Welcome to the Corcept Therapeutics Second Quarter Conference Call. My name is Adriane and I will be your operator for today's call. At this time all participants are in a listen only mode. Later, we'll conduct a question-and-answer session. Please note this conference is being recorded. I'll now turn the call over to Charlie Robb, Chief Financial Officer. Charlie Robb, you may begin.

Thank you. Good afternoon. My name is Charlie Robb. Joining me today is Dr. Joseph Belanoff, our Chief Executive Officer. Thank you all for participating in the call. Earlier today, we issued a news release giving our second quarter 2016 financial results, a reaffirmation of our 2016 revenue guidance, and a corporate update. To get a copy of this release go to corcept.com and click on the Investors' tab. Complete financial results will be available when we file our Form 10-Q with the SEC. Today's call is being recorded. A replay will be available through August 16th, at 888-843-7419 from the United States and 630-652-3042 internationally. The passcode will be 42972085. Before we begin, I want to remind you that any statements made during this call other than statements of historical fact are forward-looking statements subject to known and unknown risks and uncertainties that might cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements include statements regarding our anticipated revenues and expenses for 2016 and beyond, the anticipated contributions of our sales organization, the cost, timing and results of preclinical and clinical trials, whether conducted by us or by independent investigators, the clinical attributes and advancement of our next-generation selective cortisol modulators including CORT125134, CORT118335, CORT125281 and CORT122928. The protection afforded by Korlym's orphan drug designation for Cushing's syndrome or our other intellectual property rights, including the composition of matter patents covering our selective cortisol modulators and patents concerning the use of cortisol modulator to treat triple negative breast cancer, castration-resistant prostate cancer and other indications. These and other risks are set forth in our SEC filings which are available on our website, or from the SEC's website, sec.gov. We disclaim any intention or duty to update any forward-looking statement made during this…

Thank you, Charlie and thank you all for joining us. I'll begin by reviewing the second quarter results of our Cushing's syndrome franchise and then briefly discuss progress of the development of our cortisol modulation platform. As most of you know, our first product, the cortisol modulator Korlym, treats patients with endogenous Cushing's syndrome, the archetypal disease of cortisol excess. Cushing's syndrome is caused by a tumor that produces either cortisol or ACTH, a hormone that causes the body to produce cortisol. It's a serious disorder; left untreated it can be deadly. There are about 20,000 patients with Cushing's syndrome in the United States; approximately half of them are cured by surgery. The rest are candidates for treatment with Korlym. As Charlie just noted, our Cushing's syndrome franchise performed well in the second quarter, revenue grew 23% compared to last quarter and 65% compared to the second quarter of 2015. We earned a GAAP profit of $1 million. Excluding non-cash expenses, our profit on a non-GAAP basis was $3.2 million. Our cash balance rose even as we increased spending on the development of our next-generation selective cortisol modulators. One of the reasons for our strong performance in the second quarter is that the clinical specials we added to our sales force last year have now been in the field long enough to begin generating commercially meaningful results. Cushing's syndrome is a complex, rare disease. Physicians typically require five to seven visits from a Corcept clinical specialist before writing a first prescription. Furthermore, once a patient begins taking Korlym, it is often several months before the patient reaches a steady state dose, which is in most cases higher than the initial dose. As a result, the full impact of a new prescription on our revenue takes time to develop. We began…

Thank you. We'll now begin the question-and-answer session. [Operator Instructions] And Charles Duncan is on line with the question from Piper Jaffray. Please go ahead.

Hi guys. First of all, thanks for taking the question and thanks for the good overview on the platform, Joe.

You're welcome Charles. Good to talk to you.

Yes. So, just had a couple of questions, one is somewhat mundane, but its regarding the Korlym business. I mean nice growth in the quarter. I guess I'm wondering if you or Charlie could talk about your guidance assumptions or the assumptions behind guidance and the range, what do you need to do to get to that upper end?

