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Edited Transcript of CORT earnings conference call or presentation 7-Nov-19 10:00pm GMT

Q3 2019 Corcept Therapeutics Inc Earnings Call

MENLO PARK Nov 20, 2019 (Thomson StreetEvents) -- Edited Transcript of Corcept Therapeutics Inc earnings conference call or presentation Thursday, November 7, 2019 at 10:00:00pm 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

* Sean Maduck

Corcept Therapeutics Incorporated - SVP of Commercial

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Conference Call Participants

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* Adam Anderson Walsh

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

* Charles Cliff Duncan

Cantor Fitzgerald & Co., Research Division - Senior Analyst

* Christopher Lawrence Howerton

Jefferies LLC, Research Division - Equity Analyst

* Matthew Lee Kaplan

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

* Yoon-Seo Kang

H.C. Wainwright & Co, LLC, Research Division - Associate

* Alan Leong;BioWatch News LLC;CEO;Cofounder

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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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Good afternoon. My name is Charlie Robb. I'm Corcept's Chief Financial Officer. Thank you all for joining us.

Earlier today, we issued a press release announcing our third quarter financial results and reviewing our research and development programs. 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 November 21 at (888) 203-1112 from the United States and (714) 457-0820 internationally. The passcode will be 8532239.

Statements during this call, other than statements of historical fact, are forward-looking statements based on our plans and expectations and are necessarily subject to risks and uncertainties that might cause actual results to differ materially from those the forward-looking statements express or imply. These risks and uncertainties include, but are not limited to, our ability to generate sufficient revenue to fully fund our commercial operations and development programs; the availability and competitive viability of competing treatments for Cushing's syndrome, including generic versions of Korlym; the initiation or outcome of litigation; our ability to obtain acceptable prices or adequate insurance reimbursement for Korlym; and risks related to the development of our product candidates, including clinical outcomes, 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 revenue guidance and our expected growth in cash generation in future years; physician awareness of hypercortisolism and selection of Korlym as the optimum medical treatment; timing costs and outcome of litigation, including our lawsuits against Teva Pharmaceuticals and Sun Pharmaceuticals and the challenge to our -- challenges to our intellectual property before the Patent Trial and Appeals Board; the scope and protective power of our intellectual property; the benefits of orphan drug designation in the European Union and the United States; the clinical attributes of relacorilant, miricorilant and exicorilant; and the progress, timing, design and results of our drug product formulation efforts and our current and planned preclinical and clinical development studies and trials. We disclaim any intention or duty to update forward-looking statements.

Corcept's revenue in the third quarter was $81.5 million, a 26% increase from the third quarter of 2018. We narrowed our 2019 revenue guidance to between $300 million and $315 million, the upper end of our original range.

Third quarter GAAP net income was $26.3 million compared to $17.7 million in the same period last year. Excluding noncash expenses related to stock-based compensation and utilization of deferred tax assets together with the related income tax effects, non-GAAP net income in the third quarter was $37.8 million compared to $27.9 million in the third quarter of 2018.

Our cash and investments at quarter end were $266.9 million compared to $225.7 million at June 30. We believe our profits, together with our cash on hand, will be sufficient to fully fund our commercial business and complete our planned development programs.

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. As you've just heard, our Cushing's syndrome business had an excellent quarter. The number of patients receiving Korlym increased, as did the number of physicians prescribing the medication. We expect growth to continue. There are thousands of patients with Cushing's syndrome who could benefit from Korlym who have yet to receive it. To reach more doctors, we've begun the planned expansion of our sales force from 40 clinical specialists to 55. These new clinical specialists will complete their training and begin calling on physicians next quarter and should start contributing to our results in the second half of next year.

Korlym is an effective and well-tolerated medication. 87% of patients in Korlym's pivotal trial demonstrated significant clinical benefit. The year's long growth in the number of patients taking Korlym to treat Cushing's syndrome stems from an essential fact: the medicine works. Unfortunately, Korlym's off-target effects make it not the optimal treatment for many patients and make it completely unsuitable for others. Korlym benefits patients by modulating cortisol activity at the glucocorticoid receptor, GR for short. However, Korlym also binds to the progesterone receptor, PR for short, which is why Korlym is an abortifacient and carries a black box warning for termination of pregnancy. Korlym's PR affinity also causes endometrial thickening and vaginal bleeding in many women, regardless of their age. These adverse events are particularly significant in the medication for patients with Cushing's syndrome, approximately 70% of whom are women.

By a different off-target mechanism, Korlym can also lower blood potassium, potentially a life-threatening medical condition known as hypokalemia. These adverse events are not rare. 1/3 of the female patients in Korlym's pivotal trial experienced endometrial thickening or vaginal bleeding. 44% of the participants, both men and women, developed hypokalemia. These conditions are manageable, but can be problematic and require close monitoring. Patients and physicians would strongly prefer to avoid them.

Our planned successor to Korlym, relacorilant, binds to GR but not PR, and so does not cause endometrial thickening or vaginal bleeding. It is not the abortion pill. It also does not cause hypokalemia. Without causing these side effects, relacorilant's efficacy in its Phase II trial was comparable to what was observed at similar time points in Korlym's pivotal study. We presented our findings in April at the Annual Meeting of the American Association of Clinical Endocrinologists. You can see our presentation at the Investors Events tab of our website.

