Earnings Call Transcript - CORT Q2 2021

Operator, Operator

Good day, thank you for standing by and welcome to the Corcept 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. I'd now like to hand the conference over to your speaker today Mr. Atabak Mokari. The floor is yours.

Atabak Mokari, CFO

Thank you. 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. The 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 on the Investors past events tab of our website.

Charlie Robb, General Counsel

Thanks, Atabak. I'll briefly review our litigation against generic manufacturers Teva, Hikma, and Sun Pharmaceuticals. In March 2018, we sued Teva in Federal District Court to prevent it from marketing a generic version of Portland in violation of our patents. Originally, the trial was set to start in February of this year. Last quarter, the court vacated this date in order for the parties to be ready for trial in March. That trial ready date was also vacated. A new trial date has not been set. In April, we asked the court's permission to file for summary judgment based on Teva’s alleged infringement of our 214 pack. The court granted permission and Teva responded by filing some summary judgment motion with respect to the same patent. Summary judgment is a procedure whereby courts can decide the case without holding a trial. We believe that the court has all it needs with respect to the Q1 core patents and can decide the case in our favor. There’s been lots of action before the PTAB, so we can no longer challenge the 214 patent's validity in the district court case. So we can only argue that this proposed product will not infringe, a position we believe has no legal or factual support.

Joseph Belanoff, CEO

Thank you, Charlie. We are pleased with our commercial results in the second quarter. Pandemic-related restrictions made it very difficult for our business to grow because those restrictions made it hard for physicians to provide optimal care to patients. Diagnosing and treating patients with a complex disease such as Cushing syndrome requires frequent in-person contact. For much of the pandemic, this level of contact was, for many patients and physicians, impossible. We are encouraged that in the second quarter, particularly at the end of the quarter, our commercial activity increased notably throughout the country with indications that countries are opening more broadly. It is also heartening to see patients recently introduced to Korlym reaching their ideal dose more quickly than they did last year, as many physicians are now seeing and testing their patients at the pre-pandemic frequency.

Operator, Operator

Your first question comes from the line of Alan Leong from BioWatch News. Your line is now open.

Alan Leong, Analyst

My questions and congratulations on the quarter. I want to especially recognize Sean for successfully executing the sales plan during a time of transition in the business environment. Congratulations to him.

Sean Maduck, Sales Executive

Thanks, Alan. Yes, this is Sean.

Alan Leong, Analyst

This is a question, I guess, for anyone. Joe, you mentioned about titrating Korlym quickly. Are the physicians more willing to venture into a stronger dose than, say, even a couple of years ago, or a little more?

Atabak Mokari, CFO

Joe, do you want to take that question?

Joseph Belanoff, CEO

Yes. So just to clarify, the question is whether physicians are now more readily open to titrating to a higher dose? Was that the question?

Alan Leong, Analyst

Yes.

Joseph Belanoff, CEO

And are you asking that specifically in terms of how it may be different than during the pandemic?

Alan Leong, Analyst

It could be, but really, I would expect that the physician community, having gained more experience, read more literature, and talked to their peers about their experiences with Korlym, may feel less hesitant to increase the dose to an optimal level.

Andreas Grauer, Chief Medical Officer

Yes. I mean, I would say that you hit the nail on the head there. I mean, physicians that have had more experience with a compound are more comfortable using it, are more comfortable with the cadence of patient visits required for follow-up, and have definitely moved to titrate to the higher and most efficacious dose for that patient. Now, an important point is that it really does vary patient by patient. This is patient-dependent. Is there anything, Joe, you want to add to that?

Joseph Belanoff, CEO

Yes, I would. Alan, what you're really asking is whether the behavior has changed compared to several years ago. The answer is that right now, it really hasn't. This is actually a positive development. It's interesting to note that we are now seeing physicians adjust their patients’ doses at the same rate as we observed before the pandemic, not at a faster pace, because back then, they were able to get patients to their ideal doses. During the pandemic, the unusual factor was that, since doctors couldn't meet patients as often, it appeared they were not maintaining the same titration rhythm. It's encouraging to see that they've returned to their pre-pandemic practices at this stage. Overall, our average dose per patient remains very similar to what we experienced years ago.

Alan Leong, Analyst

I have one more question. It could be for Joe, and for Andreas. Regarding the recent NASH results you had a rapid liver fat reduction, and a little bit of inflammatory markers going up? Did you see any notable similar phenomenon with other NASH drugs either in preclinical or human trials done in the literature?

Andreas Grauer, Chief Medical Officer

Well, if you're referring to a transient increase of transaminases in patients with NASH that are treated with drugs to reduce liver fat, there are reports in the literature. It is a known phenomenon. However, the scale was different. When we looked at those, both the scale of the liver fat reduction and the scale of the transaminase elevation, what has often been described with some of the other NASH compounds is an increase in ASG and ALT of about 20%. We have looked at a much bigger increase. But that’s why we're going forward and trying to find our sweet spot where we can achieve a good reduction in liver fat without negatively affecting the liver on the way to do that.

Joseph Belanoff, CEO

I believe that's exactly right, Andreas, and I'd like to add a bit more to that, Alan. The question is whether this phenomenon, a simultaneous decrease in liver fat and an increase in liver functions, has been observed, and the answer is yes. However, Andreas' point is also crucial. No one has ever witnessed such a rapid fat decrease in their studies along with the liver function tests elevating, normalizing immediately after the drug was discontinued. So, truly consider Andreas' conclusion: our objective is to leverage this extreme activity while ensuring it does not irritate the liver. That is the goal, and that will be the focus of the next study we are conducting to determine the ideal dosing regimen.

Alan Leong, Analyst

Thanks for taking my question. It looks like a pretty interesting next 12 months.

