Corcept Therapeutics Inc Q2 FY2022 Earnings Call

Good day, and thank you for standing by. Welcome to the Corcept Therapeutics Conference Call. And please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Atabak Mokari, CFO. Please go ahead.

Good afternoon, and thank you for joining us. I'm Atabak Mokari, Corcept's Chief Financial Officer. Today, we issued a press release announcing our financial results for the second quarter and providing a corporate update. A copy is available at corcept.com. Our 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 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 may cause actual results to differ materially from those such statements expressed or implied. These forward-looking statements are described in today's press release and the risks and uncertainties that may affect them are described in the press release and in our annual report on Form 10-K and our quarterly reports on Form 10-Q. Please refer to those documents for additional information. We disclaim any intention or duty to update forward-looking statements. Our revenue in the second quarter was $103.4 million, an increase of 13%, compared to the second quarter of last year. We expect our revenue growth to continue and I've reiterated our 2022 revenue guidance of $400 million to $430 million. Net income was $27.4 million or $0.24 for common share in the second quarter. Our cash and investments increased $13.9 million in the second quarter to $382 million at June 30. The increase in cash was $13.5 million less than it might have been due to a recent change in federal tax law. Previously R&D expenses could be deducted from income for the purposes of calculating federal tax in the year in which they were incurred. Beginning this year, R&D expenses must be amortized over five years, which means that the tax benefit of each year's R&D spending, while unchanged in the aggregate will now be recognized in five equal annual installments. Our cash balance at June 30 reflects the impact of this change for the first half of the year. If Congress restored the immediate deductibility of R&D spending, we will receive a tax refund. I will now turn the call over to Charlie Rob, our Chief Business Officer to provide an update on our litigation with generic manufacturers Teva and Hikma Pharmaceuticals.

Thanks Atabak. There's little report this quarter. As many of you know, Teva is seeking to market a generic version of Korlym in violation of our patents. In March 2018, we sued Teva in Federal District Court. That lawsuit is still underway, although currently all is quiet. Over a year ago, we filed for summary judgment on Teva’s infringement of our 214 patent. As expected, Teva responded by filing its own summary judgment motion. Summary Judgment is a procedure whereby courts decide the case without holding a trial. The court has not responded to these motions. Because Teva challenged the validity of our 214 patent before the patent trial and appeals board, the procedure known as a post-grant review, or PGR and lost, it can no longer challenge the 214 patent’s validity in district court. So the only defense to our summary judgment motion is that its proposed product would not infringe, a position that we believe has no legal or factual support. If the court decides the pending summary judgment motions in our favor, Teva would be barred from marketing generic Korlym until 2037 when the 214 patent expires. If the court rules in Teva's favor we will proceed to trial most probably sometime next year. There is no timetable for the summary judgment motion ruling, no trial date, and no schedule for any trial-related activities. In March 2021, we sued another filer Hikma Pharmaceuticals in the same Federal District Court who is hearing our case against Teva. The court originally set a fact discovery deadline of July 1 of this year, although that date has been vacated. No deadlines are currently scheduled for this case. With respect to both Teva and Hikma, we are confident in the strength of our legal position. I'll now turn the call over to Dr. Joseph Belanoff, our Chief Executive Officer.

