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Edited Transcript of CORT earnings conference call or presentation 9-May-19 9:00pm GMT

Q1 2019 Corcept Therapeutics Inc Earnings Call

MENLO PARK May 20, 2019 (Thomson StreetEvents) -- Edited Transcript of Corcept Therapeutics Inc earnings conference call or presentation Thursday, May 9, 2019 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andreas Grauer

Corcept Therapeutics Incorporated - Chief Medical Officer

* 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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* Matthew Lee Kaplan

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

* Neil Eric Carnahan

Stifel, Nicolaus & Company, Incorporated, Research Division - Associate

* Pete George Stavropoulos

Cantor Fitzgerald & Co., Research Division - Associate Analyst

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Presentation

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Operator [1]

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Good day, and welcome to the Corcept Therapeutics Conference Call. Today's conference is being recorded. (Operator Instructions) At this time, I would like to turn the conference 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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Thank you. Good afternoon, everyone. I am Corcept's Chief Financial Officer. Thank you for joining us. Earlier today, we issued a press release announcing our first quarter financial results and reviewing our clinical progress. A copy is available at corcept.com. Complete financial results will be available when we file our Form 10-Q with the SEC. Today's call is being recorded. A replay will be available through May 23, at (888) 203-1112 from the United States and (719) 457-0820 internationally. The passcode will be 4773625.

Statements made during this call, other than statements of historical fact, are forward-looking statements, which are based on our current plans and expectations and are subject to risks and uncertainties that might cause actual results to differ materially from those such statements express 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 availability and competitive viability of competing treatments, including generic versions of Korlym; our ability to obtain acceptable prices or adequate insurance coverage and reimbursement for Korlym; and risks related to the development of our product candidates, including regulatory approvals, mandates, oversight and other requirements. 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 include those concerning our 2019 revenue guidance and our expected growth in future years; our stock repurchase program; physician awareness of hypercortisolism and the selection of Korlym as the optimum medical treatment for many patients; the timing, cost and outcome of our lawsuit against Teva Pharmaceuticals and the challenges to our intellectual property before the Patent Trial and Appeals Board; the scope and protective power of our intellectual property; the clinical attributes of relacorilant; the progress, timing, design and results of our development programs, including the GRACE trial as well as the other current and planned clinical trials of relacorilant, CORT125281, which we will from now on refer to by its newly approved generic name exicorilant, and CORT118335, which we'll from now on refer to by its newly approved generic name, miricorilant; final acceptance of the European Medicines Agency's recommendation of Orphan Drug designation for relacorilant; and the benefit of Orphan Drug designation in the European Union and the United States. We disclaim any intention or duty to update forward-looking statements.

Corcept's revenue in the first quarter was $64.8 million, a 12% increase from the first quarter of 2018. We reaffirm our 2019 revenue guidance of $285 million to $315 million.

Our fully diluted GAAP net income in the first quarter was $0.15 per share compared to $0.14 in the first quarter of 2018. Excluding noncash expenses related to stock-based compensation, use of deferred tax assets and related income tax effects, fully diluted non-GAAP net income in the first quarter was $0.20 per share compared to $0.19 per share in the first quarter of 2018. A reconciliation of GAAP to non-GAAP net income is contained in our press release.

Our cash and investments at quarter end were $215.7 million compared to $206.8 million at December 31, 2018. We repurchased 1.2 million shares of common stock in the first quarter at an average price of $11.61 per share at a total cost of $13.6 million. $62.8 million remains available under the currently authorized terms of our stock repurchase program. The timing and size of any future repurchases will be based on market conditions, our stock price and other factors.

We believe our profits together with our cash on hand would be sufficient to fully fund our commercial business, complete development of relacorilant in Cushing's syndrome and solid tumors, complete development of exicorilant in castration-resistant prostate cancer and miricorilant in antipsychotic-induced weight gain and NASH, advance through the clinic additional proprietary selective cortisol modulators and fund our stock repurchase program.

Now I'll provide a brief legal update. As many of you know, in February of last year, Teva Pharmaceuticals notified us that it was seeking approval to market a generic version of Korlym. In March of last year, we sued Teva for patent infringement. Teva moved to dismiss our complaint. The court denied Teva's motion as we expected it would. In February of this year, the court issued a scheduling order covering planned activities through the end of 2019.

