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Corcept Q2-2018 Update: Downward Sales Guidance and Upward Sails into Clinical Results

19:30 EDT 9 Aug 2018 | Biotech Watcher


On Thursday, August 9, 2018, Corcept Therapeutics (CORT) reportedits Q2-2018 results and held a conference call. You can hear a replay through August 23, 2018 at 1- 888-203-1112 from the United States and 1- 719-457-0820 internationally. The passcode is 6703650.

In Late July 2018, after the publication of our last report, we finally talked again with Corcept CEO Joe Belanoff. 

Recent Highlights


If you desire a refresher, you may wish to consult BioWatch’s recent commentaries on Corcept.


CORT’s valuation continued to take a hit as retail investors fretted about Teva’s prospects for obtaining the right to market generic Korlym. CORT hit the 12s, a 50% haircut from less than six months ago.

Brief Notes


First, A set of high dose (250mg and 300mg) relacorilant results arrived, and it continues to be stellar. There were no incidents of hypokalemia, or any progesterone related side effects. Although the numbers are small (N=18), there appears to be superior efficacy to Korlym. Greater percentages achieved improved glucose control (58% vs. 48%) and hypertension reduction (55% vs. 44%) versus Korlym. It was also measurably better than the low-dose cohort especially for glucose control (58% vs. 23%).



At the 250mg and 300mg cohorts, we saw solid, approvable efficacies with reduced side effects. It’s almost unbelievable that there was no hypokalemia. Over 40% of the Korlym patients in the pivotal trial experienced it…and fewer were responders. We await the 350mg and 400mg results and expect some side effects related to muscle pain and inflammation. We will scratch our head if the side effect profile remains nearly the same but efficacy still increases.

Second, the relacorilant pivotal trial (Cushing’s) will have a target enrollment of 120 patients who suffer from hyperglycemia and/or hypertension. It will be a placebo-controlled, randomized trial. Subjects that respond will then experience a randomized, withdrawal phase; they will be assigned to placebo or treatment. The expectation is that the placebo patients will see a withdrawal of their newly won benefits.

Third, Corcept cut sales guidance by $25M. It went from $275M - $300M to $250M – $270M. The stock tanked after hours and we expect momentum retail investors to continue fleeing.

Fourth, Corcept announced a $100M stock buyback. The Board has until June 30, 2019 to make these purchases. This is a stark juxtaposition to the downward revision in sales guidance. The Board obviously feels that the current valuation is misaligned with the company prospects. We think there is a nucleus of three items to consider:
The ongoing case with Teva
Future Cushing’s sales and competitive ecosystem
Optimism regarding the oncology and metabolic programs

The Board obviously asserts greater optimism over one or more of these areas. We personally think the metabolic program is overlooked by retail investors. Cancer is sexy, but we think the expected value is greater for the metabolic program.

Fifth, Belanoff announced that “enough results” from the pancreatic cancer cohort (involving relacorilant and Abaraxane) should arrive by the end of 2018, so it will guide the planning for a future trial.

We think the next pancreatic cancer trial will be a pivotal trial as the need is desperate. Corcept may already be providing the “only” extant information about pancreatic cancer patients requiring 3rd-line and 4th-line treatment. What degree of leniency is possible? We think the FDA will be remarkably lenient. If you don’t get it, then you haven’t read our summaries on pancreatic cancer treatment. It’s abysmal and is a growing problem.

The ovarian cancer cohort should launch by year end. As for the checkpoint inhibitor trials, CEO Belanoff confirmed that Merck is contributing free (Keytruda). It has been our contention that positive checkpoint inhibitor results will bring a strong investor focus to Corcept.

Sixth, we can appreciate the silence around alcohol withdrawal or other indications. Corcept has a full plate with the current programs. We expect the oncology program to take a hard look at melanoma and lung cancer. These cancers have a strong immunological component.We also expect the metabolic program to examine additional indications, at least one being a solid blockbuster, in the near future.