Thank you, Charlie. Our Cushing’s syndrome business is built on a solid foundation, a lifesaving medication promoted by a commercial team that puts the interests of patients first. Our strong second quarter results reflect this. As the country gets closer to resuming a pre-pandemic way of life, physicians will experience fewer challenges identifying, diagnosing, and optimally treating their patients, especially those with complex disorders such as Cushing's Syndrome. Leading endocrinologists increasingly believe there are substantially more patients with Cushing's Syndrome than was once assumed. For many of these patients, Korlym is an excellent treatment. We reiterate our 2022 revenue guidance of $400 million to $430 million. We are extremely optimistic about our clinical development programs. We believe cortisol modulation has the potential to treat many serious diseases. The positive results of our Phase 2 trial in women with platinum-resistant ovarian cancer provide serious evidence supporting cortisol modulation's broad application. This year, we will see important results from our Phase 2 GRATITUDE trials, an antipsychotic-induced weight gain study, and our dose-ranging study in patients with non-alcoholic steatohepatitis or NASH. Our portfolio of more than 1,000 proprietary molecules, together with funds provided by our commercial success, will allow us to further broaden our lines of inquiry. All of our compounds modulate cortisol effects by binding strongly to the glucocorticoid receptor or GR, which do not bind to the progesterone receptor and, therefore, don't cause Korlym’s most serious off-target effects. While all of our compounds modulate cortisol activity without modulating progesterone activity, they are not identical. Some cross the blood-brain barrier, while others do not. Some perform best in models of solid tumors, while others are more potent in models of metabolic disease. Some appear to be tissue-specific, while others have more global effects. These diverse qualities allow us to effectively examine a wide variety of disorders. Currently, we are studying ovarian, adrenal, and prostate cancer, antipsychotic-induced weight gain, NASH, and, of course, Cushing's Syndrome. We plan to start a Phase 2 trial in patients with ALS this quarter and have additional compounds in Phase 1 and preclinical development. Our Cushing's Syndrome business has funded all of these programs and will continue to do so. Our oncology program is testing three anti-cancer mechanisms, as first postulated by investigators at the University of Chicago and later confirmed by other prominent researchers. One mechanism is increasing apoptosis, or programmed cell death, which chemotherapy is meant to induce in solid tumors. Cortisol works against the beneficial effects of chemotherapy by suppressing apoptosis. In our successful controlled Phase 2 trial in women with platinum-resistant ovarian cancer, the addition of the selective cortisol modulator relacorilant enhanced the effect of chemotherapy, likely by blunting cortisol's anti-apoptotic effects. While these women's diseases have progressed on two or more previous lines of treatment, including previous Taxanes, relacorilant appears to re-sensitize some of them to chemotherapy’s beneficial effects. In addition, the women who received relacorilant plus chemotherapy experienced no additional side effect burden compared to those who received chemotherapy alone. Relacorilant provided meaningful benefits to many of the women in our study. Those who received relacorilant intermittently the day before, the day of, and the day after they received nab-paclitaxel exhibited a statistically significant improvement in progression-free survival and duration of response compared to the group who received nab-paclitaxel monotherapy. While our study was not powered to show a difference in overall survival, or OS, compared to nab-paclitaxel monotherapy, women in the intermittent relacorilant group also lived longer than those in the comparator arm with a P value that approached statistical significance. No approved therapies have demonstrated an overall survival benefit in patients with platinum-resistant ovarian cancer. Results from the study were featured in podium presentations at the September 2021 European Society for Medical Oncology, ESMO Congress, and at the 2022 American Society of Clinical Oncology, ASCO annual meeting. As we announced last month, we have started a pivotal Phase 3 trial in platinum-resistant ovarian cancer, which we have named ROSELLA. Plan enrollment is 360 women randomized one to one to receive either relacorilant plus nab-paclitaxel or nab-paclitaxel alone. The primary endpoint will be progression-free survival, with overall survival as a key secondary endpoint. ROSELLA’s design closely tracks our Phase 2 study with adjustments that emerged from constructive conversations with the FDA and leading clinicians from the gynecologic oncology group in the United States and the European Network of gynecological oncology trial groups in Europe. Two adjustments warrant special notice. First, women who enroll in ROSELLA must have received prior Bevacizumab therapy, which is the current standard of care in the United States for patients with platinum-resistant ovarian cancer. Fifty-nine percent of the women in our Phase 2 study had received prior Bevacizumab and we expect this percentage to continue to increase in clinical practice. Second, women whose tumors have not responded at all to platinum-based treatments, and those who have received more than three prior lines of therapy will be excluded. Women in our Phase 2 study meeting these criteria exhibited even greater differential improvement in progression-free