Earlier this year, we began a Phase III trial called GRACE, G-R-A-C-E, that we expect will support an NDA for relacorilant in the treatment of Cushing's syndrome. GRACE has 2 parts: In the initial open label phase, patients receive relacorilant for 22 weeks. Those who exhibit prespecified improvements in glucose metabolism or hypertension are randomized to a double-blind placebo-controlled phase in which half continue receiving relacorilant and the rest are switched to placebo. GRACE's primary end points are the rate and degree of relapse in patients receiving relacorilant compared to those receiving placebo during this randomized withdrawal phase. To learn more about GRACE, visit our website or cushingresearch.com.

GRACE's planned enrollment is 130 patients at sites in the United States, Canada, Europe and Israel. 42 of our planned 62 sites are recruiting patients. We expect to open 13 more sites by the end of this year. The activation, screening and enrollment pace of ex-U. S. sites, which we expect will provide the majority of patients, has allowed us to refine our estimated GRACE completion date. We believe we will be ready to submit an NDA in the fourth quarter of 2021.

Apart from GRACE, we plan to open an additional Phase III trial, a double-blind placebo-controlled study in patients whose Cushing's syndrome is caused by cortisol secretion from an adrenal adenoma in first quarter of next year. The symptoms experienced by patients with adrenal Cushing's syndrome tend to be slower in onset than those of patients we are studying in GRACE, although there is increasing evidence that these patients eventually experience serious metabolic and cardiovascular problems. The trial's planned enrollment is 130 patients, half of whom will receive relacorilant and the rest placebo. Treatment duration will be 22 weeks. The primary end points will be improvement in glucose metabolism and hypertension. Most of the investigators participating in GRACE will also participate in this trial.

The FDA has not required us to conduct a study in patients with adrenal Cushing's syndrome. We plan to base relacorilant's NDA on the results of GRACE. Cushing's syndrome in patients with adrenal adenomas has not been rigorously studied, and there's great interest in the field in doing so. We expect our study to contribute meaningfully to the understanding of Cushing's syndrome and its optimal treatment.

I'll now turn to our program in metabolic disorders, which has made several important advances since our last conference call. As some of you know, preclinical and clinical data with mifepristone suggest that cortisol modulation may play a role in treating 2 serious and widespread metabolic disorders: weight gain caused by antipsychotic medications and nonalcoholic steatohepatitis, or NASH.

I'll begin by discussing antipsychotic-induced weight gain. Millions of people rely on medications, such as olanzapine, to treat psychosis and bipolar disorder. Unfortunately, the side effects of these life-saving medications, which include rapid and sustained weight gain, hyperglycemia and hyperlipidemia, shorten life expectancy and cause many patients to discontinue treatment. We have conducted placebo-controlled trials in healthy human subjects in which cortisol modulation with mifepristone significantly reduced weight gain caused by 2 of the most commonly prescribed antipsychotic drugs, olanzapine and risperidone. These results were published in The Journal's Advances in Therapy in October of 2009 and in Obesity in December 2010.

Despite these positive data, we could not advance mifepristone as a treatment for this disorder. Because it is the active ingredient in the abortion pill, mifepristone cannot be developed as a treatment for any highly prevalent disorder. By contrast, our proprietary molecule, miricorilant, is a viable drug candidate for this indication. Unlike mifepristone, miricorilant is a selective cortisol modulator with no progesterone receptor activity. It is not the abortion pill. What's more, in animal models, miricorilant is even more potent on a per kilogram basis than mifepristone in preventing and reversing olanzapine and risperidone-induced weight gain.

We've just completed the first phase -- Phase Ib trial of miricorilant for the prevention of antipsychotic-induced weight gain. We modeled this trial on our successful trials with mifepristone. 66 healthy subjects received 10 milligrams of olanzapine in either placebo or 600 milligrams every day. The duration of the trial was 2 weeks. The primary end point was change in weight from baseline. This was the first time we had tested miricorilant in humans as a potential treatment for any indication. The question we sought to answer was limited: is miricorilant active at all in people taking olanzapine? I'm pleased to say the answer to this question is yes.

Top line data from our trial showed that miricorilant significantly reduced the amount of weight gain by healthy subjects taking olanzapine, even when administered at a low dose and for only 2 weeks. After 7 days, subjects receiving olanzapine plus placebo gained an average of 3.5 kilograms, subjects to receiving olanzapine plus miricorilant gained 2.6 kilograms. At 14 days following an additional 7 days of dosing, the difference had widened. Average weight in the placebo group was 5 kilograms; in the miricorilant group, it was 3.9 kilograms.

We are also pleased to observe that the levels of liver enzymes, ALT and AST, markers of liver damage that temporarily increase at the start of olanzapine therapy, increased less markedly in the miricorilant group. In addition, 5 subjects in the olanzapine plus placebo group left the study due to elevated liver enzymes compared to just 1 subject in the olanzapine plus miricorilant group. This finding is an early indicator that miricorilant may have protective effects in the liver.

These top line results are especially encouraging because they were observed so quickly and at such low plasma levels of miricorilant. We will present the full results of the study at a scientific conference next year.

Our program continues to advance. The second part of our Phase Ib trial, which will start in December, will test 900-milligram dose of miricorilant. We have also begun a double-blind placebo-controlled Phase II trial of miricorilant for the reversal of recent antipsychotic-induced weight gain in patients with schizophrenia. The plan is to enroll 100 patients who will continue to receive their established antipsychotic medication with either miricorilant or placebo added to their regimen for 12 weeks.

Finally, we are pleased to report that we have made significant progress developing a formulation of miricorilant that will more easily allow us to achieve optimal miricorilant plasma levels, which we estimate are several times higher than those we have tested so far.