Financial Summary


Quarter Ending June 30, 2018
(in Thousands except Share Price & Market Cap)

Q2-2018
Q1-2018
Q4-2017
Q3-2017
Q2-2017
Net Product Sales
$62,312
$57,269
$53,280
$42,763
$35,559
Cost of Sales
1,154
1,174
1,156
976
775
R&D Expense
20,543
17,050
13,632
11,693
7,876
SG&A Expenses
19,981
18,440
16,795
16,471
14,113
Total Operating Expenses
41,678
36,664
31,583
29,140
22,764
Net Income (Loss) from Operations
20,634
20,995
21,697
13,623
12,795
Net Income (Loss)
18,196
17,459
98,330*
13,757
12,647
Total Comprehensive Income
18,221
17,307
98,269
13,760
12,642
Basic & diluted income (loss) per share
0.16
0.14
0.15
0.14
0.86
0.77
0.12
0.11
0.10
0.10
Avg. Shares Outstanding
Basic & Diluted
115,492
127,515
114,882
127,733
114,370
127,361
113,603
125,651
113,249
123,011
Recent Price (per share)
13.98
(8/9/18)
17.36
(5/8/18)
24.29
(2/1/18)
19.71
(11/2/17)
12.30
(8/1/17)
Market Capitalization
2.0B
2.0B
2.8B
2.2B
1.4B
Cash
159,945
33,121
31,062
31,060
33,623
Short-term Marketable Securities
*
92,241
72,963
44,096
32,542
Long-term Marketable Securities
*
73
50
1,508
1,494
*To be included with Corcept SEC filing of 10-Q.

Within our Q1-2018 commentary, we wondered whether Corcept earnings would be flat or even decrease for a couple quarters. Corcept is enlarging its in-house clinical and preclinical programs…The projected sales should provide enough funds for in-house development for the current clinical programs: cancer, Cushing’s syndrome, and metabolic syndrome.

Sales Projections


Net Sales
Q2-2018
Q1-2018
Q4-2017
Q3-2017
Q2-2017
2017 Total
2018
Total
FY-2018
Guidance
$ 62.3M
$ 57.7M
$ 53.3M
$ 42.8M
$ 35.6M
$ 159.2M
120.0M
$250M-$270M







Corcept provided downward guidance on FY2018 sales from $275M - $300M to $250M – $270M. CEO Joe Belanoff said that the downward guidance relates to “not seeing sales acceleration beyond the current 60% to 65% growth rate. Management expects continued sales growth in 2019 and beyond.

Update - The Teva Challenge


Corcept’s attorneys has extended the time to file its motion to September 4, 2018. As we mentioned before, we expect Corcept to delay as much as possible. Even management is “reasonably confident” of victory, there is every reason for Corcept’s lawyers to proceed with a slow and deliberate speed.

First, we expect that Corcept awaits theapproval of patent apps that strengthen its position. Some of these applications are “barely” published. We don’t have to ask for this. It’s expected.

Second, on the call, Charlie Robb mentioned that getting through the morass of paperwork and filings can take “forever”.Forever represents a victory for Corcept, although retail investors won’t cotton to the apparent uncertainty. The valuation may suffer for a while.

Milestones


Corcept Sponsored Trials

Metabolic Indications
While Cushing’s syndrome is a recognized indication, its successful treatment by Korlym should be viewed as “proof of concept” for working in other metabolic indications involving diabetes, obesity, and high blood pressure. This would be especially true with mild cases of Cushing’s syndrome involving small benign tumors on the adrenal gland (adrenal incidentalomas).
Cushing’s Syndrome
There are perhaps 7,000 to 10,000 patients in the USA that should benefit from this treatment. Nevertheless, the diagnostic category may greatly expand with middle-aged and older adults who are impacted byadrenal incidentalomas. This used to be called “subclinical Cushing’s Syndrome”. Korlym or a next-generation drug targets the metabolic consequences of the disease.