survival, duration of response, and overall survival without an increase in the frequency or severity of adverse events. Median PFS for women who received relacorilant intermittently was 7.3 months compared to 3.7 months for the women who received nab-paclitaxel alone, with a hazard ratio of 0.40. Their median OS was also significantly longer, at 17.9 months compared to 12.6 months with a hazard ratio of 0.38. Our goal in Phase 3 is simply to replicate our positive Phase 2 results. Leading gynecological oncologists have told us that, in their view, relacorilant’s potential benefit of improved survival without increased side effect burden would constitute an important medical advance, and relacorilant plus nab-paclitaxel has the potential to become a new standard of care in women with platinum-resistant ovarian cancer. A second mechanism by which cortisol modulation may prove useful is by blocking an important tumor growth pathway. Cortisol stimulation is a major reason why patients with prostate cancer treated with a widely prescribed androgen receptor antagonist Enzalutamide eventually experience resurgent disease. Prior to androgen stimulation, their tumors switch to cortisol activity to stimulate growth. Our hypothesis is that adding a cortisol modulator to androgen deprivation therapy will close this tumor escape route. We recently completed a dose-finding study of our selective cortisol modulator exicorilant combined with Enzalutamide in men with castrate-resistant prostate cancer. Investigators at the University of Chicago, led by Professor Russell Szmulewitz, completed a similar study of relacorilant combined with Enzalutamide, and both studies produced acceptable dosing regimens. We decided to proceed with the randomized placebo-controlled Phase 2 trial of relacorilant plus Enzalutamide in patients with prostate cancer in collaboration with Dr. Szmulewitz at the University of Chicago. Patients in Professor Szmulewitz’s planned study will be treated with either Enzalutamide or relacorilant plus Enzalutamide before they have had an initial prostatectomy. Enzalutamide has been shown to be beneficial much earlier in patients’ treatment paths and was apparent at its first approval. We think that relacorilant has the potential to add to its benefits. The patient group that will be studied is large, as is the commercial opportunity. A third therapeutic mechanism seeks to treat tumors by reducing cortisol suppression of the immune system—a quality of cortisol that likely blunts the effectiveness of therapies intended to enhance the body's immune response. We're conducting an open-label Phase 1b trial of relacorilant plus the PD-1 checkpoint inhibitor pembrolizumab, Merck’s drug KEYTRUDA, in patients with advanced adrenal cancer whose tumors produce excess cortisol. These patients suffer the effects of adrenal cancer and Cushing's Syndrome, which is usually a quickly lethal combination, and pembrolizumab is rarely effective in treating this form of adrenal cancer. We believe that excess cortisol by suppressing the immune system may be counteracting the intended effects of pembrolizumab, which is to stimulate the immune system. Our trial is evaluating if relacorilant can treat these patients with Cushing's Syndrome by reducing excess cortisol activity and by reversing cortisol-induced immune suppression, allowing pembrolizumab to achieve its own cancer-killing effect. We plan to enroll 20 patients at sites across the United States. The primary endpoint of the study is objective response rate, with secondary endpoints including progression-free survival, duration of response, and overall survival. I'll turn now to our programs in metabolic disease, which will produce important data soon. We are conducting two double-blind placebo-controlled Phase 2 trials of miricorilant, GRATITUDE and GRATITUDE II, for patients with antipsychotic-induced weight gain, a serious and widespread disorder. In the United States, 6 million people take antipsychotic medications such as olanzapine and Risperidone to treat illnesses including schizophrenia, bipolar disorder, and depression. While these drugs are very effective, they cause rapid and sustained weight gain, as well as cardiovascular and metabolic disease. The burden on patients is severe, as the average life expectancy of patients in the United States who take antipsychotic medications chronically is decreased by 20 years. These side effects also dissuade many patients from adhering to their treatment regimens. The GRATITUDE trial seeks to build on the positive data from our study of miricorilant in healthy subjects. In 2020, we completed a trial in which 96 healthy subjects received olanzapine and either 600 milligrams of miricorilant, 900 milligrams of miricorilant, or placebo for 14 days. Subjects who received miricorilant gained significantly less weight than those who received placebo. They also exhibited a smaller increase in triglycerides and in the liver enzymes, ALP and AST, which typically exhibit sharp transient increases at the start of olanzapine therapy. A paper describing these results was published in the Journal of Clinical Psychopharmacology last year. GRATITUDE is evaluating whether miricorilant can reverse recent antipsychotic-induced weight gain. Patients with schizophrenia or bipolar disorder received, in addition to their established dose of antipsychotic medication, either 600 milligrams of miricorilant or placebo for 12 weeks. GRATITUDE II is testing miricorilant as a treatment for longstanding antipsychotic-induced weight gain. Patients with schizophrenia receive, in addition to their established dose of antipsychotic medication, either 600 milligrams or 900 milligrams of miricorilant or placebo for 26 