According to the order, by the end of this year, the parties are to propose dates for a Markman hearing at which the judge will hear argument regarding the meaning of any disputed patent terms. The timing of events after that is uncertain. 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 or so with a verdict coming shortly afterward and any appeal of that verdict being resolved another 6 months to 12 months after that.

Please remember that this time line is only an estimate and says nothing about which party will ultimately prevail, which, of course, the court will decide. But as we have said from the start, patent disputes are complex and taking a long time to adjudicate. A dispute with Teva is no exception. An example of this complexity is Teva's petition filed earlier this week for what is called a post-grant review of our recently issued '214 patent before the Patent Office Trial and Appeals Board, or PTAB.

As you may recall, the '214 patent covers methods of co-administering Korlym with our strong -- with strong CYP3A inhibitors, including antiviral, antibiotic, antifungal and antidepressant medications. It expires in 2037. Teva's petition filed on May 7 is not unusual, like inter partes reviews, commonly referred to as IPRs.

Post-grant reviews follow a predictable time line. The PTAB will decide within 6 months from now whether to institute a post-grant review. If it agrees to institution, the PTAB should reach a final decision about a year after that, November of 2020. The losing party may appeal to the Federal Circuit, which typically adds 6 months to 12 months to the process.

Finally, you may recall that Neptune Generics, a subsidiary of the litigation finance firm, Burford Capital, has initiated before the PTAB an IPR of our '348 patent, 1 of the 4 we've asserted against Teva concerning methods of dosing Korlym. The PTAB should reach its decision in February of next year, at which time the losing party may appeal to the Federal Circuit, which as I've said, typically takes 6 months to 12 months. The earliest we expect final resolution of Neptune's IPR is the third quarter of 2020.

With respect to both Teva and Neptune, we are confident in our legal position, and we'll defend our intellectual property vigorously.

I'll 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. While our Cushing's syndrome business continues to add prescribers and ship more Korlym to more patients, please note that our revenues declined from the fourth quarter of last year to the first quarter of this year.

As some of you know, insurance companies typically require patients receiving orphan medications such as Korlym to secure reauthorization of insurance at the start of each year. We do what we can to help patients and physicians surmount this annual administrative obstacle, and we provide free Korlym until coverage is restored.

Nonetheless, our revenue was reduced. It's further reduced by the statutory requirement that we cover a portion of the donut hole in our patient's Medicare Part D insurance plans, a gap in coverage most patients experience in the first quarter. This year, our mandated portion increased from 50% to 70%.

In prior years, price increases at the start of the year often offset these revenue losses. The impact was more noticeable this year because we did not increase Korlym's price. This quarter's revenue decline obscures our commercial progress. We are working with more physicians and shipping more Korlym to more patients. We remain confident in our revenue guidance of $285 million to $315 million for 2019 and expect significant growth in the future.

Let me pause now for a brief and pleasant housekeeping note. As some of you know, Korlym is the first company to advance nonsteroidal selective cortisol modulators to the clinic. Led by our Senior Vice President of Research, Hazel Hunt, we invented this entire class of compounds. About a year ago, the international and the United States regulatory authorities determined that the name of every molecule in this class would end with the syllables corilant, in the same way that other drug classes end with mab or quinolone.

The name of every nonsteroidal cortisol modulator that is ever developed, no matter who develops it, will end with corilant. More than a year ago, what was originally CORT125134 became relacorilant. Now the clinical advancement of CORT125281 and CORT118335 merits giving them their own names. CORT125281 is now exi, E-X-I corilant. CORT118335 is now miri, M-I-R-I corilant. We are proud to have created an entire class of drug candidates with the potential of great therapeutic benefit. It is a rare accomplishment that underscores the uniqueness of our science.

Our confidence in our Cushing's syndrome franchise is based on 2 simple facts. Korlym is a very effective treatment for hypercortisolism and there are many patients who could benefit from Korlym who have not yet received it. It is widely accepted that there are at least 10,000 patients with Cushing's syndrome in the United States who are candidates for medical therapy. Recent research suggests that there may be several times that many.

