Corcept Therapeutics Incorporated

Ladies and gentlemen, thank you for standing by, and welcome to the CORE-CEP Therapeutics Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star then one on your telephone. If you require any further assistance, please press star then zero. I will now like to hand the conference over to your speaker for today. Charlie, Bob, you may begin.

Good afternoon. My name is Charlie Robb. I'm CoreSep's Chief Financial Officer. Today we issued a press release announcing our fourth quarter and full year preliminary selected financial results and providing a corporate update. A copy is available at CoreSep.com. Complete results will be available when we file our Form 10-K with the SEC. Today's call is being recorded. A replay will be available at the Investors Past Events tab of our website. Statements during this call, other than statements of historical fact, are forward-looking statements based on our plans and expectations that are subject to risks and uncertainties which 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 operate our business and achieve our goals during the COVID-19 pandemic and thereafter, including our ability to generate revenue and cash reserves sufficient to fund our commercial operations and development programs. the availability of competing treatments, including generic versions of Coraline, the initiation or outcome of litigation, our ability to obtain acceptable prices or adequate insurance coverage and reimbursement for Coraline, and risks related to the development of our product candidates, including their clinical attributes, regulatory approvals, mandates, oversight, and other requirements, and the impact of the COVID-19 pandemic on our employees, consultants, and vendors, as well as on physicians, patients, insurers, regulators, and the practice of medicine in general. 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, cash flow and expected growth, our stock repurchase program, the impact of the COVID-19 pandemic on our commercial operations, financial performance, clinical development programs, physicians, payers, and patients, and expectations regarding our financial performance and clinical development programs after the COVID-19 pandemic, brought under control, physician awareness of hypercortisolism and the selection of corllum as the optimum medical treatment, timing, cost, and outcome of litigation, including our lawsuits against Teva Pharmaceuticals and Sun Pharmaceuticals, Teva's challenge to the validity of one of our patents before the Patent Trial and Appeals Board, and any legal action that may arise with HICMA Pharmaceuticals USA, the scope and protective power of our intellectual property, progress, enrollment, timing, design, and results of our clinical trials, and the clinical and commercial attributes Relacoralent, Exacoralent, Miracoralent, and our other selective cortisol modulators. We disclaim any intention or duty to update forward-looking statements. I will now share with you some preliminary financial information. Keep in mind, these results are prior to the completion of our annual independent audit and are subject to adjustment. Final figures will be available when we file our 10-K later this month. Our revenue in 2020 was $353.9 million. compared to $306.5 million in 2019. Our fourth quarter revenue was $85.7 million, and the fourth quarter of 2019 was $87.9 million. Our fully diluted GAAP net income was $0.85 per share in 2020, compared to $0.77 per share in 2019. In the fourth quarter of 2020, our fully diluted GAAP net income was $0.20 per share, was $0.24 per share in the fourth quarter of 2019. We expect revenue growth to resume as the COVID-19 pandemic is brought under control, with our 2021 revenue being between $375 and $405 million. In the fourth quarter, our cash and investments increased by $32.7 million to $476.9 million at December 31st. At December 31, 2019, it was $315.3 million. We repurchased just under 460,000 shares of our common stock in the fourth quarter at an average price of $21.08 per share. Under the currently authorized terms of our program, $190.3 million remains available for the repurchase of shares. We will determine the timing and size of any future repurchases based on market conditions, our stock price, and other factors. Now, a brief legal update. As most of you know, in March 2018, we sued Teva Pharmaceuticals and Federal District Court to prevent it from marketing a generic version of Coraline in violation of our patents. Originally, trial was set for February 2, 2021. Last quarter, the court vacated that date and ordered the parties to be ready for trial by March 17. That date is no longer realistic, although a new one has not been set. Our new trial-ready date will most likely be in the second or third quarter of this year, although that is for the court to decide. Whatever the date, we will be ready. As many of you know, in 2019, Teva challenged the validity of our 214 patent in a post-grant review, or PGR, for the U.S. Patent Office's Patent Trial and Appeals Board, PTAB. On November 18th, the PTAB announced its decision, affirming the validity of every claim of the 214 patent. TEVA has filed notice that it plans to appeal its loss at the PTAB to the Federal Circuit Court of Appeals and has until March 12th to file. Appeals to the Federal Circuit take about 12 to 16 months to resolve. The soonest we expect definitive resolution of the PGR is the first quarter of 2022. Unless and until TEVA prevails on appeal, an outcome we think unlikely, the 214 patent is and will remain valid. Furthermore, TEVA is barred from challenging the 214 patent's validity in our district court action using any arguments it raised or could have raised for the PTAC. Sun Pharmaceuticals is also seeking to market generic Corlum. Our lawsuit against Sun has stayed final FDA approval of Sun's proposed product until the earlier of December 8, 2021, or a decision by the district court that our patents are invalid, unenforceable, or not infringed. Our dispute with Sun is separate from our litigation against Teva and is following its own, more indolent timeline. There are at present no trial date or discovery deadlines in this action. Finally, on February 1st, we received notice of another antifiler, Hickma Pharmaceuticals USA, that another generics manufacturer would seek to enter the Corlam market is not surprising. It's an attractive market. The important point is this. As is true with respect to our disputes with Teva and Sun, we are confident in the strength and validity of our intellectual property, which we will assert vigorously. I will now turn the call over to Dr. Joseph Belanoff, our Chief Executive Officer. Joe?