weeks. While the primary endpoint in both studies is reduction in body weight, it is important to stress that measures of metabolic activity will be examined as well, and improvements in lipids, glucose control, and markers of liver health would be highly desirable outcomes. These studies will produce important data in many areas, as dosing of patients in both trials is complete. We look forward to results by year-end. Miricorilant is also our candidate treatment for patients with NASH, a serious liver disorder that affects millions of patients in the United States. In our prior study, patients who received miricorilant exhibited large rapid reductions in liver fat, but also substantial, albeit transient elevations of ALP and AST. The improvement in liver fat in these patients was greater and occurred much more rapidly than we had expected and are rarely seen over any period of treatment. Patients exhibited reductions from 38.5% to 73.8% after receiving miricorilant for just one month. To put this in perspective, recall that the trial's primary endpoint was a 30% reduction in liver fat after 12 weeks. It may be that the rapidity of miricorilant’s fat-reducing effect caused the patients’ ALP and AST to rise. One way the liver sheds fat is by metabolizing it into fatty acids, which in excessive amounts irritate the liver. Lipids in the bloodstream of these patients did not increase, providing support for the idea that miricorilant caused their excess fat to be metabolized immediately within the liver. Our current Phase 1b dose-finding trial in patients with presumed NASH aims to identify a dosing regimen that significantly reduces fat without causing excessive liver irritation. We expect results later this year. As most of you know, we are evaluating relacorilant, our planned successor to Korlym, for the treatment of hypercortisolism in two Phase 3 trials, GRACE and GRADIENT. Relacorilant is a selective cortisol modulator. Like Korlym, it achieves its effect by competing with cortisol at the glucocorticoid receptor. Unlike Korlym, it does not bind to the progesterone receptor, and so does not cause PR-related side effects including termination of pregnancy, endometrial thickening, and vaginal bleeding. Through a different mechanism, relacorilant also does not appear to cause hypokalemia, or low potassium, serious side effects experienced by 44% of patients in Korlym’s pivotal trial. Korlym-induced hypokalemia is a leading cause of Korlym discontinuation. Relacorilant Phase 2 efficacy and safety data were strong. Patients experienced meaningful improvements in hypertension and glucose control, as well as in a variety of other signs and symptoms of Cushing's Syndrome. There were no relacorilant-induced instances of endometrial thickening or vaginal bleeding, and no drug-induced hypokalemia. The trial results were published in Frontiers in Endocrinology last year. GRACE has a planned enrollment of 130 patients with any etiology of Cushing's Syndrome and has a randomized withdrawal trial design. All patients initially receive relacorilant for 22 weeks. Those who meet response criteria are randomized to continue treatment with relacorilant or placebo for 12 weeks. We, and our investigators, are eager to take GRACE to the finish line. We expect GRACE to serve as the basis for NDA submission in Cushing's Syndrome, which we expect to submit in the second half of 2023. Our second Phase 3 trial, GRADIENT, is studying relacorilant’s effects in patients whose Cushing's syndrome is caused by an adrenal adenoma or adrenal hyperplasia. Patients with this etiology of Cushing's Syndrome often experience a less rapid decline, but their health outcomes are poor. GRADIENT is the first controlled study in patients with this type of Cushing's Syndrome. While we do not expect our NDA in Cushing's Syndrome to depend on data from GRADIENT, we do expect that its findings will improve the care of these increasingly recognized patients. GRADIENT, a randomized placebo-controlled study, has a planned enrollment of 130 patients. Finally, a word about Dazucorilant, which has shown great promise in animal models of ALS. ALS, commonly known as Lou Gehrig's disease, is a devastating disease with very modest pharmacologic treatment options. This quarter, we plan to initiate a 198-patient randomized, double-blind placebo-controlled Phase 2 trial of Dazucorilant in ALS, which we have named DAZALS. This study is being shepherded by TRICALS, a leading ALS Academic Consortium in Europe. To sum up, our second-quarter commercial results were strong, and we expect growth to continue as pandemic conditions recede. We have reiterated our 2022 revenue guidance of $400 million to $430 million. Our development programs continue to generate evidence validating our long-held belief that cortisol modulation has the potential to treat a wide range of diseases. Reducing cortisol activity is a straightforward way to treat Cushing's Syndrome. What now appears clear is that excessive cortisol activity affects other very important diseases and can be improved by cortisol modulation. Ovarian cancer is an excellent example, but there will be others. Later this year, we will have important data from our antipsychotic-induced weight gain and NASH studies. Our just-opening multinational trial in ALS has real promise. A whole academic field in the use of cortisol modulation in alcohol and other addictions is beginning to emerge. And in addition to relacorilant, miricorilant, and Dazucorilant, we have many individually distinguishable cortisol modulators with clinical potential. Corcept is steadily advancing. I thank our dedicated creative employees and loyal investors for making this possible. I'll stop here for questions.