The availability of an improved formulation will also allow us to advance our program in NASH, a severe form of nonalcoholic fatty liver disease that is characterized by excess fat in the liver and inflammation. NASH is often a precursor to liver fibrosis and cirrhosis, which can lead to liver cancer. Millions of people in the United States suffer from the disorder. As with the antipsychotic-induced weight gain, there's evidence that cortisol modulation may offer a treatment for NASH. Fatty liver disease is a common symptom of Cushing's syndrome, and we have seen the condition resolved when patients are treated with Korlym. In animal models of fatty liver disease and cirrhosis, miricorilant is again more potent than mifepristone. We plan to start a double-blind placebo-controlled Phase II trial in patients with NASH next year.

I will conclude with a brief discussion of our oncology programs. Many solid tumors, including pancreatic and ovarian tumors, express GR. Unfortunately, cortisol activation of GR inhibits apoptosis, programmed cell death, which is the mechanism by which chemotherapy achieves its intended effect. Coadministration of a cortisol modulator may allow chemotherapy to achieve its full cancer-killing potential. As many of you know, we have tested this hypothesis by combining relacorilant with nab-paclitaxel, Celgene's taxane-based drug, Abraxane, in a Phase I/II trial in patients with solid tumors.

The results, which we presented at ASCO earlier this year, were striking. Seven of 25 patients with metastatic pancreatic cancer and 5 of 11 patients with advanced ovarian cancer achieved durable disease control, meaning their tumors either shrank or ceased growing for 16 weeks or longer. The duration of benefit in some patients was eye-catching. Tumor shrinkage in 2 patients with metastatic pancreatic cancer lasted longer than 50 weeks. A patient with ovarian cancer exhibited tumor shrinkage for 65 weeks. All of these patients' tumors had progressed despite multiple lines of prior therapy, including treatment with taxanes. That any of them responded when relacorilant was added to their chemotherapy regimen seems extraordinary. The study post that we presented at the ASCO conference is available at the Investors Past Events tab of our website.

We expect to receive FDA guidance concerning the optimal development plan for relacorilant plus nab-paclitaxel to treat patients with metastatic pancreatic cancer this quarter. These patients have a poor prognosis and few good treatment options. We plan to start a Phase III trial following completion of our discussions with the agency and expect to be able to provide more details about our plans soon.

Our Phase II controlled study of relacorilant plus nab-paclitaxel in metastatic platinum-resistant ovarian cancer is in progress, with sites in both the United States and Europe.

Cortisol modulation may also help to castration-resistant prostate cancer, a disease with a poor prognosis. Stimulation of the androgen receptor causes prostate cancer cells to grow, which is why androgen receptor antagonism medication, such as enzalutamide, Pfizer's drug XTANDI, is a standard therapy. Investigators at Memorial Sloan Kettering and the University of Chicago have shown that when prostate tumor cells are exposed to enzalutamide, their growth shifts to being stimulated by cortisol. Adding a cortisol antagonist to androgen deprivation therapy blocks this tumor escape route in preclinical models, and we are testing whether these findings translate to men with the disease.

We are concluding a dose -- excuse me, we are conducting a dose-finding trial of our proprietary selective cortisol modulator, exicorilant, combined with enzalutamide to treat patients with castration-resistant prostate cancer. Our collaborators at the University of Chicago are leading controlled Phase II trials, testing Korlym plus enzalutamide and relacorilant plus enzalutamide. We expect data from these trials to be available next year.

To summarize, Corcept had an excellent third quarter. Our Cushing's syndrome business added patients and prescribers, and we expect this growth to continue. We've begun hiring additional clinical specialists who will enter the field early next year. We narrowed our 2019 revenue guidance to between $300 million and $315 million. Our GRACE trial is now active at 42 sites. We expect to be able to file relacorilant's NDA for the treatment of patients with Cushing's syndrome in the third quarter of 2021.

In the first quarter of next year, we plan to start a double-blind, placebo-controlled Phase III trial in patients with Cushing's syndrome caused by adrenal adenomas. We expect to receive feedback from the FDA soon and start a Phase III trial of relacorilant plus nab-paclitaxel in metastatic pancreatic cancer in the first quarter of next year. Our controlled Phase II trial of relacorilant plus abraxane in metastatic platinum-resistant ovarian cancer is in progress at sites in the United States and Europe. Exicorilant and relacorilant are being tested in combination with enzalutamide for the treatment of patients with castration-resistant prostate cancer.

Finally, our program in metabolic disease took important steps forward since our last call. Top line results from the first part of our Phase Ib trial of miricorilant to prevent antipsychotic-induced weight gain were positive. That trial's second part will soon begin testing a higher-dose of miricorilant. We have initiated a double-blind placebo-controlled Phase II trial of miricorilant in patients with recent antipsychotic-induced weight gain. We will start a Phase II trial with miricorilant in long-standing antipsychotics induced weight gain and a Phase II trial in NASH next year.

I'll stop here for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We'll take our first question from Charles Duncan of Cantor Fitzgerald.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [2]

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First of all, congrats on the progress in the quarter and the revenue and all the things that you have going on, lots going on.

Appreciate the granularity with regard to the GRACE study. And it looks like a pretty interesting design, randomized withdrawal, relatively high power to show efficacy. I guess I'm wondering if you could provide a little color on the rate or the percentage of relapse that you'd expect within a certain period of time or that you're kind of modeling off with that patient population?

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

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Thanks for the question, Charles. I think we really absorbed it. I want to introduce -- reintroduce you to Andreas Grauer, who is our Chief Medical Officer, and I'll turn the question over to Andreas.