Thank you, Charlie. Much in life is unknowable, but of one thing I am sure. Last January, no company had the words COVID-19 in its business plan. Like the virus itself, the challenges posed by the pandemic have been unprecedented and persistent. In such a difficult environment, Corsup's stable commercial business and lean operating model are especially valuable. We did not achieve all of the goals that we set for ourselves before the pandemic started, but we accomplished a lot. We generated more revenue, more net income, and more cash in 2020. The Patent Office ruled against Teva in full in Teva's challenge to our 214 patent, which runs to 2037. We are more confident than ever in our intellectual property and added several more Orange Book patents over the course of the year. Our commercial team has adapted to pandemic conditions creatively. The obstacles they face and have faced since last March are significant. The diagnosis of Cushing syndrome requires extensive examination and repeated testing. This is obviously hampered by patients being reluctant to leave their homes and by physicians' understandable concern about necessary follow-up. In addition, many medical practices have sharply limited in-person visits by commercial representatives, reducing educational opportunities for physicians who have not yet prescribed coralline. The challenges posed by remote medicine made growing our business extremely difficult in 2020. We continue to enroll new patients and add it to our roster of coralline prescribers, but more slowly. We are confident the pace of enrollment will quicken as pandemic conditions improve. The signs we see now are encouraging. Many physicians have begun to resume seeing patients in person. Patients are becoming more comfortable leaving their homes to seek care. These visible shifts, if they are sustained, bode well for our results. The foundation of our business, an effective life-saving medication promoted by a dedicated commercial team that puts the interests of patients first, remains rock solid and is poised to support significant growth once conditions improve. We hope not, but there may be setbacks and temporary reversals, but a brighter future is in sight. We are confident in our commercial prospects in 2021 and beyond. The pandemic's impact on our development activities has been variable. It has significantly slowed the pace of studies in illnesses that are less rapidly progressing. It has been frustrating to watch our trials in patients with Cushing syndrome, castration-resistant prostate cancer, antipsychotic-induced weight gain, and nonalcoholic steatohepatitis, or NASH, accrue patients more slowly than they would have in a world without COVID. During this slowdown, we are working to ensure that our clinical trial sites are ready to make rapid progress once conditions improve. In contrast, studies in patients with acutely life-threatening diseases have been largely unaffected. Our trials in patients with metastatic pancreatic cancer and platinum-resistant ovarian cancer, severe diseases for which there are no good treatments, enrolled briskly and will produce data in the first half of this year as we expected before the pandemic set in. We were also excited about the progress last year in new clinical development efforts. Despite pandemic-related obstacles, we opened important trials, Phase III trial in patients with metastatic pancreatic cancer, phase 1B trial in patients with advanced adrenal cancer, a second phase 2 trial in patients with antipsychotic-induced weight gain, and a phase 2 trial in patients with NASH. We also continue to advance new selective cortisol modulators. One such compound, CORK113176, has shown promise in animal models of ALS. We plan to evaluate it in a phase 2 trial beginning in the fourth quarter of 2021. As I've said before, I do not know any company of Corsef's size that combines commercial success with such diverse and promising clinical activities. As many of you know, we are evaluating relacoralin, our planned successor to Coralum, for the treatment of hypercortisolism in two Phase III trials. Relacoralin is a selective cortisol modulator. Like Coralum, it achieves its effect by competing with cortisol at the glucocorticoid receptor. Unlike Coralim, it does not bind to the progesterone receptor, PR for short, which means it does not cause PR effects, including termination of pregnancy, endometrial thickening, and vaginal bleeding. By a different mechanism, Relacoralin also does not appear to cause hypokalemia, low potassium, a serious side effect experienced by 44% of patients in Coralim's pivotal trial. Coralim-induced hypokalemia is a leading cause of Coralim discontinuation. We expect relucorolin's phase 3 GRACE trial to serve as the basis for our NDA submission in Cushing syndrome. GRACE continues to enroll patients, although the pandemic has significantly slowed the rate of addition. The surge in COVID infections seen in the United States and Europe in the third and fourth quarters of last year, coupled with the slow pace of vaccinations, mean we are unlikely to meet our target of submitting an NDA in the second quarter of next year. The date we ultimately achieve will depend in large part on the virulence and duration of the pandemic. It is difficult to know how long the current pandemic conditions will persist. If they are slow to abate, our