That is why we expect our commercial and clinical investments to generate returns for years to come. As physicians become more aware of the true extent of hypercortisolism and the bad health outcomes associated with it, it will screen more patients for the disorder and will conclude that for many patients, cortisol modulation with Korlym would be the optimal treatment. The clinical results we have obtained so far suggest that our planned successor to Korlym, the selective cortisol modulator relacorilant, will greatly expand the number of patients for whom cortisol modulation is the optimum choice.

For all its advantages, Korlym can cause adverse events that sometimes lead physicians and patients to discontinue treatment or avoid Korlym altogether. Korlym binds the progesterone receptor, PR for short, which makes it in an abortifacient that can cause endometrial thickening and vaginal bleeding in some women regardless of their age.

Korlym also causes cortisol levels to rise in both men and women, sometimes sharply. A frequent result of this cortisol rise is hypokalemia or low potassium, a condition which can be life-threatening if not noted and treated. To prevent hypokalemia, physicians often prescribe spironolactone, a potassium-sparing diuretic. Spironolactone is effective but can cause its own adverse events, some of them serious. Spironolactone lowers androgen levels in men and can cause gynecomastia or breast development and sexual dysfunction.

44% of patients in Korlym's pivotal trial experienced hypokalemia. So Korlym's label instructs doctors to check their patients' potassium levels every few weeks. Hypokalemia is manageable with close attention, but it remains a leading cause of Korlym discontinuation, particularly in patients whose physicians are prescribing for the first time. And it is an appropriate source of concern for both patients and physicians.

The reason relacorilant may be a benefit to more patients than Korlym is that it is more selective than Korlym. Like Korlym, relacorilant treats the symptoms of Cushing's syndrome by binding to the glucocorticoid receptor, GR for short, and reducing the excess cortisol activity that causes the disease. Relacorilant does not bind to PR. It is not the abortion pill. It does not cause endometrial thickening or vaginal bleeding.

Relacorilant's affinity for GR but not PR is a major medical advance, but it appears not to be relacorilant's only advance. Unlike Korlym, relacorilant does not cause sharp rises in cortisol or ACTH levels. As a result, in its clinical testing, it has not caused hypokalemia, which as I mentioned, is a leading cause of Korlym discontinuation and the reason for constant vigilance and anxiety on the part of patients and physicians.

I base these conclusions on relacorilant's preclinical and clinical data, including the positive results of relacorilant's Phase II trial, which we presented last month at the American Association of Clinical Endocrinologists Annual Meeting in Los Angeles.

To briefly summarize, patients in the trial demonstrated clinically meaningful improvements in the key endpoints of glucose control and hypertension and in important secondary endpoints including weight loss, liver function, coagulopathy, cognitive function, mood and quality of life. Relacorilant was well tolerated. The most common adverse events were those associated with the reduction in excess cortisol activity, back pain, headache, nausea and edema that usually resolve with continued treatment. As expected, relacorilant did not cause vaginal bleeding. In fact, there were several women in relacorilant's Phase II trial who had dropped off of Korlym because of abnormal vaginal bleeding. There are no instances of drug-induced hypokalemia.

The recent recommendation by the European Medicines Agency's (EMA's) Committee for Orphan Medicinal Products that relacorilant receive orphan designation in Europe was based on its finding that relacorilant's Phase II data constitute plausible evidence of relacorilant's efficacy and potential to offer significant clinical benefit compared to already approved treatments, which in Europe included ketoconazole, metyrapone and pasireotide. In its notice letter, the committee stated and I quote directly, "The sponsor, that is Corcept, has provided clinical data to demonstrate that the product can reduce blood pressure and improve control of hyperglycemia in patients who are not adequately managed by currently authorized products. The committee considered that this constitutes a clinically relevant advantage."

Orphan Drug designation in the Eastern Europe -- in the European Union provides regulatory and financial incentives, including 10-year market exclusivity upon approval compared to 7 years in the United States. Orphan exclusivity also includes protocol assistance, reduced fees and access to the EU's centralized marketing authorization procedure.

As you may remember, relacorilant had already received Orphan Drug status for Cushing's syndrome in the United States in October 2018. Those of you who are interested can review relacorilant's Phase II data on our website, corcept.com. Look in the Events section of the Investors tab. Relacorilant's Phase III GRACE, G-R-A-C-E, trial is underway. We plan to enroll 130 patients at 60 sites in the United States, Canada, Europe and Israel.