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Andreas Grauer, Corcept Therapeutics Incorporated - Chief Medical Officer [4]

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Yes, [that did it]. Great question. And the primary end point for -- so as you may recall, we are enrolling these patients with Cushing's syndrome based on their 2 main clinical manifestations. So they either have diabetes or impaired glucose tolerance or they have hypertension, and the relapse will be measured with regard to the relapse in their glucose control or their hypertension. So for the glucose control, we're assuming -- and we're assuming an average increase of the glucose area under the curve of 3.7 [millimolar]. It doesn't mean much for most clinicians, but it is the area under the curve of glucose in the -- to our glucose filings test, is what the FDA really likes to see as an end point of these patients. So I hope that answers your question.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [5]

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It does partially. And would you anticipate that to take a month or a year or 6 months for most patients once they've responded to rela?

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

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That's a great -- that also is a great question. But the randomized withdrawal phase that we have in this study is 3 months long. Based on our experience that we have in our Phase II study and also that we have previously with Korlym, we think that the relapse, especially off the glucose control parameters and the hypertension, should happen within that 3-month time period.

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

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And just to give you a little context for this, Charles. I don't know if you remember, back to the SEISMIC study. In that study, the FDA required us at the end of the treatment period, and in that case it was 24 weeks, to take patients off of the medicine for 6 weeks before they could essentially reenter an extension study. And within that 6-week period, suddenly -- unfortunately many of them relapsed. It actually was useful for us because when they went back on medicine in the extension phase, they got better again. So I think that sort of that zone of 4 to 8 weeks is where most people really begin to show clinical decrement. Although for some patients, I can tell you, who were in the SEISMIC study, it was as early as 2 weeks.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [8]

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That sounds like a pretty neat protocol. I guess a question regarding timing, and definitely appreciate you helping us with regard to gauging that timing on NDA, Joe, would you say then that the rate-limiting step in terms of timing is really related to enrollment and then driving patients to a response? Because it seems like the 3-month part is pretty well set. The second (inaudible)

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

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Yes. In -- I would even, if anything, really start -- and I tried to really talk a little bit about this before. The rate-limiting step really started out, with any of these studies these days, in site activation, which has become, in the 20 years that I've been doing this, more and more complex with number of IRBs and contracts. But we spent a lot of time on that since the last conference call. We're really way ahead on that. And it really gives us visibility into what we think the actual timing is. So yes, the [rate remained variable] is patient enrollment. And we feel like we have a pretty good handle on what that rate is going to be.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [10]

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Okay. And then my last question is more commercial. It's oriented towards the increase in the number of sales folks or clinical specialists that you plan to bring on board. I guess you did mention that you'd anticipate they'd be able to contribute to results in third quarter of next year. But how would you really measure effectiveness? And what is the goal for those specialists? Is it to broaden the geographic reach or increase the number of or intensity of prescriber outreach within just a certain geography?

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

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Charles, I'm going to pass you over to Sean Maduck, who I know you know, and who runs all of our commercial area.

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Sean Maduck, Corcept Therapeutics Incorporated - SVP of Commercial [12]

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Great. Yes. Thanks for the question. And I think before I answer the direct question, I'll step back a little bit so that everyone in the call understands what our impetus was for the expansion.

So as a reminder to everyone, that at launch our goal was to reach 1,500 high potential prescribers, and we've reached that goal. I mean we have over that number of prescribers. And in reaching that goal, we've learned a couple of really important things about our market. The first being time matters. And you just sort of alluded to that. Prescribing physicians do require a lot of attention. We are shifting an entrenched mindset where patients are diagnosed very slowly, and treatment is reserved for the most severe cases of this disease. So to shift that mindset, multiple in-depth conversations are required to move a physician from, call it, naive to his or her first prescription. And given the many touch points required to accomplish this, smaller territories have proven to be highly productive for us. So that was learning one.

I think learning two really is that we believe that hypercortisolism patients exist in every single endocrinology practice, some who have previously been diagnosed, and some who have yet to be identified. So with both of those in mind, as we look to reach our next 1,500 prescribers, we see an opportunity to add territories that we believe will be very productive. It will decrease the size of some of our existing territories, and it will allow for more frequent touch points with both existing prescribers and potential new prescribers. So we've previously stated, we -- the goal is to move from 40 clinical specialists to 55, we're about halfway through that expansion, and we expect those territories to add value next year as you stated.

So success is measured really by all the points that you talked. It's increased touch points with the prescribers we have and reaching new potential prescribers out there.

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Operator [13]

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We'll take our next question from Adam Walsh of Stifel.

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Adam Anderson Walsh, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [14]

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Nice quarter here. On the Korlym question, I'm just wondering, Joe, this came up last call, I know that you did take a price increase during, I think it was this quarter. And I'm just curious how much kind of pricing flexibility you believe you have going forward for Korlym. That's number one.

And then Charlie, I know there's a decision whether or not to institute PGR for the [2 1 4] patents this month. Can you kind of bring us up to speed on the timing, the dates where you might hear things and what's -- kind of what you interpret as the potential outcomes?

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Gary Charles Robb, Corcept Therapeutics Incorporated - CFO & Secretary [15]

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Sure, Adam. I'll answer both questions. So I think as most folks on the call are aware -- at least some of you, we took a price increase for Korlym on August 1, what effectively net amounts to a little less than 8%. That's the first price increase we've taken in 18 months.

As to pricing flexibility, pricing is something we look at every quarter with sort of a fresh set of eyes. And I guess all I can comment on in response to your question is that we're -- we, like any drug company [with soaring] revenues, are -- we are on the radar of payers in terms of their paying attention to our pricing decisions, but we have been -- have received excellent reimbursement and things have gone through smoothly so far, and that was the case here. And we'll just have to keep that in mind next quarter, when we look at this question again. That's really sort of all the insight I can give you on that.