NDA submission can be delayed as much as a year. We are working to ensure that our sites are ready to resume aggressive, effective enrollment as soon as conditions permit. The delay in grace is exceptionally frustrating. Reliquaryland's Phase II results were strong, patients experienced meaningful improvements in hypertension and glucose control, as well as in a variety of other signs and symptoms of Cushing syndrome. There were no relacoralin-induced instances of endometrial thickening or vaginal bleeding, and also no drug-induced hypokalemia. We and our investigators are anxious to take grace to the finish line. Our second phase three trial of relacoralin in patients with Cushing syndrome, Gradient, studying relacoralin's effects in patients whose Cushing syndrome is caused by an adrenal adenoma or adrenal hyperplasia. Patients with this etiology of Cushing syndrome often experience a less rapid decline, but ultimately their health outcomes are poor. Gradient is the first controlled study in patients with this type of Cushing syndrome. We expect its findings will contribute to the optimal treatment of these patients. As I mentioned, our trials in metastatic ovarian and metastatic pancreatic cancer will produce data in the first half of this year. Before I go further, let me provide some background. Our oncology program is testing three mechanisms postulated by investigators at the University of Chicago more than 10 years ago. The first mechanism, which we were evaluating in our study in ovarian and pancreatic cancer, concerns apoptosis. The program's cell death chemotherapy is intended to induce. Cortisol suppresses apoptosis. There is compelling preclinical and clinical data suggesting that relacoralin can blunt cortisol's anti-apoptotic effect, helping chemotherapy reach its full potential. Our study in ovarian cancer is a controlled phase 2 trial in 178 patients with platinum-resistant disease. The trial has three arms. Patients receive either continuous or intermittent doses of relacoralin plus napaclitaxel or napaclitaxel alone. Trial's primary endpoint is progression-free survival, with secondary endpoints including objective response rate, duration of response, and overall survival. We hope data from this trial will guide us to design a Phase III study that will lead to a successful NDA. We will have top-line results from this study in the second quarter. Our study in pancreatic cancer, Reliant, has a planned enrollment of 80 patients with metastatic disease. with each patient receiving relacoralin plus napaclitaxel. The trial's primary endpoint is objective response rate, with secondary endpoints including progression-free survival, duration of response, and overall survival. The trial design includes an analysis of data from the first 40 patients. We will also have top-line results from this cohort in the second quarter. In addition to blunting apoptosis, cortisol activation reduces inflammation and suppresses the immune system, which is why synthetic cortisols are used to treat inflammatory and autoimmune disorders. Unfortunately, by suppressing the immune system, cortisol also diminishes the effectiveness in immunotherapy in patients with solid tumors. In September, we initiated an open-label Phase Ib trial of relacoralin plus the PD-1 checkpoint inhibitor, Pembrolizumab, Merck's drug Keytruda, in patients with advanced adrenal cancer whose tumors produced excess cortisol. These patients suffer the effects of adrenal cancer and Cushing syndrome, a usually quickly lethal combination. We believe their cortisol excess may also counteract the intended effects of Pembrolizumab, which is rarely effective as monotherapy in these patients. Our trial is evaluating whether reliquaryland can treat these patients' Cushing syndrome by reducing the effects of excess cortisol activity and by reversing cortisol-induced immune suppression, also allow pembrolizumab to achieve its full cancer-killing effect. Our posters at this year's ASCO and AACR meetings present preclinical and clinical biomarker data supporting our hypothesis. You can review them at the research and pipeline publications tab of our website. We plan to enroll 20 patients in this trial at five sites in the United States. Primary endpoint is objective response rate, with secondary endpoints including progression-free survival, duration of response, and overall survival. The third mechanism we are studying concerns cortisol's ability to stimulate tumor growth in patients with castration-resistant prostate cancer. Cortisol stimulation is a major reason patients treated with the widely prescribed androgen receptor antagonist enzalutamide eventually experience resurgent disease. Prived of androgen stimulation, their tumors switch to cortisol activity as a growth pathway. Our hypothesis is that adding a cortisol modulator to androgen deprivation therapy will close this tumor escape route. We are conducting a phase 1b trial of our selective cortisol modulator, X-correlant, combined with enzalutamide in patients with castration-resistant prostate cancer, and expect to identify a dose regimen suitable for advancing to a larger controlled study in the second or third quarter of this year. I will conclude with a brief update on our program in metabolic diseases, where our selective cortisol modulator, Miracorrelant, has shown promise in preclinical and clinical