Joseph Belanoff, CEO

Thank you, Alan.

Andreas Grauer, Chief Medical Officer

Thanks, Alan.

Operator, Operator

Your next question comes from the line of Matt Kaplan from Ladenburg Thalmann.

Matt Kaplan, Analyst

Hi, good afternoon guys and thanks for taking the questions. Just wanted to know, first, congrats on the strength of the quarter. Nice rebound in the revenues of Korlym. So dig into your pipeline a little bit. Can you give us, I guess, first, an update in terms of the pace of enrollment and how enrollment is going with the relevant Phase 3 gradient study in Cushing's syndrome?

Joseph Belanoff, CEO

Yes. I mean, as I said, Matt, in my remarks, we have not changed the timeline at all. It's just as it was before. The only caveat I would add to that is that we're in an uncertain time in the world. We see no need at the moment to make any alterations. Things are certainly better than they were a year ago. But we'll just have to see what happens. So I would just refer you to that. The timelines are unchanged.

Matt Kaplan, Analyst

Okay. That's helpful. And then I guess you're on track to start your Phase 3 study in ovarian cancer in the first quarter of next year. Can you give us a little color in terms of what that study will look like in terms of design and endpoints?

Joseph Belanoff, CEO

Yes. Let me just turn that question over to Andreas.

Andreas Grauer, Chief Medical Officer

We are finalizing some of those questions, and obviously, many of them are important. There are a few things that are clear. One is that the regimen we’re going to test is the intermittent regimen of relacorilant plus nab-paclitaxel. The comparator we're favoring right now is a physician's choice comparator, so we would give a dealer's choice, allowing physicians the choice of a single-agent chemotherapy in these platinum-resistant or refractory patients. The primary endpoint is expected to be overall survival, which is going to be required as a primary endpoint for approval. We're having a lot of conversations with high-level opinion leaders and will obviously eventually, pretty soon, have conversations with the regulators to form those assumptions.

Matt Kaplan, Analyst

Okay, that's helpful. And then I guess lastly, in terms of the work you're doing with miricorilant and metabolic diseases, specifically anti-psychotic-induced weight gain, how are those studies progressing now? And when can we expect them to yield results?

Andreas Grauer, Chief Medical Officer

Yes, you've surely read what we shared in the press release. We still want to complete enrollment in the GRATITUDE II study by year-end and the GRATITUDE study by mid-2022. We're on track for that, and obviously, we'll have to flip the cards over and observe what we see in these trials. We're quite excited about it and hope to demonstrate the treatment benefit.

Joseph Belanoff, CEO

What I would just add to that is, as you know, the pandemic created different pressures in different types of studies. At the moment, we're actually seeing things progress quite well. Again, I want to emphasize that it's an uncertain world, but at this moment in time, we’re really satisfied with what we're seeing and, as we've said, we’ve reiterated our timeline.

Matt Kaplan, Analyst

And just a follow-up on that in terms of your sense of moving the impact point of view on the weight gain and the unmet need in this patient population. Where could miricorilant play a role?

Joseph Belanoff, CEO

Let me address this one, because, you know, Matt, as you know, these are my patients. As a psychiatrist, every psychiatrist prescribes these medications. They're very effective for what they're intended to treat, which is psychosis, and they are used as adjuncts to handle depression in major depression or bipolar disorder. So from an advocacy point of view, they are very good. Unfortunately, they have this terrible metabolic side effect, which is that they really disrupt that system, leading to weight gain. Even though I didn't mention it in my remarks, this is actually a problem for treatment adherence; people don't like how they look, they don’t like how they feel. And if they are disciplined enough to stay on the medications, ultimately, they develop a lot of the diseases associated with 10% or 15% weight gain, or sometimes even more than that. There's no doubt among physicians who treat these patients that there’s a great need to address this problem. So, again, I look at both halves here—as a treater of these patients and as a developer of medications for them. I really believe that if you could come up with something to help with these issues, it would be exceptionally meaningful with a large market and significant suffering. We'll just have to see; the studies are set up to demonstrate effective weight change. But importantly, also to address the metabolic disturbances that come with weight gain. It would be much better if we could develop something to help with some of the other issues, like increasing triglycerides or fasting insulin, which would make people less prone to diabetes. Thank you for giving me an opportunity to elaborate; mental illness as a whole has a lot of stigma and is often discussed within it. This is a significant problem, and we can do something about it.

Matt Kaplan, Analyst

Thanks, Charlie. That's helpful; it's good to put into context. Thanks for taking questions.

Charlie Robb, General Counsel

Sure.

Operator, Operator

Your last question comes from the line of Arthur He from H.C. Wainwright. Your line is now open.

Arthur He, Analyst

Good afternoon, everyone. This is Arthur He for RK. Thank you for taking my question. Most of my questions have been answered. So I'm just curious, besides the share buyback program, has the management discussed any other plan to further improve shareholder value?

Atabak Mokari, CFO

We discuss it continuously in our planning. No, and look, the most important thing we can do to increase shareholder value is for our program to succeed, as well as for our commercial program to continue on its current path. In addition to that, we do review these matters; our board is very conscious of these things. We feel that our stock is at an inexpensive price right now; as you know, we're committing our own funds to it, and we will continue to do that. But beyond that, when we have something more specific, Arthur, we will discuss it.

Arthur He, Analyst

Thank you. Thank you for that, and congratulations on the strong quarter.

Atabak Mokari, CFO

Thank you very much. I want to thank everyone else for joining us. I'm sure it's a hot summer afternoon, wherever you are, so stay cool and healthy, and we'll talk to you next quarter.

Operator, Operator

This concludes today's conference. Thank you all for participating. You may now disconnect.