CORT 125134 (AKA relacorilant) is a next generation, selective GR-antagonist. It is good at blocking the glucocorticoid receptor (GR), but unlike Korlym it does not block the progesterone receptors (PR). It lacks some of Korlym’s off-target effects, especially its ability to terminate pregnancies.
Phase IIa Top-Line Results (30 pts) – Relacorilant
Group 1: 100 mg/day for 4 weeks, then 150 mg/day for 4 weeks,
then 200 mg/day for 4 weeks.
Group 2: 250 mg/day for 4 weeks, then 300 mg/day for 4 weeks,
then 350 mg/day for 4 weeks, then 400 mg/day for 4 weeks.
Q3-2018
Phase III Launch – Open-label - 100 Patients
Relacorilant
Q4-2018
Phase III Results
Relacorilant
Q4-2020 *
CORT118335

CEO Belanoff stated thatCORT118335produced promising results in animal models of fatty liver disease including a reduction of white fat in the liver and other organs. Additional work with metabolic syndrome is being conducted by independent investigators.

Cushing’s syndrome patients, especially those with mild disease, are “human models” for metabolic syndrome.Corcept’s patentfor treating fatty liver disease is now published in the US and Europe.

Why CORT118335 rather than Korlym?

Cushing’s syndrome requires a drug that has wide dispersion through the body (Korlym). On the other hand, metabolic syndrome, especially involving NASH disease, requires a drug that is well absorbed by the liver (CORT118335). CORT118335’s targeting is inappropriate for Cushing’s syndrome.

About two years ago,we also underscoredCORT118335’s potential use for treating alcohol withdrawal in animalmodels. 
Metabolic Syndrome
In the Phase 1 trial, it is a 3-part, single center study of single and multiple ascending doses in healthy subjects. Quotient Clinical in the UK is conducting the trial, the same group that executed the Phase 1 for relacorilant.

Part 1 of the study is a double-blind, randomized, placebo-controlled assessment of single-ascending doses (SAD) of CORT118335. Subjects will be enrolled sequentially into 1 of up 7 cohorts (Cohorts A to G), each containing 8 subjects. Within each cohort, 6 subjects will be randomly assigned to receive a single dose of CORT118335 and 2 subjects will be randomly assigned to receive a single dose of matching placebo.

Part 2 Cohort A, food-effect, will be an open-label 2-way crossover study in one cohort of 12 subjects, randomized in a 1:1 ratio to receive a single dose of CORT118335 once after an overnight fast and once after a high-fat breakfast or the alternate sequence, over 2 study periods separated by a washout of at least 7 days/5 half-lives.

Part 2 Cohort B, PD cohort, will be a double-blind, randomized, placebo-controlled, 3-way cross-over study and will serve as proof of pharmacological effect (GR modulation) for CORT118335. Subjects will be randomized in a 1:1:1 ratio to receive placebo, and two dose levels of CORT118335 in one of three treatment sequences across 3 study periods separated by washouts of at least 7 days/5 half-lives. On each occasion, the ability of CORT118335 to ameliorate the pharmacological effects of a single dose of prednisone will be measured.

Part 3 is a double-blind, randomized, placebo-controlled assessment of multiple oral ascending doses of CORT118335. Subjects will be enrolled sequentially into 1 of up to 4 cohorts (Cohorts A to D), each containing 12 subjects. Within each cohort, 9 subjects will be randomly assigned to receive CORT118335 and 3 subjects to receive matching placebo daily for 14 days. There is an option for the last cohort (Cohort D) to undergo prednisone challenge before and after treatment with CORT118335 or placebo to study the effects of CORT118335 on the response to prednisone challenge.
Phase 1 Results – 128 Healthy Patients – Dose Ranging, Double-Blind
CORT118335 ± Prednisone, Glucose, Placebo
Q3-2018
Phase 2 Launch – Antipsychotic Weight Gain Mitigation
CORT118335
Q4-2018
Phase 2 Launch – NASH Treatment
CORT118335
Q4-2018
Cancer Program

Cortisol modulation may play a role in treating solid tumors through two mechanisms.

First, in cancers where the tumors express GR, such as pancreatic, triple negative breast, and ovarian cancer. cortisol stimulates genes that retard apoptosis – the programmed suicide of dysfunctional cells. Chemotherapies aim to provoke apoptosis.