And our first question comes from the line of Matt Kaplan with Ladenburg.

Hi, thanks for taking the questions. And congrats on a quarter. I guess with the initiation of your Phase 3 in platinum-resistant ovarian cancer patients, can you help us understand the market opportunity there? Specifically, how many patients, ovarian cancer patients in the US and how many of those are platinum-resistant and would be targets for your treatment?

Yes. Thanks, Matt. Thanks very much for the question. So, first I just want to point out I know you know this to the whole group, that the group of platinum-resistant patients is a subgroup of patients. All patients who have ovarian cancer are approximated to be somewhat above 200,000 patients in the country who have ovarian cancer, and our best estimate is about 20,000 to 25,000 patients who have platinum-resistant disease and about an equal number in Europe to that.

Okay, great. And with the Phase 3 trial, can you help us understand the timeline for that program?

Yes, and thank you very much for that question. So yes, the ROSELLA study is open, and we're actively working with sites to enroll patients as soon as possible. We're also actively working with adding additional sites from around the world. So when I look at this trial, based on our estimates, the study will take us about 12 to 14 months to enroll, and about 12 months to approve the data. So about two years from now, we should see results from the ROSELLA trial.

Okay, and then the last question on the ovarian cancer. Do you think in the future that this could be an opportunity to move to earlier stage treatment, and specifically frontline ovarian cancer in combination as well?

Well, thanks, Matt. The answer to that is something we're looking at very seriously. As you know, many drugs are often approved in sort of late-line therapy and then as evidence increases and, of course, with longer studies, it moves earlier in treatment, and we are certainly taking a very close look at that, in fact, it is really top of our list and I hope to really be able to update you on how we're thinking about that incoming calls.

And your next question comes from the line of Dennis Ding with Jefferies.

Hey, guys, thanks for taking my question, two for me. Question number one, can you give a little bit more granularity on some of the patient dynamics in Q2, specifically how much of the sequential revenue growth was from normalization of price? How much of that came from patients who are new to Korlym? And how much came from patients who couldn't take the drug before because of COVID but are getting back onto it? And then my second question, can you just update us on the DOJ subpoena in terms of what we're waiting for? And just remind us, what is the next step? It seems like this could be a pretty major binary event once that eventually unfolds? Thank you.

Okay, thank you, Dennis. I'm glad to hear from you. I'd first like to introduce, reintroduce our group to Sean Maduck, who is the President of our Endocrinology Division and handling all responsibilities, including the commercial responsibilities for Korlym.

Dennis, yes, thanks for the question. I thought I would start by reminding everyone that Q1 is typically slightly depressed due to all the insurance changeovers and the volume of free drugs that we give to ensure patients don't stop therapy over the course of their insurance reauthorizations. All that being said, we're very pleased with the second quarter, and I want to remind everyone of what are the key drivers of our business. And that's really a patient's ability to see their doctor in person. And then, of course, that clinical specialist's ability to meet with physicians. Again, both of those are key drivers. In the second quarter, we did see some improvement in both of those areas, which led to more patient-physician interaction and more Corcept physician interactions, which led to more new patients being prescribed and more new prescribers coming on board. So I would say those two are the main drivers of the change: new patients and new prescribers. Again, all that being said, neither of those metrics have reached the pre-pandemic levels that we had seen before the start of COVID-19, and we're actually not sure if they ever will as an organization. As telemedicine and medical practices are closing their doors, in some cases, to pharmaceutical representatives, and that creates operational hurdles that are not just Corcept specific; these are industry-wide. Our commitment is that we have worked hard to find new ways to operate in that new normal, and I am very confident we will find new and creative ways to continue to reach our target audience.

And, Charlie, would you like to answer the second question, please?

Sure. Hi, thanks for the question. The short answer is there's no update with respect to the DOJ subpoena. But before I elaborate a little bit on that, let me give some background for folks who might not be as familiar. We, folks may recall that back in 2018 or so, we suffered some short-seller attention and attacks that we pushed through, of course, but there were a couple of lingering consequences of that. One was this securities class action that we are grinding through right now. And the other, I believe, was this DOJ inquiry, where they requested a whole bunch of documents concerning our commercial business. Now, our approach to this, beyond obviously cooperating with the DOJ, is to give them as much information as they want faster than they can actually absorb it just because we want to get all the information in front of them. So that we can move through this, we think that's our path to resolution. The truth is our friend in this case, and we are moving things as quickly as we can on our side. I stress that just because it's a little unusual; I think the typical strategy is just to delay. We see no point in doing that. We know there's light at the end of the tunnel, and that's what we're driving to as fast as we can. Having said that, of course, we don't control the pace of this. All we can do is put the information out there as it's requested and faster than expected. We're doing that, but other than that, that's all I can report because that's all I know. So we'll this be resolved at some point. We're very confident in our position. I just can't say more than that right now.