I will now turn to our oncology program, which is based on a few important insights. The first insight is that in tumors that express GR, cortisol simulation suppresses the programmed cell death known as apoptosis. Since chemotherapy drugs kill tumors by promoting apoptosis, this affected cortisol is harmful. Our hypothesis, which originated with investigators at The University of Chicago, is that adding a cortisol modulator to a chemotherapeutic regimen will turn down cortisol's anti-apoptotic effect and allow chemotherapy to achieve its full potential.

We have been conducting a Phase I/II trial of relacorilant in combination with nab-paclitaxel to Celgene's drug Abraxane to treat a range of solid tumors. Data from this trial has been encouraging.

At last year's ASCO conference, we reported intriguing results in individual patients with metastatic ovarian cancer, including one patient with a complete response. These patients had previously failed taxane-based therapy, suggesting that the addition of relacorilant restored Abraxane's potency. The data presented at ASCO, combined with additional patient results through the year, led our investigators to recommend that we begin a randomized placebo-controlled study of relacorilant plus Abraxane in platinum-resistant ovarian cancer. We initiated that study in the first quarter. Our plan is to enroll 180 patients at 30 sites in the United States, Canada and Europe.

The responses of individual patients with metastatic pancreatic cancer in our Phase I/II trial have also been noteworthy. Our trial has continued to enroll patients with this indication. We will present our data at the 2019 ASCO conference next month, where we'll also discuss our next steps in pancreatic cancer.

Cortisol modulation may also treat patients with metastatic prostate cancer. Androgens stimulate growth in tumors of the prostate, which is why androgen deprivation has been the standard treatment for many years. Investigators at The University of Chicago and Memorial Sloan Kettering have shown that prostate tumor cells treated with androgen deprivation agents such as enzalutamide, Pfizer's drug XTANDI, immediately shift their growth response to cortisol stimulation. Our hypothesis, which again originated with investigators at The University of Chicago, is that adding a cortisol modulator for androgen deprivation therapy will block this tumor escape route.

We are conducting a dose-finding study of our proprietary selective cortisol modulator, exicorilant, formerly CORT125281, combined with XTANDI to treat patients with castration-resistant prostate cancer and expect to determine the optimal dose in the second half of this year. Investigators at The University of Chicago are leading 2 controlled Phase II trials in this indication, when examining Korlym plus XTANDI and the other relacorilant plus XTANDI. We hold the intellectual property covering the use of these combinations in this disease.

I will conclude with the discussion of our program in metabolic disorders, which recently took an important step forward. Preclinical and clinical data shows that cortisol modulation may play a role in treating metabolic disease. We are seeking to advance therapies for 2 disorders: weight gain caused by antipsychotic medications and nonalcoholic steatohepatitis, or NASH.

Millions of patients rely on antipsychotic medications to treat severe psychiatric illnesses such as schizophrenia and bipolar disorder. These medications are effective, but almost all of them cause serious metabolic side effects, including weight gain, hyperglycemia and hyperlipidemia. These effects shorten the lives of many patients, most of whom die from cardiovascular disease. There are no FDA-approved treatments for the adverse effects of these drugs, drugs which these patients must take to maintain their mental health.

Some years ago, we demonstrated in placebo-controlled clinical trials in healthy subjects that cortisol modulation with mifepristone, the active ingredient in Korlym, significantly attenuates the metabolic side effects of 2 commonly prescribed antipsychotic medications, Zyprexa and Risperdal. These results were published in the journals Advances in Therapy in October 2009 and Obesity in December 2010.

Sadly, we could not bring Korlym forward for this use because its status as the abortion pill makes broad distribution for a common disorder impossible. Our selective cortisol modulator, miricorilant, formerly CORT118335, is even more potent than Korlym in preclinical models of antipsychotic-induced weight gain, and because it does not bind to PR and is not the abortion pill, would be suitable for a widespread distribution if it proves to be effective.

In April, we began dosing subjects in the first of 3 planned clinical trials in this indication. This first trial is similar to the 2 trials we conducted with mifepristone. It is a double-blind, placebo-controlled study in which healthy subjects will receive olanzapine, the generic form of Zyprexa, every day for 2 weeks together with either miricorilant or placebo. The trial's primary endpoint will be prevention of weight gain. We expect to have data from this trial late this year.