As for the -- I appreciate the question about the IPR -- or the PGR institutions. And again, there, let me give, to folks who haven't followed as closely as you have, Adam, a little bit of background. We have 2 generic companies are attempting to get approval to mark clearance to market and sell a generic version of Korlym. Teva Pharmaceuticals gave us notice that they wanted to do that back in February of 2018. So here we are about 20 months later just undergoing the typical litigation back and forth, driving to a Markman -- what's called a Markman hearing in the first quarter of next year, where the judge will decide the meaning, if there are any of our patent terms are in dispute with Teva that -- those decisions will be made, clearing the way for a trial some period after -- some quarters after that.

So there's no real news there. But what -- for folks who, again, need a little more background. What Adam is referring to is a separate proceeding that Teva has brought, an administrative challenge to one of our patents. We have a patent covering the coadministration of Korlym and a class of drugs known as strong CYP3A inhibitors. Teva has -- we received that patent earlier this year, Teva has asked the patent office to review that patent's validity and -- in a procedure known as a request for post grant review. Now the -- what is going on now and has been going on for the past few months is, we of course have opposed Teva's request. And at the end of this month, the patent office is set to announce whether it will agree to hear -- to perform Teva's requested review or not. So will they institute Teva's challenge? That's called an institution decision.

Now something to keep in mind here is this is a bit of an asymmetrical risk -- outcome for Teva here, because on the one hand, the bar for instituting this sort of review is quite low. The patent office simply has to decide that Teva's arguments have a reasonable chance of prevailing, not that they will prevail, but that's a reasonable set of arguments. And if they think that, they institute the challenge and what would follow at that point is a year-worth of essentially administrative litigation with regard to this question. A decision a year later, that would be November of 2020. And if there's any element of that, that either Teva or we are dissatisfied, is we would have the right to appeal that decision to the federal courts, which would add another 6 months to 9 months of the whole process.

So the bar for institution, which is -- which we'll learn about at the end of this month, is pretty low. We wouldn't be surprised if it was instituted. On the other hand, if the patent office does not institute it and issues a decision saying they essentially don't think Teva's arguments have a reasonable chance of prevailing, that's pretty bad news for Teva. Because although they'll still be able to pursue their arguments in District Court, they'll have had a panel of disinterested adjudicators pronounce a negative opinion on their legal position.

So news at the end of this month, relatively low threshold for institution. If it is instituted, we have great confidence in the validity of the patent and what will proceed is essentially additional sort of litigation-type arguing just in a slightly different form.

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Adam Anderson Walsh, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [16]

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Charlie, that's really helpful to lay it all out like you did. The other question is, Joe, in the graph that you have for microcorilant (sic) [miricorilant] in the antipsychotic weight gain, the pictures that you included in the press release, I noticed that the -- and I know, look, it's an early study. It's difficult to kind of parse these things out, but the body weight and the liver enzymes are measured on different days, I think. Can you just help kind of contextualize what was done and what you're showing us in terms of [sort of] the time line of some of the trials.

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

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This is essentially a 2-week study. And so the weight gain is really just measured at baseline, day 8 after 1 week and day 15. And what you can see, and I'll give you kind of my own opinion in a second, is that the people who were on olanzapine alone gained significantly more weight than the people who were on olanzapine and miricorilant.

And I think just sort of along those lines, that -- I mean with my eyes was a very surprising and particularly positive response. I mean we didn't know what was the right dose of this drug. We saw it work very well in animals, but we didn't know what plasma level was going to be effective in humans. And it would not have stunned me if we didn't see anything in 2 weeks or -- and really, anything much to speak of. And just to provide a little context for this. I give them great credit because in some ways, Alkermes has really sort of plowed new ground here with a study -- a series of studies to really try to address this very strong clinical need in patients who have to take, again, a psychotic (sic) [antipsychotic] medication. In their case, if you look at their chart at 2 weeks, the combination of their drug and olanzapine, patients had actually gained more weight than those who had taken olanzapine alone. So this is a surprising, positive result very [akin] to what we had seen in animals and really is sort of the main point of the study.

Now the second thought that's interesting, so olanzapine, and I think even most psychiatrists -- and Adam, I know you know this, I am a psychiatrist. Most psychiatrists are unaware that when you give olanzapine, initially, you get real -- what is essentially an acute hepatitis. It tends to be asymptomatic, but you can really measure at the beginning that liver enzymes go up because there's real irritation to the liver. And the interesting thing about that particular effect is, as what most psychiatrists probably wouldn't measure this until 3 months were out, but at the time 3 months have gone out, it's really returned to pretty much normal. And so it's really an effect that you measure really in an acute stage. And what you're seeing here is that the liver enzymes did in fact rise more in the group that got olanzapine and was mitigated to a degree -- in fact, in one case with statistical significance, by the addition of miricorilant.

So again, it just shows you, from our perspective, that what we thought was true, which is that miricorilant has particular sensitivity in the liver, and that it is essentially preventing what is in fact an inflammatory effect to the liver, actually seemed to be happening in this case. Now I really look forward to giving you the full data set we'll be presenting next year when it's all in there. But this was a really heartening first step for us.

I just want to -- I alluded to it in my comments before, we saw the same effects with Korlym almost a decade ago. But we couldn't get a single one, at that point, the large pharmaceutical companies, interested in all of this, simply because Korlym was the abortion pill. And it really took us this length of time to get to a second-generation of compound that didn't have the progesterone effects and showed what appears to be the same clinical effect first in animals and now in people.

