only prevent weight gain, but actually reversed the weight gain that these medications are causing. And we've been able to show that in animal models that this class of drugs, and particularly CORT118335, does both. But before we really talk about how the FDA is going to deal with our specific program, we really need to generate human data, and obviously, we don't have that so far.

Well, listen, thank you all for calling in. Appreciate everyone's time today and look forward to updating you as 2019 goes along. Thanks.

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Operator [36]

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And this does conclude today's conference. We thank you for your participation. You may now disconnect.