In the second half of the year we are planning 2 double-blind, placebo-controlled Phase II trials. One will evaluate whether miricorilant can reverse recent antipsychotic-induced weight gain. The other will evaluate miricorilant for the reversal of long-standing weight gain.

NASH is a serious disorder characterized by fatty liver, liver inflammation and fibrosis. It is precursor to cirrhosis. It afflicts millions of people in the United States, and there is no FDA-approved treatment. Mifepristone is potent in animal models of this condition. In addition, Korlym appears to have reversed fatty liver disease in patients with Cushing's syndrome. In preclinical studies, miricorilant is more potent than Korlym in preventing and reversing these conditions. Based on these data, we plan to initiate a double-blind, placebo-controlled Phase II trial to patients -- in miricorilant to patients with NASH in the second half of 2019.

To recap, our Cushing's syndrome franchise continues to grow. We reaffirm our 2019 revenue guidance of $285 million to $315 million and continuing to invest in the growth of our franchise, which we expect to significantly expand should our relacorilant development program succeed.

Our oncology program continues to advance. Following striking early clinical data in patients with advanced ovarian cancer, we are enrolling patients in 180-patient, controlled Phase II trial of relacorilant plus Abraxane. We will present additional data from our Phase I/II trial at the ASCO Meeting next month, and we'll also discuss there our plans in metastatic pancreatic cancer, another disease in which we have generated encouraging data. In the second half of this year, we expect to determine an optimal dose of exicorilant plus XTANDI in patients with castration-resistant prostate cancer.

Finally, a true milestone, our metabolic program is now in the clinic. We are dosing subjects in a placebo-controlled trial of miricorilant as a potential treatment for antipsychotic-induced weight gain and plan 2 additional placebo-controlled Phase II trials for the second half of the year. In the second half of the year, we also plan to start a placebo-controlled Phase II trial of miricorilant 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) So we have a question from Matt Kaplan, Ladenburg Thalmann.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [2]

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I guess a question for Charlie. I just wanted to dig in a little bit more to the litigation with Teva and kind of the next steps in that process and I guess specifically the new announcement in terms of the post-grant review filed by Teva for the '214 patent. Can you give us a little bit of detail in terms of what that process looks like and your position there?

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

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Sure, sure. Well, just to give a little bit more background for folks who don't follow this perhaps as closely as we do, so we are litigating in federal court where we have alleged against Teva infringement of our -- of certain of our patents. The -- what Teva has done is to also challenge one of the -- to challenge itself one of the patents -- or attempt to challenge one of the patents from that litigation in an administrative proceeding. So after a patent is issued, anyone can challenge that patent for a period of 9 months after issuance by going to the Patent office -- Trial and Appeals Board and asking for a post-grant review, where the Patent Trial and Appeals Board will review and determine whether they think the patent or some of its claims are valid or not.

So the process is like this. Teva requested this -- that this review be made. The Patent Trial and Appeals Board will spend in the next 6 -- within the next 6 months will determine whether they're going to accept that or not. If they determine that Teva is not likely to succeed on the merits, they will reject the institution and will just return proceedings to district court.

So what to expect is, within 6 months, a decision by the Patent Trial and Appeals Board whether this post-grant review will proceed. If they do decide that it will proceed, we will have a decision from them about a year after that. So that's 18 months from now. And then however they decide, the losing party has the right to appeal the decision to the Federal Circuit Court of Appeals, which will add another 6 months to 12 months to the process. We're talking about a 2 or 2.5-month -- 2.5-year procedure sort of soup to nuts.

The thing I want to stress really is that this kind of maneuver by Teva is exactly how these disputes play out. There are multiple forms that folks can take advantage of, and they do. And so when this challenge came in, it was by no means a surprise to us. We're -- other than I can't comment on the merits of it beyond saying we're confident in our legal position and we'll defend our patent vigorously. But this is very much how these disputes are fought, and I think everyone should expect as this litigation proceeds that these kind of maneuvers will be -- will take place. It's just part of the -- part of how they -- how it all works.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [4]

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I guess, for Joe, a question about the GRACE study and how that's enrolling. And give us a sense in terms of the timing for a potential outcome for obviously this Phase III trial in Cushing's syndrome.