And your next question comes from the line of Michael from Canaccord.

Hello, this is Michael on for Edward. Congrats on the quarter, I had two quick questions. So for the Phase 3 ROSELLA trial, can you remind us what led to choosing nab-paclitaxel as the active chemotherapy control, which does match the Phase 2 trial, by the way, but I remember the initial Phase 3 design allowed for investigator choice. So what, as you lost that last month, what led to that change?

Yes, no, I understand the question and Bill, if you are out there, would you please answer that?

Yes, thank you very much for the question. So it was a really easy decision to make. We were looking at the Phase 3 study design and working with the GoG, the Gynecological Oncology Group, as well as we had thought of and come up with many different iterations of a Phase 3 design. The first one that you had mentioned was investigator choice. After we got very positive and supportive comments from the FDA, we then looked at other analyses around prior Bevacizumab use, as well as patients who had one to three prior lines of therapy, and excluded patients who were primary platinum refractory. Based on that analysis, we then decided to repeat the Phase 2 study because we saw unprecedented results. As Joe had indicated, we saw an overall response rate for PFS of greater than three months, with a hazard ratio of 0.40; we saw an OS benefit of greater than five months with a hazard ratio of 0.38. And we saw a benefit of about 2.5 months of duration of response with a hazard ratio of 0.29. So looking at those Phase 2 results and working with the FDA, we felt it was simplest to just repeat the Phase 2 trial in our Phase 3 study design, and the FDA agreed with that as well. So that was the simplest path to moving forward as quickly as possible, and it was a very straightforward path for us to follow.

And understanding what comments about because I think you asked specifically about why we went from dealer's choice to nab-paclitaxel alone. Now just to remind everyone, our Phase 2 study was with nab-paclitaxel. The overall feedback we got, including the regulatory feedback, was that it was a very easy to understand result, and if replicated would be very easy to understand as a Phase 3 result.

XTANDI.

Yes, no, I'm really glad that caught your attention because it's a very interesting program. Just a couple of things to remind the group: we are using relacorilant; we had a choice between relacorilant or exicorilant. The person who led the relacorilant study in the previous study and dose-finding in this group, Russell Szmulewitz, the University of Chicago, is actually going to be leading this study, as well as an investigator study as a grant-funded study. The timing is a little more opaque to us, although I know he's very anxious to get going with it. Everything that you said is, in fact, true. It's been very nice to see because of Enzalutamide's real success that patients with prostate cancer have received a lot of benefit that was really unthinkable 15 years ago. As I said in my comments earlier, Enzalutamide does seem to work kind of at the end of the line of treatment, but earlier in therapy. We think that adding relacorilant to that to shut off a tumor escape route will have even greater benefit. But the timelines for it at this point in time are a little uncertain to us. But it will be some time—you're absolutely right, this is not like an end-stage disease where, sadly, people die quickly. We'll have to look at this over a period of time, and I'll get back to you with more specifics in incoming calls.

Your next question comes from the line of Greg Fraser from Truist Securities.

Good afternoon, folks, thanks for taking the questions. First off on relacorilant. You had a good year-over-year growth in sales. The trajectory doesn't appear to have been impacted so far by the newest entrant into the Cushing's market. I'm just curious if you've detected any impact so far on utilization trends or prescribing that might be related to Korlym?

Yes, Greg, I'm going to pass you back over to Sean.

Great. Thanks for the question. No, we have not seen an impact from the competition, and traditionally, we're pleased that more patients or more companies are out there educating physicians on hypercortisolism. Obviously, the guidelines and proper screening will continue to help patient care.

Got it. On the GRACE study, I know you reiterated your target for NDA submission. Can you just confirm that enrollment in the study has been progressing in line with your expectations?

Yes, in fact, let me give you back over to Bill again, who seems to be working. Go ahead, Bill.

