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. [Operator Instructions] Please be advised, today's conference is being recorded. I would like to turn the call over Atabak Mokari. Please go ahead.

Hello, everyone. Good afternoon and thank you for joining us. Today, we issued a press release announcing our financial results for the fourth 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 or 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 fourth quarter of 2023 was $135.4 million, an increase of 31% compared to the fourth quarter of the prior year. We expect our revenue growth to continue and are reiterating 2024 revenue guidance of $600 million to $630 million, compared to 2023 revenue of $482.4 million. Net income was $31.4 million in the fourth quarter and $106.1 million for the full year of 2023. Our cash and investments at December 31 was $425.4 million. I will now turn the call over to Charlie Robb, our Chief Business Officer, to provide a legal update. Charlie?

Thanks, Atabak. In March 2018, we sued Teva Pharmaceuticals to prevent it from marketing a generic version of Korlym in violation of our patents. The case went to trial in federal district court in September of last year. On December 29, the court found that Teva's generic product would not infringe the two patents we had asserted against it. We believe the court's verdict is wrong and is based on a misunderstanding of the law. Accordingly, we are seeking its reversal by the Federal Circuit Court of Appeals. It is impossible to predict exactly how long the appeal will take. Briefing will be complete no later than May. Our opening brief is due March 09. Teva will have up to 40 days after we file to respond. Our reply brief, closing the briefing cycle, will be due no later than 21 days after that. These documents will all be publicly available on the internet at the PACER website. With briefing complete, the timing of oral argument and issuance of an opinion are entirely up to the court. Based on past practice, it's reasonable to expect oral argument in the fourth quarter of this year and a decision early in the first quarter of 2025. If we prevail, Teva would lose FDA approval of its product, at least until the expiration of our patents in 2037. We are eager to advance this appeal. As has always been the case, we strongly believe that our position is the correct one. We are confident that the Federal Circuit, with its deep expertise in this area of the law, will agree. I will now turn the call over to Joe Belanoff, our Chief Executive Officer. Joe?

Thank you, Charlie. And thank you everyone for joining us this afternoon. Atabak highlighted our strong commercial performance and the revenue guidance we have set for 2024. A few weeks ago, I had the opportunity to meet with our endocrinology team at our National Field Meeting. The enthusiasm about our prospects in hypercortisolism was palpable. We have the opportunity to help many more patients with Cushing's syndrome. We are reaching a tipping point of sorts, with the medical field increasingly understanding that hypercortisolism is far more prevalent than was previously assumed. Our ongoing Phase 4 CATALYST study will reinforce this emerging understanding, and I believe this study will be a landmark in guiding the future screening and accurate diagnosis of patients with Cushing's syndrome. Catalyst is the largest clinical trial ever conducted to examine the prevalence of hypercortisolism in patients with difficult-to-treat type 2 diabetes. Its investigators are unquestionably the country's top diabetologists. Today, we announced preliminary results from the first 700 patients enrolled. Those results showed a hypercortisolism prevalence rate of 24%, far higher than many in the medical community have believed to be the case in this population. This is a two-part study. The prevalence portion of catalyst continues to enrol patients. Those diagnosed with hypercortisolism can enrol in the treatment phase. The final results from the prevalence phase will be presented in a keynote session at the American Diabetes Association's Annual Meeting in June. The results of the CATALYST study will undoubtedly stimulate physicians to screen patients for hypercortisolism, and many more than are currently identified will be found. Corcept is well-positioned to help them. For more than a decade, we have invested in patient advocacy and education and patient support services that are all based on understanding the journey and needs of an individual diagnosed with…

[Operator instructions] Our first question for the day will be coming from Matt Kaplan of Ladenburg. Your line is open.

Hey, guys. Thanks for taking the question. Just wanted to start off first with your reiterating your guidance of $600 million to $630 million for 2024. Can you give us a little bit more color in terms of, I guess, given the court's recent decision on the Teva case, why you're still confident and why you're reiterating the guidance that you had given before the court's decision?

Just one small point, but good to hear from you, Matt. Our guidance came after the court's decision, but we are reiterating it here. Sean Maduck, who is President of our Endocrinology Division, will take this question.