I think that Charles as you know -- you've -- someone as followed the company for a long time, our communication strategy is really to be right down the middle of the road. And we obviously analyze our guidance every time we make a public statement and we're going to continue to look at it as the quarter progresses. We're obviously very pleased with the second quarter results, but we'll continue to have an evaluation as we go forward and obviously, make an adjustment if we feel like it is material to do so.

Okay. And what do you attribute the driver, is there one or two things? I know that you spoke to increasing the size of the sales force and then getting traction, but is there anything with regard to experience-based for the prescribers that you want to point to, to be encouraged about the uptick in at Korlym.

Charles, I just want to [Indiscernible], for some people who don't know him, Sean Maduck who runs our Cushing's syndrome franchise, and is our Senior Vice President, in charge of Commercial to answer that question.

Charles, Thank you for the question. So, the first point that Joe brought up in the comments around increasing the sales force, I mean that really has been a big contributor to the uptick in sales this quarter. We expanded from -- if you recall last year, from 17 to 25 clinical specialist and it does take time for individuals to become productive in the field commercially and we really saw that come to fruition over the last few months and as well as patients taking some time to get to their optimal dose. Those two factors combined have really driven revenue. But, to your question around the experience of the physician base. I mean over the last few years we've obviously spent a lot of time working with our physicians and working to move them along the adoption continuum and we continue to see new prescribers being added on a quarterly basis and we also continue to see an increase in our multi-prescribers. As Joe stated in the opening statement, Korlym is a very effective treatment for patients with Cushing's syndrome who have failed surgery or otherwise are ineligible and when doctors see the benefit that they have, they then look to other potential patients to prescribe the product.

Yes. And Charles the only thing I'd like to add to that is these are -- this is really a science based sale, it takes us time to train our clinical specialists, not every clinical specialist frankly has really the potential to do it, and so we select very carefully. We're not done expanding. But, we really do this in a way that we think that we can add value with every clinical specialist who we add and this is really very nice confirmation if done correctly, we really can get to more patients and really our business can grow in a purely organic way, this is what happened in this quarter.

That's helpful. Thanks for the added color. I'd like to just -- if we could -- just a couple quick questions, move on to what's more important to longer term pieces in perspective on the company's potential of the pipeline. And that is, regarding the triple negative breast cancer results that could come out towards the end of the year, with Korlym, what would be a win in your view in terms of response rates and durability. We've seen, obviously, with this very tough to treat disease, something on the order of 20% response rate could be not a bad thing.

Well, I think that what's really striking about these results, I mean, is one this is a very difficult part patient population to treat. We think it's really moved in -- with the results, we see the move in the direction to thinking that cortisol modulation has the potential really to have efficacy in this very difficult group to treat. Now, I think the really critical thing and I think it got lost a little bit in -- I think in all the news around ASCO is that Celgene is now paying for a controlled study which I think will really tell us what is the effect of our medicine as opposed to what's in the background medicine. And the last thing I'd really say and I'll point to it again is what really stepped out to us and the consultants and investigators we've shown it to, is we now have a group of patients whose progression-free for survival has extended well beyond what was previously noted in a trial of Eribulin monotherapy. Now, the study is still running, patients who are still going on right now. We do not have the final results and we'll have to take that all in. But, in this very difficult to treat -- group of patients to treat, I think we really have seen encouraging data and for whatever it's worth have gotten the validation of a very large player in the oncologic field.

Absolutely. And then my last question is on 134, and second-generation or third generation compounds, I guess I'm wondering if you could share with us the IP there and is it possible that the GR activity, within the absence of PR activity, could result in really some different distribution or loss of restrictions -- removal of restrictions in terms of the distribution of that class of compounds relative to Korlym?