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [5]

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Yes. Matt, I'd be glad to answer your question, but I actually want to use this is an opportunity to introduce you to Andreas Grauer. Andreas is our Chief Medical Officer, who joined us about 3 months ago from Amgen, where he'd been the Vice President of Global Development. And he had been responsible for many programs and all aspects of many programs as they work their way to the finish line. So please meet Andreas. And Andreas, if you'd like to answer that question.

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Andreas Grauer, Corcept Therapeutics Incorporated - Chief Medical Officer [6]

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Yes. Matt, pleasure to meet you over the phone and over the line. The GRACE study is progressing well. We have been able to open sites both in the U.S. as also now starting to open sites in Europe. And we're excited to have our European investigator meeting coming up soon in June, which will probably jump-start the enrollment there in Europe even further than it's already started right now.

And you may recall that in the Phase II study of relacorilant, we actually recruited approximately 70% of the patients in Europe because they do not have a treatment like Korlym available there for the management of the patients and therefore are even more interested in participating in the trial. So we're progressing well. We're on track so far with what we've previously communicated. And so we'll obviously keep you posted on the progress there.

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [7]

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It's still nice to talk to you, Matt, even though I put Andreas on.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [8]

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I guess final question in terms of the upcoming ASCO Meeting and data that's expected there. What should we be looking for from that Phase I/II trial?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [9]

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Yes, I'll take this. As you may remember, we presented data at last year's ASCO conference. And in some sense, this is really an update of that. That study has continued. Now a portion of it, sort of the punch line has already been spoken. The data that was produced at last year's ASCO with the additional patient data from the end of the year really got our investigators in ovarian cancer to a place where they said it's time to move forward. And we have already begun that. But you'll see that additional data as well. You'll also see the data which was produced over the last year both from the patients who were already on treatment at last year's ASCO Meeting for pancreatic cancer and those who came on in the last 12 months.

But there are also interesting things. And as long as you're asking, this was a Phase I/II study that allowed essentially all solid tumors that were GR positive, that had the possibility for cortisol modulation. And you'll see the first data in those tumors as well. So it will be a range of things. But early stage. Remember, this is just the beginning of it. These aren't controlled studies, but you'll get to see where the science has taken us over the last year.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [10]

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Great. Great. And maybe one more before I jump back in the queue. Give us a little bit more detail on 335, I guess it's called miricorilant now, in terms of the antipsychotic weight gain study and what we should be looking for in terms of impact on weight gain on these atypical antipsychotics.

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [11]

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Well, I guess what's really exciting for us is this is a proprietary compound, and it's the first study in patients. It did very well in Phase I, but of course, that doesn't really give you indication of whether that's going to work in a clinical disorder. The study is -- it's actually now running. Dosing has already taking place. And it's -- a portion of it is already completed. It is in patients -- it is in normal people who have been introduced to Zyprexa and then put in the study where they're either being treated with Zyprexa plus miricorilant or Zyprexa alone.

And obviously, the reason we're doing the study is to find out where it goes. But I'd just refer you back to the studies that we did with Korlym and Zyprexa, the ones from really almost a decade ago. And there was a pretty even -- in a study of essentially 50 to 100 patients, it really was a striking difference in a 2-week period between those who were on a combination drug and those who were on Zyprexa alone.

And so we don't know exactly how this is going to go. Preclinical models would indicate that miricorilant is equal or more potent than Korlym was, but that's why you do the experiments. And we're going to be very excited to see those results. And we'll have them basically by year-end.

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Operator [12]

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We will now take our next question from [Falcon] Duncan from Fitzgerald.

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Gary Charles Robb, Corcept Therapeutics Incorporated - CFO & Secretary [13]

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I think that's Chaz Duncan or someone working with him.

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

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This is Pete Stavropoulos on for Charles. Can you hear me?

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

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Yes, we can hear you.