Matt, thank you for the question. Our revenue guidance will always consider all the information that we have and our best estimates going forward. Our range includes a multitude of factors, including a potential Teva launch and its impact. We have reiterated the range of $600 million to $630 million because we're confident in our ability to both grow our own business and to defend our market share.

Then in terms of, I guess, maybe for Charlie, a legal update, you said that you remain confident in terms of being able to win the argument as you appeal the court's decision. Can you give us some more color in terms of where you think the court erred in this decision and why you think you'll be able to reverse it?

Yeah. Unfortunately, Matt, I really can't share our legal deliberations as we work through. Obviously, I've given the matter a great deal of thought, but what I can say is what will really matter, will be available to everyone as the brief says we file it. I'm really going to have to let them speak for themselves and we'll shortly be submitting our brief and you and everyone can take a look at it then and that's really the most I can tell you at this point.

Okay. Fair enough. And then I guess congrats on the initial results in the CATALYST study, 24% prevalence of hypercortisolism. That's higher than, I guess, we had expected. How does this translate? Help us translate this into potential market size and numbers of patients given that result?

Yeah, Matt, I'll take that question. I think it's just really critical for people to understand that many people thought that the answer to that prevalence rate was going to be zero or zero to a couple of percent. Now, that wasn't borne out by earlier evidence. There were many studies over the last decade that indicated in this group of patients, patients who have otherwise refractory diabetes, difficult to treat diabetes, that the results were substantial. There were substantial groups of patients with that, but no one had ever attempted as large a study in the way we did it prospectively or frankly with the level of investigators who actually participated in this study. So I don't know exactly how that is going to reflect in what the final prevalence turns out to be, but what I can tell you is that it's substantially higher than what has previously been assumed. What's been previously assumed, I'll remind you, because we said it many times on this call, there were about 20,000 patients who had Cushing syndrome and about half of them were cured by split surgery. It's very clear to us right now that the actual overall prevalence for Cushing syndrome is considerably higher than that.

Our next question is from Xinwen Yang [ph] of Canaccord. Your line is open.

Hi, team. Congrats on the results and thank you for taking the questions from us. So we understand that when a patient stops taking Korlym, the cortisol levels begin to rebound within four to five weeks and the randomized risk growth in the GRACE study is 12 weeks. So how confident are we that a statistical significant difference in the changes of blood pressure would be observed during that 12-week window?

I'm not sure I really understood the question and so please tell me if in the end I haven't answered what you said, but I think the question had to do with for patients who were successfully treated with Korlym, how long does it take for stopping for when you stop Korlym for their effects of the Korlym effects to rebound? And now remember, we're talking at this moment about Korlym, not relacorilant. Our experience was much quicker than I think what I heard you said. Usually within a couple of weeks, we actually see rebound for patients who stop taking Korlym, which frankly is a compelling reason for the high adherence rate we see with Korlym is that when they stop taking their medicine, they get pretty much worse pretty quickly. We actually expect the same sort of timeline with relacorilant is that. Obviously, the study will give us the results for that, but we think that we have a more than substantial length of time in order to see the rebound effect that comes from not taking relacorilant in the upcoming study.

And our next question will be coming from David Amsellem of Piper Sandler. Your line is open.

Hey, thanks. So, I just had a few. So, I wanted to come back to the generic of Korlym and I get your comments. I guess I just wanted to get more color on the barriers to generic adoption that you think are in place. In other words, the specialty hub that serves all of these high touch points that are related to Korlym. Is that something that ultimately proves to be a barrier to generics and can you just talk about those dynamics? That's number one. And then secondly, you're talking about filing. I'm sorry, filing in the second quarter on relacorilant, but you're also going to have top line data in the second quarter. So, that's kind of a tight turnaround. So, can you just talk about that and why you're confident you can file it so quickly? And then lastly, are you going to be running any additional trials on relacorilant to tease out long-term health benefits? Can you just talk about additional clinical work you might do to support that product? Thank you.

Okay. So, three different questions in three different areas, David. Thank you. The first one, I'm going to point to Sean to talk about how we run our endocrinology business. Go ahead, Sean.