All right, Charles, just to give everyone on the call a little context for that. I'll start sort of at the end of your statement. I think as many of you know and some who may not, the Korlym's active ingredient mifepristone is the same active ingredient and what used to be called RU-486 or the drug which is used to terminate early pregnancy. It has got a specific purpose, which is to terminate early pregnancy and that quality comes from its blockade of the progesterone receptor. So, we do think that taking away the activity potentially allow this group of medications if they prove to be efficacious to be available in a much wider group of patients than is currently available with what we can do with Korlym. So, I think it’s a very exciting both from a medical perspective and eventually, if it pans out from a commercial perspective. I think the other thing that's interesting about it and I just want to reiterate going backwards is that we have a variety of compound, it's not a single GR antagonists. Some of these compounds may be organ-specific in ways that Korlym is not and may allow to develop drugs of different disorders very specifically. And the last -- going back to the first question, but I think is very important and I don't want the audience to lose sight of this is that we're not done fully fleshing out what we can do with Cushing's syndrome. And not only do we think that Korlym has a lot of room to grow, we think that if we can get CORT125134 to the market, eventually we'll have a name and not just numbers, it will broaden the market even beyond that because there are doctors who we know for a fact -- in fact I visited one just a couple of weeks ago, who prescribed the men and not prescribed in women for reasons of their choice and I think that that issue will go away with CORT125134's successful entry into the market. Last was how long does the intellectual property go? Well, these are composition of matter patents that all go well into the 2030s for the new compounds.

Fabulous. Thanks for the added information, Joe. Congrats on the quarter.

Thank you very much Charles.

And our next question comes from Christopher James from FBR Company. Please go ahead.

Hi guys. Thanks for taking the questions and congratulations on a very successful quarter.

Thanks Chris.

Specifically Joe -- yes, thank you. So, specifically with the expanded sales force, eventually you guys are doing a fabulous job obviously. Joe I think you mentioned that you said you're not done with expanding the sales force. I just wanted to -- how should we think about the further expansion of the expansion of the sales force in Cushing's syndrome specifically given that CORT125 could o be in Phase 3 in a relatively short time?

Chris, I'm just going to turn you over to Sean here.

Hi Chris. This is Sean again, thanks for question. So, yes, last year, again, we announced that we would expand up to 25. We've been very opportunistic in our expansion. We've never set forth a cap number of how big we would go. It's where we realize we have a viable territory on its own and we have the right talent that can sell Korlym and just go to sort of the challenges in that -- and the type of person it takes. We will carve out another territory and expand. So, we recently have expanded to 30 territories and are in the process of filling those. And just to add a little more color, one of the changes we made this quarter was to put a National Sales Director in place and to expand to five Region Managers. We previously had four. And those five regions now give us the infrastructure to again to be opportunistic and grow where we feel is appropriate and where we feel we can add incremental value to the organization. But, what we won't do is just add -- to add again, it requires the right individual and the territory that we believe can be viable.

Right. That makes sense. And then just a follow-up to the previous question. Can you remind us of the IP on CORT125 and you think there is an opportunity to extend the IP with Abraxane combination?

Just a couple of things, first, and I think it's sort of easiest patent to understand is on all of our new compounds, we have composition of matter patents and they went out over an extended period of time as I said in into the mid-2030s. So, they have their core issue. We also have a patent, as an example, with all -- the whole class of GR modulators with chemotherapy, like Abraxane, that's a license patent that we have one for triple negative breast cancer, another for castration-resistant prostate cancer that before this whole program that going, we licensed from the University of Chicago. So, we're always looking to extend our intellectual property portfolio. For a company of our size, I think it's quite extensive and we think that it's the right thing to do on a variety of levels and one we think it's a real statement of discovery and the other is that it provides commercial protection beyond -- in time in many cases with the actual other protections like orphan protection or proposition of matter protection might be.

Got it. Thank you. That's very helpful. And then finally, can you remind us, I know the data with the prostate cancer is an RSP [ph], but maybe can you speak to eventually when those data could be available? And maybe can you just give us a very brief -- can you maybe speak to the scientific rationale behind that?