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Pete George Stavropoulos, Cantor Fitzgerald & Co., Research Division - Associate Analyst [16]

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So I've got a couple of questions about relacorilant in Cushing's. Do you think there will be a need for a longer-term follow-up study?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [17]

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Well, I think what we're going to do is we're going to have an extension study. In fact, we already have for the people who are in the Phase II study. And yes, we plan an extension study as part -- in the same respect that we did with Korlym when it was approved. In fact, I can tell you just as a small aside, there are actually some patients from the Korlym study 8 years ago who are actually still on medicine who passed through the pivotal study and into the extension study and then into commercial use. So yes, we're very interested in following those patients for as long as possible.

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Pete George Stavropoulos, Cantor Fitzgerald & Co., Research Division - Associate Analyst [18]

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All right. And beyond the current Phase III, is all the work completed or being completed to support an NDA like tox studies, manufacturing scale-up and commercial batches?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [19]

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Much is completed and much remains to be done. But we expect that by the time we have the NDA, we know what we need to do, and it all will be completed.

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Pete George Stavropoulos, Cantor Fitzgerald & Co., Research Division - Associate Analyst [20]

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And how long do you think after we see the Phase III data we'll need to prepare an NDA and file with the NDA -- or with the FDA?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [21]

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Well, I'm going to say this, and I hope Andreas isn't going to kick me under the table, but obviously as fast as we can. But I think it would be reasonable to assume 3 months to 6 months.

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Operator [22]

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We will now take our next question from Adam Walsh from Stifel.

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Neil Eric Carnahan, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [23]

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This is Neil Carnahan on for Adam. Just with all the activity you have going on in the clinic, can you provide any OpEx guidance going forward? And then I got one follow-up.

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Gary Charles Robb, Corcept Therapeutics Incorporated - CFO & Secretary [24]

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Yes. Neil, this is Charlie. So as you know, we don't provide sort of specific earnings guidance. But I think that if you just look at the activities we have planned during the year, we talk about these trials ramping up, which is certainly true. But at the same time, a good portion, as Pete alluded to, of our spending has to do with things like CMC work, manufacturing work, other boluses of activity as well as new compound development that we don't talk about yet because it's so early that really provide, as it turns out, a rough offset as it turns out, against sort of ramped up actual clinical spending.

So although the trajectory of our spending on research and development, as you note, is increasing as our programs proliferate and become more advanced, I think that the best way to think of it is not as a sharp up-ramp in activity over the rest of the year. Beyond that, I really can't give you more specific guidance than that.

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Neil Eric Carnahan, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [25]

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Okay. I just saw the verbiage in the document you guys filed, volume-related distribution costs. Can -- sorry, go ahead.

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Gary Charles Robb, Corcept Therapeutics Incorporated - CFO & Secretary [26]

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So I'm happy to talk about that. That is -- what that really is, is things like we pay a fee to our specialty pharmacy per shipment. So if shipments rise, those expenses rise, I think, like pharmacy costs. There are [admissions] of operating expenses. Obviously, we pay incentive compensation to the sales force and so forth. So that is not a particularly large portion -- percentage of our revenues by any means, but it increases as our revenue increases.

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Neil Eric Carnahan, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [27]

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Okay. And then maybe a question for Andreas. Can you walk us through why relacorilant doesn't cause the hypokalemia issues that you guys see with Korlym? Is it somehow linked to the difference in the binding affinity of the glucocorticoid receptor? Could you just walk us through that?

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Andreas Grauer, Corcept Therapeutics Incorporated - Chief Medical Officer [28]

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Yes. So the affinity of the glucocorticoid receptor is actually very similar. The big difference to Korlym in comparison is with the progesterone receptor. But to your point, that is not what is explaining the fact that it's not causing hypokalemia. So what we do see and what we do now is that it doesn't increase cortisol and it doesn't increase ACTH sharply as Korlym does.

So that's the mechanism why it doesn't cause hypokalemia. Why it doesn't increase cortisol and ACTH is a more complex question. We have some hypotheses. But as I said, that's -- those are hypotheses. One of them is that potentially the tissue binding, the binding to receptors in specific organs, is somewhat different to Korlym, which may lead to this very desirable different profile.

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [29]

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Yes. Just a little bit of follow-up on that, Neil, just in a couple of ways. Directionally, it's the same. So ACTH does rise a little and cortisol does rise a little, maybe 30% to 40%, whereas with Korlym, it rises 3x to 4x, 300% to 400%. And I think that's really all the difference in the world. And we noticed this tissue selectivity actually as early as Phase I. And I think I actually remember talking to you at last year's meeting in Boston how we saw it in even the Phase I study, but I wasn't sure in the Phase II study whether it was just dose-related. At the lower dose, you wouldn't see it. In the higher dose, you would see it more. But it really didn't pop up in that way.