Cortisol modulators should reverse this effect and downregulate the “apoptosis suppressing genes”. This enables chemotherapy to make a stronger impact.

Second, cortisol modulation may help the immune system fight cancer. A healthy body regularly produces cancer cells, but the immune system identifies and destroys them. Even at normal levels, cortisol suppresses the immune system. Unfortunately, the stress of cancer and its treatment raise cortisol activity above normal levels and creates even greater immunosuppression. Cortisol modulators counter this effect by mitigating cortisol’s effects, thus freeing the immune system to act more potently.

Corcept’s oncology program builds on preclinical and clinical research at the University of Chicago and confirmed by researchers at Sloan Kettering. There is great interest in therapies that stimulate the immune system to fight cancer because it can be a powerful weapon.
Solid Tumors
CORT125134 (relacorilant) is in a Phase I/II trial to treat solid tumors including breast and ovarian cancer. In the Phase I part, CORT125134 is paired with Abraxane. Dose cohorts are employed to seek the maximum tolerated dose (MTD).

Corcept expects to open additional expansion cohorts in patients with other tumor types, most likely ovarian and triple-negative breast cancer in 2018. Corcept is opening a cohort of pancreatic cancer patients. Given the preclinical animal results, we aren’t surprised.

Relacorilant has shown potential. Besides lacking a couple side effects associated with Korlym, the animal models andearly clinical data for treating solid tumors looks good, especially for pancreatic and ovarian cancers.

Relacorilant appears to perform better than Korlym in mouse models of TNBC and castration-resistant prostate cancer. It also demonstrated good results with ovarian cancer cells in the lab. It is like Korlym but lacks some of its side effects.

Relacorilant is already being paired with acheckpointinhibitor, namelyPembrolizumab(Keytruda).
Ongoing Results –Relacorilant (100 mg/ daily) + Abraxane (80 mg/m2)
20 Patients with Pancreatic Cancer
Q4-2018
Phase II ResultsExpansion Cohorts – (~24 pts per Cohort)
Relacorilant + Abraxane (ovarian & triple-negative breast cancer)
Relacorilant + Pembrolizumab (Keytruda)
Q2-2019*
Phase II ResultsExpansion Cohorts – (~24 pts per Cohort)
Relacorilant + Abraxane (Pancreatic Cancer)
Q4-2018 / Q1-2019
Prostate Cancer
CEO Belanoff mentioned CORT 125281 stood out with treating rodent models of prostate cancer including castrated animals. There will be close attention from the cancer community on trials involving GR antagonists for treating prostate cancers that are resistant to enzalutamide and abiraterone.

The Phase 1a trial involves separate single ascending dose (SAD) and then later a multiple ascending dose (MAD) cohorts. The MAD part of the study will be double-blind, randomized, placebo-controlled and parallel-group with respect to CORT125281. The trial is being conducted in London.

The SAD part of the study is double-blind, randomized and placebo-controlled with two cohorts, each of 9 subjects. Each subject will receive three sequential single doses of either CORT125281 at the assigned dose level or placebo, in a partial within-subject crossover manner. The starting dose is CORT125281, 40 mg. The PD effects of CORT125281 will be examined by a concomitant dose of prednisone.

The MAD part of the study will be double-blind, randomized, placebo-controlled and parallel-group with up to four cohorts of 8 subjects. Each group is randomized so that 6 receive CORT125281 and 2 receive placebo, so that up to four dose levels of CORT125281 are studied. An exploratory assessment will be made of the effect of repeated doses of CORT125281 on exposure to pioglitazone, probe substrate for CYP2C8. On Day1, subjects will receive a single oral dose of pioglitazone, 15mg. From Day3 to Day16 (14 days), subjects will be dosed daily with IMP (CORT125281 at the selected dose or placebo). On Day13, subjects will receive a second dose of pioglitazone, 15 mg.