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Operator [18]

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We'll take our next question from Chris Howerton of Jefferies.

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Christopher Lawrence Howerton, Jefferies LLC, Research Division - Equity Analyst [19]

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It's been too long, Joe, so it's been -- it's nice to speak with you. So I guess what I was -- wanted to figure out with respect to the GRACE trial and the enrollment, we had a competitor also announce a delay in their enrollment and expectations of readout for their Cushing's syndrome trial. So curious if you think it's a broad effect within the Cushing's syndrome space with respect to recruitment or perhaps there's 2 different scenarios going on here.

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [20]

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Well, I really can't speak because I don't really know the ins and outs of really anybody's business except for our own. We've been involved in Cushing's syndrome now for about a decade. I think we really kind of know this market and know the patients pretty well. There's no escaping that it's an orphan disease. And so unlike a disease like diabetes in general or something where there's a zillion patients out there and you're just really sampling from them, this is a disease where you're adding to your enrollment total by 1s and 2s everywhere you go. We feel at this point like knowing the market as we do and knowing sort of what's occurred to this moment, that we have enough visibility to really tell you guys what we think is going to happen next. Now obviously it's never 100% guarantee, but we feel pretty confident that the time line that we're now presenting is a reasonable one and one that we are certainly working towards.

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Christopher Lawrence Howerton, Jefferies LLC, Research Division - Equity Analyst [21]

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Okay. All right. Cool. And then now that you have that time line perhaps into sharper focus, does that change your thinking in any way with respect to the challenge for mifepristone and the potential timing of any decisions and things like that? Any material changes to strategy?

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Gary Charles Robb, Corcept Therapeutics Incorporated - CFO & Secretary [22]

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Chris, this is Charlie. I'll respond to that. I mean the short answer is no. We -- obviously, there's no direct impact on any litigation associated with this. But the fundamental -- our fundamental belief is we have real confidence in our intellectual property. We're pleased with how things are going. And the fact that relacorilant's -- we have a refined estimate that is sort of where it is now is something where we're comfortable with, at least from a legal perspective anyway.

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [23]

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Yes. And I think -- I mean -- I think the question is -- I'm going to just enlarge it just to make some comments that I have made previously. There's no doubt in our mind that relacorilant, if it continues to show the results that it showed so far, will replace Korlym. In many respects, it's just a superior medication. I love Korlym. It was our first child. We brought it forward. It helped lots of people. But we really had an opportunity to improve on it, and I think we've really done that. And so now it's really a question of doing the appropriate blocking and tackling to bring it to the finish line. That's why the really esteemed Dr. Grauer is here with us right now, and we think we're going to do that.

So Charlie has been managing the litigation in a way that is, at this point to me, not surprising. It's gone very much the way our lawyers anticipated it would. We think we have excellent intellectual property. But the real game is getting relacorilant to the market because it's going to be the thing which is most helpful to patients.

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Christopher Lawrence Howerton, Jefferies LLC, Research Division - Equity Analyst [24]

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Sure. Okay. Totally makes sense. And the -- I guess for the adrenal adenoma Cushing's syndrome study, how do you see the differences, if any, in terms of potential enrollment, cadence to that type of thing? And then what the expected effects has or clinical meaningfulness within that specific patient population? Any more color you can provide to us with respect to the broader Cushing's syndrome?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [25]

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Sure, Chris. I'm going to turn you back to Andreas.

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Andreas Grauer, Corcept Therapeutics Incorporated - Chief Medical Officer [26]

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Yes. So these patients with Cushing's caused by an adrenal tumor are -- they do have a less severe form of Cushing's disease. So they usually don't have the classic symptoms that people know, like the central obesity or the buffalo hump, but they do have clinical manifestations. They do have impaired glucose tolerance. They do have hypertension. And actually, interestingly, in a number of case series, it's been shown that these patients have increased cardiovascular mortality, for example, compared to patients that have adrenal tumors with no hormone activity. So they do have -- they're sick, right? But they're not as sick as the Cushing's patients that we're studying in GRACE.

That allows us to -- and currently, many of these patients are not treated at all. Watch and wait is a strategy that many physicians apply. That allows us to do something that we couldn't do in the GRACE population. It allows us to do a placebo-controlled study that is placebo-controlled from the start, and that will again allow us to treat these patients over 6 months and to look at the key end points, i.e., improvement of glucose control and improvement of blood pressure and answer the question that the field has been waiting for, whether medical intervention is a winning strategy in this patient. So we're actually quite excited to do this study, and we talk to the leaders in this field. We have received a lot of positive feedback because they all say yes, but that question really is the question that needs to be answered.

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Christopher Lawrence Howerton, Jefferies LLC, Research Division - Equity Analyst [27]

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Okay. Great. Makes sense. And then just maybe one more question, if I may. The -- when you think about the antipsychotic-induced weight gain, obviously the positive results or the encouraging results or whatever adjective you'd like to put on there for the Phase Ib, how do you expect that to translate into neuropsychiatric patients? Do you feel like there's any reason to believe that there would be a different response in the 2 different patient populations? Or any maybe potential adverse event that would be theoretically different between the 2? Or anything with respect to translatability from the healthy volunteers to the diseased population would be great.

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

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I really do understand the question. And first, I'll give you kind of the standard answer and then I'll tell you what I really think. So the standard answer is, well, we'll find out because we're actually doing that study right now. But I'll -- since I can make forward-looking statements and -- I'll answer your question in more speculative way. I don't think there's really a lot of reason to think in this variable that healthy subjects are really any different than patients with psychiatric diseases. These are really metabolic problems that are shared because of the mechanism of the drug and so forth.