Yeah. No, thank you for the question. And your question was specifically around sort of what we believe to be barriers to entry and I'll just say that this is not your typical pharmaceutical market and supporting Korlym patients is far more than just filling a prescription. And automatic substitution does not happen at a Walgreens pharmacy till like you see in a lot of these cases. We have a very high touch, tightly controlled model. Every prescription that is written kicks off multiple high touch support initiatives to ensure that both the patient and the prescribing physician have the optimal experience.

And the only other thing I'd add here is that we spent over 12 years growing this business and we've done that through the development of a deep understanding of the market and by building very strong relationships with providers. Korlym is a very promotionally sensitive drug and we have all the pieces go through the initial part of the process of education of a physician through the filling of that prescription.

Charlie, would you take the question about the NDA, please?

Sure. Just a little background for those who don't know this process as I'm sure David does. A new drug application, which is what we're going to submit for relacorilant and Cushing's syndrome in the second quarter, really is a substantial document. It's a lot of work and so that's why David's asking a very good question. But I think what people also may not understand is that much of the information and analysis that you submit in the new drug application stems from work that is done years before the last patient leaves the pivotal study. So think of all of the preclinical research that's done, all of the Phase 1 trials, the drug-drug interaction studies, the manufacturing development work. All this makes up a really substantial part of the NDA submission to the FDA and we've been working on that for almost a year now. So the reason we'll be able to submit this so quickly is that a great deal of the work will be complete before the last patient leaves the great study and we will be ready therefore to file really promptly after that. That's why we're confident. Thank you, Charlie and Bill Guyer, who's our Chief Development Officer, will answer the question about relacorilant and longer-term use.

Yeah, long-term data. So thank you for that question. So there's a study that's actually ongoing that we don't talk about much, and it's a long-term extension trial and so that is a study that is taking patients from our Phase 2 trial, they can roll into the long-term extension trial. GRACE and GRADIENT, when they completed those trials, they can roll into that long-term extension trial. At this point in time, we have patients out six years in that long-term extension trial. We're going to continue that study throughout to continue to provide long-term data on the safety and efficacy of relacorilant patients with Cushing syndrome.

Thank you, Bill. Next question, please.

And our next question will be coming from Swayampakula Ramakanth of H.C. Wainwright. Your line is open.

Thank you. This is R.K. from H.C. Wainwright. I have a few questions, so I'm going to kind of ask, if you don't mind, one at a time. The first one is on the guidance itself. So you're kind of guiding, if I take the midpoint, you're guiding for like 27% increase from where we are now and then in '23, you grew about 20%. So I'm just trying to understand the tremendous growth that you're expecting from where you are now. So what is included in that? How much of that is price increase and in terms of market growth itself, where do you see that market growth coming from because in the fourth quarter, we didn't see that jump -- that quite rate compared to Q3.

I'm not, R.K., I think I got the question a little bit difficult to hear. Sounded as if what you were asking was you'd like to know what are the components of the growth that we see currently in the market and where we think it's going in the future. So I think that's about right. Now, it's not let us know, but I'll turn that over to Sean.

Yeah, no, thank you for the question. In terms of, I guess, the range I mentioned earlier, it takes in a multitude of factors and the biggest, obviously, right now is that we have more positions prescribing Korlym and more patients being prescribed from each position. Over the last year and growth that we see continuing, we've added new patients from both existing and new prescribers throughout the country and we're really pleased with the result we've seen, been driven by improved field execution and we're starting to see early returns from some of the investments that we've made, both on the salesforce side and on the disease education side. And one of the areas of growth on our business has been on the salesforce expansion. I wanted to update you on that in terms of where that team's at. Now we're currently at about 70 clinical specialists and we're continuing to add clinical specialists throughout the country. Our target right now is 100 and we're unlikely to stop there and we'll continue to add top talent as we find it throughout the country, but we believe that that expansion is going to also help drive growth.

Let me just sum that up for you, RK. More doctors prescribing and more patients from each doctor, it's a trend which really got very strong towards the end of last year and we're seeing it continue as we speak.

Is there a price increase included in this?

Sorry, I couldn't hear the question.

Is there a price increase included in this? There's not an additional price increase included in the range for this year. We took a price increase on January 01 of this year, 9.49%. We realized about 6.5% of that, but there was no other price increase included in that number.