Yes. In fact let me do that first. It's a really interesting scientific rationale. I think for those of you who follow prostate cancer, prostate cancer for many men is either a disease that will kill them when they get to be 130 or is easily treatable, but for younger men who end up with metastatic disease, it really is a very bad disease and unfortunately until relatively recently, there weren’t good treatments for when it became what's castration-resistant. Enzalutamide, Medivation's drug, is an excellent drug in that regard, it's a potent androgen receptor antagonist, but one of the things that -- one of the -- the really important lab at Sloan Kettering showed was that really within hours of giving enzalutamide, you begin to select for colonies of cells for which androgen is no longer the growth factor but cortisol is. And so, there's a real scientific underpinning now shown in transgenic animal models and so forth that the combination of either surgical or chemical castration with a drug like androgen deprivation with the drug better said, with a drug like enzalutamide plus a GR antagonist like mifepristone, like CORT125134 can really enhance the treatment. And it's, I think, a very promising idea, we'll really find out what happens in this controlled study. And to your first question that you asked a little while ago, we expect results of that study -- again it's an IST, but in 2018.

Got it. Thank you so much. Thanks for taking the questions. Congrats on a great quarter. I will jump back in the queue.

Thank you.

Thanks Chris.

And your next question comes from Roy Buchanan from Janney Montgomery Scott LLC. Please go ahead.

Hi, thanks for taking the question. Very good quarter on the top and bottom-lines. I guess I had a follow-on for Sean, first if there were any price increases in the quarter and any plan for the year?

Hey just to spread the questions around a little bit, I'm going to give you to Charlie Robb, our Chief Financial Officer, Roy.

Hi Roy.

Hi Roy. No, we didn’t raise prices this quarter. So, we had a price increase last quarter February 1st, nothing this quarter.

Okay. And then I wonder if you could elaborate a little bit on Joe's comment that added support I guess from patient advocates and specialty pharmacy, can you tell us a little bit more what that means?

So, I'm going to -- so I'm going to give that one back over to Sean.

Thanks Roy, one of the challenges in orphan disease space and the nature of this condition is that these patients need support along the way. It's taken a long time to get to a place of being diagnosed and treated and then helping them along their patient journey. We have a Patient Advocate team offer support for patients from disease onset all the way through the lifecycle of their treatment and the ways of helping them sort of manage -- manage side effects, manage the comorbidities associated with their disease, it's an opt-in program, those patients have to consent to be involved in that, but our Patient Advocate team has grown over time and it's become very involved with those patients. And also on pharmacy side, of course, there's a pharmacist with our specialty pharmacy and our case handlers that work very closely with those patients as well on a monthly basis as they are coming up for new shipment. So, they work closely with them. If there are challenges or questions they may have.

And Roy, the only color I'd really like to add to this and it's something that really struck us from the beginning of our commercial launch is that when we began to talk to patients, we found that these were often patients because it's a rare disease, they had bounced around and come -- taken a long time to get to diagnosis. Often felt as if they had not been treated well in the medical system and we really felt that by helping to guide their journey, we really could improve their medical care optimally. And I actually think that our Patient Advocates are very large part of it. They are trained nurses and so forth and they really can help, of course, with the patient's consent, their pathway through. Additionally, -- and I'll just point to this things separately, from the time we launched, we actually stated and we never violated, every patient who gets a prescription gets the medicine and we worked very, very hard to make sure that happens as expeditiously as possible. They can help with that as well.

Great. Very helpful. And then I guess a follow-on for Chris' questions about data timing. Do you guys have any sense of timing for the Phase 2 for 125134 in Cushing's? Could we see anything at ASMO? And can you remind if Eribulin and Korlym Phase 2 is event-driven, when can we see data from that? Thanks.

Okay. So, two questions. I mean we're now just beginning the Phase 2 study for CORT125134 in Cushing's syndrome and we think that Phase 2 study will take about a year. So, I'm hoping by the time we have this call next year, fingers crossed, we'll have all of the results that we need to show you by that point in time. And as you know, in oncology, it's not like you have an eight week observation period. We're going to run the study until patients have progressed. So, this is Korlym and Eribulin study. Now, the nature of this disease, these are highly pretreated patients with metastatic illness. In many cases, unfortunately that time is not long. So, we expect to report those results at San Antonio Breast Cancer Meeting, but we'll have -- we'll report them as soon as we really possibly can and its sort of fully baked.