studies. In animal models, miracoralin prevents and reverses fatty liver disease and liver fibrosis, two precursors of NASH, a serious disorder that affects 5% of the U.S. population. In December, we opened a double-blind, placebo-controlled Phase II trial of miracoralin as a treatment for patients with NASH. The trial has a planned enrollment of 120 patients at 15 sites in the United States. Study participants will receive a daily dose of either 600 milligrams of miracoralin 900 milligrams of miracoralin or placebo for 12 weeks. We were also evaluating miracoralin as a treatment for antipsychotic-induced weight gain, a serious and widespread disorder. In the United States, 6 million people take antipsychotic medications such as olanzapine, Eli Lilly's drug Zyprexa, and Risperdal, J&J's Risperdal, to treat illnesses such as schizophrenia, bipolar disorder, and depression. While these drugs are very effective, They exact a steep price in the form of rapid and sustained weight gain, cardiovascular disease, and other metabolic disturbances. Patients can gain more than 50 pounds, and their life expectancy is decreased on average by 20 years due in part to excess cardiovascular events such as heart attacks and strokes. We have completed three double-blind placebo-controlled clinical trials in healthy subjects, in which co-administration of a cortisol modulator reduces these dangerous adverse effects. Two of these trials used mifepristone, the active ingredient in Corula. Our positive results were published in the journals Advances in Therapy and Obesity in 2009 and 2010. Unfortunately, Corula, which shares its active ingredient with the abortion pill, cannot be advanced for such a prevalent disorder. Miracoralin is not the abortion pill and can be advanced for this use. Results from Miracoralin's first trial in this disorder were promising. In that trial, 99 healthy subjects received olanzapine and either 600 milligrams of Miracoralin, 900 milligrams of Miracoralin, or placebo for 14 days. Studied participants who received Miracoralin gained statistically significantly less weight than those who received placebo. In addition, they exhibited a smaller increase in triglycerides and in the liver enzymes AST and ALT, markers of liver damage that rise at the onset of olanzapine therapy. We plan to publish a paper presenting the results of the study later this year. Our double-blind placebo-controlled base-2 trials of miracoralin in antipsychotic-induced weight gain continue to enroll patients. The GRATITUDE trial is evaluating whether miracoralin can reverse recent antipsychotic-induced weight gain. 100 patients with schizophrenia or bipolar disorder will receive, in addition to their established dose of antipsychotic medication, either 600 milligrams of miracoralin or placebo for 12 weeks. GRATITUDE is being conducted at 30 centers in the United States. Our Gratitude 2 study is testing miracoralin as a treatment for longstanding antipsychotic-induced weight gain. 150 patients with schizophrenia will receive, in addition to their established dose of antipsychotic medication, either 600 milligrams or 900 milligrams of miracoralin or placebo for 26 weeks. Gratitude 2 will be conducted at 35 centers in the United States. The primary endpoint in both studies is reduction in body weight. Other important measures of metabolic activity will also be examined. In 2020, the COVID pandemic had a real effect on Corecept, as it did on most companies. Nonetheless, we entered 2021 stronger in every respect, financially, legally, and clinically. Although our financial results were affected by the pandemic, our revenue, net income, and cash balance increased significantly. We expect further growth as pandemic conditions improve. Our revenue guidance for 2021 is $375 to $405 million. Our clinical programs also made substantial progress. Five existing trials advanced and important new trials were started. The pandemic slowed enrollment in some of our trials significantly, especially those studying diseases that are not acutely life-threatening. This slowdown has delayed our target date for submitting relacoralin's NDA as a treatment for Cushing syndrome. That being said, all of our trials continue to add patients and collect valuable data, and we expect the pace of enrollment in all of them to accelerate once conditions improve. We completed enrollment in both our Phase II trial of relacoralin plus napaklitaxel in patients with metastatic ovarian cancer and, a short time ago, in the first 40-patient cohort of Reliant. our Phase 3 trial in patients with metastatic pancreatic cancer. We will have data from both these trials in the first half of this year as planned. Enrollment is underway in our Phase 1B trial, abrelacoralin, combined with a PD-1 checkpoint inhibitor, pembrolizumab, to treat patients with advanced adrenal cancer and cortisol excess. In the second or third quarter of this year, we expect to select the optimum dose of exoquarlin to advance in combination with enzalutamide in a controlled phase two trial in patients with castration-resistant prostate cancer. Finally, enrollment is underway in three double-blind placebo-controlled phase two studies in patients with metabolic disorders, one in patients with NASH and two, gratitude and gratitude two, in patients with antipsychotic-induced weight gain. I'll stop here for questions.