Okay. And then on the diabetes population itself, I'm trying to understand a little bit more about how the catalyst data is going to help you out. So to start off, in terms of the percent of population, the diabetes population who are considered difficult to treat, can you give us a number? What percentage of the diabetes population is considered that? And then do you need to do, how do you plan to include that into your label? Is this going to be, do you need to file something or how does it work?

Yeah. So I think the answer, I think the first question you were asking, RK, was what percentage are difficult to treat diabetics and that's specifically defined in the protocol, patients who have hemoglobin A1Cs despite having multiple treatments and optimal care. So those patients have been on all of the modern medicine. We've been told by our expert, the diabetologists.

No, that doesn't give percentage. That just defines who is considered that, but what percentage of population is that?

I'm getting there. The percentage of the population that, of diabetic population that's considered to be in that group, difficult to treat diabetics is about a quarter.

Okay. Thanks.

And the second question, Sean?

35.05 [ph] :

And we have a follow-up question from David Amsellem of Piper Sandler.

Yeah, just a follow-up. So to the extent that the two other generic, Sun and Hikma, enter the market later this year, does that change how you think about your sales expectations or does your $600 million to $630 million contemplate three generic entrants by the second half of this year? Thank you.

Our guidance includes all those scenarios. And I just want to state that we've been thinking about this for a long time and we've been prepared for this possibility since 2020. We have a plan in place and we will continue to revise that plan as we receive new market intelligence and as I said before, we're continuing to invest in our Korlym business and we're confident in our ability to both grow and protect the share that we have. But yes, all of those scenarios are included.

And our next question will be coming from Joon Lee of Truist. Your line is open.

Thanks for the update, and for taking our questions. So 24% of the quarter of 30 million diabetics in the U.S. is an attractive opportunity, but with the Phase 3 grades not having hyperglycemia as an endpoint spelled out, represent a headwind to utilization of melacorlin in diabetics. Or do you think the data from the GRADIENT could be supported there? And also with the orphan pricing of Korlym or relacorilant be prohibited in the utilization and I have a follow up.

Yeah, Joon, I'm very glad that you asked the first question because it really gives us an opportunity to really clarify what the situation is. Bill, could you please take that one?

So yeah, for the GRACE trial, we have a primary endpoint blood pressure control and a secondary endpoint of glycemic control and so what we do is we have a hierarchy. When we meet our blood pressure control, we plan to then have that as our primary endpoint and therefore, we then move in that hierarchy to glucose control and we expect to meet both of those endpoints and we expect to have a robust response to both hypertension and diabetes control, as well as other comorbidities and based upon meeting all those endpoints, we expect a broad indication for miricorilant.

I think that's really an important thing. I'm just going to emphasize that I don't have anything different to say than Bill said. I want to just underscore that. Our anticipated label for relacorilant is to treat Cushing syndrome. There are many variables that we're measuring in that and in the hierarchy, hypertension is at the top of the list, but glucose intolerance is on that list, as are many other endpoints that describe Cushing syndrome. It's probably 20 different endpoints, because Cushing syndrome is a syndrome caused by excess cortisol activity. Cortisol goes everywhere in the body. And many things go wrong when people have Cushing syndrome. Now, you asked a really interesting question about price as we go forward and that's -- that really is something that we really have to think about, as the market enlarges and enlarges and enlarges and we don't know, as someone I asked, I answered to an earlier question, exactly what the market size is, but we will certainly take all those things into account as we go forward. One thing I want to just emphasize at this point is that we have not seen a single bit of influence yet from the catalyst information, not a patient. So it'll be very interesting to see where that goes over time.

All right, looking forward to the full data. And on generic, are you seeing any impact to Korlym since Teva was generic launch six, eight weeks ago and have you or do you plan to institute any new sales strategy in response to generic launch? Thank you.

I'm going to give you back to Sean for that question.

Yeah, no, June, thanks for the question. There has been no impact to our business since Teva announced its launch. We have seen no evidence of generic Mifepristone in the marketplace and we're monitoring daily. And to your second question, I'm not going to go into any specifics, but again, we've been prepared. We have a plan in place and more to follow.

Thank you. There are no further questions in the queue.

All right. Well, thank you, everybody. And look forward to three months.