The Phase 1/2 Trial involves pairing CORT125281 with enzalutamide (Xtandi)to treat 80 mCRPC (metastatic, castration-resistant prostate cancer) patients. The study aims to find the maximum tolerated dose (MTD) of the combination therapy. At least one cohort of patients must have progressed during treatment with enzalutamide or second-generation AR-blocking therapies.
Phase 1a Recruitment Finished – CORT125281 – 50 Healthy Patients
May 2018
Phase Ia Results – CORT125281 – 50 Healthy Patients
Q3-2018
Phase 1b Ongoing Results – CORT125281 + Xtandi – Dose Escalation
80 Metastatic Castration Resistant Prostate Cancer (Open Label)
TBA
Phase 1b Final Results – CORT125281 + Xtandi – Dose Escalation
80 Metastatic Castration Resistant Prostate Cancer (Open Label)
Mid-2021*
*Guesstimate

Independent Investigator Sponsored Trials
Cancer Program
Advanced GR+ Triple Negative Breast Cancer
Patients are treated in a randomized, double-blinded, placebo-controlled design.
Phase II Results (University of Chicago) (64 pts)
Korlym + Abraxane
Q3-2019
Advanced HER2-negative Breast Cancer & Checkpoint Inhibitor
The open-label study will include a safety lead in of ten patients. Patients who are deemed eligible and have signed informed consent will be treated with pembrolizumab(Keytruda) at a fixed dose of 200 mg intravenously on day 1 of each 21-day cycle for each dose level. Mifepristone 300mg PO will be administered daily starting the week prior to pembrolizumab.

Pembrolizumab is an approved anti-PD-1 mAb, marketed by Merck.

The first cohort of 10 patients will be evaluated for safety (Phase 1). During dose expansion, the study will include triple-negative breast cancer patients. After successful Phase 1 safety is passes, then both cohorts will be subjected to dose expansion.

Cohort 1: Hormone receptor positive, treatment refractory breast cancer (25 to 34 pts)
Cohort 2: Triple Negative breast cancer (27 to 40 pts)
Pembrolizumab + Mifepristone - (University of Chicago) (74 pts)
2H-2020 *
Prostate Cancer
While an August 2018 finish date is published, we are cautious. The University of Chicago investigators are sometimes slow with releasing their results. Patients are given Xtandi vs. Xtandi + Mifepristone. While these patients have failed prior therapy, they are naïve to 2nd generation AR antagonists (Xtandi, AR509)
Xtandi ± Mifepristone - (University of Chicago) - 108 pts
2H-2018 *
Advanced Non-Small Cell Lung Cancer
Corcept is listed as a collaborator in the study. It is an open-label design, in patients with metastatic NSCLC who have failed 2+ prior chemotherapies. It is hoped that mifepristone as a monotherapy will increase the median progression-free survival time to 15 weeks and overall survival time of 16 months. We are a bit queasy because we do not view Corcept’s drugs as monotherapies for treating cancer.
Phase II Top-line Results(Cooper Institute) (40 Pts)
300mg/day in 28-day cycles
2019*
Addiction Disorders
Recentcommentaryimplicates the use of glucocorticoid antagonists, including mifepristone, for treating general addiction problems.
Alcohol Withdrawal – Prior Phase IIa study reported positive results with untreated alcoholics. There is also an “observational” studyin which cortisol levels predicted the drinking intensity in alcoholics.

There are some impressive research labs, including the current NIAAA Director’slabat UCSD, that have been using Corcept’s drugs with alcohol withdrawal. Nevertheless, we don’t expect Corcept to initiate an in-house program before 2019. We speculate that management will wait until the metabolic program has returned some Phase 2 results, which enables a closer look at the effect of Corcept’s drugs on the liver.
Phase II Results (Scripps – San Diego) (150 pts)
Placebo, 600 mg, 1200 mg/day; 7 days
Q3-2020 *
Phase I/II Results(Brown University) (20 pts)
Crossover, Double-Blind, 600 mg/day, 7 days
1H-2019 *
Phase IV MIFCOG TRIAL Results(King’s College – London) (120 pts)
Cognitive Impairment & Depression in Alcoholics
Double-blind, 12-Month Follow-up
600 mg/daily for 1st week, 400 mg/daily for 2nd week
2018*
Phase II Results in Heavy Drinkers (Johns Hopkins) (150 pts)
6 doses of Mifepristone vs. CORT125134 vs. Placebo
Q1-2022
Tobacco Use Disorder - Mifepristone may be a potential treatment for Tobacco Use Disorder (TUD). No previous studies have examined the therapeutic potential of mifepristone for TUD. There is indirectevidenceincluding the relation between cortisol levels and nicotine craving. but this study is a first attempt at exploring a direct intervention.