Now a more subtle question is this one. What we just demonstrated and what we demonstrated with mifepristone, was that we can prevent weight gain with these drugs. The real question that's coming up next is, can we remove the weight gain which was already there for patients who have taken these drugs? And that is a bit of a different question now. But what we have to go on right now, and we don't have human data, is in our animal data, the drug was just as potent as removing standing weight gain as it was preventing it at the beginning. And this next study will help us figure out whether that does, in fact, translate to humans.

I'm hoping so because there's a lot of patients out there, many of whom -- I mean many of my own patients who actually have had great benefits psychiatrically from these medications, but have really made the metabolic status much, much worse. And as the audience might know, the unfortunate truth is that patients who chronically take antipsychotic medications on average have a lifespan of 55, 20 years less than the population in general. And it's not because of suicide, it's because of metabolic and cardiovascular disease. And not all of it's the medication. But having to take these medications is really a terrible detriment for them and frankly causes many of them to not want to take them at all. So all that information is still to come. Very excited about it. But what we really learn from the study is we have an active compound, and we will really have to figure out how to optimize it to help with these patients.

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Operator [29]

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We'll take our next question from Matt Kaplan of Ladenburg Thalmann.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [30]

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Just wanted to dig in a little bit to the oncology programs that you have ongoing, and help us think about -- if you could help us think about in terms of -- obviously, you're going after [as a lead] Phase II program, the area with the largest unmet need in terms of pancreatic cancer. But also given that the unmet need is driven obviously by the difficulty of that indication, can you help us think about that in context of the other programs that you have ongoing as well in terms of castrate-resistant prostate cancer and ovarian cancer and the opportunities there? And how are we thinking about them in a pipeline and priority point of view?

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

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Okay. So Matt, just because your call broke up a little bit, I'm going to rephrase your question, and then you tell me if I've gotten it right, okay? So the question is, how does -- where we're sort of -- at the one end of the spectrum, you have a disease like pancreatic cancer, which appears to have some responsiveness to the medications that we're treating and very little other choices. And at the other end, you have other serious diseases like castration-resistant prostate cancer where -- a bad disease where a lot is going on, how do we prioritize where we are? Is that the question?

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [32]

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Exactly. Yes. Yes.

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

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Okay. Andreas, would you like to take that?

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Andreas Grauer, Corcept Therapeutics Incorporated - Chief Medical Officer [34]

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Yes. And I think the answer to that is we really follow the science here, right? We have in our -- the fact that we are focusing on pancreatic and ovarian cancer in our combination with Abraxane is the result of our experience in our solid tumor Phase I and Phase II study, where those were the tumor types where we did see surprisingly good results, and thought that, that was worthy of further investigation. And also got a lot of positive feedback from our investigators who really told us that their feeling is we're on to something here, and that is worth studying further.

With regard to the prostate cancer situation, again, this was one of the situations where the initial -- some of the initial observations were made in collaboration to outside investigators, who showed additional effects and to -- who developed a very interesting scientific hypothesis that made us believe that we could potentially help these patients mechanistically, and -- which is why we want to explore this. We have a -- what we feel is a very interesting compound that -- studying both relacorilant and exicorilant in this patient population, and we feel that this really sort of deserves studying, and then we'll follow the signs again and see what we -- whether that's worth expanding and pushing forward.

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

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Now let me just add a couple of comments to this. One is this, not all cancers are appropriate candidates for our treatment because not all cancers have glucocorticoid receptors. And we actually did a few years ago, you may [remember], sort of the largest tumor bank screening, and we could find some cancers like, for instance, pancreatic cancer or metastatic ovarian cancer, are rich in glucocorticoid receptors. But there are other cancers like stomach cancer where it just didn't exist. So our treatment would not be useful in that regard.

Now the practical part of your question, which maybe is what you're getting at, is just the truth of this is that some of these cancers, because of the other treatments that are unavailable, do have a different bar for approval than -- there is a continuum. And you are correct, cancer like pancreatic cancer really has very little to offer for people who have already tried the first couple of lines of treatment. So that does influence us to a bit. But Andreas' point is correct. It really starts with where the science and the evidence is.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [36]

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Okay. That's helpful. And then just on relacorilant, help us understand in terms of the commercial opportunity there versus Korlym, given it's improved, let's call it, safety profile and tolerability profile and kind of going forward?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [37]

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Well, we -- I can't give you exact projections. But what I'm really comfortable telling you is the market for relacorilant is substantially larger than it is Korlym. Korlym is an excellent medicine, it really has great efficacy, but it's got some serious Achilles' heels. The progesterone receptor effect means that in some places it's politically too toxic to take. It also means that there are medical issues like the endometrial hypertrophy and vaginal bleeding that are very problematic. And frankly, the effect on potassium that you get with Korlym, which an experienced practitioner can get ahead of but really has to be observed, is probably the single biggest reason why people drop off the medication.

So if those -- if the efficacy that we've seen so far, taking away those side effects really turns out to be the case, my own opinion is that Korlym is really going to go to 0. And I think that miricorilant will replace it in its entirety. How big that market can be? I don't know. I will point you to what Sean said before, which is our biggest sale -- sales tactic is just having patients screened because we believe that there are patients with hypercortisolism and Cushing's syndrome in every endocrine practice in the country and not every doctor's screening for them at this point. I think that if you give them a more tolerable medication, the screening for that disease will increase, and some of them will eventually use relacorilant. So again, I'll give you the simple answer: bigger. I don't know how much bigger, but bigger for sure.