And I think that's probably what it's related to, that there is some issue of tissue selectivity just in terms of potency and particularly at the level of the pituitary and where you get the antagonism of the feedback mechanism. And it really is a very happy result for us because hypokalemia is very annoying and sometimes bad side effect for people who have it. So we are very pleased that we were able to confirm that in the higher dose of the Phase II study.

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Operator [30]

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We will now take our next question from [Cameron McCain] from BioWatch News.

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Unidentified Participant, [31]

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So I know you reported at a number of endocrinology conferences, and those studies have some supporting indications of preoperative usage, severe diabetes, hypertensive diabetics. But you also have a full plate on your current portfolio. So I was wondering how the company is going to move forward with potential extensions, if you're pursuing clinical trials, waiting for funding or pursuing independent investigators.

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [32]

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Yes. So [Cam], I know you know the story very well, but I just wanted to enlarge the conversation a little bit for others. So one of the strategies that we have taken as a pharmaceutical company, which is really very different than -- for reasons I understand, than other pharmaceutical companies is that we really encourage investigators to use our medications to see if we can push the science forward. And so what you're noting is that at these scientific meetings, there's often a lot of information about our drugs and things that are not in the center of where we're working but are also interesting clinical questions and academic questions. And that's what you're referring to. Those appear and people can access these posts. It's very interesting.

Now as a practical matter, it has served as a very nice farm system for us to bring things in-house and move them faster. So just sort of 2 points that we've discussed today. Our oncology program really came out of a long-standing collaboration we have with The University in Chicago here in the United States, and our metabolic program where it came out of the long-standing collaboration we have with the University of Leiden in the Netherlands.

But my point really is that we really go where the data takes us. And if anything really emerges that is strong enough to really be -- feel like it's worth our resources to do that, we will bring it in-house and make it go faster. We will make room to do that. Yes. We have a very full plate right now. There's certainly things that are interesting. But if they cross the threshold of where we think they can provide real value to patients in a relatively short period of time, we will figure out a way to fund them and do them ourselves.

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Unidentified Participant, [33]

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Very nice. And then yes, just to touch on the antipsychotic weight gain program. I know you're proposing clinical trials that span a pretty wide variety of patients. So I was wondering if you can provide some color on that space because I know that the drugs currently have a difficulty being a complete solution. So I was wondering what the competitive landscape looks like and what you're trying to accomplish with the CORT 335.

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [34]

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Yes. And thanks for asking that particular question. Again, for the people who have followed Corcept for a long time, I can tell you, I can answer this question with a lot of energy because as you know, I'm a practicing psychiatrist. I prescribe these medications on a regular basis. Our patients badly need to take them. Psychosis is a terrible thing. And the medications we have are pretty good at treating psychosis. I mean I don't want to be a hypocrite. I prescribe them all the time.

But they have a real metabolic Achilles' heel, and it's a dramatic problem for these patients. Keeps them from taking their medication. It adds to their cardiovascular and metabolic risk. The average age of death of someone who takes chronic antipsychotic medications in the United States is 55, and it's not because of suicide. It's because of metabolic and cardiovascular disease.

So the clinical need is really, really, really high. And unfortunately at this point in time, we just don't have anything for those patients. And I'm encouraging of anybody who sort of has an idea. One of the really hard parts of our story was that about a decade ago, in sort of first group of experiments, the controlled double-blind human experiments, we were able to show that Korlym prevented antipsychotic-induced weight gain in people newly taking it. And we just couldn't go forward because Korlym just was not a drug that could be developed for such a mass market. And it's now taken us almost a decade to get back to where we were at that point with the new drug.

So the competitive landscape is modest. I wish it were greater because our patients really need treatments for this. And we're going to try to push this forward as aggressively as we can.

Okay. Well, thank you, guys, very much. I really appreciate it, and we'll talk to you next quarter or see you at conferences in the middle.

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Operator [35]

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This concludes today's call. Thank you for your participation. You may now disconnect.