Okay. Very good. Thanks guys.

And our next question comes from Tazeen Ahmad from Bank of America. Please go ahead.

Hi, good afternoon, thanks for taking my questions. Maybe the first one on triple negative breast cancer, I have thought that for the Eribulin combo study, you have been expecting results from the study mid-year, but has that timeline as of today -- as of the call today been pushed out to the end of the year and if so, what's the delay?

Patients are still on study.

So, should we assume that that means that they are not progressing?

Well, we presented the results, as I said at ASCO, and I think that's really the last kind of material update we're going to provide for everybody, but I really can still tell you that patients are on study and when they are not, we'll have our final results.

Okay. And then to just drill a little bit into what the opportunity could be here, taking into account the triple neg is a tough disease with limited options for patients. If you combined your drug with Eribulin that would certainly not be an inexpensive combo treatment. So, based on the three patients that you reported back at ASCO that had a partial response out of, I guess, 21 GR positive and two patients with unknown status, do you think a 13% or 14% response rate in a combo would be considered clinically meaningful?

Well, I think that there are really two things to look at. One is the overall response rate as you've described and I think that this is a difficult disease and the response rate -- really for many conditions is -- by standards and other diseases pretty low. I think what's really striking to us and we'll have to see if it is also provable in a controlled study is that there's a group of patients, and it's similar to what I think people see in immunotherapy who seem to really respond for a much longer period of time than would otherwise have been expected. About a quarter of our patients are now beyond what was the 95% confidence level in a pretreated group of Eribulin-only patients. And again I caution everybody that we have previous study was an open label study, ours is an open label study. The real passive test is in the controlled study. But it is a striking result that they really are -- and I use this term with some trepidation, but it's just what some people say some super responders. I don't know really why that's the case. We can't prove at this point that it's not just random, but it really has been striking to everybody we've shown it to and I think really worthy of further exploration.

Okay. And then maybe moving on to Korlym, can you give us an idea of how much of the use is coming from the higher dose and how long it usually takes a patient to titrate up?

Yes. I think I can really answer your question, but I really again want to provide some context for this. In our study for approval, our pivotal study, the median dose was about 750 milligrams and actually the median dose was about 900 milligrams. So, we have -- and in that sort of study, titration took place pretty quickly because it was part of the protocol where as in the real-world titration takes a little slower because people don't come to the clinic every week or every two weeks. Now, what's interesting is that our average dose has increased over time, but it still -- rougher for round numbers, 600 milligrams and not 750 milligrams. So, we think that actually it could go further because we think that patients optimize treatment little bit further. So, I think that what we're really going for and really helping our doctors with is that patients get to optimal therapy because we think it's the optimal therapy pretty nearly every patient should see a substantial response. And that's true for some patients right now, but not all of them, but we hope to move the dial in that direction as time goes on along. And clearly although it's a secondary thing, there is more economic benefit for getting people at the optimum dose.

Okay. And then a last question maybe for Charlie, can you talk us through how you record sales, do you record sales the ones you ship because I noticed that you do have a pop-up and trade receivables this quarter versus last?

Yes. So, we record the vast bulk of our sales. We sell directly to patients. So, we record sales on delivery to the patient. A very small portion of our sales is through a distributor who sells to hospital pharmacies, I really wouldn't -- that's not really needs to be a material part of your calculation. So, the vast majority of sales directly to patients and it’s upon delivery that they are recorded. I think the reason you see receivables pop-up is that we had a very strong quarter and just we have that had time to collect everything yet, but there's been no real change in the sort of financial terms of our business over the quarter.

Okay, great. Thank you.

And next question comes from Alan Leong from BioWatch News. Please go ahead.

