Business context and reporting period
Corcept Therapeutics Incorporated is a commercial-stage biopharmaceutical company focused on cortisol modulation. Its marketed product, Korlym (mifepristone), treats certain adults with endogenous Cushing’s syndrome in the United States. The company is developing selective cortisol modulators for Cushing’s syndrome, cancer, ALS, liver disease and antipsychotic-induced weight gain.
This Form 10-K covers the fiscal year ended December 31, 2023. It reports annual results; standalone fourth-quarter financial figures are not provided in the supplied filing text.
Financial performance and liquidity
| Metric | FY 2023 | FY 2022 | Change |
|---|---|---|---|
| Net product revenue | $482.4 million | $401.9 million | +20.0% |
| Income from operations | $107.3 million | $112.6 million | -4.7% |
| Net income | $106.1 million | $101.4 million | +4.7% |
| Diluted earnings per share | $0.94 | $0.87 | +$0.07 |
| Operating cash flow | $127.0 million | $120.3 million | +$6.7 million |
- Revenue growth reflected higher sales volume and a price increase effective January 1, 2023; volume accounted for 57.4% of the increase.
- Cost of sales was $6.5 million, or 1.3% of revenue. Approximate operating margin declined to 22.2% from 28.0%; net margin was approximately 22.0% versus 25.2%.
- Research and development expense rose to $184.4 million from $131.0 million, primarily due to development-program spending and employee compensation. Selling, general and administrative expense rose to $184.3 million from $152.8 million, mainly reflecting compensation and legal costs.
- Cash, cash equivalents and marketable securities totaled $425.4 million at year-end, versus $436.6 million a year earlier. Current assets were $458.6 million and current liabilities $104.5 million.
- Cash used in financing was $148.7 million, including $145.4 million for a 2023 tender offer. The filing’s balance sheet presents no borrowings; total liabilities were $114.8 million.
- Interest and other income increased to $17.3 million from $3.6 million, mainly due to higher market interest rates. Income tax expense was $18.4 million.
Material changes and business developments
- Korlym remains the company’s sole marketed product and principal revenue source. A generic entrant could materially affect sales and pricing.
- Teva’s generic Korlym received FDA approval and Teva announced its launch. On December 29, 2023, a district court ruled Teva’s product did not infringe two asserted patents; Corcept appealed. Settlements with Hikma and Sun permit generic entry under specified conditions, including following Teva’s sales.
- Pipeline activity advanced: relacorilant’s GRACE Phase 3 Cushing’s trial completed enrollment; GRADIENT and the ovarian-cancer Phase 3 ROSELLA trial were ongoing. Corcept also started the MONARCH Phase 2b NASH trial and a Phase 1 study of miricorilant for prevention of antipsychotic-induced weight gain.
- FY 2023 research and development expense was 49% of total operating expenses. The company had 352 employees at year-end.
Outlook, risks and unusual items
- Management expects 2024 research and development expense to exceed 2023 levels as trials expand, and selling, general and administrative expense to rise with increased commercial, administrative and litigation activity. It expects to fund planned operations and development for the next 12 months and beyond without raising additional funds, based on current plans.
- In January 2024, the board authorized a share repurchase program of up to $200 million; repurchases are discretionary. Corcept also noted the IRA’s Medicare provisions, including manufacturer cost shifts beginning in 2025, may reduce revenue and profits. The company did not expect the 15% corporate alternative minimum tax, effective for it in 2024, to significantly affect its financial statements.
- A 2022 securities-litigation settlement expense of $14.0 million was offset by a $14.0 million insurance recovery. In January 2024, the company paid the settlement into escrow and was reimbursed by insurers; final court approval was pending, with a hearing scheduled for June 6, 2024.
- The U.S. Attorney’s Office for the District of New Jersey is investigating whether criminal or civil violations occurred relating to Korlym sales and promotion, healthcare-professional relationships and payments, prior authorizations and reimbursement. The company said it is cooperating and is not currently considered a defendant.
- Other material risks include clinical-trial failure or delay, product safety and regulatory risks, dependence on contract manufacturers and a single specialty pharmacy, reimbursement and drug-pricing pressures, and litigation and patent uncertainty. The filing also identifies mifepristone-related public and regulatory scrutiny as a potential commercial risk.
Investor verification priorities
- Track the Teva appeal, generic launches by Teva and other manufacturers, and any resulting effect on Korlym revenue, price and patient access.
- Verify subsequent clinical and regulatory milestones for relacorilant, including GRACE, GRADIENT and ROSELLA, and for the MONARCH and DAZALS programs.
- Monitor government rebate assumptions and accrued rebates: the year-end accrual was $18.5 million, and 2023 revenue reductions for rebates were $52.3 million.
- Follow the DOJ investigation and final approval of the Melucci settlement, as well as the status of related derivative litigation.
- Assess the effect of rising operating expenses, the new repurchase authorization and Medicare policy changes on cash, margins and the company’s stated funding outlook.