This is a double-blind, placebo-controlled design on the effects of a 7-day treatment with 600 mg mifepristone, or placebo, on cognitive function, tobacco withdrawal severity, and smoking behavior.
Phase 1a Results (Yale University) (40 pts)
600mg, daily, for 7 days
Q4-2019 *
Metabolic Syndrome
A recent study treated patients who suffered from benign adrenal incidentalomas (adrenal tumors) with diabetes and mild hypercortisolism. Mifepristone treated patients experienced: decreased waist size and insulin resistance, and improved quality of life. These (very) mild cases of Cushing’s syndrome should be viewed as a human proof of concept for treating other forms of metabolic syndrome.
Diabetes, Obesity
Crossover, Double-Blind
2H-2018 *
not well-controlled on oral medications – (Drew University) - Results
(60 pts)
Mid-2020
*Guesstimate

Final Thoughts


In our recent commentary on BioMarin (BMRN), we likened it to Corcept. Both are reliant on its currently marketed orphan drug(s) to fund its blockbuster pipeline. Both have risks related to the expiration or invalidation of intellectual property protection of marketed drugs.

With Corcept’s smaller size, there is a key difference. Corcept doesn’t need a blockbuster to make a huge dent. It can market for a product that has a “mere” $250M in peak sales and it means more than a $1B product to BioMarin. Corcept has a platform of indications that portend good things. It has several more shots on goal

Before too long, we should also hear important Phase 1 results for Corcept’s new drugs. We will say it now: by the end of 2019, Corcept’s metabolic platform will command significant attention. Wall Street and retail investors will see past just the cancer platform.

Valuation


As we recently stated:We would not be surprised to see CORT fall even further, but at a certain point, it becomes an interesting deal for certain types of investors.

We indeed saw CORT hit the 12s. CORT is not immune to valuation spikes and valleys fueled by events in the courts. With the reduced sales guidance, the retail investors are fleeing. CORT may hit the 10s and 11s. That’s understandable and expected.

What do we think?

If the robust growth continues, we aren’t upset. Corcept is hitting Tier 2 and perhaps even Tier 3 markets. In the longer run, Corcept needs a next generation drug like relacorilant to break $450M for the Cushing’s market. A few years ago, some thought that peak sales would be under $100M!

Amidst this valuation carnage, the Corcept Board is doing a $100M stock buyback. At least three of the Board members are “elderly”. This shows tremendous confidence in the prospects for CORT over the next couple years.

Barring the immediate loss of protection for Korlym, Corcept’s road ahead is already laid out. The management is committed and even if there’s a revenue shortfall, the clinical programs will travel the currently planned path. It’s a full train with multiple shots on goal...and the announced clinical results were stellar. 

Thoughts for Longtime Readers


There’s a large enough mass of shorts that you should expect some pessimism and derision across the message boards and even among institutional shills. We should well-consider contrary and reasonable opinions – that’s a valuable commodity. We should also reject derisive and ill-informed commentary, especially from anonymous sources. To that end, I will plan an East Coast trip and announce office hours in Carolina. There are wonderful cities in North and South. I hope to meet a few of our longtime readers and listeners.

(At the time this post was written, one or more BioWatch authors held a position in CORT)

This blog post is from The Biotech Watcher:

Original Article: Corcept Q2-2018 Update: Downward Sales Guidance and Upward Sails into Clinical Results

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