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Operator [38]

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We'll take our next question from Sean Kang of H.C. Wainwright.

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Yoon-Seo Kang, H.C. Wainwright & Co, LLC, Research Division - Associate [39]

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I have a question about adrenal Cushing's syndrome program basically. First, what's the patient percentage of adrenal Cushing's syndrome within the whole Cushing's syndrome patients?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [40]

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I think it's really unknown at this point. I think what's been very interesting is that over the past basically decade, but particularly the last 5 years, there's been a lot of academic research in this area, and while this was understood to be a real form of Cushing's syndrome prior to that point, as scanning got better, and you actually be able to see what percentage of the population actually have these tumors, and then they began to be tested for how many of those tumors are actually producing cortisol, the numbers have grown with each year. Nobody has an exact amount for it, but it is not an insubstantial number.

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Yoon-Seo Kang, H.C. Wainwright & Co, LLC, Research Division - Associate [41]

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I see. In terms of standard of care though, is there any difference between, in terms of standard of care treating adrenal Cushing's syndrome patients compared to non-adrenal patients?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [42]

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I think for both cases, standard of care is if you can find the tumor and take it out, you do it. And it's certainly my own opinion. But in some of these cases, it's really -- in fact, the patients that end up on medicine that really wasn't possible. Either they can't exactly find the tumor; it's a place they can't take it out; people have more than one tumor, so taking out one won't cure the disease. And so from a mechanistic point of view, the standard of care is the same: reduce cortisol activity. That's what you want to do in any of these cases. But in fact, I think that many of the patients with adrenal adenomas are actually never really getting treatment because they really -- first, many of them haven't been diagnosed; and second, because they don't present as floridly, doctors are able to kind of push them from one appointment to the next, and they decline over time as opposed to instantly.

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Yoon-Seo Kang, H.C. Wainwright & Co, LLC, Research Division - Associate [43]

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I see. One last quick question. It's regarding financial modeling. I see that you have planned for multiple trials in 2020 and also expect to increase the clinical specialists from 40 to 55. So should we expect a similar level of yearly increase in operating expenses for next year?

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Gary Charles Robb, Corcept Therapeutics Incorporated - CFO & Secretary [44]

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Well, the addition of the clinical specialists will not really add all that much to our cost. I mean I think -- I think sort of a good sort of rule of thumb per clinical specialist is put in $0.25 million per added person for the cost of their salary and travel and so forth and then any revenue production that they would have, any commissions they might earn will just be the result of revenue they're helping us to produce.

So in terms of increasing the operating expenses, I would answer, no more than sort of a few million dollars for the added folks. And as for that and the other information obviously where we will have -- early in the next year, we'll have our revenue guidance for the coming year and so forth and be better able to address the sort of the spending side of the question, too.

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Operator [45]

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We'll take our next question from Alan Leong of BioWatch News.

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Alan Leong;BioWatch News LLC;CEO;Cofounder, [46]

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I wanted to drill down a bit on the liver protection. I know there was a hint that miricorilant, it's suggested that's protective of the liver. Do you have some sense in the liver enzyme data that miricorilant is exerting some protective effects independent of the degradation of metabolic or weight metrics? Or are you getting some sense with the preclinical studies? Or lastly, are you going to have to -- or will you have to wait the answer in future studies of already obese patients?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [47]

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All right. So Alan, since you're an academic, I can give you a homework. There's an excellent paper, first author is (inaudible), which really describes the effect on -- of liver toxicity. And you may have already read it, I'm just kidding around. But it really explains how, in animal models, you really can both prevent and reverse the liver injury which is caused in that case by a high-fat diet. And mechanistically, it was really very elegant how it was shown. Whether it translates to people or not, I can't say for certain. And what we've shown you so far, is just a glimpse of what I think might see. But I was actually surprised that we could pick it up in this 2-week study. But I think it was the same effect that we were seeing in the animal models. That's all the data we have for now, but it's really going to be a big part of the program as we go forward.

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Alan Leong;BioWatch News LLC;CEO;Cofounder, [48]

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Yes, I've read through that. I remember the original studies of mifepristone on CORT 108297, that the metrics returned independent of weight. And I want to give you a chance to -- you've got some early data, the treatment period went 14 days rather than 28 or -- 21 or longer. Any thoughts on comparing what you saw just now with miricorilant with the prior studies with mifepristone and CORT 108297?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [49]

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Yes, well particularly with mifepristone, we knew what the dose really should be. I mean we had a lot of experience with what the plasma levels should be and so we knew kind of what to pick. Here we were really just guessing with the first thing. And just so you get some sense of this, the plasma level that we generated with miricorilant in this study was about 1/10 of the plasma level that we generated with mifepristone in its studies. And we saw no adverse events in this study that [weren't] specifically related to olanzapine. So I'm convinced that a higher dose would be tolerable and more effective, but the evidence will prove me right or wrong. But we have a good sense that this is just the beginning.

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Alan Leong;BioWatch News LLC;CEO;Cofounder, [50]

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Yes, it's pretty potent. A question here, you have the better formulation, are you going to use any of that or have you used any of that with higher dosage cohort or are we waiting really in future trials for it?

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Joseph K. Belanoff, Corcept Therapeutics Incorporated - Co-Founder, President, CEO & Director [51]

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Coming up. Not so far. We have not used a new formulation yet.

And thank you all for spending an hour with us today. We really look forward to the next call. And we do have -- we will have information that's coming out between now and year-end and we'll release it as soon as it's available to us.

So thank you very much.

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Operator [52]

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

And have a great evening.