Yes. Thank you for that question. So yes, timelines are still on track. First and foremost, we're excited and focused on finishing this study, as are each and every one of the investigators because of the benefit relacorilant can bring to their patients. We've completed a few investigator meetings in the US and Europe, and each of the investigators has reiterated their excitement and enthusiasm for relacorilant and their unwavering need and desire to help us enroll this study expeditiously. So based on all of our interactions with investigators, we feel that we are still on track.

Very good. And then on the prostate cancer program, can you comment on any efficacy signals that were seen in the Phase 1 study? Thank you.

Yes, I just—I mean, really, there really is a quick answer to that. It's really designed as a dose-finding study, obviously not in a controlled setting, so I don't think that there's really much efficacy data that I can relate to you for things that you could draw forward from. I think that all of the results again in the investigator study will be presented at a conference as we will as well. But I just want to remind the group that whenever he is there reminding that this was really a safety and tolerability study, and to give us an indication of where to go next.

And your next question comes from the line of Arthur He from H.C. Wainwright.

Thank you. Good afternoon, gentlemen. First, congrats on a very good quarter. And just a couple of quick questions on the pipeline front. On the ROSELLA study, does the study have an interim look? And if it does, at what point is the interim look?

Bill? Could you take that question?

Sure. I'll take that question. No, we do not have an interim look into this study. The primary endpoint is PFS, and so when we hit our predefined PFS numbers, that's when we will read out the study, and our secondary endpoint is overall survival. So at this point in time, there is not an interim look designed for the ROSELLA study.

Okay, thank you. And then on the DAZALS, in ALS, I am trying to understand how does DAZALS and relacorilant work? And also, does this drug have any efficacy in other movement disorders or neuromuscular disorders such as MS and Parkinson's?

Yes, I'm glad you asked that. It's a little more scientifically far-field than I usually get in conference calls, but, RK, you know me I could talk about this for a long time. The bottom line is, it has been known for quite a while that there are neuromuscular diseases, and ALS is a good example where you have aberrant cortisol activity. Cortisol levels are higher, people lose their diurnal rhythm, and there really has been a thought that this contributes to disease progression. What really got us interested in ALS specifically is there's a good animal model of ALS. It's obviously not exactly the same as ALS, but it's one that has been used for a very long time, called the wobbler mice. In some sense, it sounds sort of like what it is; these are animals that really lose their coordination and may exhibit similar symptoms to what people with ALS do. They have the same cortisol issues that people do as well. Now, in, I guess almost half a dozen publications it has been shown that Dazucorilant GR modulation really changes that. In the animals, at least, not only would the patient not only the animals slow their decline in their neurologic symptoms, they actually improved over a period of time. So, of course, not everything in animals translates to people; it would be wonderful if that actually did translate to people. The bottom line is there is really a good reason to even try. I said it before, ALS is kind of, as much as we have, the Mount Everest of medical maladies, and if we could offer these patients anything that resembled the results that we saw in animals, that would be a wonderful thing. Now, your second question is also precious, because there are other neuromuscular diseases where there is cortisol aberration. For instance, Huntington's disease is one, and we actually have preclinical investigators who are studying Huntington's at this point. We happen to have been talking to an investigator today who is interested in looking at GR modulation in Parkinson's disease. As you know, Psychiatry and Neurology have been my interests for a very long time. These are very difficult areas in which to show progress, but I do think that we will be enlarging our programs in this area and hopefully ultimately be able to offer patients something they clearly cannot get today.

Thank you for that. And then the GRATITUDE studies, where the data is expected by the end of this year. So what's the next step in those development programs? In terms of when you could initiate late-stage trials and look at antipsychotic-induced weight gain?

Yes. Well, first, we're very excited to complete these studies. No one has ever had a successful study in reversing antipsychotic-induced weight gain. We could do it in animals, and we have real hopes in these studies. But I just thank our internal staff and our investigators for actually getting this all enrolled, and up to the point where we're going to see results. As I said before, I just want to emphasize this point that we're not just looking at hopefully we will really see involved changes that will be very beneficial to these patients as well. One thing I haven't commented on before is we may see psychiatric changes that are beneficial to these patients because we think that cortisol modulation has a chance to actually be useful in that vein as well. Now, the answer to your specific question I can give you: my general answer would be it's going to be results-dependent on sort of what we have to do next. But if you go to the extreme end of a result, that is extremely clear and easy to interpret. I’m certain that we will begin a late-stage study next year. I really don't want to promise that; I haven't seen the results yet. But certainly, if the path is straightforward, that's where we'll go. But first, the results.