Thanks for taking my questions. I have a couple of them. Joe, you have a number of drugs that clearly impacted metabolic markers, you have Korlym and CORT125134 that will -- have gone through or will go through a proof-of-concept on Cushing's syndrome. And I hear the excitement around CORT118335, what makes it so interesting from a AMO [ph] model, what's so no unique for metabolic syndrome.

What's interesting -- and I have to be completely honest with you, Alan. We look at these things empirically, we'd love to know why CORT118335 is so potent, but I can tell you it's about -- even though Korlym really moves everything in the right metabolic direction, sometimes fairly substantially on a per milligram basis, CORT118335 is priced 60 times more potent. And it seems to be particularly potent in diseases where the liver is very heavily involved, so fatty liver disease, antipsychotic induced weight gain and insulin sensitivity around those levels. Now, it's still fairly early in its pathway. It just had animal studies, but the animal studies are -- have been replicated in many different sites and there really is something going on with this medication that we don't fully understand. Although, I know you're sort of a scholar about these things, it was an interesting article published in [Indiscernible] about the cofactors which are involved with 118335 and they may give you an idea as to perhaps why this compound empirically is more effective. We'll see if that translates to humans next year.

I have yet another question about sales for you and Sean, but hopefully, it will be more of a conversation, I'll try to give in that tact on it. Korlym is priced so high that new lives just have to account for a very few new prescriptions a year for Corcept to generate profits. At the same time, you're getting past your first tier, your physicians and patients are getting increasingly dispersed and Sean you talked about opening new areas organically. So, if I read this right over time, even though you're opening organically, you really don't need a lot of patients in an area to signal the need for opening a new area. Did I get the package right or could you provide some color on it?

Well, I think -- I'm going to hand it over to Sean in a second, but I think that the most important thing and I know it's sort of an unstated assumption for us, but I just want to make sure that everyone on the call gets it, is that Korlym is a very effective medication. And in the pivotal trial, the overall percentage of people who had significant clinical improvement was 87%, which really meant that it was pretty nearly 100% if I think it's dosed correctly and I think that's a very important starting point. We think that there are many patients in the country who have not sort of found their way to optimal treatment and so we get -- and we really noticed that early on and had to adjust for, these patients existing medical practices in all 50 states and rural areas and urban areas and so forth. So, that's the lay of the land. Now, I'll let Sean answer your specific question.

Yes, so, I mean just back to reiterate the specific question was just around the incremental enrollments that come in and what's required from a headcount standpoint. You really try and understand what does it takes to grow and what does it take to add-on incrementally to grow our business? One of the things is this is a drug in the orphan space. I mean we have patients across multiple etiologies; they have different retention factors associated. We have very topic patients that come in that are very, very sick and unfortunately they pass away on the product over time. I mean these are not -- we're not building upon the same base on a month-by-month basis. So, we need to continually, obviously, add patients. I think given the long sales cycle associated with this, I mean we really need to make sure that it does make sense to put an additional headcount from a cost point standpoint into a specific territory to grow the business or is that something that could be covered by an individual that's already there. So, again, we're very careful about where we think it makes sense to add but, to your point, given the drug and the price of the drug, if we find an opportunity where we believe there are patients that are not being reached because of inadequate touch, then we will expand our field to reach those patients.

And Alan something I said before, but I just want to repeat this. The controlling variable is really finding the right clinical specialists. Because we really do think that the right clinical specialist in a territory which was previously not been productive for us for patients having been treated will succeed. So, call of the things that Sean said are true and really go decision of very, very important, but what we really look as the front end can -- and we've learned what the front end really looks like, can we get the right person, can we train them correctly, because we think if we can and we place them in the right territory, they will be productive in the timeline that we've talked about.

I appreciate that. Thanks.

We have no further comments at this time. I'll turn the call back over for final remarks.

Well, thank you very much on a summer afternoon -- late in a summer afternoon for all listening in. And we look forward to talking to you in another quarter. Thanks very much.