And your last question comes from the line of Alan Leong with BioWatch News.

Congratulations on another good quarter. Although I've written about it, our readers would like to hear about your rationale behind the ALS trial design. They notice, they know that, I quote, it’s not toe dipping phase two pilot, end quote, but a larger well-controlled design. What motivated the commitment to a stronger design?

Yes, I really, okay. Now I heard that time, Alan. And I really do appreciate that question. Alan was asking is, instead of doing a small study, just looking at a specific biomarker or something like that, why are we doing essentially what is a very good-sized, well-controlled study? Part of that is my own personal bias, which is that it's very hard to know, particularly in psychiatric and neurologic diseases, what you actually have until you do a well-controlled study with placebo. The flip side of that is that I think, particularly in a disease like ALS, where, sadly, people only have one shot at a trial, that you actually have to be able to present to them something that has a legitimate chance to actually provide real benefit. As I said before, animal studies really were quite positive. But it was very important for us to be able to substantiate this concept to a very experienced group of investigators who believe that it had a shot because, just to be blunt about it, if patients enter our study, they may never be able to enter another study. We really wanted to get to the point where we use their time and our time to test and present a result that actually is going to be the most dispositive about where we stand.

Thank you. And then with the upcoming prostate cancer study, you stayed with relacorilant rather than exicorilant. As I recall, relacorilant has excellent jab-blocking properties, while exicorilant, if I'm not mistaken, has some interesting tissue penetration. Is that correct? And can you provide some color on the advantage that propelled relacorilant as your drug candidate?

Yes. The first thing I'd say is it's a pretty close call to read. It's sort of funny; we sat down at the very beginning of these two studies and we got first choice and we picked exicorilant, and Dr. Szmulewitz got second choice and he got relacorilant, so clearly we got it wrong there. The results were pretty similar; we actually found relacorilant has a little bit better tolerability, it's a bit easier to manufacture. We know a lot more about it since that study began, and we study lots of people with relacorilant; we know pretty much how it acts. So exicorilant is not going to zero; it’s going to be on the shelf right now. We just tried to be as objective as we could, and we thought the prospects were better with relacorilant. Also, I just want to fill in one that you have a good memory; in preclinical models, although both relacorilant and exicorilant work well, exicorilant actually did work a little better in preclinical models. But that highlights the point that I made before: you do your best to translate from animal studies, but it's not lockstep, and we just have to go with where the data showed us the best results.

And lastly, this question might be for Sean. I keep asking you this: How much increasing hubbub are you hearing out there or getting requests for treating Cushing's that have become more or less severe? Related to that, are the results for GRADIENT being released about the same time as GRACE? That's really a question.

No, I’ll pass over to him.

Yes, thanks for the question, Alan. Look, Korlym is prescribed for all epilogues of Cushing's Syndrome, for treating patients through to these renal patients. Over time, we've seen more and more patients overall be prescribed for all of those respective epilogues. I would say the understanding of this illness has increased; that's where we spend a lot of our time educating physicians. Through that, we've seen some demand increase.

Yes, no, I think, Alan, that may be one of the things that you're getting at is some sense of what's the value of this study on adrenal adenomas of the GRADIENT study in particular. In order to answer that, I really have to give the whole group some context. Fifteen to twenty years ago, it really wasn't appreciated how many patients there were—and again, still a rare disease—but more than people thought who had hypercortisolism, Cushing's Syndrome caused by adrenal tumors. Probably a decade ago, we started to see that this was a real group. But what's happened over the last decade is that data has really filled in. Now, there is no doubt that there are many patients who have hypercortisolism caused by adrenal tumors that have previously been ignored, had bad outcomes, and are largely untreated. The group that the GRADIENT study focuses on is that which actually reading study focuses on. Now, we'd like to be able to help any patient who has hypercortisolism, and I think that actually producing controlled results is one of the ways to really get there. We think that the field is very, very interested in what's really kind of a standard double-blind study. We'll see what the results will be; patients ranging from the best places to the maybe the point that I'll leave you with is that what was once really sort of tossed off as not very important is no longer tossed off. In publications ranging from the best places to the Mayo Clinic, it's now very clear that the group of patients with adrenal adenomas is both sizable and adversely affected by their hypercortisolism.

Thanks. Looking forward to the rest of the year.

Thank you, Alan. I think that wraps us up here. So thanks. Thank you, everybody. I hope you have a great rest of the summer, and we look forward to talking to you in three months.

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